Customer Service and CRM Initiatives
Reference no 506-163-1
This case was written by Mridu Verma, under the direction of Kaushik Mukerjee, ICFAI Business School, Pune. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. © 2006, ICFAI Business School, Pune.
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"UPS's vision of synchronizing commerce means that operations research becomes more and more important as our customers ask us to do more and offer more specialized services, and to be more integrated into their businesses."
Jack Levis, Project Portfolio Manager UPS1
UPS in 2006: Customer service & CRM initiatives
In 2006, the $42.58 billion United Parcel service (UPS) was the world's largest package delivery company. UPS transported over 15 million packages and documents per business day throughout the U.S. and to more than 200 countries and territories. The company’s delivery operations used a fleet of about 92,000 motor vehicles and nearly 600 aircrafts. UPS also offered supply chain management services, including logistics and freight forwarding, and trucking. Apart from its well known logo, UPS was also identified with the colour brown, the colour of its trucks for nearly 100 years. Such was its rising popularity that UPS, which had not been in the list of the 100 most powerful brands in the world in 2004, joined the list straight at the 32nd position in 20052. The survey valued the brand at $ 9.92 billion in 2005. To maintain its market leadership, UPS depended on state-of-the-art technology and innovative customer relationship management (CRM) practices. UPS’ CRM strategy focussed on developing one-to-one customer relationships, while maintaining an IT infrastructure with ‘dialtone reliability’. “We cater to customers on a one-to-one basis,"3 CIO and Senior Vice-President David Barnes mentioned. In 2005, UPS launched several CRM oriented projects to maintain its lead in highly competitive package delivery business. Would the new initiatives deliver the expected results?
In 1907, James E. Casey (Casey) borrowed $100 from a friend and founded a six-bicycle messenger service called American Messenger Company in Seattle, Washington. Casey set the future tone of the company by mandating that it be employee-owned. In 1913, Casey merged his company with Motorcycle Delivery Company, creating Merchants Parcel Delivery. In 1915, the company began painting its delivery vehicles –a fleet of four cars and five motorcycles – brown, a colour that hid dirt well. In 1919, the new company ventured out, buying a delivery firm in Oakland, California. As there was a similarly named firm already operating in San Francisco, a new name -- United Parcel Service (UPS) was adopted. During the 1920s, UPS expanded to Los Angeles, San Francisco, San Diego, Portland, and Oregon.
In 1930, UPS extended its reach to the East Coast when it began consolidating the deliveries of several large department stores in New York City and New Jersey. UPS also moved its headquarters to New York that year. During World War II, retail stores curtailed delivery services and encouraged customers to carry their packages home, a trend that continued after the war. Affected by this move, UPS managers decided to enter the private and commercial package segment in the early 1950s, bringing it in direct competition with the U.S. Postal Service. In...