UPS: neither cheap nor good

In my first job out of college, writing SIMSCRIPT compilers for CACI, I had to go to the management training (corporate culture indoctrination) sessions at company HQ in Rosslyn. CACI founder Herb Karr had a bunch of slogans illustrated by cartoonist, in hopes of promoting a decentralized, entrepreneurial, bottom-line oriented culture. The one I remember is the slogan "We’re not cheap, we’re good,” with the customer using a monocle to look at an eye-popping diamond.

This mantra (which I later learned is called “premium pricing based on quality differentiation”) stuck with me when I started my own business. It worked for us for more than a decade, until a) our customers faced price pressures and started pinching pennies; and b) technological change lowered entry barriers, commoditizing our market segment.

At CACI and when self-employed, I used Federal Express. Meanwhile, my mentor Charlie Jackson swore by United Parcel Service. He always said that UPS was the one company he couldn’t do without (to deliver his software products) — suppliers, distributors, dealers, FedEx were all expendable, but UPS was indispensable.

Today I swore at UPS, because their bureaucratic inflexibility in the name of efficiency belies the claim they are delivered a “service.”

For more than 50 years, UPS has been famous for epitomizing Taylorism (i.e. the principles of F.W. Taylor’s 1911 treatise The Principles of Scientific Management). Every year or two, we’d see our driver accompanied by a researcher (supervisor) equipped with a clipboard, doing time-and-motion studies in hopes of improving productivity. The trend has only continued with the advent of modern technology.

Anyone who’s dealt with their residential service knows that their #1 priority is making the delivery — to the point of leaving a $100 item behind a hedge in the rain if that saves them from coming back.

Today’s hassle — trying to gain custody of my latest Amazon purchase — went far beyond the telephone-tree-hell that we’ve all become accustomed to. The left a tag Friday, but I knew that no one would be around during some of the 3 hour window specified for Monday, so I was trying to schedule a time when someone would be home.

Whether talking to the computer (their preference) or a human being (in a futile hope of gaining more flexibility), I could pick a dropoff date but not one of the three-hour time ranges on the tag. They said I could have a neighbor sign for my parcel (my neighbors work) or redirect to my work (which, being a government bureaucracy, proclaims that “We do not accept personal parcels and are not responsible for damage or loss of such items.”) This means that for accepting delivery of everyday (signature required) items, UPS is less convenient than either the cable guy or the phone company. Hardly a standard of service to which one aspires.

Meanwhile, UPS has been pushing up prices to milk more yield out of customers (even before fuel prices went up); for anything over a few pounds, FedEx Ground (née Roadway) has been much much more affordable. Meanwhile, the stock is trading within 5% of where it closed on its IPO date back in 1999.

Lousy service, higher prices, poor shareholder returns. What’s not to hate?

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