United Parcel Service:Business Transformation through Information Technology
by Karen Seiberlich
BUS 550Contemporary Firm
03 May 2011
Contents• Background• Business organization• Business Decisions• Technology• Capabilities• Challenges & Risks• Opportunities• Business solutions• Services• Questions
Background• 1907: Jim Casey & Claude Ryan - American Messenger Company, Seattle, WA
– 24/7 service by foot or bicycle– U.S. Post Office largest customer –special delivery
• 1918 – Department store “common carrier”• 1922 – Acquired Los Angeles company
– Accepted checks– Multiple try delivery & scheduled pick-ups
• 1924 – 1st package handling conveyor belt• 1930 – “United Parcel Service” - U.S. consolidation
• Pullman brown • 1st mechanical package sorting
• 1953 – Air carrier service• 1975 - Interstate Commerce Commission grants permission• 1981 – 1982 - 1st aircraft; Louisville, Kentucky hub• 1988 – Operate own aircraft• 1994 – UPS.com• 1999 – Initial Public Offering/New York Stock Exchange
“Best service and lowest rates"
Revenue Segments
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9ODUzODd8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Revenue Recovery
http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9ODUzODd8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
Organization
Data Centers
Warehousing
International shipping•220 countries•2,773 Operating facilities
•2010 -3.94 billion deliveries•61,775 - Retail access
Shipping•1,757 flights/day•99,795 Trucks
Customers8.5 million
Customer ServiceCustomer order•Employees- 400,600
1914 alternative fuel vehicles
Delivery
1 million data transactions/ minute
Worldport Server Room
IT Business Decisions• 1986-1996-invested $11 billion in IT• Centralized and standardized IT• Subsidiaries managed like start-up companies • Information systems – I year to develop; 6 month release cycles• UPS & Genzyme: Pharmaceutical serialization initiative
– Commitment to patient safety & investment in future: "bottle" traceability • Hired IT managers with > 10 years diverse experience• Many small servers for back-up • 2 data centers back up each other• Ensure source of electricity; back-up diesel generators• UPS Mobile App for iPhone – Shipping labels
1 Mainframe118 IS FTE’s
IT Technology
1
•6 Mainframes•1200 MIPS•300 minicomputers•39,500 PCs•600 LANs•77,400 DIADs•I data center•4 Terabyte data•2000 IS FTEs
•15 Mainframes•19,400 MIPS•906 servers•245,000 PCs•2,700 LANs•91,000 DIADs•2 data centers•176 Terabyte data•5,000 IS FTEs
•12 Mainframes•51.898 MIPS•191,052 laptops•15,727 servers•108,938 DIADs•2 data centers•10 Petabytes data•4,442 IS FTEs
1985
1992 2001 2011
IT Budget
Technology Evolution
•Driver communication
•Wireless network
•Hand-held device
•Driver timesheet
•Delivery info•Int’l shipment• process system
•PLD – full-tracking
•Upload via cellular networks
•1995: Web tracking
•1996: Wearable scanner
•1997: Interactive voice response
•Real time data upload
•2-way text messaging
•SmartPhone for small customers
•PFS – intelligent packaging/routes
•6 Online tools
•Device signatures
•Eliminate 59 million sheets of paper
•Can jump cellular carriers
•Pictures: proof of delivery
•2-D imaging
•Clear signature
•Lighter weight
Terminal II1989 DIAD I1991 DIAD II1993 DIAD III1999 DIAD IV2005 DIAD V2011
Package Level Detail (PLD) • Production Flow System (PFS)
IT & Green Awards
Challenges & Risks• Competition • Integrating subsidiaries• $ Gasoline, Diesel, & Jet Fuel• Security breaches• Greenhouse gas emissions• Weather• Exchange rates - British £, Canadian $, € • Emerging markets• Strikes – Teamsters
http://en.wikipedia.org/wiki/File:Venezia0750UPS.jpg
Opportunities
• Customer Service• Better staff relationships with managemetn• 2012 London Olympics
– London Olympic Logistics Center– Paralympics Games– Official Logistics and Express Delivery– Supporter of 2012 Olympics
Extensive Website
http://www.ups.com/content/us/en/contact/index.html?WBPM_lid=/homepage/ct1.html_mod_qlk
Sustainable Solutions Alternative fuel technologies/options:1. 1980s: Compressed Natural Gas &
propane 2. 1998:Hybrid-electric vehicles3. 2004 UPS - All-electric vehicles in
and then Liquefied Natural Gas (LNG) tractors
4. Korea - Liquefied Petroleum Gas 5. Experimented with hydraulic-hybrid
& Hydrogen fuel cell technologies6. Bicycles
Recognition• 2000-Fortune named “most admired” in its industry• 2000-Forbes Magazine – one of Top 10 most reputable
companies• United Way – UPS and employees - first company to donate
more than $1 billion • President Obama asked UPS to serve on Export Council with
administration and business leaders• Goal: Double U.S. exports in next 5 years
Technology is the key to progress
Adjacent Business SectorsCompass® Business solutions and tips• Customers with missed sales opportunities
– UPS international fees added at website• International shipment delays
– UPS redesign supply chain• Custom delays into Canada
– Discount Ramps.com – Virtual presence in Canada– Reduce brokerage fees, simplify process
UPS Capital Services• Distribution Financing• First International Bank-gov’t guaranteed
export/import financing• Glenlake Insurance-loss protection choices• Global Trade Finance-protect & expedites export
services-• COD Enhancements – direct from banks• Equipment leasing-telecom systems, business
equip.
