UPS Case StudyUPS Case StudyLance WilliamsLance Williams

CSUCI MBA ProgramCSUCI MBA ProgramBusiness 550Business 550

UPSUPS Founded in 1907 in Seattle Washington as Founded in 1907 in Seattle Washington as

American Messenger CompanyAmerican Messenger Company Started with just $100 dollars.Started with just $100 dollars. 1919 started service in Oakland, CA1919 started service in Oakland, CA 1930 started service in New York, NY1930 started service in New York, NY 1952 Began to offer Air service (threw 31952 Began to offer Air service (threw 3rdrd party party

airlines)airlines) 1988 launched its own air fleet1988 launched its own air fleet 1999 UPS becomes a public company1999 UPS becomes a public company

Main competitorsMain competitors TransportationTransportation

FedexFedex Deutsche Post (DP)Deutsche Post (DP) United States Post OfficeUnited States Post Office

LogisticsLogistics ExelExel Li & FungLi & Fung

System IntegratorsSystem Integrators AccentureAccenture IBM Global ServicesIBM Global Services

LocationsLocations

Headquarters are now based out of Sandy Headquarters are now based out of Sandy Springs, Georgia (near Atlanta).Springs, Georgia (near Atlanta).

Formerly headquartered in Seattle, WA Formerly headquartered in Seattle, WA and then Greenwhich, CT.and then Greenwhich, CT.

Worldport is their main air hub is in Worldport is their main air hub is in Louisville, KT.Louisville, KT.

The 90’sThe 90’s

Started the decade with $14 billion in Started the decade with $14 billion in revenuerevenue

By 1999 was at $30 billion in revenueBy 1999 was at $30 billion in revenue They realized that they were spending the They realized that they were spending the

majority of their cost on logistics, even majority of their cost on logistics, even though 95% of revenue came from though 95% of revenue came from package deliveries.package deliveries.

UPS – Industrial Engineers UPS – Industrial Engineers

Always employed a large staff including the worlds largest staff of industrial Always employed a large staff including the worlds largest staff of industrial engineers. In the late 90’s they shifted away from the focus being on engineers. In the late 90’s they shifted away from the focus being on

industrial engineers, to information technology specialist. industrial engineers, to information technology specialist.

There was also a focus on “adjacent businesses”, moving away from the There was also a focus on “adjacent businesses”, moving away from the traditional package delivery services.traditional package delivery services.

Out of every dollar spent on logistics, sixOut of every dollar spent on logistics, sixcents is spent on moving small packages. Thecents is spent on moving small packages. Theother 94 cents is the other part of the supplyother 94 cents is the other part of the supply

chain. It’s fulfillment, it’s warehousing andchain. It’s fulfillment, it’s warehousing andit’s the cost of the goods. So we have beenit’s the cost of the goods. So we have been

moving into the other 94 cents.moving into the other 94 cents.

——Mike Eskew, Vice ChairmanMike Eskew, Vice Chairmanand incoming CEOand incoming CEO

LogisticsLogistics

Supply Chain OptimizationSupply Chain Optimization

Inventory OptimizationInventory Optimization

Transportation OptimizationTransportation Optimization

Package EngineeringPackage Engineering

Hazardous MaterialsHazardous Materials

Warehouse DesignWarehouse Design

Business Process ReengineeringBusiness Process Reengineering

Supply Chain OptimizationSupply Chain OptimizationThey use a ten step process to analyze and design a unique solution.They use a ten step process to analyze and design a unique solution. Define project scopeDefine project scope Gather detailed data set Gather detailed data set Establish design assumptions Establish design assumptions Baseline existing supply chain network Baseline existing supply chain network Identify improvement opportunities Identify improvement opportunities Develop scenarios Develop scenarios Run scenarios Run scenarios Rationalize the scenarios Rationalize the scenarios Compare scenarios to each other and the baseline Compare scenarios to each other and the baseline Develop recommendations, present conclusionsDevelop recommendations, present conclusions

Benefits RealizationBenefits RealizationTry to give at least a Try to give at least a 5, 10, or even 15% reduction in supply chain costs resulting in a competitive advantage by 5, 10, or even 15% reduction in supply chain costs resulting in a competitive advantage by having a more efficient, flexible and, responsive supply chain.having a more efficient, flexible and, responsive supply chain.

