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UPS: Delivering for Shareholders?

For a company that is 93 years old, UPS still knows how to innovate and grow. With the world-wide move towards supply-chain management, UPS has much more room on the upside.

To be competitive, companies are trying to find ways to streamline the supply chain. Focus on your core competencies and outsource everything else. However, in order to do this, you need sophisticated technology, as well as strong logistics. In terms of logistics, time-definite transportation is critical. The clear leader in the industry is: UPS . In fact, the company has helped other companies design complex logistical systems. This has helped lower costs, increase customer service and improve inventory flows.

The company is continually adding new service offerings to its logistical services. One of the more recent is UPS Capital Corp. Think of this as a way to integrate a company s delivery of goods with sophisticated electronic bill payment. Services include payment scheduling and dispute resolution.

During the 1990s, UPS has spent more than $1 billion per year on information technologies. For example, the company has its own cellular network.

Of course, UPS is also a leader in business-to-consumer e-commerce. The company s services are embedded in more than 20,000 Web sites. About 60 percent of all merchandise sold on the Web is done through UPS.

UPS knows how to retain and increasingly improve its workforce. Much of the management team have had long careers at UPS. The CFO joined UPS in 1971 as a part-time accounting clerk. The CEO was hired by UPS in 1964 as a package car driver. Before joining UPS in 1970, the Chief Operating Officer was a combat engineer for the US Army in Vietnam.

In a way, UPS has run itself like a high-tech start-up. The company has been a firm believer in employee ownership. About two-thirds of outstanding shares are owned by employees and retirees.

On the financial front, the company continues to post strong results. Revenues increased in the last quarter by 14 percent to $7.2 billion. Net income was $813 million, which compares to $499 million in the same period a year ago. Moreover, the company showed a 23 percent increase in international export package volume.

UPS will not be a high-flier. But it will provide long-term growth, which of course, will be powered by the worldwide high tech revolution.


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