Performance Measurement

Report

UNITED PARCEL SERVICE, Inc.

Piotr Bartenbach
Bartomiej Staszczyk
Dominik Wolski

TABLE OF CONTENT
1. Strategy of the UPS

2. Key Success Factors

3. Strategy Map

4. Measure Cards

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

o Number of retail
points worldwide

access

3. Strategy Map

= 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 companys 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: UPSs 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

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

coveredan
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 parcelsan
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

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 supporting 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).

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 webbased 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 companys 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

Name: Value of ROI (for stakeholders)

Justification: Examination of company self-development and indicator for potential
shareholders.
Linkage to strategy: Verification of companys 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 customers awareness and
development of the company and its employees in terms 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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