You could see benefits from the following:You could see benefits from the following: Improved assignment of customers to servicing distribution centers with optimum mode/service use Improved assignment of customers to servicing distribution centers with optimum mode/service use Optimized inventory levels throughout your supply chain Optimized inventory levels throughout your supply chain Mapped supply chain through Mapped supply chain through Data collection/validation process, question/answer sessions Data collection/validation process, question/answer sessions Baseline flow maps, tables Baseline flow maps, tables Baseline costs by typeBaseline costs by typeCustomer "test drive" scenarios prior to significant capital investmentsCustomer "test drive" scenarios prior to significant capital investments

Inventory OptimizationInventory Optimization They will review raw materials and component inventories through internal They will review raw materials and component inventories through internal

channels and nodes and, in some cases, all the way down to the retail shelf. channels and nodes and, in some cases, all the way down to the retail shelf. UPS uses a combination of business analysis, intellectual property, and UPS uses a combination of business analysis, intellectual property, and modeling tools to assist you in developing and defining strategies for modeling tools to assist you in developing and defining strategies for sourcing, transportation, and inventory holding cost.sourcing, transportation, and inventory holding cost.

Analysis and assessment address the following: Analysis and assessment address the following: Inventory levels by product Inventory levels by product Inventory form at each node--raw material, finished goods, WIP Inventory form at each node--raw material, finished goods, WIP Inventory drivers Inventory drivers Service Service Supply and demand uncertainty Supply and demand uncertainty Lead times Lead times Inventory policies Inventory policies Transportation modes Transportation modes Node to node impactsNode to node impacts

Transportation OptimizationTransportation OptimizationThey develop a transportation strategy for your They develop a transportation strategy for your

company resulting in efficient movement of company resulting in efficient movement of products as a result will help keep costs low and products as a result will help keep costs low and customer satisfaction high. customer satisfaction high.

Customer Solutions evaluates multiple Customer Solutions evaluates multiple transportation modes, carriers, routes, shipping transportation modes, carriers, routes, shipping strategies, and support to find the lowest cost strategies, and support to find the lowest cost combination for your companies transportation combination for your companies transportation optimization needs.optimization needs.

Package EngineeringPackage EngineeringMovement along your supply chain can take a toll on your shipments, Movement along your supply chain can take a toll on your shipments,

and your packaging must be able to hold up under various and your packaging must be able to hold up under various conditions. conditions.

UPS's test lab is a place where packages are tested for their UPS's test lab is a place where packages are tested for their endurance under extreme conditions. endurance under extreme conditions.

Packages are tested for: Packages are tested for: CompressionCompression ImpactImpact VibrationVibration ShockShock

The data from these tests help our engineers identify the most The data from these tests help our engineers identify the most appropriate packaging for your product to help prevent damages, appropriate packaging for your product to help prevent damages, minimize reshipments, and keep your customers coming back for minimize reshipments, and keep your customers coming back for more.more.

Hazardous MaterialsHazardous MaterialsUPS has support services to help with the transportation of UPS has support services to help with the transportation of

your hazardous materials. your hazardous materials.

MedicalMedicalPharmaceuticalPharmaceuticalBio-medBio-medToxic WasteToxic Waste

Video - Temperature ShipmentsVideo - Temperature Shipments

Warehouse DesignWarehouse Design

UPS will help redesign your warehouse. UPS will help redesign your warehouse. From layout to function, Customer From layout to function, Customer Solutions can help you design or redesign Solutions can help you design or redesign your distribution center so it works in the your distribution center so it works in the most efficient way as possible to suit your most efficient way as possible to suit your individual needs.individual needs.

