CASE
STUDY
UPS
COMPETES GLOBALLY WITH INFORMATION TECHNOLOGY
CASE SUMMARY
UPS
has created its own information system with Delivery Information Acquisition
Device (DIAD) and Web-based Post-Sales Order Management System (OMS) globally
by using developed information technology. These special systems help the
company to reduce the cost of transaction greatly. By building its efficient
order information management system, UPS can make optimal routing strategy,
place orders online, and track shipments to meet customer needs. These
information systems guarantee the possibility of two-day delivery nationwide as
well as lower warehousing and inventory costs for the company.
1. What are the inputs, processing, and
outputs of UPS’s package tracking system?
a)
Inputs
The
inputs include package information, customer signature, pickup, delivery,
time-card data, current location (while en route), and billing and customer
clearance documentation.
b)
Processing
The
data is transmitted to a central computer and stored for retrieval. Data is
also reorganized so that it can be tracked by customer account, date, driver,
and other criteria.
c)
Outputs
The
outputs include pickup and delivery times, location while en route, and package
recipient. The outputs also include various reports, such as all packages for a
specific account or a specific driver or route, as well as summary reports for
management.
2. What technologies are used by UPS? How are
these technologies related to UPS’s
business strategy?
Technologies include handheld
computers (DIADs), barcode scanning systems, wired and wireless communications
networks, desktop computers, UPS’s central computer (large mainframe
computers), and storage technology for the package delivery data. UPS also uses
telecommunication technologies for transmitting data through pagers and
cellular phone networks. The company uses in-house software for tracking
packages, calculating fees, maintaining customer accounts and managing
logistics, as well as software to access the World Wide Web.
3. What strategic business objectives do
UPS's information system address?
Some
problems this information system solves relate directly to logistics and supply
chain activities, not just for itself, but also for other companies. These
services include supply chain design and management, freight forwarding,
customs brokerage, mail services, multimodal transportation, and financial
services, in addition to logistics services. Because of the advanced
integration of its technology, UPS can provide these services cheaper and more
efficient than most companies can create them in-house.
ü Operational
excellence:
UPS
has maintained leadership in small-package delivery services despite stiff
competition from FedEx and the U.S. Postal System by investing heavily in
advanced information technology.
ü New
products, services, and business models:
In
June 2009 UPS launched a new Web-based Post Sales Order Management System (OMS)
that manages global service orders and inventory for critical parts fulfilment.
The system enables high-tech electronics, aerospace, medical equipment, and
other companies anywhere in the world that ship critical parts to quickly
assess their critical parts inventory, determine the most optimal routing
strategy to meet customer needs, place orders online, and track parts from the
warehouse to the end user.
ü Competitive
advantage:
UPS
is leveraging its decades of expertise managing its own global delivery network
to manage logistics and supply chain activities for other companies. It's
Supply Chain Solutions division provides a complete bundle of standardized
services to subscribing companies at a fraction of what it would cost to build
their own systems and infrastructure.
4. What would happen if UPS's information
systems were not available?
a) Arguably, UPS might not be able to compete
effectively without technology. If the technology were not available, then UPS
would, as it has through most of its history, attempt to provide that
information to its customers, but at higher prices. From the customers’
perspective, these technologies provide value because they help customers
complete their tasks more efficiently. Customers view UPS’s technology as
value-added
b)
services as opposed to increasing the cost of
sending packages.
- Incurs
more cost
- Slow
in providing information to customers
- Slow
Operation
- Slow
in finsing customer information
