UPS Case Study Lance Williams CSUCI MBA Program

UPS Case Study Lance Williams CSUCI MBA Program Business 550

UPS Founded in 1907 in Seattle Washington as American Messenger Company Ø Started with just $100 dollars. Ø 1919 started service in Oakland, CA Ø 1930 started service in New York, NY Ø 1952 Began to offer Air service (threw 3 rd party airlines) Ø 1988 launched its own air fleet Ø 1999 UPS becomes a public company Ø

Main competitors Ø Transportation l l l Ø Logistics l l Ø Fedex Deutsche Post (DP) United States Post Office Exel Li & Fung System Integrators l l Accenture IBM Global Services

Locations Ø Headquarters are now based out of Sandy Springs, Georgia (near Atlanta). Ø Formerly headquartered in Seattle, WA and then Greenwhich, CT. Ø Worldport is their main air hub is in Louisville, KT.

The 90’s Ø Started the decade with $14 billion in revenue Ø By 1999 was at $30 billion in revenue Ø They realized that they were spending the majority of their cost on logistics, even though 95% of revenue came from package deliveries.

UPS – Industrial Engineers 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 industrial engineers, to information technology specialist. There was also a focus on “adjacent businesses”, moving away from the traditional package delivery services.

Out of every dollar spent on logistics, six cents is spent on moving small packages. The other 94 cents is the other part of the supply chain. It’s fulfillment, it’s warehousing and it’s the cost of the goods. So we have been moving into the other 94 cents. —Mike Eskew, Vice Chairman and incoming CEO

Logistics Ø Supply Chain Optimization Ø Inventory Optimization Ø Transportation Optimization Ø Package Engineering Ø Hazardous Materials Ø Warehouse Design Ø Business Process Reengineering

Supply Chain Optimization They use a ten step process to analyze and design a unique solution. Ø Ø Ø Ø Ø Define project scope Gather detailed data set Establish design assumptions Baseline existing supply chain network Identify improvement opportunities Develop scenarios Run scenarios Rationalize the scenarios Compare scenarios to each other and the baseline Develop recommendations, present conclusions Benefits Realization Try to give at least a 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. You could see benefits from the following: Improved assignment of customers to servicing distribution centers with optimum mode/service use Optimized inventory levels throughout your supply chain Mapped supply chain through Data collection/validation process, question/answer sessions Baseline flow maps, tables Baseline costs by type Customer "test drive" scenarios prior to significant capital investments

Inventory Optimization 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. UPS uses a combination of business analysis, intellectual property, and modeling tools to assist you in developing and defining strategies for sourcing, transportation, and inventory holding cost. Ø Analysis and assessment address the following: l l l l l Inventory levels by product Inventory form at each node--raw material, finished goods, WIP Inventory drivers Service Supply and demand uncertainty Lead times Inventory policies Transportation modes Node to node impacts

Transportation Optimization They develop a transportation strategy for your company resulting in efficient movement of products as a result will help keep costs low and customer satisfaction high. Customer Solutions evaluates multiple transportation modes, carriers, routes, shipping strategies, and support to find the lowest combination for your companies transportation optimization needs.

Package Engineering Movement along your supply chain can take a toll on your shipments, and your packaging must be able to hold up under various conditions. UPS's test lab is a place where packages are tested for their endurance under extreme conditions. Packages are tested for: l l Compression Impact Vibration Shock The data from these tests help our engineers identify the most appropriate packaging for your product to help prevent damages, minimize reshipments, and keep your customers coming back for more.

Hazardous Materials UPS has support services to help with the transportation of your hazardous materials. Medical Pharmaceutical Bio-med Toxic Waste Video - Temperature Shipments

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

Business Process Reengineering The first step to refining your supply chain is to understand where improvements can make a significant difference in performance. UPS can help by running a business process reengineering (BPR) assessment to map the current and desired future state of your supply chain, evaluate current roles and responsibilities, review data to prioritize your path forward, and identify areas for improved performance.

Capital Financial Services has many tools in which it help with assist the clients of UPS. Some of those services include: Ø Ø Ø Lending Funding Restructuring Insurance services Credit Card Processing

Consulting Ø Supply Chain forecasting and planning. Ø Procurement, Production and fulfillment consulting Ø Cash Management Consulting

Freight Forwarding/Brokerage Ø Freight Transportation Ø Trade Management Services Ø Material Management Services (JIT fulfillment)

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

Mail Innovations Various levels of shipping services including: Ø Ground Ø Air Ø 2 nd day Ø Overnight Ø Freight Ø Hazardous Materials

i. Ship Web bases solutions for management to track the shipping services for the entire company. They can track by department, employee and even specific details about packages. Allows for one system for filling your shipping needs. From the desktop to the mail room, all the way to accounting, the information is entered only once because one system is all that is required.

