22 Part One Organizations, Management, and the Networked Enterprise

I N T E R A C T I V E S E S S I O N : T E C H N O LO GY
UPS COMPETES GLOBALLY WITH INFORMATION TECHNOLOGY
United Parcel Service (UPS) started out in 1907 in a cally captures customers’ signatures along with
closet-sized basement office. Jim Casey and Claude pickup and delivery information. Package tracking
Ryan—two teenagers from Seattle with two bicycles information is then transmitted to UPS’s computer
and one phone—promised the “best service and network for storage and processing. From there, the
lowest rates.” UPS has used this formula successfully information can be accessed worldwide to provide
for more than 100 years to become the world’s largest proof of delivery to customers or to respond to
ground and air package delivery company. It’s a customer queries. It usually takes less than 60
global enterprise with over 408,000 employees, seconds from the time a driver presses “complete” on
96,000 vehicles, and the world’s ninth largest airline. a DIAD for the new information to be available on
Today, UPS delivers more than 15 million pack- the Web.
ages and documents each day in the United States Through its automated package tracking system,
and more than 200 other countries and territories. UPS can monitor and even re-route packages
The firm has been able to maintain leadership in throughout the delivery process. At various points
small-package delivery services despite stiff competi- along the route from sender to receiver, bar code
tion from FedEx and Airborne Express by investing devices scan shipping information on the package
heavily in advanced information technology. UPS label and feed data about the progress of the package
spends more than $1 billion each year to maintain a into the central computer. Customer service
high level of customer service while keeping costs representatives are able to check the status of any
low and streamlining its overall operations. package from desktop computers linked to the
It all starts with the scannable bar-coded label central computers and respond immediately to
attached to a package, which contains detailed infor- inquiries from customers. UPS customers can also
mation about the sender, the destination, and when access this information from the company’s Web site
the package should arrive. Customers can download using their own computers or mobile phones.
and print their own labels using special software Anyone with a package to ship can access the UPS
provided by UPS or by accessing the UPS Web site. Web site to check delivery routes, calculate shipping
Before the package is even picked up, information rates, determine time in transit, print labels, sched-
from the “smart” label is transmitted to one of UPS’s ule a pickup, and track packages. The data collected
computer centers in Mahwah, New Jersey, or at the UPS Web site are transmitted to the UPS cen-
Alpharetta, Georgia, and sent to the distribution tral computer and then back to the customer after
center nearest its final destination. Dispatchers at processing. UPS also provides tools that enable cus-
this center download the label data and use special tomers, such Cisco Systems, to embed UPS functions,
software to create the most efficient delivery route such as tracking and cost calculations, into their own
for each driver that considers traffic, weather Web sites so that they can track shipments without
conditions, and the location of each stop. UPS visiting the UPS site.
estimates its delivery trucks save 28 million miles In June 2009, UPS launched a new Web-based
and burn 3 million fewer gallons of fuel each year as Post-Sales Order Management System (OMS) that
a result of using this technology. To further increase manages global service orders and inventory for
cost savings and safety, drivers are trained to use critical parts fulfillment. The system enables high-
“340 Methods” developed by industrial engineers to tech electronics, aerospace, medical equipment, and
optimize the performance of every task from lifting other companies anywhere in the world that ship
and loading boxes to selecting a package from a shelf critical parts to quickly assess their critical parts
in the truck. inventory, determine the most optimal routing
The first thing a UPS driver picks up each day is a strategy to meet customer needs, place orders online,
handheld computer called a Delivery Information and track parts from the warehouse to the end user.
Acquisition Device (DIAD), which can access one of An automated e-mail or fax feature keeps customers
the wireless networks cell phones rely on. As soon as informed of each shipping milestone and can provide
the driver logs on, his or her day’s route is down- notification of any changes to flight schedules for
loaded onto the handheld. The DIAD also automati- commercial airlines carrying their parts. Once orders
 Chapter 1 Information Systems in Global Business Today 23

are complete, companies can print documents such stores and larger home improvement stores.
as labels and bills of lading in multiple languages. The company had used multiple warehouses to
UPS is now leveraging its decades of expertise provide two-day delivery nationwide. UPS created a
managing its own global delivery network to manage new logistics plan for the company that helped it
logistics and supply chain activities for other compa- reduce freight time in transit and consolidate inven-
nies. It created a UPS Supply Chain Solutions tory. Thanks to these improvements, Servalite has
division that provides a complete bundle of standard- been able to keep its two-day delivery guarantee
ized services to subscribing companies at a fraction while lowering warehousing and inventory costs.
of what it would cost to build their own systems and Sources: Jennifer Levitz, “UPS Thinks Out of the Box on Driver
infrastructure. These services include supply chain Training,” The Wall Street Journal, April 6, 2010; United Parcel
Service, “In a Tighter Economy, a Manufacturer Fastens Down Its
design and management, freight forwarding, customs Logistics,” UPS Compass, accessed May 5, 2010; Agam Shah, “UPS
brokerage, mail services, multimodal transportation, Invests $1 Billion in Technology to Cut Costs,” Bloomberg
and financial services, in addition to logistics Businessweek, March 25, 2010; UPS, “UPS Delivers New App for
Google’s Android,” April 12, 2010; Chris Murphy, “In for the Long
services.
Haul,” Information Week, January 19, 2009; United Parcel Service, “
Servalite, an East Moline, Illinois, manufacturer of UPS Unveils Global Technology for Critical Parts Fulfillment,” June
fasteners, sells 40,000 different products to hardware 16, 2009; and www.ups.com, accessed May 5, 2010.

CASE STUDY QUESTIONS MIS IN ACTION

1. What are the inputs, processing, and outputs of Explore the UPS Web site (www.ups.com) and
UPS’s package tracking system? answer the following questions:
2. What technologies are used by UPS? How are 1. What kind of information and services does the
these technologies related to UPS’s business Web site provide for individuals, small businesses,
strategy? and large businesses? List these services.
3. What strategic business objectives do UPS’s 2. Go to the Business Solutions portion of the UPS
information systems address? Web site. Browse the UPS Business Solutions by
4. What would happen if UPS’s information systems category (such as shipment delivery, returns, or
were not available? international trade) and write a description of all
the services UPS provides for one of these
categories. Explain how a business would benefit
from these services.
3. Explain how the Web site helps UPS achieve some
or all of the strategic business objectives we
described earlier in this chapter. What would be
the impact on UPS’s business if this Web site were
not available?

The system must also provide information to satisfy the needs of

managers and workers. UPS drivers need to be trained in both package
pickup and delivery procedures and in how to use the package tracking
system so that they can work efficiently and effectively. UPS customers may
need some training to use UPS in-house package tracking software or the UPS
Web site.
UPS’s management is responsible for monitoring service levels and costs and
for promoting the company’s strategy of combining low cost and superior
service. Management decided to use computer systems to increase the ease of
sending a package using UPS and of checking its delivery status, thereby
reducing delivery costs and increasing sales revenues.