UPS E-commerce Delivery Services

Introduction 

Following the emergence of online shopping, delivery companies have faced a boom in demand for their services. However, increased competition from e-commerce giants such as Amazon, FedEx, among others, have prompted a change in strategy for some companies one of them being UPS. Jamieson (2018) noted that UPS is looking to revise its strategic plan through hiring lowly-paid hybrid drivers who will be working in the weekends. The idea is to increase the number of deliveries thereby achieving a competitive advantage. Thus, the article is important as it addresses the challenges that delivery companies currently face in the world of e-commerce. In this regard, various topics that warrant attention are such as: factors affecting UPS in relation to delivery; management perspectives associated with the parcel delivery industry; type of leadership at UPS; human resource management (HRM) implications of hiring low-paid drivers; a SWOT analysis to demonstrate the company’s position in the market; the role of effective leadership and how it can be improved at UPS; and a proposal for global strategy for the next three years. 

Factors Affecting UPS 

According to Jamieson (2018), there are various factors affecting UPS. The dominant factor is a rather competitive environment from companies such as Amazon and FedEx. Amazon has an already established market presence as the he company has its own delivery service such as Amazon Flex which relies on the services of independent contractors like Uber. In this case, the drivers take on the costs of doing business which a normal employer would bear (Jamieson, 2018). Additionally, there are concerns that the new pool of hybrid drivers will be largely vulnerable to abuse. Ken Smith, a driver at UPS, asserts that less pay for the new drivers would affect the value of the driving profession. Smith is simply concerned about, for instance, job satisfaction among the new drivers. Equity theory states that individuals are likely to experience distress if they perceive themselves as either over or under-rewarded (Huseman, Hatfield & Miles, 1987). The implication is that for an individual such as Smith, he would not feel content knowing that some drivers are paid less for their work. Therefore, UPS faces the challenge of promoting employee equity. 

Management Perspectives 

In the parcel delivery industry, companies look towards increasing their brand awareness through ensuring that consumers get their products on time. Lukinskiy, Pletneva, Gorshkov and Druzhinin (2016) noted that following the continued growth of e-commerce, there is a high demand for just-in-time (JIT) delivery. The increasing frequency of online product purchases has pushed companies towards revamping their logistics system to satisfy the ever-growing demand. Through JIT, companies are required to ensure that not only does the product reach the consumer in time, but that is in the right condition, and of the quality expected. Meng and Zhou (2016) discussed the service quality gap theory which bases on key aspects which are reliability, response, and accessibility. Thus, from a management approach, UPS could apply the service quality gap theory to evaluate its current delivery system. The idea is to better understand its strengths and weaknesses hence be in a better position to integrate new measures if needed. 

Leadership at UPS 

Leadership plays a pivotal role in ensuring that an organization moves towards the right direction. While management focuses on strategies to help an organization achieve its preset goals, leadership is about having a social influence on others thereby achieving efficiency in an organization’s operations (Bohoris & Vorria, n.d.). In the context of UPS and applying management theory, the company is looking to manage resources through hiring new drivers but paying them less. The idea is to cut costs whereby some funds would be re-invested in the business. However, from a leadership perspective, UPS leans more towards a situational leadership approach. Uzohue, Yaya and Akintayo (2016) noted that situational leadership involves an assessment of the circumstances facing the company. In this case, UPS is looking to become even more competitive against the e-commerce giant, Amazon. However, to do so, there is a need to evaluate its ability to meet ever-increasing consumers’ expectations regarding delivery time. Hence, one can understand why UPS has proposed a model whereby the new drivers will be paid less, but they will be working during the weekends only. 

HRM Implications 

The idea behind UPS’ decision to hire new drivers bases on the company’s goal to increase its market share. Jamieson (2018) noted that with the new approach, UPS will be able to increase the number of deliveries. However, the hybrid drivers will also be required to work inside package facilities. However, the concern is that the drivers will not be covered under other contract protections, for instance, when a driver works at least 9.5 hours more in a period of two days (Jamieson, 2018). The likely outcome is that the hybrid drivers would not feel as motivated as their full-time counterparts. To understand their potential behavior, one could look at the attribution theory. Hewett, Shantz, Mundy and Alfes (2017) noted that in HRM, attribution theory helps explain the source of a particular behavior in employees. In the event of resistance to a proposed work model, the HRM should evaluate how the said changes affect the needs and overall welfare of workers. In this regard, UPS should look into addressing potential issues that may arise regarding the welfare of the hybrid drivers. 

