Supply Chain Management Ups Essay
SCM Transport| The Super Transport System| SCM Transport| The Super Transport System| Table of Contents Introduction * Transport * United Parcel Service Overview * Industry Impacts * Industry Overview 2009 & 2010 * Competition * Customers * Organisation of the System * Movement of freight * Conclusion * United Parcel Service To transport people or services in the twenty first century, the process can either be a long haul one or a short crisp and clean journey, of course depending on what exactly is being transported and where the point of origin is and the final destination.
Supply Chain Management is the procedure by which this is done “… moving from one location to another, safely, conveniently, and as economically as possible. Goods must be moved to a point of Distribution in order to be made available to the ultimate customer. ” Lennon, SCM Transportation 2010 Transportation Transportation and logistics are crucial to our economy and society. As well as been responsible for the process of moving people and goods, the worlds transportation and logistics service is accountable for the creation of many concepts and inspiration for new technology.
Transport is the means or process by which people and goods are moved from one location to customers, safely, conveniently and as economically as possible. – Logistics, The Stores, Inventory Control, Transport and Distribution Aspect. McInerney, 2000 From the invention of the first steam engine to the twenty first century fuel powered aircraft, express vessels and even transportation to outer space our economy has improved immensely with expertise and knowledge always improving in relation to transportation. Currently there is a great variation in the market for both domestic and industrial usage.
Time is no longer a problem when it comes to moving from one continent to another. It only takes a matter of hours compared to the long process which once took months. Communication worldwide has benefited from these improvements and this has a knock on effect on businesses. Different communities and societies now correspond with each other, transportation is always generating relations and theses relations have a major role in our society, in development, social, regional and economic consistency in the world. From every standpoint in a business operation a well organised and competent arrangement of transportation is vital.
Manufacturers, customers and finally the consumer all need a reliable efficient system in place so that they can operate from. The manufacturer entails transport in both an inbound and outbound manner. A good system in this example will result in less capital engaged in stock because supplies can be acquired faster; therefore the manufactures company at large will have a better cash flow system. Also a cheaper rate of transportation will mean the company will have a higher profit margin and their chance of succeeding will increase. To the world at arge there are many advantages of an efficient transportation system including new markets, increased standard of living, etc as well as some weaknesses such as exploiting of inferior nations and the impact on nature along with many other predicaments. Elements of an idyllic transport arrangement are determined by expenses, safety, speed, convenience, flexibility and reliability, these elements come considered when choosing a mode of transport. On all sides of the globe there are many different means of transportation. They comprise of the well known road, rail, air, water and the lesser known pipeline, cable and space.
The selection of the most appropriate style of transportation from the manufacture to the end customer or the movement of basically anything or anybody involves these elements of the transportation arrangement. In correspondence with the transport system at large and taking all the elements of an excellent operated system the author decided to base her report on a logistics servicing company with an extensive assortment of transportation, e-commerce in addition to many business services. The company is identified as United Parcel Service (UPS) and is part of the world’s leading logistics operators.
The author, in this report will focus on the corporation’s transportation system throughout the world. United Parcel Service Overview The company UPS is a well known reputable business which was established in 1907 by teenager named Jim Casey. The proposal for the company was recognised when the founder was employed by a private messaging company in Seattle, America. Whilst working there Casey recognised how the mailing services were inefficient. Little did he know that his initiative would launch the world’s largest small-package carrier company.
