Each chapter in my next book, The New Technology Elite, has a case study or a guest column. The text is going through the publisher’s edits and subject to change. Here are some excerpts from the UPS case study in Chapter 1.
"There will be no more stress, 'cause you've called UPS… THAT’S LOGISTICS."
In the Fall of 2010 UPS launched a global TV ad campaign around the Dean Martin classic "That's Amore," sung in Mandarin, Spanish and English. The lyrics went along with the theme of “We (Heart) Logistics” which replaced UPS’s previous theme of “What can Brown do for you?”
UPS is unabashedly proud of its “brown collar”, “box kicker, label licker”, “logistics is sexy” image. 2010 Revenues of almost $ 50 billion and a history of over a century justifies that pride.
But look under its zillions of bar coded labels, and you see a marvel of technology which keeps a massive data center in Mahwah, NJ and another outside Atlanta, GA humming. 12 mainframes rated at 52000 MIPS, nearly 16,000 servers, and 190,000 workstations are part of its technology landscape. UPS says its package tracking is done by one of the world’s largest DB2 site (the IBM database software). It stores over 10 petabytes of data, It is one of the largest user of mobile minutes in the world. UPS.com, available in 32 languages, handles 48 million tracking requests on a peak day during holiday season. Its technology helps optimize truck routes and famously minimize left turns. It is investing in a variety of fuel - efficient trucks and techniques, such as continuous descent approach, to glide its planes for fuel efficiency and noise reduction.
Scott Davis, the Chairman and CEO says “Often when I’m talking to investors I tell them that we’re about half a transportation company, half a technology company. “
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A delivery information acquisition device (DIAD) is what UPS’s truck drivers use to guide their delivery routes and more. The DIADs help UPS drivers in their brown trucks deliver over 22 million packages a day during the peak holiday season. It was introduced back in 1990, way before the iPhone or the iPad was even conceived of. Now in its fifth generation (in photo), it does many of the things those Apple devices do – and others they don’t. And its battery lasts all day - much longer than most Apple or Android devices.
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A UPS cargo airline pilot lines up with the runway much earlier — sometimes up to 40 miles away from landing — and cuts the thrust once and descends at a consistent rate.
“If the stepped landing is a flight of stairs, then the continuous descent approach is a wheelchair ramp. And since the planes aren’t constantly ramping up and pulling back on the engines, it’s a lot more efficient…..UPS pioneered the approach and found nitrogen oxide emissions dropped by 34 percent below 3,000 feet and engine noise fell by 30 percent within 15 miles of the airport. The planes also saved 250 to 465 pounds of fuel per flight.”
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CIO David Barnes (who happens to also be one of the most respected CIOs in the industry) who started his career at UPS as a part time loader over 30 years ago describes the then and now:
“If you were a pre-loader in the morning, it was a great college part-time job. Get in there before class. But you have to memorize the routes of three drivers. A very painful process because if you misloaded that package and you put 101 Main St. behind something else, the driver had to loop back and that’s not very efficient….We’d done it one way for 90 plus years at the time. We are very good at it - industry leading. How could you do it dramatically different? We threw out all the norms and developed a system called Package Flow Technology. Just one small aspect of that program was to take a fresh look at how you optimize networks. And as a result of optimization routines that we put within that software within the practices at UPS, we were able to reduce our mileage in a given year in the United States alone by 30 million miles - that’s about three million gallons of fuel. And perhaps more important to all of us it represents 32 million tons less of CO2.”
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CIO Barnes again:
“In the Atlanta (data center) we chill the cold water that runs through those chillers at night. We have a 500 gallon tank buried beneath the data center. We chill the water at night. We get lower electricity rates at night and then we use that chilled water during the hot summer days to chill the plant down. It’s very, very environmentally sensitive. It reduces the demand for power generation at peak times during summer days. “
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(Scott Galloway) traded that career (in ERP software) for an investment in a UPS Store franchise. Store 4586 in Tampa, Florida he says, is “simplicity personified compared to the career in ERP.” Simplicity sounds like an oxymoron when you are also talking largest DB2 database in world. Few of the over 4,000 store operators in the US have a technology background like Galloway does. So, UPS strives to keep the processes and technologies simplified and standardized.
In 2001, UPS acquired the Mail Boxes Etc. franchise, rebranded it The UPS Store, and has steadily grown the volume of stores and the range of products in such stores. Besides the mainstay shipping, the stores offer copying and printing services, packaging supplies, mailboxes, notary services and plenty more. The shipping, of course, allows for a wide range of global destinations, multiple air, ground and other paths, zillions of rates, corporate discounts and taxes.
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What if UPS were not as the CEO described “half a transportation company, half a technology company”? Could it be a full fledged technology company?
Think of the DIADs going back to 1990 and its huge leverage with the mountain of mobile minutes it procures – UPS could have introduced an iPhone like device way ahead of Apple. Think of the green innovations – UPS could easily be a cleantech player. Think of the store software – UPS could easily be a software vendor to countless other industries which use franchise models. Think of the various verticals UPS has built niches in.
That’s idle thinking. UPS is clearly comfortable in its skin – as a dominant logistics provider – and where technology fits in that definition. As its new jingle goes
Where technology knows right where everything goes … THAT’S LOGISTICS….Bells will ring and ding and ding and ding… THAT’S LOGISTICS
Photo Credit: UPS
So how come their website is a nightmare and their customer service is a bottomless pit of failure?
Posted by: BrianSJ | October 25, 2011 at 04:54 PM
my experience with them is mostly positive otherwise would not have written a case study.
Posted by: vinnie mirchandani | October 27, 2011 at 09:32 AM