SWOT Matrix 

Leadership Improvement 

Based on the SWOT analysis, it becomes clear that UPS is likely to face a rebellion from the new drivers in the event that they feel that they are being underpaid. Furthermore, as mentioned earlier, there is no equity when it comes to how hybrid drivers are paid compared to full-time drivers. Huseman, Hatfield and Miles (1987) emphasized the possibility for distress among employees in the event that they notice lack of equity. For instance, Smith showed great concern about the effect that low-pay for drivers would have on the profession. Therefore, the implication is that UPS could adopt a new leadership model. The most likely leadership approach is the transactional model whereby a company pays workers fairly and equitably based on their effort and compliance (Uzohue, Yaya & Akintayo, 2016). hence, with such a change, UPS will not only be in a position to retain workers, but also offer stiff competition to Amazon and FedEx. 

Strategy for UPS 

As noted earlier, UPS pays its drivers higher rates compared to companies such as Amazon or FedEx. However, that being a considerable advantage, the company needs a strategy that will likely boost its operations in the near future. Buhler (2016) noted that online shopping is polarizing delivery whereby there is a global direct model on one end, while a hyper-local delivery is on the other end. That being the case, it means that consumers are shopping beyond borders in large numbers. Consequently, there is limited warehousing or fulfillment technology (Buhler, 2016). With such knowledge, UPS could invest in establishing warehouses and fulfillment centers such that products bought from international markets are repacked after arriving into the United States. The idea is to close the already existing gap thereby giving consumers with an extra layer of security for their products. Using the management theory, UPS will focusing on managing time through having products organized and arranged in a particular category or manner, such as target location. This will help minimize number of trips thereby saving on resources such as fuel while increasing efficiency in service delivery. 

Conclusion 

Undoubtedly, UPS faces considerable competition from Amazon, the leading e-commerce company. However, in response, UPS proposed a strategy to hire new drivers and have them work on the weekend, but at a lower hourly rate. While that would be, to some extent, a way of managing the company’s resources, there is a likelihood for HRM issues. Nevertheless, UPS could provide equitable pay for the new drivers alongside establishing warehouses and fulfillment centers across the country. With a motivated body of drivers, the company will realize increased efficiency and productivity among workers hence a competitive advantage. 

References 

Bohoris, G. & Vorria, E. (n.d.). Leadership vs. management. Retrieved from https://www.ep.liu.se/ecp/026/076/ecp0726076.pdf 

Buhler, B. (2016). The new delivery reality: Achieving high performance in the post and parcel industry. Retrieved from https://www.accenture.com/t20170317T061554Z__w__/sg-en/_acnmedia/PDF-47/Accenture-The-New-delivery-Reality-HP-Post-and-Parcel-research-2016.pdf 

Hewett, R., Shantz, A., Mundy, J., & Alfes, K. (2017). Attribution theories in Human Resource Management research: A review and research agenda.  The International Journal of Human Resource Management,29 (1), 87-126. doi:10.1080/09585192.2017.1380062 

Huseman, R., Hatfield, J., & Miles, E. (1987). A New Perspective on Equity Theory: The Equity Sensitivity Construct.  The Academy of Management Review,    12 (2), 222-234. Retrieved from http://www.jstor.org/stable/258531 

Jamieson, D. (2018, August 4). A new UPS union contract shows how online shopping is dragging down delivery jobs. The Huffington Post . Retrieved from https://www.huffingtonpost.com/entry/a-new-union-contract-at-ups-shows-how-online-shopping-is-dragging-down-delivery-jobs_us_5b647691e4b0de86f4a0d39f 

Lukinskiy, V., Pletneva, N., Gorshkov, V., & Druzhinin, P. (2017). Application of the Logistics “Just in Time” Concept to Improve the Road Safety.  Transportation Research Procedia,20 , 418-424. doi:10.1016/j.trpro.2017.01.068 

Meng, Q. & Zhou, Q. (2016). Assessment of express delivery service based on SERVQUAL model . Wuhan International Conference on e-Business. Retrieved from https://pdfs.semanticscholar.org/7935/f1f9029cdf3475c6ed7bc2be7077fc3015e0.pdf 

Uzohue, C. E., Yaya, J. A. & Akintayo, O. A. (2016). A review of leadership theories, principles, styles and their relevance to management of health science libraries in Nigeria. Journal of Educational Leadership and Policy, 1 (1), 17-26.