From 1913, the business expanded and developed their potential. They no longer bound themselves to work with just mail but they introduced large packages, then motor vehicles, then deliveries for vendors and merchandisers and then the shipping of parcels. Between the late seventies and early eighties, UPS began shipping parcels worldwide. To ignore dilemmas and jeopardise relations with their customers they avoided using commercial aircraft and set up their own airline business. Currently their position is the “9th largest airline in the world”. http://www. wikinvest. om/stock/United_Parcel_Service_(UPS) UPS was first established in the American state of Washington and found themselves operating in a company that was capitalized with $100 in debt. The company spread from eastern USA to the mid-west, from Los Angeles to New York the company soon spread to all parts of the States. Beginning with their first plane in 1952 to creating their iconic logos the company that is UPS always represented stability and is a highly regarded efficient operation. UPS constantly grows each year and is always at a bid to try and improve their services. Industry Impacts
The author is without doubt positive that this industry of transportation was sure to occur. Along with FedEx and some other competitors UPS commenced the operation of this industry. Constantly it is been pushed to higher grades, the next day delivery is a prime example. Previous to UPS AND FedEx the industry simply didn’t exist. The delivery of packages and documents was carried out by a haphazard system of carriers consisting of trucks, trains and aircraft that were often operated by independent entities. Neither speed nor reliability was a hallmark of this system. SRI International 2001, Global Impact of FedEx on the New Economy
Industry Overview 2009 & 2010 Economic health is a key determinant of mail and package capacity. If the economy is not healthy, then the volume of domestic packages with in the U. S, to international packages, and onto freight and supply chain is reduced and UPS and others in their industry likewise. 2009: UPS and many other companies alike in their industry had a pessimistic outlook on their corporations mainly during the years 2008 and early 2009 because of the downturn in the world’s economy. Weaknesses lay all over the world, from Europe to Asia and American all suffered from this slowdown.
It resulted in countless companies, from retailers to internet sources having a decrease in sales, and to the individuals that also availed of UPS’s services financially notable to pay for the services of USP. The demand for packages diminished. Some workplaces put up the shutters, whilst others put in place dramatic cutbacks as funds were not available for them and this directly affected UPS in 2008 and partly 2009. However because UPS had created a strong brand name, a good standing n the market and an excellent operations system in place they overcame the collapse of the worldwide market.
Also the evacuation of some minor league competitors resulted in an overall enhancement for USP. From mid 2009 onwards the company reaped the rewards of profits suffered earlier in the year, the volume of packages increased. Average daily volume for next day air increased 2. 8% over 2008 levels. Ground volume demonstrated an improving trend over the previous quarters despite a 2. 9% decline in the fourth quarter compared with 2008. -http://www. wikinvest. com/stock/United_Parcel_Service_(UPS) 2010: After an improvement in 2010, UPS has progressed even further in 2010.
Profits are highly cyclical as they rely on a strong American, European and Asian Market and are growing even further into the undeveloped markets. For the first quarter of 2010, revenue increased by 7% to $11. 7 billion since the previous year’s first quarter. This was mainly due to increases in yield and operating leverage. The overall increases in operating leverage were due to overall growth in all business segments, most notably the growth in the international package and supply chain business. Higher revenues were also due to increases in base pricing and higher fuel surcharges.
Higher prices were possible due to the recovery from the 2008-2010 recessions. In the overall, net income increased by 37% UPS expects these increases to continue throughout the year, producing substantial revenue growth from recessionary levels. Wiki Analysis -http://www. wikinvest. com/stock/United_Parcel_Service_(UPS) Competition The UPS Corporation is a multibillion dollar enterprise with over 200,000 employees. In their industry of transportation and logistics UPS has only three chief contenders, FedEx, DHL and United States Postal Service (USPS). Between the four companies they provide equal services, however their ifferences lies in the prices, which is an apparent point of competition, but is only an issue in undeveloped markets. Also the availability of the service provider in specific locations is another distinction. Competition is rigid, but because of the vast investment devoted by each of the companies there is only a few major competitors. FedEx currently stands as UPS’s biggest competition. They are the only treat to UPS as they could manage to outsize them in this industry. They offer the exact same services, and both operate in the same league but the scale of operation between the two rivals is different.
However FedEx has the reputation for being much more expensive in relation to their products. DHL is another key contender for UPS. This company mainly operates from their base country of Germany and is involved in the traditional postal services. As well as that they offer an array of services, whether you are shipping across town country or continent. They also hold with them the title of being the world’s largest logistics provider. As of now the European market for UPS is on a rise so warms up the competition for both companies even further.
