Express Deliveries Like Fedex And Ups example essay topic

Executive Summery The parcel service industry is made up of four main competitors. These competitors are UPS, FedEx, Airborne Express, and the U.S. Postal Service. Since 2000, American consumers have spent more than $50 billion to ship parcels, packages, and overnight letters. New parcel distribution patterns developed due to the way U.S. manufacturing companies are operating. The Internet has expanded the reach of direct marketing, particularly with retail transactions requiring home delivery.

Globalization has also created the need for parcel carriers to expand worldwide. UPS and FedEx are the leading parcel carriers in the U.S. FedEx has significantly expanded their capability to compete with UPS's dominant ground delivery service. UPS has continued its strong marketing efforts in overnight and deferred air services. Both of these carriers have introduced information systems, which include user-friendly Internet interfaces.

The carriers have also expanded logistical services and improved integration with customer supply chains. State of the Environment State of the General Environment More and more people are using computers and the Internet. Dual income families have increased spending; therefore more people are ordering products over the internet at a high rate. The Internet offers customers a one stop source for global shipping. Due to this, there has been an increase in using information technology and the Internet for businesses. This has created an increase in trade and investment along with global shipping logistics and supply chain solutions.

With the increase in globalization, companies have had to adapt to the diverse work force and the culture of the countries in which they are conducting business. The parcel service industry is controlled by strict regulations and federal law. For example, September 11 brought stricter laws and regulations in the parcel service industry. Operations must maintain federal approval to operate in the United States.

State of the Industry Environment The parcel service industry is dominated by four carriers that make up 95 percent of the industries domestic revenue. Over the years, the industry has had an increase growth rate over time and an increased role in the economy. This is due to the way manufacturing companies are now operating. With the growth of the parcel service industry, companies were able to decrease their inventories. These companies were relying on just-in-time inventory controls; they now had mass customization and the increasing demand for logistical services. Manufactures also depended more on the customer, information technology, and the increase in the use of technology in all parts of the economy.

Companies such as FedEx, UPS, Airborne Express, and USPS shipped parcels at a faster rate and were more reliable than other rail, motor, and water carriers. Trends and opportunities of the parcel service industry include globalization, e-commerce, and supply-chain management. Internet logistics was FedEx and UPS's fastest growing business. The internet enabled customers to link directly to retailers and their manufacturers. In 2001, parcel carriers served almost all of the online market. They were able to provide information on packages to customers through tracking systems on the web.

This allowed customers to plan ahead and decrease delays in deliveries. It also allowed for faster transactions and lower communication costs. Parcel companies created partnerships with large Internet retailers. These partnerships allowed parcel service companies to expand its overall delivery volume. Parcel companies improved tracking by implementing several technological innovations. These included "laser scanners and bar codes, state of the art software programs, satellite and cell phone communication equipment, electronic information interchanges, and the Internet".

Globalization is another major trend. Since the emergence of the Internet, barriers that use to hinder the business world are now being lifted. Businesses are now able to conduct business with any other company or consumer throughout the world. This has led to an increased demand for the parcel service industry. The parcel service industry supplies much of the growing demand of the global supply chain. Supply chain management is the third growing trend that can be used to define the package delivery industry.

FedEx and UPS are improving their operations and integrating their supply chains to better serve their customers, drive efficiencies, eliminate waste and create more sustainable business models. This will help companies develop and manage their inventory and shipping logistics. These plans are a much more efficient and effective way to handle inventory, because the inventory is always in transit. Better inventory and logistics management also helps to lower costs and speed up distribution.

Both the supplier and the parcel delivery company would benefit, because the suppliers save on distribution costs and the parcel delivery company receives the delivery business. State of the Competition State of the Competitive Environment When choosing a parcel service, consumers, both individuals and businesses, look for reliability, fast, inexpensive, and convenient ways to ship a product. The ability to track shipments is becoming more important to the consumer, therefore the demand for technological innovations is essential. The package delivery industry can be broken up into three distinct customer categories.

These include the shipment of small to medium sized packages by those who request shipment of time-critical parcels, the sending of overnight letters, and the movement of heavy freight between large corporations. In this industry there are two major competitors that had many similarities; these companies are FedEx and UPS. Other minor competitors include Airborne Express, DHL, and USPS. These competitors all offer services in each of the segments, although each company have similar characteristics, they also have dominant differences from one another. When choosing a parcel service, consumers, both individuals and businesses, look for reliability, fast, inexpensive, and convenient ways to ship a product. Competitor Value Chain Analysis Originally, FedEx and UPS were created for separate purposes.

