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Information and Knowledge Management
Discuss how UPS aligned their ICT Strategy (IT/IS) to the organisation’s strategy?
UPS is the acronym for United Parcel Service, the world’s largest fully automated package handling facility in the world. UPS is based in Louisville International Airport.The alignment between IT/IS and business means that both can work together to achieve the organization goals (Tarafdar and Qrunfleh, 2010).
The strategic alignment between IS/IT and Organisation
The role of information technology in organizations has been changing since its developments, where it started as a role for supporting daily tasks and transferring these tasks into electronic processes. Later on, this role was changed to support business strategies (Henderson and Venkatraman, 1999) and to shape new strategies for the organization (ibis).
One of the most extensively used models of arrangement is the Strategic Arrangement Model proposed by Henderson and Venkatraman (1999). This multidimensional model (Fig. 1) identifies the internal and external proportion sand how these can be combined functionally with the organizational strategy.
Henderson Venkatraman(1999) describe that it is the supporter the significance of strategically positioning of IT/IS within organizations. They argued that successful demands of this model result in organizational possible to force IT/IS resources on a continual basis to support competitive advantage in the marketplace. Figure 1.2, shows the interdependence between technology and strategy and how this is influenced by the organizational culture. The model shows also the link may also be influenced by internal
and external technological and socio-economic environments.
This means that the organization may be highly active and arrangement may need to be continually reexamined, observed and adjusted.Managers should expect to realize a good arrangement between information systems and business for flat work of the organization. Many organizations structure IT/ISand information flow in a way to be concentrated thus resulting in the control of information which in turn may result significant power structure within the company (Bhatnagar and Ankit, 2007).
While,information systems can provide support how an organization is structured, it can also “concentrate decision-making at a certain level as it increases the capacity to procedure information” (King and Teo,2000; Bhatnagar and Ankit, 2007).
UPS a global leader in a fully automated packaging handling industry. With the alignment of IS/IT strategy and organisation strategy allows UPS a competitive advantage to improve their effectiveness and to emphasis customer satisfaction. Also to sustain their current position in the market and to focus in expanding their market position. Gaining speed, simplicity and trust in this arena is key to UPS success.
UPS is the environmental leader in the originating in the U.S. and Internationally package delivery industry. UPS reduces its carbon emissions through integrated networks. The use of air fleet, alternative fuel sources and the use of trucks that turns only right to reach its destination quicker. UPS has a paperless invoice system and eliminates the need for paper invoices by integrating order and shipping processing.
They service more than 200 countries and territories with approximately 4,00,000 employees worldwide. UPS has an advanced supply chain and has a strong brand name. UPS has an established network and continue to invest in network expansion globally.
This is a highly competitive segment, thus the market share growth is limited. The brand is dependent on delivery staff appearance at the touch points. The labor force of the UPS is unionized and thus affects the labor cost of the UPS.
Expansion of online shopping and distribution.Business to business growth will help to expand operating profit due to economy of scale.
By increasing the expectations of customer’s higher quality products, UPS scalability in a fragmented Asian market. They first entered the market by working with key business players in the market with a focus on export or import. UPS promote its network by providing logistics solutions for the retail and manufacturing companies.
The threat to strike and can cause pressure in order for UPS to increase wages.UPS fuel surcharge in the domestic and international package as their primary means of reducing the risk of adverse changes in fuel prices.
Adverse weather conditions, bad weather can damage the quality and efficiency in delivery. In addition, bad weather can affect retail sales and other opponent companies canhurt UPSsales. While the UPS cannot control the weather, they have improved their tracking platform for customers by providing more information and provide an updated time for customers in case of any delay doubt.
Because UPS is an international company,currency plays a big roll.Currency can directly affect the inflation costs. In other words the exchange rate should be monitored regularly.
The alignment of IS/IT and Organisation strategy is critical in UPS management. The combination of IT/IS strategic plan with the business strategic plan allows UPS to be a global leader in this industry.
Evaluate and discuss how UPS applied information system strategies to improve their logistics.
In this section the systems that are relevant to the Management Information Model for UPS will be discussed. Focus on the applied information system strategies.
Laudon and Laudon (2014:83) describe enterprise application as “a systems that span functional areas, focus on executing business processes across the business firm, and include all levels of management.” Enterprise applications integrate systems like TPS, MIS, DSS and ESS to ensure the synergy of these applications to work more efficiently.
