Marketing Strategy and Competitive Positioning pdf ebook

UPS and FedEx turn focus to consumer behaviour
By Robert Wright
Source
: JOHAN NILSSON/epa european pressphoto agency b.v./Alamy 
Stock Photo.

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CHAPTER 15 STRATEGIC ALLIANCES AND NETWORKS
‘We’re very focused on expanding capabilities and 
capacity to meet the current growth, not to mention 
the peak season,’ Mr Kuehn says. ‘We have what is 
in many ways an enviable problem.’
One of UPS’s efficiency-boosting investments is 
on display at the Louisville Centennial Hub, a base 
for UPS’s ground operations near Worldport. Jerry 
Durham, a driver, each morning consults a bank of 
computers running Orion, a new computer system, to 
work out the most efficient route between his sched-
uled drop-offs.
The technology has raised the average number 
of drop-offs per mile from 1.9 when drivers devised 
their own routes to 2.2 now, says Roger Hicks, UPS’s 
business manager for Louisville East.
The system has overcome his initial scepticism, 
according to Mr Durham.
‘I’ve gotten to like it a lot more,’ he says.
Mr Maier praises new hand-held scanners for 
boosting FedEx’s efficiency. The scanners know 
the GPS co-ordinates of every address in the US and 
will alert drivers if they appear to be delivering in 
the wrong place. Such technology helps to cut down 
worker errors, especially among temporary staff 
taken on for the peak season.
‘It makes our temporary resources much more 
effective,’ Mr Maier says.
An innovation at Centennial typifies UPS’s 
approach. In the past year, sorters have been given 
technology that scans package labels and tells them 
into which delivery bag they should post them. The 
technology has cut down on wasteful ‘mis-sorts’.
Mr Kuehn says most investments are focused on 
such local hubs, rather than the efficient Worldport, 
and predominantly into computer systems.
Yet, for UPS, last Christmas’s biggest failing may 
have been in communication rather than in technol-
ogy. UPS failed to spot its customers’ higher than 
expected order volumes in time. Much of the short-
term effort has focused on ensuring future volume 
forecasts and communications with customers are 
better than last year’s. FedEx says that such forecast-
ing also plays a key role in its peak-season planning.
‘We’re working with some large customers to get 
enhanced visibility,’ Mr Kuehn says.
In the long run, meanwhile, both companies expect 
to overcome the challenges partly through making 
more of their facilities operate like Worldport.
FedEx already operates all 33 of its ground net-
work’s hubs in the US on Worldport’s highly auto-
mated model, with minimal handling by humans. 
Mr Maier says it expects to start introducing 
such advanced technology in still more, smaller 
facilities.
For UPS, meanwhile, Worldport, the world’s 
biggest fully automated package-handling facility, 
remains noticeably more advanced than smaller 
hubs such as Centennial, where much sorting is still 
by hand.
As the company adapts to the challenges of han-
dling more shoes, medical supplies and fish, that will 
have to change, Mr Kuehn says.
‘[Worldport is] a highly automated, incredible 
asset, driven by technology,’ he says. ‘There are sev-
eral other generations of buildings around the coun-
try that we’re going to be renovating to look more 
like Louisville.’