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Ups Competes Globally with Information Technology - Case Study

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UPS is the largest air and ground package-distribution and a provider of supply chain management solutions. Started in 1907 in a closet-sized basement office with only two people, two bicycles and one phone, pursuing the objective of the “best service and lowest rates” which has last for over 100 years.

Today UPS delivers more than 13.6 million parcels and documents per day in USA and in more than 200 countries and territories, employing 435.000 people worldwide. Despite having strong competitors (FedEx and Airborne Express), UPS maintains the leadership by investing heavily in information technology to boost customer service while keeping costs low and streamlining its overall operations. Proof of this is that UPS spends more than 1 billion dollars each year to maintain a high level of customer service.

We will now explain in detail how UPS uses information technology to provide value for the company and its customers and to pursue their business strategy.

Question 1 – What are the inputs, processing and outputs of UPS’s package tracking system?

The inputs of UPS’s package tracking system are related to shipping information such as customer signatures, pick-up information, delivery information, time-card information, current location and billing and customer documentation. These information is accessible through a Delivery Information Acquisition Device (DIAD). DIAD is placed into the UPS truck’s vehicle adapter that will then transmit package tracking information to UPS’s computer network for storage and processing in UPS’s main computers in New Jersey and Georgia. This information will be accessible worldwide to provide proof of delivery to customers or to respond to customer queries. This part is the processing of UPS’s package tracking system. The outputs of UPS’s package tracking system include the delivery status, pickup and delivery times, position of a parcel, reports that can show the route and the designated driver(s). These reports can be used by management to improve company’s service provision. (1)

Question 2 - What technologies are used?

They built an IT network and a database to collect and track over 200 data fields for each single package. UPS also offers a set of transportation APIs called the UPS Online Tools (2) that allow businesses to integrate tracking, rating, address validation and other important jobs. The list of technologies they are using is as follow:

  • DIAD (Delivery Information Acquisition Device): it’s a handheld computer device for capturing information about each package by driver;
  • It is a global electronic data communication network that provides an information processing pipeline for international package processing and delivery (3);
  • Barcode scanner;
  • Wireless communication;
  • GPS tracking software;
  • Centralized database (4);
  • Web-based service: Both the shipper and recipient of a package can track the status of the package directly from the UPS website;
  • UPS online tools which is an Application Program Interface (API) (5);
  • UPS Rates and Service Selection: A tool that allows a customer to estimate the cost of sending a package (6);
  • UPS Time in Transit: Customers can use this tool to estimate the ground transportation time for sending packages (7);

Question 3 - How are these technologies related to UPS’s business strategy?

UPS has done a huge investment in IT, which made them the biggest in their sector of activity. The text clearly enhances the fact that UPS strategy goes through the improvement of their services through the use of technology.  

The core business of a package-distribution company is to move a product from point A to point B. UPS does it, and does it better than others, with the lowest rates, in the fastest way, keeping costs low. They achieved this level of process optimization by using IT/IS tools.

They add value to their service, enhanced and strengthen their value proposition - nowadays the most important feature a company can have to maintain and achieve success.

They have empowered their customers through the use of technology enabling service co-creation, giving to the costumer an active and fundamental role.

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