INTERACTIVE SESSION: TECHNOLOGY
UPS COMPETES GLOBALLY WITH INFORMATION TECHNOLOGY
United Parcel Service (UPS) started out in 1907 in a c1oset-sizedbasement office. Jim Casey
and Claude Ryan-two teenagers from Seattle with two bicyc1es and one phone-promised the
"best service and lowest rates." UPS has used this formula successfully for more than a
century to become the world's largest ground and air package-delivery company. It's a global
enterprise with over 400,000 employees, 93,000 vehicles, and the world's ninth largest
airline.
UPS delivers 15.6 million packages and documents each day in the United States and more
than 220 other countries and territories. The firm has been able to maintain leadership in
small-package delivery services despite stiff competition from FedEx and Airborne Express
by investing heavily in advanced information technology. UPS spends more than $1 billion
each year to maintain a high level of customer service while keeping costs low and
streamlining its overall operations.
It all starts with the scannable bar-coded label attached to a package, which contains detailed
information about the sender, the destination, and when the package should arrive. Customers
can download and print their own labels using special software provided by UPS ar by
accessing the UPS Web site. Before the package is even picked up, information from the
"smart" label is transmitted to one of UPS's computer centers in Mahwah, New Jersey, ar
Alpharetta, Georgia, and sent to the distribution center nearest its final destination
. Dispatchers at this center download the label data and use special software to create the
most efficient delivery route for each driver that considers traffic, weather conditions, and the
location of each stop. UPS estimates its delivery trucks save 28 million miles and burn 3
million fewer gallons of fuel each year as a result of using this technology. To further
increase cost savings and safety, drivers are trained to use "340Methods" developed by
industrial engineers to optimize the performance of every task from lifting and loading boxes
to selecting a package from a shelf in the truck.
The first thing a UPS driver picks up each day is a handheld computer called a Delivery
Information Acquisition Device (DIAD), which can access a wireless cell phone network. As
soon as the driver logs on, his ar her day's route is downloaded onto the handheld. The DIAD
also automaticalIy captures customers' signatures along with pickup and delivery
information. Package tracking information is then transmitted to UPS's compute r network for
storage and processing. From there, the information can be accessed worldwide to provide
proof of delivery to customers ar to respond to customer queries. It usualIy y takes less than
60 seconds from the time a driver presses "complete" on the DIAD for the new information to
be available on the Web.
Through its automated package tracking system, UPS can monitor and even re-route
packages throughout the delivery process At various points along the route from sender to
receiver, bar code devices scan shipping information on the package label and feed data about
the progress of the package into the central computer. Customer service representatives are
able to check the status of any package from desktop computers linked to the central
computers and respond immediately to inquiries from customers. UPS customers can also
access this information from the company's Web site using their own computers ar mobile
phones. UPS now has mobile apps and a mobile Web site for iPhone, BlackBerry, and
Android smart-phone users.
Anyone with a package to ship can access the UPS Web site to track packages, check
delivery routes, calculate shipping rates, determine time in transit, print labels, and schedule a
pickup. The data collected at the UPS Website are transmitted to the UPS central compute r
and then back to the customer after processing. UPS also provides tools that enable
customers, such Cisco Systems, to embed UPS functions, such as tracking and cost
calculations, into their own Web sites so that they can track shipments without visiting the
UPS site.
A Web-based Post Sales Order Management System (OMS) manages global service orders
and inventory for critical parts [Link] system enables high-tech electronics,
aerospace, medical equipment, and other companies anywhere in the world that ship critical
parts to quick1yassess their critical parts inventory, determine the most optimal routing
strategy to meet customer needs, place orders online, and track parts from the warehouse to
the end user. An automated e-mail ar fax feature keeps customers informed of each shipping
milestone and can provide notification of any changes to flight schedules for commercial
airlines carrying their parts.
UPS is now leveraging its decades of expertise managing its own global delivery network to
manage logistics and supply chain activities for other companies. It created a UPS Supply
Chain Solutions division that provides a complete bundle of standardized services to
subscribing companies at a fraction of what it would cost to build their own systems and
infrastructure. These services include supply chain design and management, freight
forwarding, customs brokerage, mail services, multimodal transportation, and financial
services, in addition to logistics services.
