THE SCRAMBLE AT UPS

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UPS is currently scrambling to get all its moving parts working together.  One of its most troubling elements is its network – currently represented by freezer-sized control panels that monitor operations in each of its distribution facilities, around the country.  The control panel is comprised of red and green lights blinking to indicate the network’s interactions inside the building’s web of conveyor belts.

UPS personnel recently explained that 30 years ago, the control panel operation was state of the art.  But, today, the control panel’s computing capabilities are of a size (that is, magnitude) that could fit on a not-so-smart phone.  This circumstance is one of those kind of instances which have caused companies to lose serious traction in the past – [Remember, Kodak, for example, where executives failed to see the need for updating in time to avoid the company’s demise].  In an effort to play catch-up, UPS is planning on spending $20 billion over the next three years, much of which will go toward opening automated facilities as well as for technology upgrades to route packages around bottlenecks.  Juan Perez, UPS Chief Information Officer, reports that, “We definitely need to do these kinds of things to remain competitive.”  No lie!  One wonders where Perez and other UPS execs have been for the past 10 years!  Part of the difficulty (easily determined if one were closely tracking the trends – as all change management execs should be doing) is related to the change in the business model for the company: from one where most packages went to corporations and retailers. to current times where the bulk of the package delivery business is devoted to getting packages sent by e-commerce companies to homes across the U.S.  Apparently, UPS embraced e-commerce delivery early, although some former executives say that there was concern among executive ranks that chasing lower-margin package delivery (such as that to homes) would cause problems.  Well, that’s certainly true if one doesn’t devote the funds to update systems that are far out-of-date, in order to give the company an edge in handling the current volume generated by e-commerce.  Since rates haven’t diminished in recent years, and instead have increased, I’d say that the worry about chasing “low-margin” business was ill-founded – if e-commerce generated multiples more packages being delivered and if packages – whether to corporations or home generally cost about the same in dollar value charged for the service – then, there is not a downturn in business and revenue, but, instead, an upturn.  The problem clearly lies, therefore, with those same nay-saying executives who likely were able to hamper the upgrading of  technology systems for the company – an action that certainly needed to have taken place no matter what the business deliveries were comprised of!

ALL THE MOVING PARTS, folks – read about those intricacies in the book by that title – available on line at: WWW.CHANGESTRATEGISTS.COM.
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