UPS leverages real-time data

For a company that delivers more than 13 million parcels and documents each day within a service area that includes some 200 countries and territories, any technology that improves package flow is bound to have a major impact.

That's the case at United Parcel Service, which developed a package-flow application that's dramatically improving the company's delivery operations.

The technology consists of software and hardware, including application, database and reporting servers at each of the company's package centers. But the heart of the system is an information-packed label, similar to a bar code, that UPS uses for package sorting and addressing worldwide.

The label is generated by UPS customers and affixed to packages moving through the network. Package information is transmitted to UPS and processed before the package is picked up by a UPS driver. At the package center, the information on the label is validated, and another label -- called the preload assist label (PAL) -- is generated. The PAL tells UPS workers exactly where to sort the package so it can go on to its final destination.

Another element of the package-flow application is an advanced geographic tool that lets planners analyze and adjust dispatch plans. UPS drivers can view all packages in optimum delivery order. They are alerted via wireless handhelds as a delivery commitment time nears and are warned if a package is being mistakenly delivered at the current stop.

Customized information, such as where a customer wants a package dropped off if no one is home to receive it, is stored in a database.

UPS first launched the package-flow system in early 2003 and is rolling it out gradually. When fully deployed in 2007, the system will be used by 100,000 employees at more than 1,000 sites, says Cathy Callagee, vice president of information services, who now oversees the package-flow technologies. At the time the project was launched, David Barnes, who was named CIO in January, was vice president and portfolio manager, with oversight of the package-flow project.

Training slashed

Before the system was in place, UPS loaders in the packaging centers had to memorize hundreds of addresses and ZIP codes. "It would take a long time to get people up to speed," says Callagee. "With the new system, you can stand there, and this puts the label on the package and tells you this is the cart or shelf where the package should be placed."

The system reduces training requirements for UPS drivers, since their deliveries are known before the start of the loading process and each package has specific instructions on where it should be placed inside the delivery vehicle.

Brian Clancy, a principal at MergeGlobal, a consulting firm, says other shipping companies have launched similar efforts, but the UPS endeavor stands out. "The big difference is the granularity and the real-time nature of what (UPS is) doing," he says. "They collect more data compared with the other guys. When you have that information available on a real-time basis, you can use that to do a better job of planning resources."

A project of this scale doesn't come without hurdles. "The largest challenge was integrating the package-flow (data) into back-end systems," such as those used for scanning, tracking and delivery, Callagee says. "We have a lot of (legacy) systems out there, and we needed to understand those systems and how to tie them into this one."

There was also the challenge of adjusting to new processes related to package flow. During the prototype phase, UPS managers held meetings with employees who would be affected by the system to ensure that it would meet their business needs.

The expected benefits should make the challenges well worth it. The company anticipates savings of $600 million annually -- or more than US$2.25 million per business day -- once the system is fully operational. They will come from the reduced need for training, lower fuel consumption and less wear on vehicles, Callagee says.

UPS estimates that package-flow technologies will reduce delivery-vehicle travel by more than 100 million miles a year. That translates into an even larger benefit: an annual reduction of 130,000 metric tons of carbon dioxide emissions.

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