Jack Levis Director of Process Management

Package Flow Technologies

The Road to Optimization

2

The Road to Optimization About UPS – Founded in Seattle, Wa - 1907

– 400,600 employees

– 200+ countries and territories

– 95,244 package cars, vans, tractors, motorcycles, etc.

– 216 owned / 296 chartered (9th largest airline)

– Drive 2.5+ billion miles / year (U.S. alone)

– Daily flight segments – 936 U.S. / 755 Int’l

– 15.1 million packages a day

– 7.9 million daily customers

– UPS / Supply Chain & UPS Freight

– Winner 2011 Gartner BI Intelligence Award

3

The Road to Optimization Stated Operations Vision

– Use Historical and real time

information to predict future patterns

– Plan from the forecast

– Optimize the plans to be as efficient

as possible

– Simplify the operations so that the

plans can be efficiently implemented

– Analyze actual results and feed back

to forecast and planning tools

4

The Road to Optimization Analytics

Analytics facilitates the realization of business objectives through the reporting of data to analyze trends and the creation predictive models for forecasting and

optimizing business processes -

Optimization

Simulation

Pre

scri

pti

ve

An

aly

tics

Pre

dic

tive

An

aly

tics

Data Modeling

Descri

pti

ve

An

aly

tics

Visualization

Regression

Data Mining

Predictive

modeling

What

happened?

What could

happen?

What is best

action /

outcome?

Prepares and analyzes historical data

Identifies patterns from samples for reporting of trends

Predicts future probabilities and trends

Finds relationships in data not readily apparent with traditional analysis

Evaluates and determines new ways to operate

Targets business objectives

Balances all constraints

2010

5

The Road to Optimization The Chain of Understanding

Org

an

iza

tio

na

l M

atu

rity

Low

High

Optimization

Simulation

Regression

Visualization

Data Modeling

Predictive

Modeling

Data Mining

Standard & Ad

hoc Reports

Query / Drill

Down

Ad Hoc

Foundational

Competitive

Differentiating

Breakaway

Spreadsheets and Extracts

Data Warehouses

Master Data Management

Scorecards

Dashboards

Predictions

Contextual Business Rules

Prescriptive, Situational, Real

Time, Pattern Based

Strategies

Data

Need

s

Medium

Very High

Pre

scri

pti

ve

An

aly

tics

Pre

dic

tive

An

aly

tics

Descri

pti

ve

An

aly

tics

7

The Road to Optimization Evolution of the DIAD

Today 1991 The DIAD has changed from an acquisition device

to an assistant for better decision making

8

The Road to Optimization Evolution of the DIAD

Tomorrow

DIAD V

Today 1991 The DIAD has changed from an acquisition device

to an assistant for better decision making

9

Combined the information about each shipment to analyze service

or cost deficiencies

10

The Road to Optimization How do I Affect Change??

Package Flow

Technologies

Customer

Address (USPS)

Geography (Map)

UPS Proprietary

Regulatory

GPS

Vehicle

Service

12

The Road to Optimization Knowledge Barrier

13

The Road to Optimization Knowledge Barrier

10- 205 10- 245 10- 145

10- 005

10- 140 10- 200 10- 320

10- 240

10- 325 10- 365 10- 455

10- 405

10- 450 10- 600 10- 400

10- 360

1118

To reduce driver time, packages are

loaded in a general order of delivery

14

The Road to Optimization Breaking the Knowledge Barrier

15

Made EDI with

customers a priority

16

The Road to Optimization Preload Assist Label (PAL)

Sortation

Handling

Delivery

Vehicle

Shelf

Placement

Commit

Time

17

The Road to Optimization Knowledge Barrier

3000 4000 2000

1000

1999 2999 4999

3999

5000 6000 8000

7000

7999 8999 6999

5999

1118

Training time reduced from

three weeks to three hours

1118

18

The Road to Optimization Supporting one to one Business

Address Information Commit

Time

Additional Activity

(COD, signature, etc.)

Number of Packages

Shelf

Location

19

The Road to Optimization Supporting one to one Business

Street# Street Name Type Dir Suf

PLANDOME RD

City ZIP Code Unit

CLARKVILLE 99001 01011201

Consignee Room Flr

Note:1 CDS N

Completed Stop = 16 Prerec Stop = 0

SplCnts PreComm / -

Edit Dup Notes PreRec Ovrride

Street # Street NameAdult Signature Required

3924 PLANDOME RD

------------------------------------------

1 Col Amt Ship # ID# Remark

1 #000000 675 CAL

Edit Dup Ship#<6 PreRec Ovrride

PkgInfo NonDel Notes Deliver

Park at Dock OnlyMailroom

Check in with SecurityUse freight elevator

No Indirect/Reroute/LA

Edit Dup Ship#<6 PreRec Ovrride

20

The Road to Optimization New Geographic Data

21

The Road to Optimization New Geographic Data

22

The Road to Optimization New Geographic Data

23

The Road to Optimization Supporting one to one Business

Street# Street Name Type Dir Suf

PLANDOME RD

City ZIP Code Unit

CLARKVILLE 99001 01011201

Consignee Room Flr

Note:1 CDS N

Completed Stop = 16 Prerec Stop = 0

SplCnts PreComm / -

Edit Dup Notes PreRec Ovrride

Street # Street NameAdult Signature Required

3924 PLANDOME RD

------------------------------------------

1 Col Amt Ship # ID# Remark

1 #000000 675 CAL

Edit Dup Ship#<6 PreRec Ovrride

PkgInfo NonDel Notes Deliver

Park at Dock OnlyMailroom

Check in with SecurityUse freight elevator

No Indirect/Reroute/LA

Edit Dup Ship#<6 PreRec Ovrride

Every

delivery

at the

right

location

24

Full Integration Prediction / Analysis / Planning

25

Predictive decisions Not where you are… but will be..