UPS was a multi-ground delivery service and FedEx was an overnight delivery service. Over the years the two companies have grown into similar business operations. Although the two companies are outwardly similar, there are fundamental differences, both financial and non-financial. One difference is that UPS relies more heavily on its ground delivery service while FedEx concentrates more on air deliveries.

Another difference between the two companies is the volume of delivery packages. In order for FedEx to manage the inventories from companies who rely on the end to end manufacturing product, they converted sorting facilities to warehouses and built new warehouses at home and abroad. UPS had to improve every segment of the business. This included online, logistics, ground, overnight, and global services. Both FedEx and UPS have brand name recognition, however FedEx was so dominant that "I'll FedEx it to you". was commonly used when shipping with any air carrier service.

FedEx spends more money on advertising and promotions than what UPS does. FedEx also responded to the customer's changing environment by operating completely, independently, and collectively. UPS's marketing strategy was to expand its marketing workforce. Before 1997, UPS did not have a sizable marketing workforce. They now have as sales force of over 3,000. UPS expanded its service options to one day, two day, three day, and time definite service.

UPS has the capability to get packages to their destination in a very short amount of time. They did this by expanding to one to six day service depending on what was requested or the nature of the delivery. Similarly, FedEx can reach almost every business in the world in as little as one day. The United States Postal Service was a little different in the placement of the product. They had the ability to reach every address in the United States and internationally, however they did not specialize in quick or express deliveries like FedEx and UPS. The pricing structures of FedEx and UPS are very similar.

In both instances, their prices varied depending on the cost of providing the service. For example, they would not charge the same amount for a small package to be delivered to nearby location as they would for a large shipment to be sent internationally. For UPS to compete against FedEx, they had to offer customers flexibility in price and service. Competitor SWOT Analysis UPS Strengths UPS is part of the largest transportation industry. It is constantly on the move and they are always making the needed changes in order to appeal to the consumers and stay on the top of technological advances. They also play a strong role in the economy.

Not only are they looked to as one of the top transportation companies, but they also contributed to a large percentage of our nation's Gross Domestic Product (GDP). UPS concentrates on strongly on delivering on its promise. UPS holds 47 percent of the market share. They provide ground and air parcel services. They are the market leader in the $17 billion ground segment. UPS has consistent financial success with a credit rating.

UPS concentrated strongly on delivery on its promise and in return UPS built strong relationships with its customers. They also focus on having strong community commitments and are aware of their impact on the environment at all times. They maintain diversity among both employees and suppliers. They believe that their employees are the heart of their success. They employ people in countries worldwide.

UPS improved its international relations because they decided to hire local executives abroad. They reduced the number of American managers working overseas from 400 to 40 percent and replaced them with local managers. UPS improved customer service by expanding on information technology systems. This was critical to their business performance.

Over the years more and more customers wanted information on package-tracing. They developed the most advanced tracking information system in the industry. It was fast, easy, and reliable for customers to use. Customers can track a package on the Internet without having to use the UPS website. They can link its system to outside websites. FedEx on the other hand forced customers to use their own software to track and ship packages.

In 1999 UPS integrated their overnight and ground services, which allowed them to reduce their cost, thus creating a lower price for the consumers UPS Weaknesses UPS's main weakness was their labor relations in the fact that they were more unionized where FedEx did not have a union. Due to employee strikes a lot of their consumers switched to FedEx. UPS was also behind FedEx in overnight express delivery. They were also number two to the United States Postal Service in the deferred segment. Another weakness is that UPS did not form alliances with other parcel service companies. For example, FedEx and USPS formed an alliance to protect against foreign parcel companies entering the U.S. market.

UPS Opportunities In 2000, UPS's overnight global delivery business was growing at more than double FedEx's rate. UPS focused on expanding their market globally. They built strong relationships with online retailers such Nike. com, General Motors Corporation, GB Technologies and they took over some of FedEx's corporate clients. UPS served their customers through websites. This allowed customers to become more dependent on their services and brand name.

