in the Internet Age Through E-Commerce Management presents the strategies
for e-volving your company into a holistic, Internet-enabled entity. This book
showcases case studies of three companies -UPS, Office Depot, and Cardinal Health-
that have been able to successfully implement many of the principles discussed
throughout this book.
The following is
a case study of how UPS transformed itself into a holistic Internet-enabled entity.
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Study: United Parcel Service, Inc. (UPS)
UPS is an enabler of e-commerce in the package
delivery industry. They have been in the package delivery business for 95 years
providing services to businesses and consumers worldwide in more than 200 countries.
Alan Amling, Director of E-Commerce Marketing,
provided the content for this case study.
Concepts from this Book:
Chapter 2: Business models
Chapter 3: Planning from
the top down
Chapter 6: Vision encompasses world market
Chapter 7: Creating
new outsourced services
Chapter 8: Finding new ways to provide more and better
Chapter 9: Employee ownership and commitment
14: Change as a part of their culture
In 1994, UPS began
to investigate the potential of e-commerce and started an internal group focused
on enabling e-commerce. UPS redefined its core business and found ways to change
its structure and processes, forming new businesses to take advantage of new opportunities.
Products and Services
is in the transportation industry. They move goods, information, and funds between
individuals and companies. Their operations provide delivery by land and by air,
and they offer services at customer shipping centers, as well as online through
They operate in more than 200 countries worldwide, do business in 15 different
languages and dialects, and deliver an average of 13.2 million packages per day.
Catalyst for Change
was interested in finding ways to leverage their extensive infrastructure and
expertise in basic transportation of goods, services, and information. They wanted
to enter new markets and continue to grow. They also wanted to undergo a more
fundamental change -- to transform their company into an enabler of global commerce.
Vision and Strategy
1991, the company's vision was to be "the leading package delivery company". They
were able to grow significantly toward that goal, but they weren't satisfied with
just that. They wanted a larger challenge for the company. In 1999, they changed
their vision statement to "the enablers of global e-commerce." It was at this
time that their company purpose (vision), mission, and strategies were redefined
- Purpose (why they are
in business): To Enable Global Commerce.
(what they seek to achieve): Fulfill their promise to constituents by:
their evolving needs
- Sustaining a
strong and employee-owned company
to be a responsible employer
as a caring corporate citizen.
(their plan of action): Sustain the core and create their future by:
in the core business of worldwide distribution and logistics
competencies in the integration of goods, funds and information
technology to create new services; attracting talented people
customer behavior and anticipating their needs
innovation that leads to growth
an environment that enables them to treat each customer as if he or she were the
When UPS began the process
of transformation, they started at the basic level[md]taking a hard look
at their core competencies and expertise. They also examined the assets in their
multifaceted infrastructure, from data communications, to their fleets of trucks
and aircraft, to their call centers. They did this analysis and examination with
the idea of finding ways to leverage the growing technology and connectivity of
the Internet in order to build entirely new subsidiaries of UPS. In the process,
they found several gold mines. With additional investment in information technology
(at the rate of more than $1 billion USD per year), they were able to transform
a very sizable company in record time.
they had identified opportunities within their own company and finished their
internal analysis, they re-examined the external world to learn more about e-commerce,
markets, and their customers. After taking a look at what people were doing with
e-commerce in the external business world, UPS decided that their own definition
of e-commerce was not about technology, but it was about the integration of "bits
and bytes with bricks and mortar". They noticed that customers were changing,
and the power dynamic was shifting from the sellers (companies) to the buyers
(customers). UPS wanted to find ways to provide more access points to that new
breed of customer.
UPS also claims that
luck and timing helped a great deal. With the surge in e-tailing as well as B2B
e-commerce, UPS was in a unique position to meet the increased demand. They were
the bridge between the physical and electronic world, with a well-tested and highly
reliable infrastructure to serve both of those worlds. UPS was able to foresee
the importance of electronic information to the transportation industry. As early
as 1985, they began improving their data networking applications to enhance communications
with their customers and increase efficiency. For instance, they built up their
IT network and database in order to collect and track over 200 data elements for
every single package that they ship. With over 13 million packages being shipped
every day, that's a lot of data! However, their system continues to handle that
level of information exchange. Consequently, they were well poised to help the
multitude of new B2C online companies who came to rely on UPS for shipping. UPS
was able to also offer these new companies tracking services as well. It was as
easy as setting up a link to the UPS Web site. UPS also offers a set of transportation
API's called the UPS OnLine Tools that allow business to integrate tracking, rating,
address validation, and a number of other valuable functions into their Web site.