Business Process Reengineering Business Process Reengineering

The first step to refining your supply chain is to The first step to refining your supply chain is to understand where improvements can make a understand where improvements can make a significant difference in performance. significant difference in performance.

UPS can help by running a business process UPS can help by running a business process reengineering (BPR) assessment to map the reengineering (BPR) assessment to map the current and desired future state of your supply current and desired future state of your supply chain, evaluate current roles and chain, evaluate current roles and responsibilities, review data to prioritize your responsibilities, review data to prioritize your path forward, and identify areas for improved path forward, and identify areas for improved performance.performance.

CapitalCapital

Financial Services has many tools in which it help with Financial Services has many tools in which it help with assist the clients of UPS. Some of those services assist the clients of UPS. Some of those services include: include:

LendingLending FundingFunding RestructuringRestructuring Insurance servicesInsurance services Credit Card ProcessingCredit Card Processing

ConsultingConsulting

Supply Chain forecasting and planning.Supply Chain forecasting and planning.

Procurement, Production and fulfillment consultingProcurement, Production and fulfillment consulting

Cash Management ConsultingCash Management Consulting

Freight Forwarding/BrokerageFreight Forwarding/Brokerage

Freight TransportationFreight Transportation

Trade Management ServicesTrade Management Services

Material Management Services (JIT fulfillment)Material Management Services (JIT fulfillment)

Mailboxes Ect.Mailboxes Ect.

In 2001 UPS purchased Mailboxes Ect. Giving the In 2001 UPS purchased Mailboxes Ect. Giving the company 4,400 retail locations in which to offer their company 4,400 retail locations in which to offer their services from.services from.

Mail InnovationsMail Innovations

Various levels of shipping services including:Various levels of shipping services including:

GroundGround

AirAir

22ndnd day day

OvernightOvernight

FreightFreight

Hazardous MaterialsHazardous Materials

iShipiShip

Web bases solutions for management to track the Web bases solutions for management to track the shipping services for the entire company. shipping services for the entire company.

They can track by department, employee and even They can track by department, employee and even specific details about packages. specific details about packages.

Allows for one system for filling your shipping Allows for one system for filling your shipping needs. From the desktop to the mail room, all needs. From the desktop to the mail room, all the way to accounting, the information is entered the way to accounting, the information is entered only once because one system is all that is only once because one system is all that is required. required.

Technology InnovationsTechnology Innovations

As UPS says, they used to be a trucking As UPS says, they used to be a trucking company that had technology and now company that had technology and now

they are a technology company, that just they are a technology company, that just happens to have trucks.happens to have trucks.

Video - Technology at UPSVideo - Technology at UPS

ConnectShip ConnectShip

UPS's Customer Solutions focuses on giving your UPS's Customer Solutions focuses on giving your team visibility at any point in your order pipeline team visibility at any point in your order pipeline and across multi-modal or multi-carrier and across multi-modal or multi-carrier environments. They help you streamline your environments. They help you streamline your shipping operation and control shipping costs. shipping operation and control shipping costs.

They will use their vast quantity of technological They will use their vast quantity of technological programs to put together a single shipping programs to put together a single shipping application that has all the tools you are looking application that has all the tools you are looking for and can be implemented in a short time for and can be implemented in a short time frame.frame.

UPS SampleSure UPS SampleSure UPS SampleSure® captures data from the moment you UPS SampleSure® captures data from the moment you

initiate a drug sample order and tracks it all along the initiate a drug sample order and tracks it all along the way. way.

It's designed to help you ship pharmaceutical samples to It's designed to help you ship pharmaceutical samples to licensed practitioners, hospitals, and drug sample licensed practitioners, hospitals, and drug sample

representatives, securely, and reliably. representatives, securely, and reliably.