United States Postal Service (USPS) is a direct competitor of UPS, however they have come together to operate a win-win situation for both companies. UPS partnered with the US Postal Service to offer UPS Mail Innovations, a program that allows UPS to pick up mail and transfers it to a USPS center, or destination delivery point (DDU), for final distribution. http://www. sooperarticles. com/business-articles/fedex-express-competitors-19758. html As well as these main competitors, UPS also battles their market share out with operators such as Canada Post, Royal Mail, Japan Post, and many other postal, cargo and courier companies.
Customers Many individuals and business use UPS to send or receive vital information. The overnight service which UPS provides is popular as some fundamental transactions for business may have to be prepared or concluded. Other companies utilize the service to send apparatus and mechanical equipment which may be required instantly to keep industrial units and technology in operation. Overall there is a demand for urgent mail, packages, and freight transportation worldwide.
Any transportation company will have a wide variety of customers, and UPS’s include entertainment, banking, science, construction, insurance, gambling, telecommunications, housing, legal, data processing, education, manufacturing, retail, medical and even the steel industry. For ever customer, there is a specific need, UPS addresses these needs and examine the characteristics of the product and get an understanding of the best mode of transportation for the customer and their goods, destination is too considered and the customer can undertake the application process online and decide and choose for themselves the best option for them.
As UPS falls into the service industry a key issue for them is to create and maintain good customer relations, this leads onto customer loyalty with the brand of UPS, the company then can observe a growth in profits, now they can avail of the opportunity to escalate and advance and as a service industry employees must understand the importance these good relations. Just of late September 2010, UPS launched a fresh logistics television advertisement campaign.
UPS wanted to show potential customers its passion for transportation and supply chains solutions, what it calls “New Logistics” and it especially wants to bring the message of growth opportunity to small business. www. social medianinfluence. com Skepys, 2010, The company wants to promote themselves even more to the world; they are ever increasing and want to work with almost everyone and every business, as in this television campaign they are reaching out to the small to medium sized businesses. Organisation of the System The author has reported extensively on the external factors which have shaped UPS accordingly.
The author has now chosen to write on some of the internal aspects which form the operation of the corporation. As already shown earlier in the report UPS have numerous transportation modes which include air, surface, charter and hand carry. Many service options are available to all customers to meet their needs. The process that UPS must entail to do this naturally depends on factors about the goods. UPS has access to transport i. e. aircrafts, ships, railways and road transport all across our globe, but the consumers needs depends on which option the company feels best suits the situation at hand.
As stated UPS’s website You get the benefits of our vast network of transport options, specialised equipment, proactive communication, advanced tracking and worldwide research. – www. ups. com If a customer wishes to send a package anywhere across the world with UPS, this is possible as there is no restrictions with them. Since UPS was first established over one hundred years ago technology has evolved so much that via the World Wide Web anybody can create shipments, imports, and returns.
They can also calculate time and cost view charges, plan to have their shipments collected, view locations and history and all at the comfort of their own home or workplace. UPS basic principles in relation to transporting goods are * Domestic parcels which are made up of post i. e. letters and packages. These can be transported anywhere throughout the USA. * UPS deliver to over 200 counties worldwide and they categorise this sector into International Packages, any type of package is suitable to be transported. UPS operate a supply chain and freight sector, it comprises of UPS’s logistics business providers in more than 175 countries throughout the globe. The author decided first to refer to the tracking service which UPS functions. Tracking a package allows the consumer to monitor the status and location of their item. The process is quite simple to use. The process is quite simple to use. Via the internet the customer can track by tracking number, by reference and email and they can even obtain signature evidence of delivery.
The system of tracking has positive effects; it means the customer will be able to have an enhanced controlled time management structure in place. Movement of Freight Road: Following tracking the author decided to focus on UPS and their movement of freight. UPS moves goods using their transport methods from their point of origin to their final destination. Depending on where the freight is destined for is related to the type of transport used, also factors such as volume, weight and purpose of the goods conveys the mode of transport used.
