UPS is betting on tech to deliver a competitive edge
It's a sweltering July in St. Louis, but at 6 a.m., there is only a hint of the day's coming heat. And still, Kerwin Williams is sweating. His shirt is soaked, because he's moving several hundred boxes in a matter of a few hours, across a narrow platform to three United Parcel Service trucks whose open cargo bays gape like hungry mouths. Williams feeds the vans with boxes and letters that he pulls from cages that are rolling past, every fifth one with boxes for him to grab.
It's hard work in the belly of a UPS package center, and not all physical. Loaders like Williams have to be thinking, and fast. They find the address on each UPS label and, if possible, from memory, mark the box with one of hundreds of sequence numbers that are based on physical addresses--the houses, loading docks, and office doors that are final destinations. Those sequence numbers then guide them to load the parcels onto one of three or four "package cars," in proper order, so the brown-uniformed UPS drivers can find them quickly as they dash on and off the van.
Williams's sorting is the last in a series that routed the parcels across the country or around the world. Until they arrived here, the packages were forwarded based primarily on ZIP codes. In Williams's head is where those ZIPs get broken down into the real world of streets and addresses, a job that until now was simply too overwhelming for a computer system.
Perhaps no industry has more effectively embraced the power of digital technology to modernize operations--even more so than airlines, which were long seen as leaders in cutting costs and boosting revenues through computers. "The delivery companies have leapfrogged ahead," says Satish Jindel of SJ Consulting Group.
In their tight competition, industry leaders UPS and FedEx have one-upped each other for years in rolling out hand-held computers, wireless links, and new uses of mainframe computing power. Now UPS is pushing automation to the last mile of its delivery network, down to charting the order in which packages are loaded on a truck and the most efficient route for delivering them. Dubbed "package flow technology," the latest upgrade is costing $600 million and taking three or four years to implement across the company's 70,000 routes. When the upgrade is in place, UPS says it should get back that $600 million every year in saved costs, as more-efficient routes cut 100 million miles of driving time and 14 million gallons of gas. "It's fundamental--a major, major change that will even change the way our drivers run their routes," says Chief Information Officer David Barnes.
Service. Besides lowering costs, the system already is speeding deliveries and making them more reliable, adding confidence that Mom will get the holiday package on time. UPS execs say the march of technology will give rise to new services, too, such as eventually enabling a recipient to change the level of service, meaning Mom can pay to get her package overnight after you cheapened out to send it by ground.