In 2006, UPS started running the supply chains of medical device and pharmaceutical
companies. For example, at UPS headquarters in Louisville, Kentucky, company pharmacists
fill 4000 orders a day for insulin pumps and other supplies from customers of Medtronic Inc.,
the Minneapolis-based medical device company. UPS pharmacists in Louisville log into
Medtronic's system, fill the orders with devices stocked on site, and arrange for UPS to ship
them to patients. UPS's service has allowed Medtronic to close its own distribution
warehouse and significantly reduce the costs of processing each order. UPS and other parcel
delivery companies are investing in giant warehouses that service multiple pharmaceutical
companies at once, with freezers for medicines and high-security vaults for controlled
substances.
UPS has partnered with Pratt & Whitney, a world leader in the design, manufacture, and
service of aircraft engines, space propulsion systems, and industrial gas turbines, to run its
Georgia Distribution Center, which processes 98 percent of the parts used to overhaul Pratt &
Whitney jet engines for shipment around the world. UPS and Pratt & Whitney employees
together keep track of about 25,000 different kinds of parts and fulfill up to 1,400 complex
orders each day-ranging from a few nuts and bolts to kits comprising all the parts needed to
build an entire engine. On the receiving side of the 250,000-square-footbuilding, UPS quality
inspectors check newly arrived parts against blueprints.
Sources: Jennifer Levitz and Timothy W. Martin, "UPS, Other Big Shippers, Carve Health
Care Niches," The Wall Street Journal, June 27, 2012; "Logistics in action: At Pratt &
Whitney Facility, Silence Is Golden," UPS Compass, August 2012; Bob DuBois, "UPS
Mobile Goes Global," UPS Compass, January 27,2011; Jennifer Levitz, "UPS Thinks Out of
the Box on Driver Training," The Wall Street journal, April 6, 2010; Agam Shah, "UPS
Invests $1 Billion in Technology to Cut Costs," Bloomberg Business week, March 25, 2010.
Case study summary:
United Parcel Service(UPS) started in 1907. Jim Casey and Claude Ryan with two bicycles
and one phone promised the best service and lowest rates to become the worlds largest
ground and air package delivery company.
UPS has been able to maintain leadership in small package delivery [Link] spends
more than $1 billion each year to maintain a high level of customer service while keeping
cost low and streamlining its overall operations.
UPS started with scannable bar code label which contains detailed information about the
sender. The destination and when the package should arrive. It helps customer to download
and print their own labels using special software provided by UPS or by using UPS web site.
Before the package is even picked up information from the smart label is transmitted to one
of UPS computers and sent to distribution centre nearest its final destination.
Dispatchers download the label data and use special software to create most efficient delivery
route. Using this technology 3million gallons of fuel is saved each year. To further increase
cost savings and safety drivers are trained to use 340 methods developed by industrial
engineers to optimize the performance of every task.
UPS driver picks a handheld computer called a Delivery Information Acquisition
Device(DIAD) which access a wireless cell phone network. The DIAD automatically
captures customers signature along with pickup and delivery information. Package tracking
information is then transmitted to UPS's compute r network for storage and processing. From
there, the information can be accessed worldwide to provide proof of delivery to customers or
to respond to customer queries.
Customer service representatives are able to check the status of any package from desktop
computers linked to the central computers and respond immediately to inquiries from
customers. UPS customers can also access this information from the company's Web site
using their own computers ar mobile phones. UPS now has mobile apps and a mobile Web
site for iPhone, BlackBerry, and Android smart-phone users.
UPS also provides tools that enable customers, such Cisco Systems, to embed UPS functions,
such as tracking and cost calculations, into their own Web sites so that they can track
shipments without visiting the UPS site.
Order Management System (OMS) manages global service orders and inventory for critical
parts [Link] system enables high-tech electronics, aerospace, medical equipment,
and other companies anywhere in the world that ship critical parts to quick1yassess their
critical parts inventory, determine the most optimal routing strategy to meet customer needs,
place orders online, and track parts from the warehouse to the end user.
UPS creates a UPS Supply Chain Solutions division that provides a complete bundle of
standardized services to subscribing companies at a fraction of what it would cost to build
their own systems and infrastructure.
In 2006, UPS started running the supply chains of medical device and pharmaceutical
companies. . UPS's service has allowed Medtronic to close its own distribution warehouse
and significantly reduce the costs of processing each order. UPS and other parcel delivery
companies are investing in giant warehouses that service multiple pharmaceutical companies
at once, with freezers for medicines and high-security vaults for controlled substances.
UPS has partnered with Pratt & Whitney, a world leader in the design, manufacture, and
service of aircraft engines, space propulsion systems, and industrial gas turbines, to run its
Georgia Distribution Centre, which processes 98 percent of the parts used to overhaul Pratt &
Whitney jet engines for shipment around the world.
