Case Study: UPS Competes Globally With Information Technology

What are the inputs, processing, and outputs of UPS's package tracking system?

Inputs

• The inputs include package information, customer signature, pickup, delivery, time-card data, current location (while en route), billing and customer clearance documentation.

Processing

• The data is transmitted to a central computer and stored for retrieval. Data is also reorganized so that it can be tracked by customer account, date, driver, and other criteria.

Outputs

• The outputs include pickup and delivery times, location while en route, and package recipient. The outputs also include various reports, such as all packages for a specific account or specific driver or route, as well as summary reports for management.

What technologies are used by UPS? How are these technologies related to UPS's business strategy?

Technologies include 

• handheld computers (DIADs)

• barcode scanning systems,

• wired and wireless communications networks, desktop computers

• UPS’s central computer (large mainframe computers)

• storage technology for the package delivery data.

• Telecommunications for transmitting data, pagers, cellular phone networks

• Many different pieces of UPS in-house package tracing software for tracking packages,

• calculating fees, maintaining customer accounts and managing logistics, as well as

• software to access the World Wide Web.

 

Strategy use 

• UPS has used the same strategy for over 90 years. Its strategy is to provide the “best service and lowest rates.” 

• One of the most visible aspects of technology is the customer’s ability to track his/her package via the UPS Web site. 

• However, technology also enables data to seamlessly flow throughout UPS and helps streamline the workflow at UPS. 

• The technology described in the scenario enables UPS to be more competitive, efficient, and profitable. 

• The result is an information system solution to the business challenge of providing a high level service with low prices in the face of mounting competition.

 

What strategic business objectives do UPS's information systems address?

 

Operational excellence:

UPS has maintained leadership in small-package delivery services despite stiff competition from FedEx and the U.S. Postal System by investing heavily in advanced information technology.

 

Customer and supplier intimacy:

Customers can download and print their own labels using special software provided by UPS or by accessing the UPS Web site. 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.

 

New products, services, and business models:

In June 2009 UPS launched a new Web-based Post Sales Order Management System (OMS) that manages global service orders and inventory for critical parts fulfillment. The system enables high-tech electronics, aerospace, medical equipment, and other companies anywhere in the world that ship critical parts to quickly assess their critical parts inventory, determine the most optimal routing strategy to meet customer needs, place orders online, and track parts from the warehouse to the end user

 

Improved decision making:

Special software creates 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.

  

Competitive advantage:

UPS is leveraging its decades of expertise managing its own global delivery network to manage logistics and supply chain activities for other companies. It's Supply Chain Solutions division provides a complete bundle of standardized services to subscribing companies at a fraction of what it would cost to build their own systems and infrastructure

 

What would happen if UPS's information systems were not available?

UPS might not be able to compete effectively without technology. If the technology were not available, then UPS would, as it has through most of its history, attempt to provide that information to its customers, but at higher prices.

From the customers’ perspective, these technologies provide value because they help customers complete their tasks more efficiently. Customers view UPS’s technology as value-added services as opposed to increasing the cost of sending packages.