Vital information for every shipment can be stored for future Vital information for every shipment can be stored for future reconciliation and reporting. Missing shipping or delivery reconciliation and reporting. Missing shipping or delivery

information proactively triggers a follow-up. information proactively triggers a follow-up.

UPS Trackpad UPS Trackpad Trackpad eliminates the need for paper manifests. Trackpad eliminates the need for paper manifests.

It will show package data to show where it is stored for look-up and It will show package data to show where it is stored for look-up and reports. You can even make information available at each desktop reports. You can even make information available at each desktop to minimize "where is my order" calls. Trackpad creates an efficient to minimize "where is my order" calls. Trackpad creates an efficient

information pipeline enabling all users and administrators to manage information pipeline enabling all users and administrators to manage and search for information in seconds rather than minutes. It will and search for information in seconds rather than minutes. It will

also will print existing barcodes or customize new ones on demand.also will print existing barcodes or customize new ones on demand.

UPS Complete View Shipping UPS Complete View Shipping (iShip)(iShip)

Use the Web-based interface and eliminate the need to Use the Web-based interface and eliminate the need to install software on each employee's computer. Along install software on each employee's computer. Along with a customized look and feel, and options that work with a customized look and feel, and options that work for you, your job gets easier with every use. It has the for you, your job gets easier with every use. It has the ability to use multiple views of shipping options to ability to use multiple views of shipping options to request additional bar codes for your shipping label. request additional bar codes for your shipping label.

iShip can create reports detailing:iShip can create reports detailing: TrackingTracking PerformancePerformance ClaimsClaims BillingBilling Brokerage shipment dataBrokerage shipment data

UPS Returns on the Web - Ready UPS Returns on the Web - Ready to Use to Use

UPS Returns on the Web is a ready to use self-service UPS Returns on the Web is a ready to use self-service returns solution that automates the returns process.returns solution that automates the returns process.

This service allows returns to be completed online by the This service allows returns to be completed online by the customer, including the delivery of a UPS return label. customer, including the delivery of a UPS return label.

It can also link your back-end databases to the returns It can also link your back-end databases to the returns process to maximize the use of the return product process to maximize the use of the return product information, reducing costs while improving customer information, reducing costs while improving customer service.service.

UPS – PLD File TypeUPS – PLD File TypeIn 1994 UPS went to a central file type for all packages called a PLD. In 1994 UPS went to a central file type for all packages called a PLD.

It contains all of the packages information such as: It contains all of the packages information such as: departure addressdeparture address destination address destination address sendersender recipient recipient consignee, consignee, product data, product data, package content package content international customs information international customs information

The benefit to this is that there is no need to have multiple systems at The benefit to this is that there is no need to have multiple systems at UPS. The one file type can be used by all the various programs and UPS. The one file type can be used by all the various programs and

communicate seamlessly between all the various departments. communicate seamlessly between all the various departments.

DIADDIAD 1991 DIAD I was released1991 DIAD I was released

1993 DIAD II which could update the date 1993 DIAD II which could update the date basses via cellular transmitters in the vehicles.basses via cellular transmitters in the vehicles.

1999 DIAD III real time uploads and 2 way text 1999 DIAD III real time uploads and 2 way text messaging for immediate pick-upsmessaging for immediate pick-ups

2004 DIAD IIII had Bluetooth, WiFi and GPRS or 2004 DIAD IIII had Bluetooth, WiFi and GPRS or CDMA connectivity options. Also had GPS built CDMA connectivity options. Also had GPS built into the unit for real time tracking.into the unit for real time tracking.

DIAD VDIAD V

DIAD VDIAD VReleased in 2010 Released in 2010

Includes to following upgrades:Includes to following upgrades: First device in industry to switch on-the-fly between First device in industry to switch on-the-fly between

cellular carriers independent of cellular technology. cellular carriers independent of cellular technology. Faster WiFi support (600 mbps) enables larger and richer Faster WiFi support (600 mbps) enables larger and richer

content downloads such as training videos content downloads such as training videos A state-of-the-art color display and microprocessor with A state-of-the-art color display and microprocessor with

expanded memory to support driver training and future expanded memory to support driver training and future applications including navigation applications including navigation

About half the size (3.5”) and weight (1.3 pounds) of DIAD About half the size (3.5”) and weight (1.3 pounds) of DIAD IV. IV.

