Question

UPS COMPETES GLOBALLY WITH INFORMATION

TECHNOLOGY

United Parcel Service (UPS) started out in 1907 in a closet-sized basement office. Jim
Casey and Claude Ryan—two teenagers from Seattle with two bicycles 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 nearly 400,000 employees, 96,000 vehicles, and the world’s ninth
largest airline.
Today UPS delivers 16.3 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 or
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, or
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. In 2009, UPS began installing sensors in its delivery vehicles that can
capture the truck’s speed and location, the number of times it’s placed in reverse and whether the
driver’s seat belt is buckled. At the end of each day, these data are uploaded to a UPS central
computer and analyzed. By combining GPS information and data from fuel-efficiency sensors
installed on more than 46,000 vehicles in 2011, UPS reduced fuel consumption by 8.4 million
gallons and cut 85 million miles off its routes. UPS estimates that saving only one daily mile
driven per driver saves the company $30 million.
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 or her day’s route is downloaded onto the handheld. The DIAD
also automatically captures customers’ signatures along with pickup and delivery information.
Package tracking information is then transmitted to UPS’s computer 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. It usually takes less than 60 seconds from the
time a driver presses “complete” on a 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 or mobile phones. UPS

now has mobile apps and a mobile Web site for iPhone, BlackBerry, and Android smartphone
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 Web site are transmitted to the UPS central computer 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 fulfillment. The system enables high-tech electronics,
aerospace, medical equipment, and other companies anywhere in the world that ship critical parts
to quickly assess 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 or 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.
For example, UPS handles logistics for Lighting Science Group, the world’s leading
maker of advanced light products such as energy-efficient light-emitting diode (LED) lamps and
custom design lighting systems. The company has manufacturing operations in Satellite Beach,
Florida and China. UPS conducted a warehouse/distribution analysis to shape the manufacturer’s
distribution strategy, in which finished goods from China are brought to a UPS warehouse in
Fort Worth, Texas, for distribution. The UPS warehouse repackages finished goods, handles
returns and conducts daily cycle counts as well as annual inventory. Lighting Science uses UPS
Trade Management Services and UPS Customs Brokerage to help manage import and export
compliance to ensure timely, reliable delivery and reduce customs delays. UPS also helps
Lighting Science reduce customer inventory and improve order fulfillment.
UPS manages logistics and international shipping for Celaris, the world’s largest wireless
accessory vendor, selling mobile phone cases, headphones, screen protectors, and chargers.
Cellaris has nearly 1,000 franchises in the United States, Canada and the United Kingdom. The
company’s supply chain is complex, with products developed in Georgia, manufactured at more
than 25 locations in Asia and 10 locations in the U.S., warehoused in a Georgia distribution
center, and shipped to franchisees and customers worldwide. UPS redesigned Celaris’s
inbound/outbound supply chain and introduced new services to create a more efficient shipping
model.
UPS Buyer Consolidation for International Air Freight reduces complexity in dealing
with multiple international manufacturing sources. UPS Worldwide Express Freight guarantees
on-time service for critical freight pallet shipments and UPS Customs Brokerage enables single-
source clearance for multiple transportation modes. These changes have saved Celaris more than
5,000 hours and $500,000 annually, and the supply chain redesign alone has saved more than 15
percent on shipments.

Answer the following Questions. (Weight 50 points each)

1. Discuss and debate how did the information systems improve the performance of UPS?
2. What were the types of enterprise systems adopted by UPS? Explain.

Answer 1

1. The information systems have improved the performance of UPS with increasing its efficiency with streamlined efforts and resources. The information technology has helped UPS to improve its customer services and also manage the supply chain and international operations of other clients. With help of technology, it has introduced transparency across its supply chain that has benefited the businesses that send or ship critical parts in business using UPS logistics services.

2. The types of enterprise systems adopted by UPS for offering services to its clients are supply chain management, customs brokerage, freight forwarding, mail services, multi modal transportation and financial services. The system has also post sales order management that helps the clients and customers to track their goods across the supply chain. UPS has supported its ERP system with information devices that help the clients and customers to participate in the logistics and transportation processes with calculation of minimum time and shortest routes, location of their goods, booking shipments and printing labels for pick up by UPS personnel that enables faster shipping and accurate information sharing between the stakeholders. The customers brokerage system, mail services and multi modal are helpful for businesses to be managed by UPS with their own network for shipping the parts, documents and goods across global locations.