United Parcel Service Ups - Performance Measurement Report 2k1h5i

Performance Measurement Report

UNITED PARCEL SERVICE, Inc.

Piotr Bartenbach Bartłomiej Staszczyk Dominik Wolski

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TABLE OF CONTENT 1. Strategy of the UPS

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2. Key Success Factors

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3. Strategy Map

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4. Measure Cards

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5. Managerial Dashboard12 6. Strategic Initiatives

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1. Strategy of the UPS  Purpose (why we are in business): To enable global commerce.  Mission (what we seek to achieve): Fulfil our promise to constituents by: o Serving their evolving needs o Sustaining a strong and employee-owned company o Continuing to be a responsible employer o Acting as a caring corporate citizen  Strategy (our plan of action): Sustain the core and create our future by: o Investing in the core business of worldwide distribution and logistics o Building competencies in the integration of goods, funds, and information o Using technology to create new services o Attracting talented people o Studying customer behaviour and anticipating their needs o Practicing innovation that leads to growth o Developing an environment that enables us to treat each customer as if he or she were the only one

2. Key Success Factors 3

Customer  On time deliveries o Average time of delivery o Average delay  Competitive prices o Prices in the market  Provide access to customer's information about the location and contents of packages o Number of entries to website-based parcel tracking system  Ability of the customer to intercept and change the direction of a delivery o Number of changed delivery destinations  Global range o Market shares o Countries covered

Internal Business Processes  Availability of vehicles for deliveries o Parcels per car in an area o Fleet size in an area  Ensuring low wrongly delivered parcels o Number of wrongly delivered parcels divided by all parcels  Worldwide operating facilities o Number of operating facilities  Retail access points

Financial  Keeping debts at stable level o Debt ratio  Cost transfers (instead of calling customers in order to arrange delivery, receiver is sending request about convenient time of delivery)  EBITDA o Value of EBITDA

Learning & Growth  Internet based solutions o Daily online tracking requests  ROI o Value of ROI for Shareholders o Value of ROI for Stake owners  Expansion of the early morning deliveries

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o Number of retail points worldwide

access

3. Strategy Map

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= Increase

= Decrease

Name: Changed delivery destinations Justification: It shows popularity of this solution as well as allows us to spend less on not successful deliveries. Linkage to strategy: This ability is connected with our goal to spend as low as possible on not successful deliveries. Formula:

Number of deliveries wit h c h anged destination Total number of deliveries

Value: Gaining new potential clients that often use this possibility, and reduction of costs. Measurement moment: Every month. Measure owner: Chief Logistics Officer Sources of data: Monthly reports from all offices, website-based tracking service. Form of presentation: Percentage number with two decimals after point and Name: Debt ratio. presentation of monthly changes on two year basis. Justification: It shows our level of debt which is crucial for company’s development opportunities as well as indicates how well the company is operating and how is it managing its finances. Linkage to strategy: This ability is connected with our goal to develop sustainably. Formula:

Debt ratio=

Total debt Total assets

Value: The value of 30%. Measurement moment: Every quarter. Measure owner: Chief Financial Officer Sources of data: Monthly reports from all offices. Form of presentation: Percentage number with four decimals after point, presentation of quarterly changes on five year basis, pie charts.

4. Measure Cards Name: Average time of delivery Justification: It shows the average time in which the parcels reach recipients Linkage to strategy: UPS’s strategy is to be recognized as a fastest deliverer Formula:

Total timeof deliveries Total number of deliveries

Value: Ability to compare with competition. Basis for further measurements of variance in delivery time. Measurement moment: Updated and monitored daily Measure owner: Chief Logistics Officer Sources of data: UPS tracking system

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Name:

Distance covered by car/driver in an area

Justification: It shows how the fleet is managed and indicates if the number of parcels are divided properly. Linkage to strategy: Name: Average delay Linked to the strategy of lowering unnecessary costs and fairness of work. Justification: It shows the average delay time

covered∈an area Linkage toDistance strategy: UPS aims at diminishing the delay time to the lowest possible Formula: level Value: 300 km / car daily.

Total delay time of deliveries

Measurement moment: Every month. Formula: Total number of delayed deliveries Measure owner: Chief Logistics Officer Sources of data: Monthly with facility reports. If the amount is high it indicates that UPS Value: Ability to compare competition. Form presentation: Distance covered shouldofdevelop strategy to it. by car/driver presented in comparison with all Name: Parcelsaper car in andiminish area. the cars. Measurement Updated monitored daily Justification: Itmoment: shows how the fleetand is managed. Measuretoowner: ChiefLinked Logistics Officer Linkage strategy: to the strategy of lowering unnecessary costs. Sources of data: UPS tracking system Number of parcels∈an area Formula: Number of cars Amount ∈fleet ∈an Form of presentation: ofarea time presented in days:hours:minutes:seconds Name: Average delay Value: 30 parcels per car. Justification: It shows the average delay time Measurement moment: Every month. Linkage to strategy: UPS aims at diminishing the delay time to the lowest possible Measure owner: Chief Logistics Officer level Sources of data: Monthly facility reports.

