Can UPS Still Deliver?

We Fixed It, You're Welcome

This episode of 'We Fixed It, You're Welcome' explores UPS's major operational transformation after 119 years of building a disciplined delivery system. The company is

Key takeaways

• UPS's recent restructuring is not sudden but part of a decades-long evolution beginning after the 2007 financial crisis.
• The company is shifting away from high-volume, low-margin customers like Amazon to focus on more sustainable growth strategies.

Main topics

• UPS's strategic restructuring and consolidation of global operations
• The impact of reducing reliance on Amazon volume

Notable quotes

"People are like banks. You put into them, they will give you much more back."

"This moment actually began in earnest around 2010... after the financial crisis in 2007."

Conclusion

UPS's transformation demonstrates that even century-old institutions can reinvent themselves while

Transcript preview

Speaker 4 (0:00) Welcome to We Fixed It. You're welcome. The show where we take over companies, you come along for the ride, and Speaker 1 (0:07) we try to put them back better than we found them. Speaker 4 (0:12) UPS is one of those companies most of us only notice when something goes wrong. A package arrives on time, we go about our day. It's 10 minutes late and we start pacing the room. But that's not the typical situation. Nearly always, the driver knows the route, we all get what we need, and life keeps moving. That reliability is not accidental. It comes from a deeply disciplined operating system built over 119 years. So why change anything, right? Well, you have to evolve with the times. Very recently, UPS announced a major new operating model. The company's consolidating responsibility across global air operations, transportation, buildings, engineering, sustainability, all of it. The company's investing heavily in its own efficiency, doubling down on what's working well and leaning into cost-cutting measures for areas that are draining revenue. And it's working. The company expects to achieve around $3 billion in benefits this year. That's efficiency doing what it's supposed to do. So the question is not whether UPS should become more efficient. Every company needs to improve. The question is, how do you rebuild a massive operating machine without losing the human judgment and culture that made that machine work for over a century? Well, fortunately, our guest today knows this machine from the inside. Noel Massey is retired vice president of U.S. delivery operations from UPS. He's now an author, executive coach, and leadership consultant. Noel, tell us a little bit more about you. Well, Speaker 1 (1:35) thank you, Aaron, and thanks for that warm introduction. I worked for UPS for 42 years. My last role, I had responsibility to support the 17 presidents in two regions in the U.S., and I reported directly to the management committee. And at the end of the day, any and all things to do with... the last mile delivery aspect of the business. I was a president for five business units. Thank Speaker 4 (2:00) you, Noel. You've seen a lot of growth and a lot of change, and there's more change coming. So you're obviously the perfect guest to discuss this with Chino, Melissa, and me. Melissa, UPS is disrupting a lot at once, standardizing, consolidating. Give us more. What is UPS changing and why should we all be paying attention right now? Speaker 3 (2:18) Reducing operational roles and moving away from planned Amazon volume that no longer fits the economics or direction of the business. The company closed 45 facilities in the first half of the year, reduced nearly 30,000 operational positions, and expects about $3 billion in benefits from its network reconfiguration and efficiency programs. This raises a question I think a lot of leaders will recognize. When does your biggest customer stop being an engine of growth and start becoming a constraint to the business? Right. Because more volume is not always better volume. I always talk about that. You know, not every customer is a great customer. Sometimes it creates density and scale, but sometimes it drives complexity, consumes capacity, really stresses and strains your employees and requires expensive workarounds and forces the entire company to be at the beck and call and operate around one customer's needs. So we're not here to ask whether UPS should change. because that's obvious that they are really believing that they need to. The question is whether UPS can become leaner, more global and more efficient without becoming too lean to handle the messy, unpredictable moments that have defined this customer trust. Can it rebuild this machine without weakening the people, the judgment and the operating culture inside it? Noel, you know the business from the inside, obviously. When you look at this new structure and the larger reset UPS has been making, what do you think the company is really trying to solve here? And what would you be most careful about not to lose? The Speaker 1 (3:58) organization only looks as though it is dynamically changing to those outside of it. If you are a UPSer like Nando and Matt Duffy, who I congratulated, incidentally, just yesterday. Matt and I work together. I work with Nando as well. We've always had this dynamic change model culturally, behaviorally, and not just within the leadership ranks, but all the way down to the front line. Now, that's not to suggest, like in any organization, that people wake