The Digital Transformation of UPS that saves Millions

The historic courier company has taken the technological revolution very seriously. So much that he is even able to know when to clean his trucks. But all this might not be enough if Amazon decides to get into the package delivery business.

The workers of the courier company UPS make hundreds of decisions every day. And when they are wrong, for example, by placing a package on the wrong conveyor belt or by loading it into the delivery vehicle that is not, they can cause the customer not to receive his order on time.

Avoiding these mistakes is key to the survival of the company. The e-commerce boom implies that UPS now delivers up to 31 million packages a day. Keeping track of all of them is an immensely complicated and worse challenge since online orders are usually made from far away locations. And the latest news that Amazon plans to launch a low-cost package delivery service means that UPS is about to face strong competition from a company with the best customer tracking capabilities and even has artificial intelligence services.

For UPS, advanced analysis is essential to address this challenge. In 2016, the company began collecting data in all its facilities. It currently has about 25 projects based on that information, grouped under the acronym EDGE (an acronym for “improved global dynamic execution”). The program has motivated changes in all areas, from how workers place packages inside delivery trucks in the morning to how the vast army of temporary employees that UPS recruits during the busy holiday season is trained. The data is even able to notify when the vehicles will have to be washed.

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When the program is fully implemented, the company expects to save about 160 million euros and 240 million euros a year.

EDGE is one of several technological projects that UPS is carrying out to improve its deliveries in the 220 countries and territories in which it serves. Its annual technology budget is 810 million euros. With it, the company also covers updates to drivers’ tools, such as the computing devices they use to scan packages and collect customer signatures, and mapping software called ORION (an acronym for “optimization and navigation integrated into the route “) that calculates the most efficient way for drivers to complete their routes. The company is also investing in more machines that automatically classify packages in UPS processing facilities.

Consumer benefits

Last year, UPS began equipping its delivery trucks with Bluetooth receivers to reduce the number of packages that are uploaded to the wrong truck. The devices, which measure about 12 centimeters and are installed inside the truck, emit a loud beep if a worker places a package in a vehicle with the wrong destination. When the package is loaded in the correct truck, the device emits a different beep confirming that it is in the right place. The system combines the wireless signals of the different Bluetooth devices with those of the scanners that workers use to read the labels of the UPS packages.

Before developing the technology, UPS did not scan the packages to confirm the truck they were supposed to travel on. Drivers who realized they were carrying a wandering package had to deviate from their route to deliver them or call a supervisor to transfer them to the correct truck.

Now, UPS can reduce these delays and offer consumers more details about upcoming deliveries. When UPS workers scan packages in the morning, the data updates the service that the company has implemented and sends emails to customers about the status of their shipments. Those who have vital register crucial for the free service receive a message informing that their package will arrive that day, together with the estimated delivery time. UPS has incorporated Bluetooth devices in 35% of its routes in the United States and in a location in Germany and plans to extend the system to Canada and the United Kingdom.

Another of the company’s projects informs temporary workers of where they should send packages that UPS vehicles pick up throughout the day. The company hires almost 100,000 of these workers between November and January. Typically, these people would need to memorize hundreds of zip codes to know where to place the packages, but last winter UPS incorporated about 2,500 with five-euro Bluetooth and scanning registration devices that issue oral instructions such as “green,” “red,” or “blue”. The colors correspond to specific conveyor belts that take the packages to other parts of the building for further processing.

This does not mean that UPS still makes mistakes in some deliveries, so the company also has a project that informs administrators of how many returned packages will arrive at its processing center and when. In this way, they can organize the appropriate number of workers to redirect packages. The data comes from a variety of sources, including drivers’ computing devices and ORION software, which UPS released in 2013. UPS transmits real-time information to smartphones Forgot Password Samsung of the managers and presents it in the form of graphs that show how many incoming packages there are, at what speed they are being processed and which teams of workers are busier so that people can be assigned where demand is highest.

Previously, UPS managers relied on historical data and radio conversations with their drivers to calculate how many undelivered they would need to drive each night. UPS vice president of industrial engineering, John Dodero, says the project makes the company more productive and can send packages that are poorly targeted to intended recipients faster.

Fight Amazon

Will all this effort be enough to defend against Amazon, if it begins to compete directly against UPS, how is it rumored? Logistics experts from the Transportation and Logistics Supply Chain Center  (which is partially funded through UPS) from the University of Washington (USA)  Barbara Ivanov, believes that Amazon represents a threat. ” Amazon has the money and the ability to establish a new package and merchandise shipping company, and the most revolutionary forced thing is that they can start from scratch with the technology at the center of their operations,” says Ivanov.

Even so, Amazon’s current delivery infrastructure is far behind that of UPS or FedEx. “Amazon has a large presence in the cities, where it will hire van drivers to make quick trips. But to become an important delivery company, it must be ubiquitous in every corner of the world, and those networks are very expensive to build and maintain “says the expert.

Babson College professor specializing in corporate analysis programs  Thomas H. Davenport says that UPS has more logistical knowledge than many people believe. The expert states: ” EDGE is simply the latest in a series of large-scale and long-lasting UPS technology projects related to things like modifying routes and telematics in trucks, and every new thing is based on previous capacity.”

Amazon has the advantage of artificial intelligence, something that UPS is still trying to catch up on. In 2017, he established an advanced technology group that is investigating ways to adopt AI. Dodero confirms. “In the end, there will be artificial intelligence in EDGE. Our engineers are already building algorithms to help determine the best daily work setup.”

Will they arrive on time? ” UPS needs all the technology, analysis and artificial intelligence that it can obtain if it intends to compete against a company like Amazon, ” concludes Davenport.