innovating to create it-based new business opportunities at ups
DESCRIPTION
UPS, IT-based, new business opportunities, innovation, SIS risk, riskTRANSCRIPT
Innovating To Create IT-Based New Business Opportunities at
United Parcel Service
Agenda
UPS’s Business Strategy Key Findings 1: How UPS Identify New Business
Opportunities (NBO) Key Findings 2: What Framework UPS Uses To
Create NBO Comment The Leavitt Model of Organisation Lesson learnt Environment Scanning Questions
UPS’s Business Strategy
“Synchronise commerce”
Use of technology to create new services and to strengthen its operations in its value network
Inbound Logistics
(Input, Orders, Pickup)
Operations (Sort, Redirect)
Outbound Logistics (Delivery)
Customer Service
(Tracking, Billing)
Key Findings 1: How UPS Identify New Business Opportunities (NBO)
Inbound Logistics (Input, Orders, Pickup)
Operations (Sort,
Redirect)
Outbound Logistics (Delivery)
Customer Service
(Tracking, Billing)
Producers
Suppliers Distributors
End Consumers
UPS’s Internal Value Chain
NBO2
NBO2 NBO4
NBO3
NBO1NBO2NBO5
Flow of goods
Flow of Information
NBO New Business Opportunities
Key Findings 2: What Framework UPS Uses To Create NBO
Box 1
Information Technology Investment
Box 2
IT Assets
Box 3
IT Competencies
Box 4
Business Capabilities
Box 5
New Business Opportunities
Box 7
Organisational Infrastructure
Box 6
Complimentary Assets
Key Findings 2: Example – NBO 1
Box 1
Automated Operational Systems
Box 2
Package Level Detail
(PLD)
Box 3
Mining Data in the warehouse
Box 4
Understand Cost
Structure
Box 5
New Business Opportunities:
Outsource Rural
Deliveries to a Competitor
Box 7
Organisational Infrastructure
Box 6
Complimentary Assets
Key Findings 2: Example – NBO 5
Box 1
Enterprise Resource System
Box 2
Integrated Supply Chain
Box 3
Coordinating multi modal
shipments and providing
customers with deep supply
chain visibililty
Box 4
Deliver direct to
end customers
Box 5
New Business Opportunities:
Do Customer’s
Work for them
Box 7
Organisational Infrastructure
Box 6
Complimentary Assets
Comment
Critique/Comment
The frameworks do not illustrate the importance of aligning:• Task • Structure• People• Technology• Environment
The Leavitt Model of Organisation
Information Technology
Task
Firm’s Technology
People
Organisational Structure
Environment
Environment
Lesson learnt
Integrate internal IT systems before Integrating customer’s
processes
Identify service gaps in customers’ business where
your IT can add value
Encourage and Be Open to ideas from Front-line
Managers
Cost-cutting business opportunities before Revenue increasing
View information and IT as 2 distinct assets
Critique : Lessons learnt might not be relevant to other firms
• Require a more generic framework for a firm to recognize how to improve
Comment:
• Lessons learnt could be considered as environment scanning
Environment Scanning
Integrate internal IT systems Before
Integrating customer’s processes
Identify service gaps
in customers’ biz
&
Value add IT
Encourage,
Open to ideas
from
Front-line Managers
Cost-cutting business
opportunities
Before
Revenue increasing
view
IT and info
As
distinct assets
Internal
S W
External
O T
Environment Scanning
Stren
gth
• Front-line Managers• Org
anizational levels
• View IT and info as distinct assets
weakness
• Weakness in not being able to efficiently utilize assets• cost
-cutting business opportunities
• More control on cost then revenue
opportunitie
s
• Identify service gaps in customers’ biz
threat
s
•Natural disaster, terrorism•Integrate internal IT systems before Integrating customer’s processes
Steps in Deploying NBO at UPSQuestion 1: Can there be improvements ?
Identify Projects Prioritize Projects
Establish a cross functional team
Perform costing for the project
Collaborate with a customer to
develop and test a prototype
Suggested answers
Identify Projects Prioritize Projects
Establish a cross functional team
Perform costing for the project
Collaborate with a customer to
develop and test a prototype
Test the new business
opportunity
Environment Scanning
REVIEW DOCUMENTATION
Question 2What are the possible IT enabled innovation risk
In the article, these are the risks mentioned: Resource-intensive process
Cost may exceed benefits in investing competitive advantage may not result
Lock-in by infrastructure limit the creation of future business opportunities
Imitation/ second mover advantage (UPS copied FedEx)
Risk averse management Unable to capitalize on opportunities
Question 2
What are the possible IT enabled innovation risk? Rejection from consumers
Non-IT savvy customers No additional benefits
Rapid expansion Employees lack the knowledge
Toyota downfall
Incapability of sustaining cost Walmart’s RFID idea