Current

Location

Completed

Work Remaining

Work

Current

Location

26

Brown Turning Green Telematics Data

E + I < E Energy Plus Information =

Less Energy

Analyzing, designing, and

implementing information systems

to increase energy efficiency

•Collection and analysis of energy data sets

•Optimization of energy distribution networks

•Optimization of energy consumption systems

27

Brown Turning Green Telematics Data

Seat Belt Sensor

Bulkhead Sensor

Reverse Sensor

28

Telematics Analysis Closing the loop

29

Telematics Analysis Predictive Failure Analysis

0 500 1,000 1,500 2,000 2,500

664463

664452

664049

664034

663547

663502

663481

663314

662783

661578

140120

134425

134416

134404

134370

134356

August 28 - Sep 1

Engine Speed to Road Speed - MBENZ - Roswell

6 8 10 12 14battery voltage

655694

655692

655691

655689

655444

655157

655146

655143

655141

136118

136116

136111

130079

August 28 - Sep 1

Battery Voltage - T444E - 1995 - 1996 - Oregon Ave.

10

20

30

40

50

01 Oct 06 01 Nov 06 01 Dec 06 01 Jan 07date

avgofpercent engine load engload_ucl

Percent Engine Load: Vehicle 131370

50 100 150 200 250engine coolant temperature

176865137939137434137431136215135874135613135608135566135437135435132722132688131377131373131371131370131343131337131332131330131307131304130659130506115903115901107441

5/21 - 5/25

Coolant Temperature

910

11

12

13

14

ba

ttery

volta

ge

21 May 07 22 May 07 23 May 07 24 May 07 25 May 07dtdatetime

battery voltage battery voltage

5/21-5/25

138025

910

11

12

13

14

ba

ttery

volta

ge

21 May 07 22 May 07 23 May 07 24 May 07 25 May 07dtdatetime

battery voltage battery voltage

5/21-5/25

655675

Voltage Draw

Voltage Recovery

Hea

lth

yS

usp

ect

910

11

12

13

14

ba

ttery

volta

ge

21 May 07 22 May 07 23 May 07 24 May 07 25 May 07dtdatetime

battery voltage battery voltage

5/21-5/25

138025

910

11

12

13

14

ba

ttery

volta

ge

21 May 07 22 May 07 23 May 07 24 May 07 25 May 07dtdatetime

battery voltage battery voltage

5/21-5/25

655675

Voltage Draw

Voltage Recovery

Hea

lth

yS

usp

ect

© Copyright 2010 United Parcel Service of America, Inc. UPS, the UPS brandmark and the color brown are trademarks of United Parcel Service of America, Inc. All rights reserved.

Deployment

32

The Road to Optimization Implementing Change

1,000 buildings / 60,000 Drivers

• Trained all management

• Roles and Responsibilities

• “Vital Stats” defined and monitored

• Set up proactive alerts, support, and monitoring

– If system fails service is impacted!!

• Updated EVERY UPS procedure

33

Delivery Methods

© Copyright 2010 United Parcel Service of America, Inc. UPS, the UPS brandmark and the color brown are trademarks of United Parcel Service of America, Inc. All rights reserved.

Results

35

The Road to Optimization Results

36

The Next Step – Getting to

37

The Next Step – Getting to

Data will need to be even smarter

38

The Road to Optimization Real Time Optimization

39

The Road to Optimization UPS Smart Navigation

40

The Road to Optimization UPS Smart Navigation

41

The Road to Optimization Breaking the Bottleneck

42

The Road to Optimization Breaking the Bottleneck

43

The Road to Optimization Breakaway Results

44

The Road to Optimization Breakaway Results

45

The Road to Optimization Breakaway…….

Average nearly 20 years of service

• ORION showed new ways to deliver area

• Mileage reduction

• Real time optimization

– Clairvoyance

• Strong management and metrics required

46

The Road to Optimization Best Practices

• Never underestimate data needs / and availability

• Worry about usability • Focus on implementation

• Ensure training is in place

• Update methods and processes

• Create checklists and milestones

• Simplify execution

• Have a goal • Create metrics

• Measure progress / benefits

• Someone must own results – Every project needs an enforcer

47

Taking the Lead in London Sustainable Logistics for the London 2012 Games

© Copyright 2010 United Parcel Service of America, Inc. UPS, the UPS brandmark and the colour brown

are registered trademarks of United Parcel Service of America, Inc. All rights reserved.

Thank You

www.ups.com/sustainability

49