Group#1 UPS Project

Making UPS Great:

Making UPS Great MBA 762 Summer 2011 Group 1: Elizabeth Ertmer Donald Phillips Emmanuel Upkong Shannon Badura Yancy Lyles

Humble Beginnings:

Humble Beginnings Founded in 1907 in Seattle as an errand and message running service Today the world’s largest package delivery company

Growth Beyond Delivery:

Growth Beyond Delivery Today’s UPS is more than package delivery UPS Package Operations UPS Supply Chain Solutions® UPS Freight ®

10 Years of Good, but not Great:

10 Years of Good, but not Great Source: Yahoo! Finance

Leadership:

Leadership CEO D. Scott Davis With UPS since 1986 “United Parcel Service's Management Is Creating Value” – Motely Fool Contributor Dan Dzombak “One of the 20 Best Companies for Leadership” – Bloomberg Businessweek

Slide 7:

SWOT Analysis: Strengths: Strong market position Broad portfolio of services Robust infrastructure Recognizable brand equity Good reputation in the industry Weaknesses: Geographical concentration Substantial debt Opportunities: Geographical expansion Expanding Chinese market Threats: Compliance with government regulations Labor issues Intense competition

Slide 8:

SWOT Analysis: Strengths: Strong market position Broad portfolio of services Robust infrastructure Recognizable brand equity Good reputation in the industry Weaknesses: Geographical concentration Substantial debt Opportunities: Geographical expansion Expanding Chinese market Economic pressures leading to focus on cost optimization Competition in the form of the US Postal Service performing poorly Threats: Compliance with government regulations Labor issues Intense competition Rising input costs, like fuel

What is needed to Move From Good To Great?:

What is needed to Move From Good To Great?

Slide 10:

Unwavering Leadership Style Must Remain Constant × Continue to promote from within × Focus on succession planning × Get the Right People on the Bus

Slide 11:

UPS Must Confront the Brutal Facts & Figure Out How to Win Expand where it is strong, like China Expand infrastructure, take advantage of low interest rates and available credit Investigate a takeover of the Postal Service Investigate new ways of electronically transferring and storing documents Expand fuel efficient vehicles Make money without fuel

Slide 12:

Hedgehog Concept: Supply Chain Management is UPS’ passion

Slide 13:

Change the Denominator to Profit/Customer

Slide 14:

Discipline at ALL Levels of the Business Package Handler Operator CFO Pilot Driver Manager CSR

Slide 15:

Technology Accelerators Fuel Efficiency Innovative Concepts You can’t stop e-commerce and you can’t stop globalization. So you’d better figure out a way to participate in that environment. —Jim Kelly, CEO and Chairman of the Board

Slide 16:

A Flywheel Example US Postal Service Alliance or Takeover Partnership or takeover of USPS is recommended. Government Accountability Office reported modernization and restructuring needed to address USPS financial challenges. UPS has streamlined and modernized infrastructure that USPS requires.

Summary of Recommendations:

Summary of Recommendations Continue with current leadership strategy Maintain disciplined culture Expand both globally and in the U.S. Focus on Supply Chain Management as the Hedgehog Move to Profit/Customer Investigate USPS alliance/takeover Seek more supply chain consulting and management revenue Invest in Technology Push for even more paperless systems Increased numbers and types of fuel efficient vehicles Investigate systems to enable more efficient supply chains

Plan for Initiating Change:

Plan for Initiating Change Unfreeze it Move it Refreeze It

Plan for Initiating Change:

Plan for Initiating Change Involve organization members in identifying the problem Recognize that there are multiple paths to a solution; Embrace Diversity

Plan for Initiating Change:

Plan for Initiating Change Determine the change agent: CEO Scott Davis? Other internal leader?

Plan for Initiating Change:

Plan for Initiating Change Respect People

Plan for Initiating Change:

Plan for Initiating Change Refreeze it Embed change and problem solving into the UPS culture

EVALUATION: Will the ends justify the means?:

EVALUATION: Will the ends justify the means? How will we know if the changes were worth while? • Did the change have a positive effect? • Should UPS change back? • Was the change financially beneficial? • Should similar change be copied to other departments? A system to measure the effectiveness of any change is needed to justify its implementation… 1 step forward, 2 steps back?

What will Define Success?:

What will Define Success? Change initiatives must be measured to quantify success in terms of: 1) Financial Return Stock Market Value Revenue, Profit Dividend size, P/E ratio Fortune 500 ranking 2) Market Share Increased # of packages and service delivered China Penetration (and other emerging markets) Global Reach 3) Industry Accolades Fortune magazine’s - World’s Most Admired Companies Business Week’s - Best Companies for Leaders Reputation Institute – World’s Most Reputable Companies

Good Change versus Bad Change…:

Good Change versus Bad Change… Did Financials Improve? Was Market Share Gained? Were Accolades Increased? Change Effort Initiated Not Changed YES NO Not Changed YES NO Not Changed YES NO Yes + Yes + Yes = Good Change Yes + No Change + No Change = Good Change Yes + No + No Change = ???

Accept or reject…:

Accept or reject… The “humble” level 5 leader is now tested…

EVALUATION TEST CASE: US Postal Alliance:

EVALUATION TEST CASE: US Postal Alliance Did the financials improve? Money out: infrastructure additions (vehicles, sorting equipment, building leases, office equipment), personnel hiring, training, legal setup fees, lobbying costs. . . Money in: revenue sharing from stamp sales, package deliver fees, possible government grants Was market share gained? Almost certainly, YES! Were accolades received? Unknown…

In Summary:

In Summary A steady History of Good needs to move to Great Leverage current leadership and discipline Expand both globally and in the U.S. Focus on Supply Chain Management Invest in Technology Make it part of the Culture Measure with Financial Return, Market Share, and Accolades