INTERACTIVE SESSION: TECHNOLOGY UPS Competes Globally with Information Technology United Parcel Service (UPS) started out in 1907 The first thing a UPS driver picks up each in a closet-sized basement office. Jim Casey day is a handheld computer called a Delivery and Claude Ryan two teenagers from Seattle Information Acquisition Device (DIAD), which with two bicycles and one phone-promised the can access a wireless cell phone network. As soon "best service and lowest rates." UPS has used as the driver logs on, his or her day's route is down- this formula successfully for more than a cen- loaded onto the handheld. The DIAD also auto- tury to become the world's largest ground and matically captures customers' signatures along air package-delivery company. It's a global en- with pickup and delivery information. Package terprise with more than 454,000 employees and tracking information is then transmitted to over 119,000 delivery vehicles. UPS's computer network for storage and process- Today UPS delivers 5.1 billion packages and ing. From there, the information can be accessed documents in more than 220 countries and terri- worldwide to provide proof of delivery to custom- tories. The firm has been able to maintain lead- ers or to respond to customer queries. It usually ership in small-package delivery services despite takes less than 60 seconds from the time a driver stiff competition from FedEx and the US Postal presses "complete" on the DIAD for the new infor- Service by investing heavily in advanced informa- mation to be available on the web. tion technology. UPS spends more than $1 billion Through its automated package tracking sys- each year to maintain a high level of customer ser- tem, UPS can monitor and even reroute packages vice while keeping costs low and streamlining its throughout the delivery process. At various points overall operations. along the route from sender to receiver, bar code It all starts with the scannable bar-coded label devices scan shipping nation on the package attached to a package, which contains detailed in- label and feed data about the progress of the pack- formation about the sender, the destination, and age into the central computer. Customer service when the package should arrive. Customers can representatives are able to check the status of any download and print their own labels using special package from desktop computers linked to the cen- software provided by UPS or by accessing the UPS tral computers and respond immediately to inqui- website. Before the package is even picked up, in- ries from customers, UPS customers can also access formation from the "smart" label is transmitted to this information from the company's website using one of UPS's computer centers in Mahwah, New their own computers or mobile phones. UPS now Jersey, or Alpharetta, Georgia, and sent to the dis- has mobile apps and a mobile website for iPhone, tribution center nearest its final destination. BlackBerry, and Android smartphone users. Dispatchers at this center download the label Anyone with a package to ship can access the data and use special routing software called UPS website to track packages, check delivery ORION to create the most efficient delivery route routes, calculate shipping rates, determine time for each driver that considers traffic, weather con- in transit, print labels, and schedule a pickup. The ditions, and the location of each stop. Each UPS data collected at the UPS website are transmitted driver makes an average of 100 stops per day. In to the UPS central computer and then back to the a network with 55.000 routes in the United States customer after processing. UPS also provides tools alone, shaving even one mile off each driver's daily that enable customers, such as Cisco Systems, to roule translates into big savings in time, fuel con- embed UPS functions, such as tracking and cost sumption, miles driven, and carbon emissions-as calculations, into their own websites so that they much as $400 million per year. can track shipments without visiting the UPS site. These savings are critical as UPS tries to boost UPS is now leveraging its decades of exper- earnings growth as more of its business shifts to tise managing its own global delivery network to less-profitable e-commerce deliveries, UPS driv- manage logistics and supply chain activities for ers who used to drop off several heavy packages other companies. It created a UPS Supply Chain a day at one retailer now often make multiple Solutions division that provides a complete bundle stops scattered across residential neighborhoods, of standardized services to subscribing companies delivering one package per household. The shift at a fraction of what it would cost to build their requires more fuel and more time, increasing the own systems and infrastructure. These services cost to deliver each package. include supply chain design and management, 16 Chapter 1: Business Information Systems in Your Career 17 freight forwarding, customs brokerage, mail ser- vices, multimodal transportation, and financial services in addition to logistics services. UPS technology and business services are help- ful to businesses of all sizes, including small start- ups. Fondarific is a Savannah-based company that manufactures and sells fondant icings for decorat- ing wedding cakes and childrens'cakes. UPS made it possible for Fondarific to grow rapidly when inter- national sales took off. UPS set up a class in export- ing to teach Fondarific how to manage international sales and logistics and how to use its WorldShip global shipping software for UPS package and freight services. UPS also showed the company how to integrate shipping systems with Quickbooks ac- counting software and inventory software. UPS provides both financial and shipping advice and services to 4Moms, a Pittsburgh- headquartered company with 80 employees that makes innovative baby products using consumer technology. 4Moms uses UPS Trade Direct, which enables companies to reduce freight and inventory costs by bypassing distribution centers and shipping their goods directly to retailers. The UPS Cargo Finance service helps 4Moms man- age the cost of inventory as it is shipped around the world. Sources: Bloomberg, "UPS Sees Payoff From $20Bn Tech Bet, Supply ChainBrain," April 24, 2019; www.ups.com, accessed February 7, 2019; Shefali Kapadia. "Company of the Year: UPS," Supply Chain Dive. December 3, 2018; and Haylle Sok. "UPS Technology to Save $75 Million per Year in 2020." Global Trade, December 25, 2018. CASE STUDY QUESTIONS 1. What are the inputs, processing, and outputs of UPS's package tracking system? 2. What technologies are used by UPS? How are these technologies related to UPS's business strategy? 3. What strategic business objectives do UPS's information systems address? 4. What would happen if UPS's information systems were not available