Business Strategy

Porter's Five Forces

 In order to understand the complexity of the UPS company, one must must need to be able to understand its business strategy. Analyzing the company's usage of Porter's Five Forces will help us understand how the company is operating.

Porter’s Five Forces
Threat of new Entrants	Medium-to-low risk Amazon subsidiaries and local delivery services
Threat of new substitutes	Low risk; nothing in the market has been presented to beat the current fast one day shipping
Industry rivalry	Medium risk; the company holds a strong position in the logistics industry but is at future risk if changes are not made in time. FedEx, DHL, USPS, Amazon are some of its main competitors
Bargaining power of suppliers	Low risk: variety of known suppliers for which UPS has great partnerships with, no apparent threat of supplier considering how large UPS is
Bargaining power of buyers	Medium risk, the buyers can simply move to another company which offers a better service price like Amazon or FedEx.

UPS' Competitive Strategy and Value Chain

    The first display of discussion is through Porter's Five Forces. The company's threat of new entrants is at a medium risk while companies like Amazon and its subsidiaries try to disrupt the delivery service industry. The company's threat of new substitutes is low risk as very few services exist on the market that can compete with same day shipping. The company's industry rivalry is at medium risk. UPS has a strong position in the logistics industry but is at risk in the future if innovation does not occur. The main competitors for UPS include FedEx, DHL, USPS, and Amazon to name a few. The bargaining power of suppliers is low risk for UPS. The company has a strong partnership within their suppliers. No threat can be seen from supplier due to how large UPS really is. The bargaining power of the buyer is medium risk for UPS. The buyers have options available in which they can move their business with. Amazon and FedEx have offered competitive prices to compete with UPS' delivery services. 

    The company is known for its competitive strategy when it comes to the delivery service industry. UPS is known as the Industry-wide differentiation. The company provides a delivery service that is not cheap but fair for its fast delivery. The company is very known in competing within the industry not just in the US but internationally as well. The company ensures to provide a great service to a variety of costumers on both the domestic and international side. 

  

Competitive Strategy
Broad	Cost Leadership	Industry wide Differentiation Delivery service is not cheap but fair They compete with everyone within the industry Provide service both domestically and internationally
Narrow	Cost Focus	Differentiation Focus
	Cost	Differentiation

    UPS is very known for their delievery service but very few people understand how they do it. Few only see the driver drop off the package, but there is more to that than this. Below is a chart of the company's value chain and a visual of how the package arrives from point a to b: 

 

UPS’ Value Chain
Inbound Logistics	Operations	Outbound Logistics	Marketing and Sales	Customer Service
Inbound trailers	Offload trailers and aircraft	Outbound trailers	Provides deals to high end customers; Louis Vuitton, Amazon, etc.	Customer Support Center
Inbound Aircrafts	Packages are scanned into trailers and containers on the aircraft	Outbound aircrafts	Social media advertisement; Facebook, Instagram, Youtube, etc.	Calls if a discrepancy has occurred regarding the package

    The company's value chain is made up of their inbound logistics, operations, outbound logistics, marketing and sales, and customer service. The area of discussion for this report will be directed towards outbound logistics. Outbound logistics is the process in which packages are to be loaded into containers which are then sent onto aircrafts and trailers to the proceeding location. The location can vary between a service center located in New Jersey such as the one in Meadowlands or somewhere in Rockford, Illinois.  

UPS' Business Processes

Shipping Process

    The process in which our team has decided to analyze is the shipping process from the outbound logistics side. This was determined as one of our team members works directly in this area with the company. In the shipping process, both trailers and aircrafts send work to the Hub facility to get sorted into their proper containers. Management is sent a report from IE in order to prepare for the volume coming in by adjusting the staffing start time and the amount needed to start the operation. Once the packages are sent into the Hub, the employees start scanning the containers with their scanning devices which sends this information to the Electronic Tracking and Tracing System, or ETT; the information sent to the ETT system includes what package has been scanned, who scanned the package, customer information on the package, and where it has been scanned in the UPS network. The ETT system then alerts the customer of the current location of package on the customer site while other information is only accessible to those with the credentials to view package details, https://www.ups.com/track?loc=en_US&requester=ST/. The ETT system also works in hand with the HMS system which the clerks use to track the hazmat and dry ice information of a package. Certain packages are not allowed to be loaded with each other which is the HMS system is such an important tool for those loading the containers and the supervisors ensuring such packages not get loaded in an incorrect manner. A discrepancy alert system, if you will. Once the packages have been properly loaded. The employees then load up said containers onto either the aircraft or the trailers. Finally, the trailers and aircrafts are then sent out to their designated location. Management is alerted of arrival time of their trailers and aircrafts through COMPASS, a dos based software application. 

Information Systems

    The shipping process can not be made possible without the help of its information systems in place. The information systems in which the team will discuss includes the following: the ETT system, the HMS system, and the COMPASS software application. These three vital systems allow UPS to provide an elegant display of logistical accuracy and efficiency. It also allows the shipping process to be more precise with little to no errors.

    UPS' industry wide differentiation requires these information systems by keeping the companies next day shipping service a reality. The information systems holds the necessary information to determine wirer the packages need to get shipped and how soon it needs to get shipped. It is not an easy task keeping track of where each package needs to go. The ETT, HMS, and COMPASS information systems provides a more efficient way for the company to ship in and out the customers packages. Their quick delivery time can only made possible with the assistance of their information systems.