Technology Innovations As UPS says, they used to be a trucking company that had technology and now they are a technology company, that just happens to have trucks. Video - Technology at UPS

Connect. Ship UPS's Customer Solutions focuses on giving your team visibility at any point in your order pipeline and across multi-modal or multi-carrier environments. They help you streamline your shipping operation and control shipping costs. They will use their vast quantity of technological programs to put together a single shipping application that has all the tools you are looking for and can be implemented in a short time frame.

UPS Sample. Sure® captures data from the moment you initiate a drug sample order and tracks it all along the way. It's designed to help you ship pharmaceutical samples to licensed practitioners, hospitals, and drug sample representatives, securely, and reliably. Vital information for every shipment can be stored for future reconciliation and reporting. Missing shipping or delivery information proactively triggers a follow-up.

UPS Trackpad eliminates the need for paper manifests. 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 to minimize "where is my order" calls. Trackpad creates an efficient information pipeline enabling all users and administrators to manage and search for information in seconds rather than minutes. It will also will print existing barcodes or customize new ones on demand.

UPS Complete View Shipping (i. Ship) Use the Web-based interface and eliminate the need to install software on each employee's computer. Along with a customized look and feel, and options that work for you, your job gets easier with every use. It has the ability to use multiple views of shipping options to request additional bar codes for your shipping label. i. Ship can create reports detailing: Ø Tracking Ø Performance Ø Claims Ø Billing Ø Brokerage shipment data

UPS Returns on the Web - Ready to Use Ø UPS Returns on the Web is a ready to use self-service returns solution that automates the returns process. Ø This service allows returns to be completed online by the customer, including the delivery of a UPS return label. Ø It can also link your back-end databases to the returns process to maximize the use of the return product information, reducing costs while improving customer service.

UPS – PLD File Type In 1994 UPS went to a central file type for all packages called a PLD. It contains all of the packages information such as: Ø Ø Ø Ø departure address destination address sender recipient consignee, product data, package content international customs information 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 communicate seamlessly between all the various departments.

DIAD Ø 1991 DIAD I was released Ø 1993 DIAD II which could update the date basses via cellular transmitters in the vehicles. Ø 1999 DIAD III real time uploads and 2 way text messaging for immediate pick-ups Ø 2004 DIAD IIII had Bluetooth, Wi. Fi and GPRS or CDMA connectivity options. Also had GPS built into the unit for real time tracking.

DIAD V

DIAD V Released in 2010 Includes to following upgrades: l l l First device in industry to switch on-the-fly between cellular carriers independent of cellular technology. Faster Wi. Fi support (600 mbps) enables larger and richer content downloads such as training videos A state-of-the-art color display and microprocessor with expanded memory to support driver training and future applications including navigation About half the size (3. 5”) and weight (1. 3 pounds) of DIAD IV. A color, auto-focus, flash camera could be used to enhance proof-of-delivery and to help resolve customer claims. An aggressive multi-dimensional imager to decode many symbologies, including UPS linear barcodes, without requiring the driver to rotate the DIAD to capture the barcode.

Ø 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. l —Phil Nardomarino, VP of IS, Operations Portfolio

The DIAD V has Enabled Real Time Tracking

UPS - Redundant Servers Ø Ø UPS’s centralized data operations center is in Mahwah, New Jersey The second data center is in Windward, Georgia to provide redundancy.

Current stats: Ø CEO – Scott Davis Ø Revenue - $53. 105 Billion Ø Net Income - $3. 804 Billion Ø Employees ≈ 425, 000 Employees Ø Trucks ≈ 95, 000 Vehicles Ø Airplanes ≈ 238 Aircraft (A 300, B 747, B 757, B 767, MD-11)

Awards Ø Awarded the Computerworld Smithsonian Award in 1991 and in 1997 Ø In 2000 l UPS named America’s and the World’s Most Admired mail, package and freight delivery company by Fortune Magazine. Forbes magazine named UPS company of the year. Named on Red Herring’s 100 Most Important Companies Named in PC weeks Fast-track 100 l MIT Sloan School of Management gave UPS a clicks-and-mortar award l l l

Any Questions?

Question # 1 Ø The latest version of the UPS DIAD is the: Ø A) DIAD I Ø B) DIAD III Ø C) DIAD V Ø D) DIAD VIII

Question # 2 Which of the following are services offered under the Logistics division of UPS? A) Supply Chain Optimization B) Package Engineering C) Warehouse design D) All of the above.

Question # 3 UPS was given the following award from the MIT Sloan school of management? A) At-a-boy award B) Thumbs-up award C) Clicks-and-Mortar award. D) Oscar award

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