Case study selected: โUnited Parcel Services (UPS): delivering packages and E-commerce solutions ", ad opera of the center for information systems (MIT).
Introduction
With its 15 million packages per day, UPS is the world leader in parcel transport.
The company, born in 1907 under the name American Messenger Company, has grown over the century its reputation as a reliable and efficient transport company, until at the threshold of 2000 it was found to be the largest transport organization on the planet, with around 13 million parcels transported daily to more than 200 countries.
In recent years it has extended its business far beyond the "simple" transport of objects: investing in research and exploiting the potential of IT, it has introduced a multitude of additional services.
The technology of the company was not a choice dictated by precise priorities. The introduction in the 80s by the competitors of highly technological services did not arouse any desire for emulation in management and there was indeed a reluctance to spend more than 1% of the annual budget on IT systems. It was only a change of leadership in 1986 that brought about the beneficial change of course, which led to massive investments and the creation of an extensive service park. Between 1986 and 1996 UPS poured more than $ 11 million into IT, growing its IT professional base from 100 to over 4000.
This decision had repercussions on the systems, on the services offered to clients, the optimization of activities, relations with partners and personnel management.
System
In the hot start of IT investments, UPS immediately built a facility in New Jersey dedicated to data storage and processing data collected; this complex should have played the role of centralized all facts and information concerning the organization, providing a single point of access for all branches of the company.
The central db was essential first of all to ensure the tracking capabilities, that is, the knowledge at every moment of the location of a package. This innovation, introduced by the competition, was very welcome by the clients. UPS therefore considered it imperative to invest in
a capillary network that allowed this flow of information: the network, which took the name of UPS Net, was launched in 1990.
Il it had to contain not only the information on the packages (an already enormous quantity, about 200 attributes for each item sent) but also on the other aspects: logistics, data collected of the clients and staff. This management of data collected impacted UPS core business, its organizational methods and collaboration methods.
Once a solid infrastructure was ensured, UPS began to tread its hand on the technology of its businesses. In 1993 it introduced DIAD, an automatic package recognition system which, in real time, recognizes the package and updates the with the operations carried out on it (departure, transport, collection, etc.). DIAD consists of a mini-terminal, currently based on Windows Mobile, date under management to anyone handling the packages. The terminal is equipped with the state of the art of connectivity (the fourth release, currently in use, has Wi-Fi and GPRS, but also bluetooth and infrared to be able to connect to computers and printers) and of course a GPS, to help drivers. in the optimization of the routes and to update the current position of the package. The analysis of the information transmitted by the DIADs brings out a plethora of data collected that the company uses to profile i clients, to optimize the flow of shipments and to put into practice an activity based costing. Also, come on data collected any "flaws" or peculiarities of the design of the shipments emerge clients, which allows UPS to offer consultancy and re-engineering services. The optimization of shipments, the classic field of operational research applied to information technology, is the master of UPS activities.
The explosion of the worldwide web in the mid-90s opened up new opportunities, resulting in the introduction of a vast range of services based on Internet (UPS Online Tools). It was one of the first companies to have its own website and, long before the theorization of the so-called E-commerce, sensed the potential of placing himself between producers and consumers, cutting out retailers and distributors from the chain.
All IT systems have been developed internally at UPS. Many applications have not remained the exclusive prerogative of the company - for example, the aforementioned tracking or cost estimate systems updated in real time across the planet - but have been made available to clients: anyone who wants can integrate these applications into their software, even in ERP systems. UPS provides the APIs and documentation, asking only for brand maintenance.
With this change in application target in mind - from internal use to customer-oriented development - the IT departments have begun to develop as interoperable and modular as possible:
systematic adoption of open standards has made UPS a winner in the first respect, and nowadays, many companies easily incorporate UPS functionality into their software;
modularity facilitated reuse and updating of code, accelerating improvements and new implementations. Unfortunately, budget constraints put a damper on this race. This aspect will be better seen in the organization paragraph.
The highly centralized structure of the systems described so far was very prone to abrupt interruptions in case of disaster; a company like UPS cannot afford downtimes. For this reason, in 1996 the chief information officer decided to introduce a data center parallel to Atlanta that replicated all operations, ensuring the desirable business continuity. The robustness and efficiency of UPS are so high that the company can guarantee shipments in very short time windows (even one hour for critical services).
