UPS and HP: Value Creation through Supply Chain Partnerships
United Parcel Service (UPS) and Hewlett Packard (HP), both global leaders in their industries, strategically aligned themselves to capitalize on their ability to competitively provide superior services to their customers. UPS, a global distribution company and HP an information technology firm signed a contract solidifying a three year partnership in the early 2000s enabling them to capitalize on both company’s core competitive competencies already in place. UPS and HP recognized their competitive strengths and abilities in domestic and international territories as they continued to seek opportunities to improve their current systems, innovate through groundbreaking technologies and utilize the competitive aptitude found in each other. The partnership was a result of HP’s operation leaders identifying potential turbulent market conditions stemming from changes in the industry and their potential lack of capturing new market opportunities. The partnership originated from HP’s lack of a tactical supply chain services and strategic goals to attain such systems and UPS’s business outlook of attaining more sophisticated technological capabilities. Leveraging an existing supply chain service allowed HP to focus on technological innovations rather than logistics and transportation. UPS’s services such as supply chain design, planning, logistics and distribution services, transportation and freight and international trade management are strengths HP identified as crucial for growth and expansion. In 2004, Pat Grace of UPS Supply Chain Solutions and Mark Colaluca of Hewlett Packard (HP) met for a quarterly business review when they both addressed a percolating issue centered around the their original strategic objectives. The original partnership objectives anchored in the strategic goal of growth was declining due to lack of process innovations and long-term forward movement. Both companies focused on improvements in existing supply chain operations with short-term objectives, which hindered growth. The key operational issues and problems derived from both companies focusing on short-term processes rather than investing in future growth opportunities and a lack of consolidation in key daily processes. This case analysis will analyze the business functions of HP and UPS and their operational struggles stemming from the partnership through the use of analytical tools and techniques leading to recommendations for action and resolution. Key Problems and Operational Issues
The key operational problem HP and UPS’s partnership experienced was primarily driven by HP’s concerns of UPS’s applied leadership and where it planed to move forward. Colaluca of HP was concerned UPS lacked thought based leadership and insight to consumer demands. HP’s operations leaders wanted “UPS to play a more proactive role in coordinating internal capabilities and applying its extensive knowledge to further transform the supply chain at HP.” (Lewis, Forquer & Quinter, pg. 1, 2007). HP’s original vision of the partnership with UPS was to utilize UPS’s current systems that not only supported its business operations but also provided a long-term strategic vision while encouraging growth and enabling them to capture new market opportunities. Pat Grace of UPS recognized one of the key operational struggles the partnership was experiencing originated from both companies lack of differentiating services on an international scale. Both companies’ business objectives were to provide quality service, deliver value through scale economies and differentiate their processes in order to be business leaders in their industries. UPS and HP were experiencing a strained relationship in their partnership due to three chief reasons: first, they agreed there was a need to focus on long-term business growth...
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