UPS Threats Even though UPS was a strong competitor in the parcel service industry, they still have viable competition that still holds a large percentage of the market share. FedEx is UPS's largest competitor. FedEx offers more services to their consumers. Another threat is the increase in globalization and the desire for foreign parcel service companies' to enter the U.S. market. FedEx Strengths FedEx was created on an entirely new concept in package delivery.

This concept was an overnight express air delivery service. FedEx has experienced consistent growth in terms of net income almost every year of operation. One of the biggest strengths is their business concept. The company also provides e-commerce and supply chain management services to clients worldwide. FedEx offers a wide variety of delivery options including worldwide express delivery, ground small parcel delivery, and freight delivery.

FedEx is a household name and exceeds in express package delivery. FedEx's success is also because of the "People-Service-Profit", which means that they put their employees first. They believe that employees will be motivated to provide the best customer service possible and then profitability will follow. FedEx created the hub-and-spoke route system; they supplied logistical services, and the introduction of advanced technology. They also helped companies in the global market and introduced them to end-to-end manufacturing product services. These services were warehousing, inventory accounting, shipping, billing and invoice reporting.

FedEx offered the only reliable tracking system, which could track package's very quickly. They supplied logistical services that required the development of information technology. FedEx Weaknesses FedEx was slow to adapt to new business innovations. For example, they did not integrate their ground and overnight services, therefore failing to cut cost for themselves and consumers. They also lacked in technological innovations. FedEx's tracking system had to be used with their software to track packages, whereas UPS created software that was compatible with any software that could be linked and operated by outside websites.

They also lacked when it came to competing over the supply of logistical services. For example, the National Semiconductor terminated their contract with FedEx when they did not reduce the company's inventory and transportation costs. This was because they did not use logistical resources to manage a central warehouse and they used the fastest and most expensive ways to ship, which was overnight delivery. Another weakness was that FedEx lacked in the development of ground transportation. FedEx Opportunities FedEx was the leader in air express delivery services which lead to global growth.

They also created online consumer services to increase business and had an increase demand in logistical services and advanced technologies. As foreign delivery companies began to enter the U.S. market, such as DHL, FedEx and UPS joined forces to operate in the United States to try to revoke DHL's right to operate. FedEx also joined forces with USPS to create a competitive advantage. The post office pays FedEx $7 billion over a seven year period of time to ship mail across country and USPS placed FedEx drop boxes outside the post offices. FedEx also felt that the opportunity in business was to serve smaller businesses. They believed there was a high potential for growth for both small and medium-sized businesses.

FedEx Threats A major threat to FedEx was foreign delivery services entering into the United States. Another threat was the online competitive advantages of their competitors. People are now using email more often then sending letters especially with the digitization of documents and the introduction of electronic signatures. There is less of a need to send important papers overnight express delivery. Rising fuel costs are also a threat. State of the Company FedEx's mission statement is "To produce superior financial returns for our shareholders as we serve our customers with the highest quality transportation logistics and E-Commerce".

The intent is to capitalize on E-Commerce. In parcel delivery, FedEx has been an IT pioneer from the early days, and the resulting prosperity has been dramatic. FedEx was originally quite weak in IT but then made a major strategic shift and invested heavily in technology for more than a decade. It is no coincidence that FedEx has become the primary delivery source for parcels ordered on the Internet. Their core competencies are in package routing and delivery. This competence reflects the company's expertise in bar-code technology, wireless communications, network management and linear programming.

FedEx's strategy flows out of core skills and technology. UPS's mission statement is "To help customers realize the powerful benefits of improved supply chain operations". The intent is to streamline supply chain, which means that a business can get paid quicker, lower its capital requirements, minimize management headaches, manage change and gain competitive advantage. UPS focus is to help their customers consistently achieve these results.

The core of UPS is the distribution of goods and the information that accompanies them. UPS has branched out to focus on services. The company's expertise in shipping and tracking positioned it to become an enabler of global commerce and also a facilitator of commerce, which includes goods, information, and capital. To fulfill the vision of offering new services, UPS strategically acquired existing companies and created new kinds of companies that did not previously exist. Through these acquisitions and creations, UPS serves its customers by providing unique supply-chain solutions. UPS allowed its customers to better serve their own customers, and focus on core competencies.

UPS has a Logistics Group to provide global supply chain management solutions and consulting services based on customers' individual needs. UPS has a mission to provide a list of options of integrated financial products and services that enable companies to grow their business.