Fedex vs. Ups
FedEx Corporation
Federal Express was founded in 1971. In 1973, FedEx started operations officially and its hub-spoke distribution pattern enabled it to offer cheaper and faster service than its competitors. By 1981, UPS began to enter into the overnight air market and the United States Postal Service (USPS) cut its overnight letter at half the price of FedEx’s. Despite facing such extreme competition in the industry, FedEx could still excel due to change in the business environment. The success of the firm could be attributed to several factors:
1. Deregulation:
Deregulation of the domestic airline industry allowed FedEx to purchase several Boeing 727s to replace smaller planes. Also, trucking industry deregulation permitted FedEx to integrate regional trucking system, which helped the firm to reduce its unit costs and compete with UPS more effectively. FedEx could achieve economies of scale that enabled the company to lower its unit costs and increase its profits through mass production.
2. Innovation in information and process technologies:
Technological innovations such as COSMOS (Customer, Operations, Service, and Master On-line System) enabled FedEx to achieve important advances in customer ordering, package tracking, and process monitoring.
3. Inflation and the rise of asset-oriented manufacturing approaches:
Manufacturers demanded closely managed inventories because of rising inflation and global competitiveness, which created a higher demand for FedEx’s rapid and carefully monitored movement of packages.
United Parcel Service, Inc. UPS was founded in 1907 and the post-World War II was the strongest growth period for the firm. In the 1970s, UPS held the most shares in the express package industry. UPS was much larger than FedEx but began competing in the overnight delivery market with FedEx after 1982 because of the high cost of building an air fleet. UPS lacked flexibility and aggressive acquisition strategy in the earlier years because
Federal Express was founded in 1971. In 1973, FedEx started operations officially and its hub-spoke distribution pattern enabled it to offer cheaper and faster service than its competitors. By 1981, UPS began to enter into the overnight air market and the United States Postal Service (USPS) cut its overnight letter at half the price of FedEx’s. Despite facing such extreme competition in the industry, FedEx could still excel due to change in the business environment. The success of the firm could be attributed to several factors:
1. Deregulation:
Deregulation of the domestic airline industry allowed FedEx to purchase several Boeing 727s to replace smaller planes. Also, trucking industry deregulation permitted FedEx to integrate regional trucking system, which helped the firm to reduce its unit costs and compete with UPS more effectively. FedEx could achieve economies of scale that enabled the company to lower its unit costs and increase its profits through mass production.
2. Innovation in information and process technologies:
Technological innovations such as COSMOS (Customer, Operations, Service, and Master On-line System) enabled FedEx to achieve important advances in customer ordering, package tracking, and process monitoring.
3. Inflation and the rise of asset-oriented manufacturing approaches:
Manufacturers demanded closely managed inventories because of rising inflation and global competitiveness, which created a higher demand for FedEx’s rapid and carefully monitored movement of packages.
United Parcel Service, Inc. UPS was founded in 1907 and the post-World War II was the strongest growth period for the firm. In the 1970s, UPS held the most shares in the express package industry. UPS was much larger than FedEx but began competing in the overnight delivery market with FedEx after 1982 because of the high cost of building an air fleet. UPS lacked flexibility and aggressive acquisition strategy in the earlier years because