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.

2. What was the strategy of UPS, and how did the information systems support the company in achieving its strategy?
3. If you are the manager of UPS what are the main opportunities you could use to ensure the success of the information system?  

Answer 1

A ) The key strategy UPS follows is giving the best service at the lowest rates. The information system help UPS to achieve its key strategy by reducing cost as per its quality. UPS spends around one billion dollars to achieve its quality service at the lowest cost.

By leveraging technology as the core component has to build an efficient system. UPS each year has saved around 30 million dollars by leveraging the best technology in its delivery mechanism. The company uses the best technology possible to lower the cost of operation and giving quality service. some of the components of technology that can draw from it are-

The company has used a scannable bar-coded label that is attached to all its shipment goods through it can be tracked by the company information system . All the information available about the package is available in the bar code. The delivery system is so technology advance that the company tracks the location of the shipment in advance and device the shortest possible route. Also the delivery guy is equipped with the latest technology by means of a delivery information acquisition device DIAD by these drivers get the shortest route which they have to follow while delivering the package saving fuel and time.

The company uses automatic packing and tracking systems in tracking the package and knowing the live details of the package customer can also use this platform if they want to reroute the package delivery. customer service officials can also excess the data if any discrepancies arise which can be communicated to customers. By this system UPS gives its customer enhanced user experience while making a loyal customer, saving costs, maintaining efficiency in the whole system.

B) To ensure the success of the information system as a manager I can use this technology to dive into various areas building new business opportunities by collaborating with the company that lagging behind because of technology. Some companies despite having good quality manufacturing they fall behind at delivery, UPS can help them by making use of its technology delivering their product on time to customers and also helping them in managing their inventory. UPS uses real-time information by its technology advanced tools which make it superior in delivering the products.

• UPS can take over the contract of delivering the goods for small companies making their delivery mechanism efficient.
• UPS can streamline the Supply Chain Management of companies at lower costs so that they don't have to build their own network.
• UPS can leverage its technological advantage by taking several companies to supply chain management who are interdependent for raw goods , taking SCM department and having information a seamless efficient delivery mechanism can be made between those supplying raw material and semi-finished to finished goods this will overall gain efficiency in the system of the delivery of the finished goods. saving costs and time for companies.