up in the morning and go, just change my life as much as possible. That only works if you're going to give them more money. Right. But any other change will be met with what change is met with. The change that's happening today actually began in earnest. This particular iteration actually began in earnest around 2010, 20, 20, 20. After the financial crisis in 2007, some some very obvious changes needed to be made in the management structure. And as I mentioned, we went from 50 business units to 20. And so think about 30 presidents being told you're no longer a president. Speaker 3 (5:07) Right. Speaker 1 (5:08) 30 CFOs being told you're not a CFO any longer. Head of engineering. We have to absorb you into the organization. Speaker 1 (5:19) That was the moment when the organization knew that the future was going to be very, very different than the past. Speaker 4 (5:26) So it seems sudden from the outside, but you're saying it's 26 years in the making. Yes, for sure. This moment. Yeah, Speaker 1 (5:32) at least 16 dramatically after 2007. I'd call it Aaron. I'd say 18 since 2018. We had subtle changes in 95 was the first time we had a buyout. Right. I was transferred from Oakland, California, where I'm from. to Philadelphia, right, to be the second in command in Philadelphia, the outgrowth of what triggered that move for me then was a buyout. It was unheard of. The organization had a buyout. It was like, are you kidding me? We thought this was like the forever job. And that really was the most dramatic change moment that occurred in the organization in 95. But it signaled to the leadership team that change was here and it just kept going. And we became very expectant of change. Very expectant. Speaker 4 (6:27) You know, how does that work organizationally when you have top level leadership and then you do such a dramatic reorg and then you say you used to have that seat and you don't have it anymore? What are the dynamics that happen as a result? Speaker 2 (6:42) Yeah, it's a very. Interesting thing. It's interesting what you're saying, all of like, you've always had kind of the ethos of like, things are going to change what that looks like might change. But to expect that, you know, since the buyout is an interesting. So, you know, you got two kind of ways to do it. Are you hiring people knowing that, you know what, this is not a for sure, this is not going to be your forever job, this is not going to stay the same? Is that something that you're building? into your culture, you're sharing every day as like, we are here now, but for us to continue to grow and to be relevant and to be the top, we know that this is gonna look different in a year, 10 years, 20 years from now. And so that takes a different type of person when you're doing the hiring to say, we need people who are more agile, who are open to change, right? And with any change management, Not everybody is going to agree. You know, we're talking about people's livelihoods. Right. And so, you know, no one is a number that scares people when that happens. So if you're the folks that have stayed and again, unless as you shared, it's Speaker 1 (7:54) a Speaker 2 (7:54) lot of the operational. I think it's about, would you say, 30,000 operational roles have just been eliminated. And so in. today's market where there's a lot of uncertainty within the market, that does leave the people who are left behind of like, what about me? Is this going to be, you know, I might just, did I just make it safe to the first round? And are there going to be other layoffs in the future, which we've seen? time and time again with other businesses. And so for the leaders that are there, it's trying to keep that momentum and to build that psychological safety as, you know, here's why we've kept you and trying to be as transparent as possible. But we can't ignore the fact that it does change the makeup and DNA of what it was. And it does leave people. a little more scared moving into a future. And so I think it's really important with UPS as they continue to make these changes is to make sure that they're keeping the people on who are a little more resistant and open to being agile and, you know, hopefully in a humane way, you know, giving people and, you know, trying to support them in kind of their new journeys. But it really all comes down to like the hiring and. the types of folks that you're bringing to the table and the conversation that leaderships have. Speaker 4 (9:20) Here's something I've done for work that I'll never volunteer for again, writing a step-by-step process document. 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To see what Scribe could look like for your organization, head to scribe.how slash fixedit and mention We Fixed It for your first month of Scribe capture free on select plans. That's S-C-R-I-B-E dot how slash F-I-X-E-D-I-T. Support for today's episode comes from Square, the business platform that helps sellers become the best in the neighborhood. Whether you're growing your business or just trying to keep up with it, Square knows what you need. You can take payments, online orders, manage your inventory, staff, and more all in one place. That means that when you're with a customer, you're actually with that customer, and they can tell you've got things under control. For one, you're focused and not running around like crazy. That's because the whole thing's designed to be easy to use. The last time I stopped by a cafe where I saw the Square