First the author chose to write about freight travelling via land, as globally this is the most common method used. Two methods for this type of transportation can be used; the first option involves using UPS services or other logistic firms. This method is basic and it involves the logistics firm, e. g. UPS picking up the goods, and delivering them via lorry’s or vans. Throughout America and vast parts of the world, UPS is well recognised by their famous Pullman brown coloured trucks and vans. Railway: The second method of land transportation is to avail of the railway service.
UPS provide this option to their customers as they believe it is lucrative and loyal preference. Railways transportation is generally used for long distance journeys for heavy goods, and it is by and large only effective for customers whom use it for them purposes. As using trains for transportation only suits a minority if the market this means more and more customers use the service of UPS road transportation as it involves less hassle, is an inexpensive method and overall is a much better approach as they are direct deliveries.
However, as the author already stated the selection for which mode of transport to avail of depends on the goods themselves, e. g. iron ore would be best transported via railway in comparison to mail with more be more effective to be transported via road. Rail transportation is able to travel at higher speeds, carry a much larger capacity, have fewer delays as traffic is never an issue and they can deal with almost all weather conditions, as well as being safe and very secure. UPS provide climate controlled containers for specific goods which may be perishable e. g. ood, flowers, as well as their ordinary containers suitable for normal goods. Ships: As well as transporting via roads and railway, UPS also uses waterways and the sea to transport their customer’s goods. The mode of transportation used is ships. The goods are enclosed in containers, which are then placed safely and correctly onto ships and then moved to different locations. This method is viable for long distance journeys and has a reputation for being the cheapest form of transportation if there is a vast volume of goods been shipped. Rivers, lakes and oceans are used in this transportation.
This system is logical for UPS to use as they have a wide customer base and the volume of goods to be transported is there. The only disadvantage of shipping is it is not adequate for fast movement of goods, nonetheless the movement of goods by means of waterways and the sea has many advantages and shipping is a highly competitive service industry. From the UPS website the company shows their customers how they organise this complex system: We are the experts at managing complex transportation networks, dedicated fleets, and multi-modal shipments.
We can deliver orders anywhere through our global network. Our freight container shipping services can bring those parts together to make managing your supply chain simpler. * FCL Container Shipping (Full Container Load) – Our comprehensive NVOCC* services provide frequent departures at competitive rates for full container load (FCL) shipments from major ports around the world. * LCL Container Shipping (Less-Than-Container Load) – When you don’t have enough cargo for a full container, we offer less-than-container load (LCL) service between major ports worldwide. ttp://www. ups. com/content/us/en/shipping/container-shipping. html As there are two options available to customers regarding shipping this means that UPS understand their customer’s needs and have adjusted to these needs by providing both options. Airplanes: The final and successful freight transportation option that UPS offers to their customers is Air transport. This is a good method to use if time is of the essence and this system can be used within or between countries, basically air transportation can happen anywhere throughout the world.
Air transport is known for its speed for both the movement of people and goods, but with this speed comes high costs. UPS runs all their own aircraft to all major cities worldwide and this is constantly improving as their geographic locations are expanding as well as their customer base. Air transport is limited to what type of goods it can carry. Generally its purpose is for unpreserved goods that are urgent to their final destination, e. g. edicine, documents, flowers or food rather than high capacitated and dangerous goods. Conclusion After accomplishing the task of evaluating a unique area of SCM transport with an aspect of logistics transport included the author concluded that the company United Parcel Service (UPS) is amongst one of the world’s largest and leading logistic operators. UPS is an admirable company which has excelled in over one hundred years of business and the author deems this company to glimmer in the future even more.
As technology has evolved over the past, so has UPS as they constantly upgrade their services and work with their customers to meet their needs with the extensive assortment of services which they provide. In the report the author focused on some external features that influence the workings of UPS as a whole and the internal factors which shaped the company’s reputation as been the leaders of the pack in the logistics world. UPS adds much value to both domestic usage and businesses surrounding us. They make things possible for us and overall have perfected the express transportation network. THE END! Word count= 3,438