Ups Competes Globally with Information Technology

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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 100 years to become the world’s largest
ground and air package delivery company. It’s a
global enterprise with over 408,000 employees,
96,000 vehicles, and the world’s ninth largest airline.
Today, UPS delivers more than 15 million packages and documents each day in the United States and more than 200 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. 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
“340 Methods” 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 one of
the wireless networks cell phones rely on. As soon as
the driver logs on, his or her day’s route is downloaded onto the handheld. The DIAD also automati-

cally 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 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.
Anyone with a package to ship can access the UPS
Web site to check delivery routes, calculate shipping
rates, determine time in transit, print labels, schedule a pickup, and track packages. 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...
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