Ups Case Study: Inside Out

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BPTrends ▪ September 2011

UPS Case Study

UPS Case Study: Inside Out
Dawson Wood
Business Process Manager
UPS
UPS was founded in 1907 in Seattle, Washington and is a large, pure-process company. Essentially, everything that UPS provides is process-as-a-product. Our 406,000 employees working in 2,750 operating facilities and 62,000 retail access points must execute those processes flawlessly. The net result of our process focus is the daily movement of 15.1 million package and documents, including 2.2 million just by air and 2.3 million internationally. On an annual basis, UPS delivers 4 billion packages and documents through a fleet of approximately 100,000 package cars, vans, tractors, motorcycles and 233 UPS-owned aircraft.

Figure 1 – UPS operates the World’s 8th largest airline

There’s a reason why so many statistics are being cited. These enormous numbers represent a monumental process challenge, and the ongoing globalization of business will move each of these numbers upward. Add to this the trend for many enterprises to subcontract most or all of the manufacturing and assembly of their products to specialized firms wherever in the world that it makes sense, and the opportunities are clear for UPS in providing logistics. Having an enormous package delivery network offers UPS an opportunity to create even greater value for their customers by using the network to manage the integration of information, transportation, inventory, warehousing, material handling, packaging and even the security of packages. This logical move higher in the value chain means offering integrated solutions that are an excellent match for the challenges of increasing globalization.

Copyright © 2011 UPS. All Rights Reserved.

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BPTrends ▪ September 2011

UPS Case Study

The Problem
For UPS to take advantage of these opportunities, we knew we must move from a primarily USbased, small-package-focused business to a transparent, end-to-end, global operation that can manage the logistics needs for both small and large enterprises worldwide. Many of the services necessary were available within our network but needed to be globalized. Some would need to be created. It would have been an easy shortcut to throw money at the problem, but we needed to use our resources wisely. Initiatives that would change UPS needed to be vetted and then measured as they were carried out.

Figure 2 – UPS Logistics Services

The Approach
UPS has a very strong culture passed down from our founder, Jim Casey, of flexibility, selfevaluation, determination and learning and adaptation. This culture has been tested many times throughout the company’s 104 years of existence, but has proved to be the core of why the company hasn’t folded to pressure from competitors, challenges from growth, and survival in the worst of economic times. We approached the challenges through several initiatives that were both internal to the company and external or market facing.

Approach
Inside: Create a centralized process group known as the Program Management Group Process Center of Excellence (PMG-PCOE) – So that process can be a differentiator in how initiatives are proposed, evaluated, approved and measured. We knew that it was critical to capture our processes and to bring about a new level of maturity toward business process in an organization that already considered process to be its stock in trade.

Process Center of Excellence came from an effort that re-defined our Strategic Processes, which continue to be implemented and refined throughout the organization. PMG-PCOE continues to support the effort to ensure our processes are documented and current and to provide organizational training in process analysis and design. We knew that this group had to be centralized to be effective and that it needed to have very senior executive support to be broad-reaching enough to make a difference. By putting program and process in the same hands, we...
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