Optimizing Operations at United Parcel Service Essay

United Parcel Service (UPS) is the worlds largest pedigree and ground software program-distribution caller, with annual sales of about $34 billion. It is also a leading exitr of specialized transportation and logistics services. Following its nearly 100-year visit of the best service and lowest rates, this company currently delivers twowhere 13. 6 million parcels and documents every business day within the United States and in over 200 other countries and territories. UPSs primary business is timedefinite deliverance of packages and documents worldwide.It has established a global transportation infrastructure and comprehensive clique of guaranteed spoken communication services, including co-ordinated supply chain solutions for major companies. UPS is the industry attractor in the voice communication of goods purchased over the Internet. UPS operates a ground fleet of more than than 88,000 vehicles, including its famous brown delivery trucks and large tractors and trail ers. In the United States, UPS copes 27 large package operating facilities as well as over 1,000 additional smaller package operating facilities.The smaller facilities have vehicles and drivers stationed for the lam of packages and for the sorting, transfer, and delivery of packages. UPS owns or leases nearly 600 facilities to support its international package operations and over 750 facilities that support nonpackage operations. This vast ground delivery system is integrated with express air services that use 600 airplanes. UPS operates the ninth largest airline in North America and the eleventh largest in the world. UPS aircraft operate in a hub and spokes pattern in the United States with a primary air hub in Louisville, Kentucky, nd six other regional air hubs in dissimilar cities doneout the United States. These hubs house facilities for the sorting, transfer, and delivery of packages. UPS estimates that this integrated door-to-door delivery system carries goods worth more than 2 percent of the worlds gross domestic product (GDP). The company faces relentless disputation from such other organizations as FedEx, DHL Worldwide Express, the United States siteal Service, Deutsche Post, and TNT Post Group. Although UPS is the overall leader, the company is not number one in every way.For example, FedEx, with about $34 billion in annual sales, leads the market in overnight deliveries, whereas DHL is the leader in cross-border (international) express deliveries. To meet competitors head on, UPS foresightful ago started dressing heavily in advanced culture systems. engineering science powers virtually every service the company offers and every operation it performs. UPS offers many another(prenominal) choices overnight air versus low-cost ground delivery, simple shipping or a panoply of supply chain and wareho utilise services.Customers can choose the delivery option or service that is most cost-effective and appropriate for their requirements. UPS has been using its automated package-tracking system to monitor all packages throughout the delivery process, hoard electronic data on 93 percent of the packages that move through U. S. systems each day. Its customers can track their own parcels and letters using the UPS electronic network site, and many customers can also track their items on their own computers using a UPS system that the customers embed into their own Web sites.However, UPSs competition now uses much of this same tracking technology and is moving into areas where UPS has been dominant. FedEx, for instance, is difficult to become a player in ground palletized-freight and international shipping. It wants to displace package data from all of its operations into a single simple system. Fierce competition has stimulated UPS to find even more advance(a) ways of servicing customers while also reducing its own costs.UPS oversight believes the company is still a leader in reliable package delivery and that its unmatc hed integrated air and ground network provide it with a level of service quality and economies of scale that differentiate it from competitors. The companys strategy emphasizes increasing core domestic revenues by cross-selling its subsisting and new services to a large and diverse customer base. It hopes to age its package business by offering services for synchronized commerce, elping customers manage the flow of goods, information, and funds throughout their supply chains. For example, UPS developed Web-based software for DaimlerChrysler AG to manage centrally all parts moving to and from more than 4,500 dealerships. piece expanding these services, UPS hopes to limit the rate at which expenses are growing. It is counting on information technologydriven efficiencies to increase its operating attain. In 2003, UPS announced plans to invest $600 million to simplify and optimize its package-sorting and delivery systems.Management believes that this systems investment depart produ ce significant gains in efficiency, reliability, and flexibility. Once fully deployed in 2007 in over 1,000 UPS package-sorting facilities, these systems are expected to reduce operating costs by approximately $600 million each year. In 2003, UPS domestic operating profit declined $304 million, caused by both slow growth in revenue mate with higher operating expenses. Higher costs for fuel and higher rents both played major roles in expense increases.