The UPS Story: The Development of the Link System

United Parcel Service (UPS) is a 100-year-old company with more than 300,000 employees serving 200+ countries. Its revenues total $20+ billion, and it is recognized as the world's largest shipping company. In the late 1980s, the UPS salespeople were customer service reps. When the shipping industry deregulated, UPS was forced to develop a sales organization to proactively market its services. Initially, UPS' salesforce was organized along product and geographic lines (UPS' internal processing needs), but in 1993 the company deployed its salesforce based on customer needs. In 1996, UPS redesigned its sales organization to serve three different types of customers:

  1. National accounts—customers expected to purchase $1 million a year or more of UPS services.

  2. Major accounts—customers expected to purchase $250,000 to $1 million a year UPS services.

  3. Key accounts—customers expected to purchase less than $250,000 a year of UPS services but requiring special attention.

UPS employs a two-tiered approach to working with national accounts. UPS National Account Managers (NAMs) create and coordinate corporate-level initiatives with each of their national customers. These NAMs have offices in or near the national customer headquarters and interact with corporate decision makers. UPS National Account Executives (NAEs) work in the field, executing any corporate-level agreements at individual shipping locations. At those locations, NAEs typically communicate the services UPS agreed to provide and help facilitate the delivery of those services. Because UPS' national accounts have been very clear in their expectation that UPS would provide consistent service at all their shipping locations, communication between the NAMs and the NAEs is crucial to success.

And here lay UPS' challenge: communication among UPS corporate, the NAMs, and the NAEs was done through traditional means—written memos, faxes, next-day document shipments, and exchanging voice messages. This didn't work very effectively for several reasons. First, because the specificity and amount of information being shared, which was huge. Second, while UPS makes service commitments to its national customers, most of these accounts do not, in turn, dictate mandatory practices to individual customer shipping locations. This means that different locations would have different expectations regarding service. UPS realized that only a very efficient means of communication could overcome both those barriers. UPS further believed that, if they did it right, such an improvement would ultimately translate into a competitive advantage.

Starting with the clearly defined need to communicate more effectively regarding its national account agreements, UPS started planning the development of what became known as the LINK system, which involved three initial steps:

  1. UPS looked at other companies with salesforces comparable to that of UPS and that had been successful in developing and using automated sales-force communications systems.

  2. UPS then researched existing commercially available software programs that could meet UPS' needs.

  3. UPS enlisted the services of a consulting firm to guide the design of the automated communication system.

Then UPS assessed in detail what capabilities corporate, NAMs, and NAEs believed the system needed to provide. The internal developers decided that the following tools needed to be included:

  • contact management software;

  • e-mail capabilities; and

  • word processing, spreadsheet, database, and presentation package 'office suite' software.

Beyond these basic needs, UPS and its national account team wanted the LINK system to facilitate the communication to implement UPS national account contracts quickly and consistently.

Once UPS identified its system requirements, it drew upon both external and internal resources to build the system. A software-consulting firm designed the "front end"—the lap-top computers NAMs and NAEs used. This package included a combination of off-the-shelf and customized software designed to meet the requirements of system users. UPS internally developed the resident database, or "back end" of the system, which stores the information accessed by the laptops. UPS first piloted the LINK system with NAMs, gathering feedback to improve the system, and later rolled it out to all NAEs.

Primarily, though, the LINK system provided a powerful communications tool for implementing national account contracts. LINK allowed NAEs to determine precisely the commitments made by both UPS and the national account at the corporate level. NAEs are then able to work with individual shipping locations to sell and implement these service features.

LINK benefits customers in two major ways: consistency of service and speed. Before the LINK system, UPS found that implementation of national account contracts required 45 to 60 days—mostly because of the problems with traditional communication. Since LINK has been in place, national contracts could be implemented in 14 days on average—a reduction from two months to two weeks.

UPS' major benefits in using the LINK system include:

  • Efficiency of the national account salesforce. LINK virtually eliminated paperwork hassles and it significantly reduced the time required to communicate effectively among the NAMs and the various national account shipping locations.

  • Provides NAMs with strategic information. The system allows NAMs to collect information from all NAEs serving national account shipping locations. This information plays a major role in developing national account business plans. LINK thus provides NAMs with an invaluable stream of information for creating customer management strategies.

  • Allows NAMs to evaluate the effectiveness of business plans. Information captured through LINK not only supports development of national account business plans, it allows UPS to monitor more easily whether it is meeting or exceeding the goals in these plans. If goals are not being met, LINK can help to identify where changes are necessary.

  • Allows UPS to know exactly what is going on with the customer. By reviewing account information and account history maintained in the LINK system, UPS personnel can instantly identify the national account decision makers and can assess the status of the relationship.

Since we wrote this case in 1997, UPS has developed several new components of LINK—both an intranet and an Internet capability. The intranet leads to greater collaboration among those who work on national accounts, and the Internet allows NAMs to conduct secondary research on customers and industries.

UPS provides an excellent example of a firm approaching technology judiciously. That was one of its keys to success. UPS is clearly a technology-supported organization that went through most of the seven implementation steps outlined above. It first carefully determined a major performance problem—the efficient execution of national agreements. UPS then broke down that performance problem into its components and asked what parts could be solved by a technical solution. It researched other firms and their technology solutions. It then developed tech-based solutions for those problems where appropriate. UPS' LINK implementation was incremental, starting with some NAMs. After they ironed out the system's kinks, the company rolled out LINK to the NAEs and corporate. And system users' feedback guided improvements and system growth. Only when the users' additional needs became clear did UPS add more functionality to LINK. It's an excellent example of a very thoughtful firm succeeding where so many firms have failed.

The Seven Keys to Managing Strategic Accounts
The Seven Keys to Managing Strategic Accounts
ISBN: 0071417524
EAN: 2147483647
Year: 2003
Pages: 112

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