Optimizing Operations at United Parcel Service Essay

coupled Parcel dish out (UPS) is the worlds extensivest get off and shew mail boat-distribution troupe, with annual sales of about $34 jillion. It is also a leading supplier of specialized transportation and logistics serve. Following its nearly 100-year promise of the best service and concluding rates, this ships company currently delivers everywhere 13. 6 million parcels and documents every business sidereal day within the United States and in everyplace 200 early(a) countries and territories. UPSs elemental business is timedefinite slant of megabuckss and documents worldwide.It has established a global transportation infrastructure and all(a)-inclusive set of guaranteed pitch services, including integrated cater chain solutions for major companies. UPS is the industry attracter in the tar of goods purchased over the Internet. UPS operates a foundation fleet of more(prenominal) than 88,000 vehicles, including its noteworthy br accept delivery trucks and large tractors and trailers. In the United States, UPS manages 27 large sh be operating facilities as well as over 1,000 additional smaller box operating facilities.The smaller facilities have vehicles and drivers stationed for the pick-me-up of packages and for the sorting, transfer, and delivery of packages. UPS owns or leases nearly 600 facilities to encourage its international package mathematical operations and over 750 facilities that support nonpackage operations. This vast ground delivery clay is integrated with exhibit credit line 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 various cities doneout the United States. These hubs house facilities for the sorting, transfer, and delivery of packages. UPS estimates that this integrated dir ect delivery agreement carries goods worth more than 2 percent of the worlds gross internal product (GDP). The company faces relentless disputation from such other organizations as FedEx, DHL Worldwide Express, the United States postal Service, Deutsche Post, and TNT Post Group. Although UPS is the overall drawing card, 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 long agone started investing heavily in groundbreaking information systems. Technology powers virtually every service the company offers and every operation it performs. UPS offers many choices overnight air versus inexpensive ground delivery, simple shipping or a panoply of supply chain and memory board services.Customers can choose the delivery extract 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, collecting 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 Web 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 engine room 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 funnel package data from all of its operations into a single transparent system. Fierce competition has stimulated UPS to find even more innovative ways of servicing customers spell also reducing its own costs.UPS vigilance believes the company is still a leader in reliable package delive ry and that its unmatched integrated air and ground network provide it with a direct of service quality and economies of scale that strike off it from competitors. The companys strategy emphasizes increase core domestic tax incomes by cross-selling its live and new services to a large and diverse customer base. It hopes to grow its package business by offering services for synchronized commerce, elping customers manage the flow of goods, information, and coin throughout their supply chains. For example, UPS developed Web-based packet for DaimlerChrysler AG to manage centrally all parts moving to and from more than 4,500 dealerships. darn expanding these services, UPS hopes to limit the rate at which disbursals are growing. It is counting on information technologydriven efficiencies to increase its operating profit. In 2003, UPS announced plans to invest $600 million to alter and optimize its package-sorting and delivery systems.Management believes that this systems enthroni sation will produce 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 narrow operating costs by almost $600 million each year. In 2003, UPS domestic operating profit declined $304 million, caused by some(prenominal) slow growth in revenue coupled with higher operating expenses. high costs for fuel and higher rents some(prenominal) played major roles in expense increases.