UPS Is Becoming A Victim Of Its Own Success

Sometimes, success can be devastating.

Just look at what is happening to United Parcel Service Inc. right now: In the past two weeks, I’ve had two perishable food orders, well, perish because the delivery company failed to deliver them on time. Other nonperishable orders have also been delayed.

And I am not alone.

Earlier this week, the Wall Street Journal reported that UPS failed to deliver nearly one in 10 packages on time last week. Worse, the Journal said the struggling company has ordered its drivers to stop picking up packages at six of the nation’s largest retailers: Macy’s Inc., Gap Inc., L.L. Bean Inc., Nike Inc., Newegg Inc. and Hot Topic Inc. until further notice.

There is an important lesson in this for all businesses: Managing success can be just as critical as managing failure.

Be careful of what you wish for

The pandemic has dramatically accelerated the shift that was already underway from in-person retail to online e-tail, and shipping companies such as UPS have seen their volumes skyrocket as a result. Coping with that increased volume has clearly been a major challenge – not only for UPS, but also for competitors such as FedEx Corp.

Brown seems to be the one buckling under the pressure.

FedEx still managed to deliver almost 98 percent of its packages on time last week, the Journal said. FedEx also picked up 95.4 percent of its packages the day they were ready, compared to just 81 percent for UPS.

UPS is failing in other ways as well.

When I tried to get an update on an overnight shipment that failed to show up last week, I found that it is now impossible to speak to an actual person at the company’s call center. I twice spent more than five minutes navigating its labyrinthine phone tree, only to be disconnected with a curt, recorded “Goodbye” each time I was finally given the option to request a live representative.

UPS told the Journal the current disruptions are temporary. That may be, but the impact they will have on the company is sure to linger. Experiences like this shake customer confidence in a brand, and UPS’s decision to leave the boxes piling up at Macy’s and L.L. Bean is likely to have far-reaching consequences – both for it and for the companies it serves (or doesn’t, as the case may be).

Plans are nothing, but planning is everything

It’s easy to dismiss business failures such as this one as the inevitable consequences of a crisis no one saw coming, but that is simply not the case.

Far from being a “black swan,” the COVID-19 pandemic was the specific manifestation of a more general respiratory pandemic threat that was widely expected, discussed and even prepared for by at least some forward-thinking leaders.

“(T)he pandemic was not an unexpected event. And alarm bells for the COVID-19 outbreak were starting to ring in January. Therefore, I don’t think the collapse of mid-February was a black swan event,” Dr. Gary Klein, one of the world’s leading experts on decision making, wrote in Psychology Today in May. “The belief in black swans comes with a delusion that once informed about a threat, we will expeditiously take action. And we know that this isn’t true.”

It certainly wasn’t true at UPS.

Back in February, many people – myself included – were warning that this pandemic was likely to create unprecedented supply chain disruptions. I used this very space to suggest that companies start using tools such as Alternative Futures Analysis to stress-test their strategies for responding to the pandemic and bake in the optionality needed to navigate through this crisis without brand-damaging disruption.

UPS also knew better most that e-commerce was increasing rapidly. That was true before the pandemic, and that increase gained significant momentum once lockdowns began last spring.

The company had more than enough time to hire and train new drivers, lease additional vehicles and – most importantly – have frank and open conversations with major retail customers about what they could reasonably expect in terms of service. Better still, UPS could have worked with this customers to develop a proactive plan for dealing with a holiday surge that anyone could have seen coming.

At least some of UPS’s competitors have clearly done at least some of those things.

In the past month, for example, I have seen new FedEx drivers delivering packages in my neighborhood from leased trucks, but I’ve only seen the same solo UPS driver in the same brown truck that has been plying this route since long before terms like “crowded” and “packed” were used to frighten small children.

I recognize this anecdotal observation represents nothing more than a single data point, but given the company’s decision to leave so many big-name retailers high and dry at the most critical time of their year, I suspect that it is part of a much more troubling data set – a trend line that I’m guessing is headed in the wrong direction for UPS.

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