United Parcel Service

UPS

‘United Parcel Service’ also known as UPS founded in 1907 always had a strong focus on ensuring that tasks are executed efficiently. Jim Casey, the founder of UPS, ran lean operations; he continually sought means to reduce expenses. Rather than looking at departments or accounting cost types, Porter's Value Chain focuses on systems, and how inputs are changed into the outputs purchased by consumers.

[pic 1]

UPS implemented a telematics-based project that reduces energy consumption and component waste (and thus its costs). This project illustrates the emergence of a new subfield of information systems—energy informatics—which is concerned with analyzing, designing, and implementing systems to increase the efficiency of energy demand and supply systems.

Package Flow Technology Package flow technology, developed and first used by UPS in 2003, is the technology upon which the telematics project builds. Its purpose is to determine the most efficient route for drivers. At the heart of package flow technology is Package Level Detail (PLD): a label on every package contains detailed package-related information, such as delivery address, time frame requested, and delivery method. Package flow technology also includes a Dispatch Planning System (DPS), which plans each driver’s route and load for the most efficient delivery. It creates a Pre-Load Assist Label (PAL), which ensures that each package is placed on a specific shelf in a designated truck for maximum efficiency. Package flow technology enabled UPS to cut its daily delivery driving in 2008 by 30 million miles (48 million km). This translates to over 3 million gallons (11.4 million liters) of fuel saved. It also meant that over 30,000 metric tons of CO2 were not added to the atmosphere. UPS has developed proprietary firmware to collect and record the state of its vehicles from the wide variety of buses found in its vehicles. This data is used to improve safety by ensuring compliance with UPS and community safety standards. To support the generation of these and other valuable insights, two senior UPS engineers (John Olsen and Mark Davidson) took the lead to develop, respectively, the necessary applications to analyze the extensive data collected (back-end) and the necessary interfaces to share information with drivers and managers of all ranks (front-end).

The currently recognized benefits associated with UPS’s telematics project fall into all three areas of the company’s commitment towards sustainability: social, environmental, and financial—sometimes referred to as “the triple bottom line. Social benefits mainly relate to the truck drivers’ increased safety. By monitoring driving patterns in fine detail, UPS managers have the ability to recommend safer driving habits. Another safety goal is to reduce the number of times that trucks are driven in reverse—a behavior UPS drivers are trained to avoid for safety reasons— by about a fourth. Telematics allows UPS to achieve environmental benefits by pinpointing opportunities to reduce mileage, fuel consumption, and replacement parts. The main environmental benefit directly associated with the telematics project is reduced fuel consumption. The environment also benefits because fewer used parts from UPS vehicles now need to be dumped in landfill sites. Some of the same changes that have resulted in social and environmental benefits— reduced fuel consumption and improved route efficiency—have also led to financial benefits from the telematics project. Telematics data has enabled UPS to move from a scheduled maintenance program to a condition-based maintenance program, which means fewer replacements parts are required. The telematics project has removed this cause of vehicle failure, with consequent savings for UPS.