These are the four major enterprise applications:
- Customer Relationship Management System (CMS)
- Supply Chain Management System (SCM)
- Enterprise System also known as Enterprise Resource Planning (ERP)
- Knowledge Management Systems (KMS)
UPS makes use of CRM
Beginning in 1999, UPS undertook the largest capacity project in the company’s history. With over 20 000 employees, UPS is one of the largest employers in Louisville and in Commonwealth of Kentucky.CRM systems capture and integrate customer data from all over the organisation, consolidate the data, analyse the data, and then distribute the results to various systems and touch points.” Laudon and Laudon (2014:381) It looks at what client information means and how it can be used for developing a better business. CRM looks at updating client ormation from client interactions and processing this information in such a way that it can be used to add value to an organization. Effective CRM system lead to more satisfied customers, lower customer turnaround, lower costs for customer acquisition and retention and greater customer loyalty.
Wailgum(2005) states that “with an effective CRM strategy, a business can increase
- Providing services and products that are exactly what your customers want
- Offering better customer service
- Cross selling products more effectively
- Helping sales staff close the deals more effectively
- Retaining existing customers and discovering new ones”
Benefits of CRM
James O’Brien ( 2007)states that : There are many potential benefits of managing customer relationships like guarantee ongoing customer satisfaction with quick response to service and support calls, optimize the potential of the service operations, service contract management and customer support etc. Beside these, with effective management of customer relationship we can have:
- More effective sales management, that can convert more opportunities into sales and prospects into customers
- Increased customer satisfaction due to faster response to calls and better problem resolving capabilities
- Improved decision making based on timely, accurate data on all aspects ofthe sales process
Disadvantages of CRM
Word of mouth in a negative way could influence future sales and services. Appearance plays a major roll as the delivery service is directly in contact with the customer.
Supply Chain Management System (SCM)
Inbound Logistics,UPS receiving and storing raw materials and other inputs, and supplying them to the operations as required. Outbound Logistics,UPS to the collection of finished goods from the operations, and their storage and distribution to distributors, retailers or customers. This lead to increase efficiency, speed and cost saving. Laudon and Laudon (2014:381) states that “supply chain cost represent up to 75 percent of operating costs in some industry therefore reducing supply chain costs has a major impact on a firms profitability.” By Supply Chain demand UPS has become a global leader.
Knowledge Management Systems (KMS)
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Frost (2014)describes KMS as “Knowledge management systems refer toany kind of IT system that stores and retrieves knowledge, improves collaboration, locates knowledge sources, mines repositories for hidden knowledge, captures and uses knowledge orin some other way enhances the KM process.
These tools support and improve the KM processes and application, and process and generate value from their intellectual and knowledge-based assets.Most often, generating value from such assets involves sharing them among employees, departments and even with other companies in an effort to devise best practices (Frost, 2012). In other words, KMS are repositories of knowledge from a collection of experts, organized in a manner such that it can be easily accessed (Chandran &Kavitha 2009).
From the non-technical perspective, KMS are those that are human and organizationally centered (Young, 2013).The focus and emphasis is on how individuals and organizations can be equipped to design and facilitate knowledge processes best. These include cross-functional project teams who are selected and assembled project
specialist or expert working together for a common goal, KM training & education, and storytelling (Frost,2012). That is, KMS are purely human centered and that it takes the human force to capture, process, store and disseminate knowledge.
In this section the information systems strategies was discussed. To improvement UPS logistics strategies like CMS, SCM, KMS and ERP were looked at.
Explain, with the aid of a diagram, the value chain of UPS.
The Value Chain forms a crucial part of an organisation. It defines their current and future position in the market. Monitor every move of the operation of the organisation.
The Business Value Chain Model
The primary activities are human resources, accounting, and finance. These functions support the primary functions of production, shipping, and sales and marketing. The value chain model shown in Figure 4 below will help an organisation focus on these activities and determine where to focus their efforts the most. From the value chain model competitive advantage comes from two sources: lowering the cost to perform
The value chain model highlights specific activities in the business where competitive strategies can best be applied (Porter, 1985) and where information systems are most likely to have a strategic impact. This model identifies specific, critical leverage points where a firm can use information technology most effectively to enhance its competitive position. The value chain model views the firm as a series or chain of basic activities that adda margin of value to a firm’s products or services.
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