UPS Airlines• One of the world’s largest airlines• More than 500 owned and chartered aircraft• 1,757 daily flight segments• 2800 pilots• Access 766 airports across the globe
Japan Tsunami Relief
http://www.pressroom.ups.com/Video/Japan+Earthquake+Relief+video?srch_pos=3&srch_phr=Haiti+and+earthquake
Haiti Relief • January 2010
http://www.pressroom.ups.com/Video/UPS+Trackpad+Helps+with+Relief+in+Haiti
UPS Donates $1 Million to Haitian Earthquake Relief
• $500,000 cash - American Red Cross / CARE / UNICEF & other long-term relief organizations
• $500,000 – shipment services of needed supplies
Discussion Questions
• How can UPS improve customer service?• What is the biggest obstacle in doubling exports in 5 years? • How can UPS develop a stronger brand reputation?• Have you ever observed their trucks speeding?• What can UPS do to market luggage shipping?
Question• Who asked UPS to work with the administration and business
leaders and serve on the Export Council?a) Al Gore
b) President Obama
c) Duke of Cambridge
d) Hillary Clinton
http://www.google.com/search?q=al+gore&hl=en&rls=com.microsoft :*&prmd=ivnsubol&source=univ&tbm=nws&tbo=u&sa=X&ei=Hbi_TbXYO-bjiALUraWdAw&ved=0CEkQqAI&biw=761&bih=397
http://en.wikipedia.org/wiki/Hillary_Rodham_Clinton
http://en.wikipedia.org/wiki/Duke_of_Cambridge
http://en.wikipedia.org/wiki/Barack_Obama
Works Cited• Ross, Jeanne, Draper, Will, Kang Paul, Schuler, Seth, Gozum, Ozge, and Tolle, Jessica, United Parcel Service: Business
Transformation through Information Technology”, MIT Sloan School of Management, September 2002• 2010 Annual Report http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9ODUzODd8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1 • UPS and Genzyme: A Pioneering Drug Serialization Initiative
http://www.pressroom.ups.com/Case+Study/UPS+and+Genzyme%3A+A+Pioneering+Drug+Serialization+Initiative • UPS And Honeywell Set Stage for Next High-Tech Handheld for UPS Drivers
http://www.businesswire.com/news/home/20100113005851/en/UPS-Honeywell-Set-Stage-High-Tech-Handheld-UPS • https://www.upsbrandexchange.com/journalistHome.awsp • http://www.pressroom.ups.com/Video/Japan+Earthquake+Relief+video?srch_pos=3&srch_phr=Haiti+and+earthquake • http://www.ups.com/content/us/en/contact/index.html?WBPM_lid=/homepage/ct1.html_mod_qlk • http://www.investors.ups.com/phoenix.zhtml?c=62900&p=irol-homeprofile#strengths • http://www.pressroom.ups.com/Video/UPS+Trackpad+Helps+with+Relief+in+Haiti • http://en.wikipedia.org/wiki/File:Venezia0750UPS.jpg • http://www.google.com/search?q=al+gore&hl=en&rls=com.microsoft:*&
prmd=ivnsubol&source=univ&tbm=nws&tbo=u&sa=X&ei=Hbi_TbXYO-bjiALUraWdAw&ved=0CEkQqAI&biw=761&bih=397
• http://en.wikipedia.org/wiki/Hillary_Rodham_Clinton • http://en.wikipedia.org/wiki/Barack_Obama • http://en.wikipedia.org/wiki/Duke_of_Cambridge
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