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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