Now, through their eLogistics service, small B2C companies (as well as large companies)
can have their own virtual logistics department hosted at UPS.
UPS redefined its core business, the description included the transportation of
goods, but also funds. They wanted a way to leverage their expertise and infrastructure
to transfer funds among entities. UPS has always dealt with COD payments, credit
risk assessment, billing systems, and cash flow. With the advent of electronic
signatures, it's easier to move such services online, and provide that as another
service to their B2B customers. UPS has even started UPS Capital, which provides
working capital to small businesses. UPS Capital has also applied the Internet
to its business, developing online COD receivables management products and cutting
customers' COD receivables wait from two weeks to two days.
communication services became another new UPS offering. UPS has significant call
center expertise and infrastructure to handle the call volume generated by more
than 13 million package deliveries daily. Now that more of their tracking requests
come in through their Web site rather than by phone (about 2.5 million requests
per day), they have excess call center capacity. They are now offering call center
services to their customers, and integrating the call center services with their
customers' business infrastructure.
of the new and existing UPS services can now be combined. With the new subsidiaries,
UPS now has the potential to lease call center capacity to a customer, handle
the logistics and related information exchange for all transactions, and then
provide fulfillment and shipping to the customer's customers. UPS is already doing
this, and an example of one of their customers is Nike.com.
All of Nike.com's back-end systems are provided and managed by UPS, along with
order handling at a UPS worldwide logistics center, and then on to UPS fulfillment,
and some of the shipping as well (depending on the destination). UPS has, through
creative deployment of its core competencies, taken on greater pieces of the value
Web in B2B e-commerce.
UPS has been able
to make tremendous strides because of their open and consensus-based company culture.
The company is still 99 percent employee-owned. Executives are willing to listen
to ideas from any employee. There are informal and formal ways to bring ideas
forward, and employees are encouraged to do this. UPS also seeks good ideas from
their customers and partners as well. It's all about being willing to listen to
an idea, regardless of the source, and then having the business savvy and commitment
to implement the best ideas. When the e-commerce team started inside the company
in 1996, team members from different functional areas were able to get the resources
they needed to move forward because the highest levels of management were committed
to the cause. There is also a more formalized process for employees to bring forward
ideas. On teams such as the e-commerce team for example, they are made up of people
from different functional organizations such as IT, sales, marketing, and finance.
Once an idea is ready to go forward, the team members begin the process of identifying
the stakeholders affected by the new idea and work to get their buy-in first.
The idea makes its way on to the agenda of a marketing or management committee
that is most often made up of these stakeholders. When the committee evaluates
an idea and makes its decision to move forward, there is a much greater likelihood
that the idea will be approved. This scenario truly represents a self-empowered
entity. People tend to support what they helped to create, and every employee
is really a stakeholder (and in the case of UPS, they are shareholders as well).
This open consensus-based process helps UPS make significant changes in a very
short period of time.
In their transformation,
UPS also restructured their organization from a functional-based structure to
one that is centered on process. They now have organizations that focus on the
customer information management process, the product management process, the customer
relationship management process, the business information and analysis process,
and the package management process. These changes did not happen overnight because
the organization was very large. However, the reorganization is already starting
to pay off. Development time for new projects has decreased significantly. The
focus on process seems to help, at least so far.
UPS has done a remarkable job
of leveraging their core competencies for the new world of e-commerce. They have
figured out ways to deliver their core business services in new ways, while leveraging
their tremendous infrastructure assets.
haven't forgotten where they came from. In that they have managed to preserve
their company culture. It has served them very well in promoting the creative
thought necessary to come up with new ways to do business and grow the company.
They were brave enough to change the vision, starting
at the top, and committing themselves to it from the top all the way down through
every employee of the company. They managed to do it quickly by making changes
in their processes and organizational structure.
has been aggressive in finding new revenue streams with existing and new customers.
They understand not only their customers and related needs, but have also figured
out ways to deliver more value. They have expanded the roles they can play in
the overall value Web by leveraging their infrastructure and expertise.
Roadmap for Continuing Evolution
The company culture of UPS will serve them well
going into the future. UPS has a clearly defined vision and set of strategies
that are understood and embraced by all employees to help them maintain momentum
They have a mechanism and process
in place to encourage and act on creative ideas brought forward by their employees,
customers, and partners. UPS will continue to find new ways to provide other services
for their customers by leveraging the assets they have and investing in new ways
to integrate the online world with the brick and mortar world.