Optimizing Operations at UPS
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Chapter 13 Enhancing Decision Making for the Digital Firm 489
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Optimizing Operations at UPS
United Parcel Service (UPS) is the world’s largest air and ground package-distribution company, with annual sales of about $34 billion. It is also a leading provider of specialized transportation and logistics services. Following its nearly 100-year promise of the “best service and lowest rates,” this company currently delivers over 13.6 million parcels and documents every business day within the United States and in over 200 other countries and territories. UPS’s primary business is timedefinite delivery of packages and documents worldwide. It has established a global transportation infrastructure and comprehensive set of guaranteed delivery services, including integrated supply chain solutions for major companies. UPS is the industry leader in the delivery of goods purchased over the Internet. UPS operates a ground fleet of more than 88,000 vehicles, including its famous brown delivery trucks and large tractors and trailers. In the United States, UPS manages 27 large package operating facilities as well as over 1,000 additional smaller package operating facilities. The smaller facilities have vehicles and drivers stationed for the pickup of packages and for the sorting, transfer, and delivery of packages. UPS owns or leases nearly 600 facilities to support its international package operations and over 750 facilities that support nonpackage operations. This vast ground delivery system is integrated with express air services that use 600 airplanes. UPS operates the ninth largest airline in North America and the eleventh largest in the world. UPS aircraft operate in a hub and spokes pattern in the United States with a primary air hub in Louisville, Kentucky, and six other regional air hubs in various cities throughout the United States. These hubs house facilities for the sorting, transfer, and
2/3/05
10:35 AM
Page 489
Chapter 13 Enhancing Decision Making for the Digital Firm 489
CASE STU DY
Optimizing Operations at UPS
United Parcel Service (UPS) is the world’s largest air and ground package-distribution company, with annual sales of about $34 billion. It is also a leading provider of specialized transportation and logistics services. Following its nearly 100-year promise of the “best service and lowest rates,” this company currently delivers over 13.6 million parcels and documents every business day within the United States and in over 200 other countries and territories. UPS’s primary business is timedefinite delivery of packages and documents worldwide. It has established a global transportation infrastructure and comprehensive set of guaranteed delivery services, including integrated supply chain solutions for major companies. UPS is the industry leader in the delivery of goods purchased over the Internet. UPS operates a ground fleet of more than 88,000 vehicles, including its famous brown delivery trucks and large tractors and trailers. In the United States, UPS manages 27 large package operating facilities as well as over 1,000 additional smaller package operating facilities. The smaller facilities have vehicles and drivers stationed for the pickup of packages and for the sorting, transfer, and delivery of packages. UPS owns or leases nearly 600 facilities to support its international package operations and over 750 facilities that support nonpackage operations. This vast ground delivery system is integrated with express air services that use 600 airplanes. UPS operates the ninth largest airline in North America and the eleventh largest in the world. UPS aircraft operate in a hub and spokes pattern in the United States with a primary air hub in Louisville, Kentucky, and six other regional air hubs in various cities throughout the United States. These hubs house facilities for the sorting, transfer, and
Links: to Customers,” Optimize Magazine, February 2004; and Paul McDougall, “Load ’Em Up,” Information Week, September 29, 2003. CASE STUDY QUESTIONS 1. Analyze UPS using the competitive forces and value chain models. 2. What is UPS’s business strategy? How do information systems support that strategy? 3. Why was a DSS to optimize delivery routes so important for UPS? What decisions did it support? 4. How successful are these DSS for helping UPS achieve a competitive advantage? Explain your answer.