UPS & FedEx: Pioneers of Logistics and Supply Chain - Essay Sample

Introduction

UPS was founded in 1907 by Claude Ryan and James Casey, and headquarter is at Sandy Springs, Georgia. UPS is a logistics company specialized in the provision of supply chain facilities. Some of the services that UPS provides include transportation, distribution, air and ocean freight, insurance, and brokerage. UPS has three primary operational segments; Supply Chain and Freight, US Domestic Package, and International Package. Frederick Wallace founded FedEx in 1971, and its headquarters is in Memphis, Tennessee. FedEx specializes in providing transportation, business, and e-commerce services. FedEx has four primary operational segments; FedEx Ground, FedEx Services, FedEx Express, and FedEx Freight. UPS and FedEx represent two of the largest courier services providers in the world. Despite this, there are significant similarities and differences between the two companies. The paper will thus give a comparison between UPS and FedEx to determine the similarities and differences between the two companies in terms of performance and operations.

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Comparison

In terms of operations, UPS is superior to FedEx. UPS recorded a net income of $3 billion, while FedEx recorded a net income of $2 billion in 2012. Revenues for UPS amounted to $53 billion, while those of FedEx amounted to $42 billion in 2012. FedEx attains most of its sales from the domestic market while UPS receives most of its income from the international market. The reason behind this is that FedEx has a larger market share in the US compared to UPS, while Europe remains the largest market share for UPS. FedEx carries out most of its logistic services through air transport, and this is why it has a large number of airplanes. Alternatively, UPS uses ground travel to carry out most of its logistic services, and this is why it has a large number of ground vehicles for its operations.

The two companies show a quite similar comparison in their delivery services. FedEx provides guaranteed day-delivery services both in the domestic and international markets. For instance, FedEx Ground offers day-delivery services in the US market at affordable prices while FedEx International provides day-delivery services to global markets. FedEx also includes freight services in both its local and international markets. UPS, as well as delivery services in both of its domestic and international markets. For example, UPS Domestic offers delivery of documents and letters in the US while UPS International provides delivery services of products to global markets.

There is also a considerable difference between the supply chain networks of the two companies. FedEx, for instance, has a sophisticated supply chain network. FedEx has made significant growth in its business. The company has engaged in differentiation, which then has led to the adoption of new logistic outlets. FedEx has maintained that each service outlet will be distinct from the other and thus will acquire a different shipping network. As a result, FedEx has multiple supply chain networks which it uses to conduct its logistic services. FedEx uses a different logo for each of its supply chain network. As for UPS, the company is highly specialized in its product and service line. Due to this, UPS only uses a single supply chain network to conduct its logistic functions. Consequently, UPS thus has a unique logo used in identifying its supply chain.

FedEx and UPS contrast in the manner they source inputs in providing for their logistic functions. UPS, for instance, uses its employees and resources in delivering its logistic features. Most of UPS's ground fleet is quoted, and this shows that the company uses resources from its hold in contracting for supply chain services. FedEx carries out a different outlook when it comes to sourcing inputs. FedEx uses independent contractors to complete logistic services assigned to the firm. FedEx uses private vehicles, and this explains why it is common not to find a quotation in most of its automobiles.

The two firms have different approaches used to meet the needs of their target customers. UPS targets both economic and high-end customers, and this explains the reason why it is highly specialized in customer service. Most UPS stores are retail outlets that offer a personal shopping experience to customers. The retail outlets help the firm to acquire feedback, which is used to transform the business into providing products and services that enhance customer satisfaction. FedEx generally targets high-end customers. Most of the firm's stores inhabit big spaces which are furnished to provide a productive environment. The stores have sophisticated equipment such as laser printers and image scanners, which offer a modernized shopping experience to their customers. Most of FedEx's customers know what they want according to product and service trends in the market. Thus the firm rely on market statistics for information on product and service development.

FedEx and UPS may seem similar, but then there are considerable differences between the two firms. Most of the differences are seen in how the companies are specialized, how they source materials, and the type of customer service offered. Both firms are, however, successful in their operations. Innovation can, however, be a potential element that would heighten competition between the two firms.