Among the relevant technological innovations of recent years, UPS has introduced RFID tagging of its special packages, a choice that has speeded up the recognition procedures and solved the problem of reading visual tags (such as barcodes) on irregularly shaped packages. In addition, a voice recognition system (UPS Interactive VoiceResponse) was developed to lighten the human workload on telephone switchboards. As can be seen, UPS pays particular attention to the evolution of its systems and willingly embraces any new technology that can increase productivity.
Organization
Strategic decisions in UPS are made based on the analysis of data collected collected by the two data processing facilities data collected, organized in data warehouse and proposed through an enterprise information system. As far as long-term strategies are concerned, UPS continuously carries out intelligence activities and above all market analysis. By periodically checking the competitor's offer, he can try to bridge the gap (competitive emulation).
Decisions within UPS were initially made solely after evaluations by the senior management committee. Following the computerization process, the IT steering committee was introduced, made up of four experts who, every fourth quarter, impose the technological direction. During the year, the commission collects ideas and requests from the various sectors of the company; since, as mentioned, the IT departments are all gathered in the two parallel offices - and it is not foreseen that subgroups are dedicated to the needs of single branches - cross-cutting projects are favored. As there is no infinite budget, I decided on the projects to be developed, ordering them by priority; the relevance is calculated by the steering committee on the basis of the expected costs and benefits: a decision support system elaborates the data collected, based on parameters such as expected return on investment, impact on other systems / procedures, and so on. The projects with higher priority are then discussed and eventually resized; finally, a budget and human resources are assigned. A significant aspect of this mechanism is that the decision-making system favors short-term projects because if an implementation takes more than a year, UPS believes that the market will already have changed before development is complete.
The steering committee requires that all applications reflect the style and graphics of the company. For this reason he decides on the table the templates to be used for any piece of software developed; the whole organization must be adhered to.
As regards objectives not directly related to IT, UPS top management makes extensive use of so-called sentiment mining, taking advantage of the Radian6 platform which monitors the main social networks (forums, blogs, Facebook, linkedin, Twitter, YouTube, etc.) and provides summary dashboards of the company's reputation online. Among the other aspects kept under close surveillance there is also the exploitation of the brand.
In order to explore radically new possibilities, UPS also has date the start of a division called e-Ventures, which deals with identifying new business frontiers in the field of the web, not attributable to the activities of the competition and which could open new partnerships with other companies. e-Ventures' first product, approved by senior management in 2000, was UPS e-Logistics, a comprehensive online shipping management platform for companies adopting UPS as their standard carrier. The idea of โโe-Logistics is to offer a single integrated package that provides any help you may need: from warehouse management to tracking, order management, telephone support, etc. E-Ventures produces an average of thirty innovative proposals a year.
In 1997, UPS established a fund called the UPS Strategic Enterprise Fund, which monitors, evaluates and invests in emerging companies exploring new markets and technologies of potential interest. This fund identified and led to the acquisition in 2004 of Impinj Inc., a manufacturer of RFID tags.
Collaboration
As can be seen from the previous paragraphs, UPS has different types of clients:
- private individuals who send parcels;
- companies that rely on it to deliver parcels to their own clients
- (online commerce without intermediaries of any kind);
- companies that not only send parcels but also exploit their IT applications.
Communication with i clients of the first type was mainly through call centers, but with the explosion of the web much of the support activity was diverted to e-mail. For example, you can receive e-mail notifications of the shipment status, or check it directly from the site. The redundancy of telephone personnel, to which the voice recognition system also contributed, allowed UPS to create a new business front: the concession of such personnel to partner companies (UPS Business Communication Services).
Organizations that take advantage of IT services can also communicate with UPS through a section of the site accessible via authentication. To avoid having to satisfy huge amounts of recurring requests, UPS has set up a series of FAQs in all languages โโand a knowledge base in which you can try to find the answer faster.
There is only one type of collaboration that occurs without the involvement of ad hoc systems, and that is that towards partners who do not show interest in additional services. These companies are personally contacted by an electronic commerce account manager who proposes any functionalities from the UPS portfolio which, based on analysis of shipments and loads, could be advantageous.
The internal collaboration in UPS takes place in different ways:
The administrators work by telephone and / or e-mail; appropriate web-based ticketing services manage the workflow for technical problems; an ad hoc application, also based on the web, is responsible for collecting and organizing the innovative proposals that will be analyzed at the end of the year by the IT steering committee.
The drivers communicate with the branches or headquarters through the DIAD mini-terminal, which is constantly connected. The administrative offices can transmit urgent information (for example on traffic, destination changes, etc.), making it appear on the display.
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