A color, auto-focus, flash camera could be used to A color, auto-focus, flash camera could be used to enhance proof-of-delivery and to help resolve customer enhance proof-of-delivery and to help resolve customer claims. claims.

An aggressive multi-dimensional imager to decode many An aggressive multi-dimensional imager to decode many symbologies, including UPS linear barcodes, without symbologies, including UPS linear barcodes, without requiring the driver to rotate the DIAD to capture the requiring the driver to rotate the DIAD to capture the barcode.  barcode. 

Before PLD and the DIAD, the driver had to pick up a physical piece of paper from the customers, obtain the signature and validate the number of packages. Now he just scans the packages and uploads the delivery Information with the DIAD, which gets matched with the PLD information from the shipping systems. Our billing is much more accurate and many driver tasks are automatic. There’s a whole driver process that has been eliminated based on the DIAD and PLD technology.

—Phil Nardomarino, VP of IS, Operations Portfolio

The DIAD V has Enabled Real Time TrackingThe DIAD V has Enabled Real Time Tracking

UPS - Redundant ServersUPS - Redundant Servers UPS’s centralized data operations center is in Mahwah, New Jersey

The second data center is in Windward, Georgia to provide redundancy.

Current stats:Current stats:

CEO – Scott DavisCEO – Scott Davis Revenue - $53.105 BillionRevenue - $53.105 Billion Net Income - $3.804 BillionNet Income - $3.804 Billion Employees Employees ≈≈ 425,000 Employees 425,000 Employees Trucks Trucks ≈≈ 95,000 Vehicles 95,000 Vehicles Airplanes Airplanes ≈≈ 238 Aircraft (A300, B747, 238 Aircraft (A300, B747,

B757, B767,MD-11)B757, B767,MD-11)

AwardsAwards

Awarded the Computerworld Smithsonian Award in 1991 and in 1997Awarded the Computerworld Smithsonian Award in 1991 and in 1997

In 2000 In 2000 UPS named America’s and the World’s Most Admired mail, package and freight UPS named America’s and the World’s Most Admired mail, package and freight

delivery company by Fortune Magazine.delivery company by Fortune Magazine. Forbes magazine named UPS company of the year. Forbes magazine named UPS company of the year. Named on Red Herring’s 100 Most Important Companies Named on Red Herring’s 100 Most Important Companies Named in PC weeks Fast-track 100 Named in PC weeks Fast-track 100 MIT Sloan School of Management gave UPS a MIT Sloan School of Management gave UPS a clicks-and-mortar awardclicks-and-mortar award

Any Questions?Any Questions?

Question # 1Question # 1 The latest version of the UPS DIAD is the:The latest version of the UPS DIAD is the:

A) DIAD IA) DIAD I B) DIAD IIIB) DIAD III C) DIAD VC) DIAD V D) DIAD VIIID) DIAD VIII

Question # 2Question # 2Which of the following are services offered under the Which of the following are services offered under the

Logistics division of UPS?Logistics division of UPS?

A) Supply Chain OptimizationA) Supply Chain OptimizationB) Package EngineeringB) Package EngineeringC) Warehouse designC) Warehouse designD) All of the above.D) All of the above.

Question # 3Question # 3UPS was given the following award from the MIT Sloan UPS was given the following award from the MIT Sloan

school of management?school of management?

A) At-a-boy awardA) At-a-boy awardB) Thumbs-up awardB) Thumbs-up awardC) Clicks-and-Mortar award.C) Clicks-and-Mortar award.D) Oscar awardD) Oscar award

The EndThe End