Total delay time of deliveries

Form of presentation: parcels per car with one decimal point presented in Formula: Total number ofNumber delayed of deliveries columnar chart. Name: Earnings before interest, tax, depreciation and amortization Value: Ability to compare with competition. If the amount is high it indicates that UPS Justification: profitability of the should developItashows strategy to diminish it. company. Linkage to strategy: ThisUpdated ability isand connected withdaily our goal to develop sustainably and Measurement moment: monitored provides important information of Officer how the company is prospering. Measure owner: Chief Logistics Sources ofEBITDA data: UPS tracking system Formula: Name: delay Form ofAverage presentation: Amount of time presented in days:hours:minutes:seconds Value: At least $8 Billion next year. Justification: It shows the average delay time Measurement moment: Every quarter. Linkage to strategy: UPS aims at diminishing the delay time to the lowest possible Measure owner: Chief Financial Officer level Sources of data: Quarterly company reports.

Total delay time of deliveries

Form of presentation: of the EBITDA with two decimal points and quarters Formula: Total number ofValue delayed deliveries comparison on five year basis with usage of bar chart. Value: Ability to compare with competition. If the amount is high it indicates that UPS should develop a strategy to diminish it. Measurement moment: Updated and monitored daily Measure owner: Chief Logistics Officer Sources of data: UPS tracking system Form of presentation: Amount of time presented in days:hours:minutes:seconds

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Name: Average delay Justification: It shows the average delay time Linkage to strategy: UPS aims at diminishing the delay time to the lowest possible level Formula:

Total delay time of deliveries Total number of delayed deliveries

Value: Ability to compare with competition. If the amount is high it indicates that UPS should develop a strategy to diminish it. Measurement moment: Updated and monitored daily Measure owner: Chief Logistics Officer Sources of data: UPS tracking system Form of presentation: Amount of time presented in days:hours:minutes:seconds

Name: Operating and retail facilities area coverage (Worldwide operating facilities) Justification: Ensuring that each of the regions is covered with web of linked organizational units ing each other in a way that guarantees customer satisfaction from service provided. Linkage to strategy: Creation of organizational units web allows to reach potential customers quicker, improve personal communication between service provider and service principal, enhance efficiency of logistic chains etc. Formula: Drawing region map with units marked on it and area of their service. Then, calculating the total coverage of the region and giving number presented in percentage. Value: At least 50% in 10 first years of activity in region (regions described with fixed area size). Measurement moment: Created on selected period of time (daily/monthly/quarterly).

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Name: Daily online tracking requests (Internet based solutions) Justification: Examination of costs reduction resulting from implementation of UPS

Parcel Tracking System. Linkage to strategy: Verification of tool usage, saving money and time of both customer and service provider. Formula:

parcels tracked wit h web−based tool total of parcel tracking requests

Value: Keeping not lower than 75% Measurement moment: Created on selected period of time (daily/monthly/quarterly). Measure owner: R&D Department, Development Department Sources of data: Data given from site statistics and call

Name: Value of ROI (for stakeholders) Justification: Examination of company self-development and indicator for potential shareholders. Linkage to strategy: Verification of company’s value created for given period of time

Formula:

Gain (¿investment −Cost of investment ) Cost of investment

Value: Not less than 9% Measurement moment: Created on selected period of time (daily/monthly/quarterly). Measure owner: CEO Sources of data: Data generated for financial reports

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Name: Value of ROI (for stakeholders) Justification: Examination of company self-development and indicator for potential shareholders. Linkage to strategy: Verification of company’s value created for given period of time

Formula:

Gain (¿investment −Cost of investment ) Cost of investment

Value: Not less than 9% Measurement moment: Created on selected period of time (daily/monthly/quarterly). Measure owner: CEO Sources of data: Data generated for financial reports

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Market Share

Change date

(As on 19th of January, 2012)

Integrity, Teamwork, Service Quality & Efficiency, Safety, Sustainability and Innovation.

Price comparison (As on 19th of January, 2012)

Average time of Average delay

5. Managerial Dashboard

Change date Change service type

UP

Price comparison Entries to tracking Global range Market share Countries covered Sum of debts EBITDA

UP 99%

Parcels per car in an ACSI Score

Change date

(As on 19th of January, 2012)

(As on 19th of January, 2012)

Fleet size in an area Parcels per car in an

ACSI Score

points are: OFF Delivery within Distribution/services 1 day

99%

93%

89 94%

97%

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6. Strategic Initiatives Strategic Initiatives are represented by the elements of a business activity which have the biggest influence on company's performance. In case of UPS, bringing strategic initiatives into live will effect in achievement of milestones in a rigorous and timely manner. For all companies, around the world, that deal with delivering parcels three factors are the most crucial: profitability, business growth and customer satisfaction. If UPS manages to be positive with those factors, it can be almost sure that everything goes as planned.

Profitability Being profitable does not only mean to make profit. It means to make profit on a lowest level of operating costs. Cutting cost to the minimum is nowadays the biggest and the most difficult task for the management of UPS. Lowering the expenses results directly in the growth of profit. Thanks to low costs UPS can maintain it profit margin and prices for deliveries on the same or even lower level.

Business Growth Improvements in this field lead to increase in market share, income generation capabilities, increase of customer’s awareness and development of the company and its employees in of knowledge management, supply chain management etc. UPS already is a worldwide known company, however, they still have the possibility to expand and have more competitive advantages.

Customer Satisfaction UPS offers its services everywhere in the world and everyone that decides to ship something via this company should obtain the service on the highest possible level. Rising the customer satisfaction is the most important part of UPS strategy. As far as UPS manages to sustain its current and gain new clients they will also notice a significant growth in previous factors.

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