CASE STUDY QUESTIONS:
1. What are the inputs, processing, and outputs of UPS's package tracking system?
The inputs of UPS package tracking system are detailed information (customer
information, package information), pickup, delivery, current location, bar coded label,
special software program by using the UPS Web site.
The processing of UPS package tracking system are the all information are
transmitted to a central computer, distribution centres, logistical planning, (DIAD)
program which was their drivers had been handheld delivery information Acquisition
Device, called UPS net, DIAD is collected from scan able label on packages, and
changing schedules.
The output of UPS package tracking system are tools that able to a customer which is
Cisco Systems, to include UPS functions, such as tracking and cost calculations, into
their own Web sites. Destination (on the way), pick-up and delivery schedule.
2. What technologies are used by UPS? How are these technologies related to UPS's
business strategy?
Technologies used by UPS are scan able bar-coded label the main thing that they use
their daily work. Also customers know fully, detailed information about their
shipment. Which contains complete information about the sender, location of where it
must go, and date of shipment should have arrive. If sender wants to get information
about the package they can go to company’s web site and download and print it out.
Before the packages picked up information transmitted to 2 main servers Mahwah, NJ
or Alpharetta, GA and send to nearest distribution centers of its final destination.
Dispatchers of these centers received the information use the special software plan the
most efficiency delivery way to each driver to consider of traffic and weather
conditions.
These technologies are related to UPS business strategy as follows:
1. UPS drivers used their daily work activities handheld computer named Delivery
information Acquisition Device (DIAD) which can access wireless network. Drivers once
he/she log in daily routes downloaded onto their device. The DIAD automatically captures
customers signatures according pickup and delivery information. Package tracking process is
then transmitted to UPS main server and storage on it. From there information can be
accessed to the worldwide. To provide proof of delivery to customers or to respond customer
questions. Process takes only 60 seconds and new information throughout DIAD to be
available on the UPS’s site.
2. In 2009 UPS launched new program called Web Based Posts Sales Order
Management System (OMS) which designed to global shipping services to provide service
dangerous shipment such as high-tech electronics, aerospace, medical equipment and any
other company’s critical shipment/inventory to fully responsibility.
These technologies involved company’s motto “best service and lowest rates “
They implement “best service” strategy. DIAD helps make it work easier and quicker for the
both sides, customers and company staff. It saves time, collect the all information make it
complete. As for the company side dispatchers schedule way routes, traffic/weather
conditions and notice the drivers. According to this information drivers can make their work
more efficiency. Company mainly focused on their high level of customer’s satisfaction.
Customers can easily go to company’s Web Site and to get complete information about the
packages. All the package are insured. UPS approximately spend 1billion USD in a one year
customer’s satisfaction guarantee for their customers while reducing cost low.
3. What strategic business objectives do UPS's information systems address?
The business strategic objectives do UPS's information systems address:
1. Scannable Bar-code: One of the MIS business strategy objectives. This system's
objective is to use time more efficiently and use low labour force in classify the
packages destination and reduce human error in classifications that will reduce the
cost. It means by reducing cost they can keep up the lowest rate.
2. In delivering UPS uses special software that help drivers to take the most efficient
routes to deliver the package, plus this system considers the traffic and weather
conditions.
3. DIAD: Every driver has device that has information about at automatically captures
customer's signature along pickup and delivering information from UPS's central
computer. Every deliver person can access information about the package and the
customer can check the package it delivered or not. Also the signature that from the
delivery will be proof, sender can check it.
4. Cisco system: contains the customer can know about their packages information
more detailed such as shipping rates, determine time in transit, print labels, schedule a
pickup, and track packages. Those actions can get the high technology to the senders
and it can reduce the time losing. They can check their tracking and cost calculations
and shipments cost without the UPS site.
5. OMS: Advanced delivering system that takes packages from the warehouse of
companies and delivers their fulfilment parts of equipment more quickly with in
efficient routes.
4. What would happen if UPS's information systems were not available?
1. Customer/ Sender: If there were not available for information system, the customer
will decrease faster. Senders want to choose the good one which has high proof and
information system and easy to understand system.
2. Global delivering: For the countries it will be difficult to get their packages. They
will not know how are going their packages. It means no information about their
packages.
3. Saving Cost: Maybe it will be good to saving cost for the company. They do not
need enough employees and machines.
4. Time Losing: Those systems always give the information about their packages. For
the company it is the one of the advantage but if they has nothing then the company
can lose their time.
