Reference no: EM131566801

United Parcel Service (UPS) started out in 1907 in a closet-sized basement office. Jim Casey and Claude Ryan-two teenagers from Seattle with two bicycles and one phone-promised the "best service and lowest rates." UPS has used this formula successfully for more than a century to become the world's largest ground and air package-delivery company. It's a global enterprise with nearly 400,000 employees; 96,000 vehicles; and the world's ninth largest airline. Today, UPS delivers 16.9 million packages and documents each day in the United States and more than 220 other countries and territories. The firm has been able to maintain leadership in small-package delivery services despite stiff competition from FedEx and the United States Postal Service by investing heavily in advanced information technology. UPS spends more than $1 billion each year to maintain a high level of customer service while keeping costs low and streamlining its overall operations. It all starts with the scannable barcoded label attached to a package, which contains detailed information about the sender, the destination, and when the package should arrive. Customers can download and print their own labels by using special software UPS provides or by accessing the UPS website. Before the package is even picked up, information from the smart label is transmitted to one of UPS's computer centers in Mahwah, New Jersey, or Alpharetta, Georgia, and sent to the distribution center nearest its final destination. Dispatchers at this center download the label data and use special routing software called ORION to create the most efficient delivery route for each driver that considers traffic, weather conditions, and the location of each stop. Each UPS driver makes an average of 120 stops per day. In a network with 55,000 routes in the U.S. alone, shaving even one mile off each driver's daily route translates into big savings-$50 million per year. These savings are critical because UPS tries to boost earnings growth as more of its business shifts to less-profitable e-commerce deliveries. UPS drivers who used to drop off several heavy packages a day at one retailer now make several stops scattered across residential neighborhoods, delivering one lightweight package per household. The shift requires more fuel and more time, increasing the cost to deliver each package The first thing a UPS driver picks up each day is a handheld computer called a Delivery Information Acquisition Device (DIAD), which can access a cell phone network. As soon as the driver logs on, his or her day's route is downloaded onto the handheld. The DIAD also automatically captures customers' signatures along with pickup and delivery information. Package tracking information is then transmitted to UPS's computer network for storage and processing. From there, the information can be accessed worldwide to provide proof of delivery to customers or to respond to customer queries. It usually takes less than 60 seconds from the time a driver presses Complete on the DIAD for the new information to be available on the web. Through its automated package tracking system, UPS can monitor and even reroute packages throughout the delivery process. At various points along the route from sender to receiver, bar code devices scan shipping information on the package label and feed data about the progress of the package into the central computer. Customer service representatives can check the status of any package from desktop computers linked to the central computers and respond immediately to inquiries from customers. UPS customers can also access this information from the company's website, using their own computers or mobile phones. UPS now has mobile apps and a mobile website for iPhone, BlackBerry, and Android smartphone users. Anyone with a package to ship can access the UPS website to track packages, check delivery routes, calculate shipping rates, determine time in transit, print labels, and schedule a pickup. The data collected at the UPS website are transmitted to the UPS central computer and then back to the customer after processing. UPS also provides tools that enable customers, such Cisco Systems, to embed UPS functions, such as tracking and cost calculations, into their own websites so that they can track shipments without visiting the UPS site. A web-based Post Sales Order Management System (OMS) manages global service orders and inventory for critical parts fulfillment. The system enables high-tech electronics, aerospace, medical equipment, and other companies anywhere in the world that ship critical parts to assess their critical parts inventory quickly, determine the optimal routing strategy to meet customer needs, place orders online, and track parts from the warehouse to the end user. An automated email or fax feature 20 Part I: Information systems in the Digital age keeps customers informed of each shipping milestone and can provide notification of any changes to flight schedules for commercial airlines carrying their parts. UPS is now leveraging its decades of expertise managing its own global delivery network to manage logistics and supply chain activities for other companies. It created a UPS Supply Chain Solutions division that 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. These services include supply-chain design and management, freight forwarding, customs brokerage, mail services, multimodal transportation, and financial services in addition to logistics services. For example, UPS handles fulfillment and distribution for PlasticardLocktech International (PLI), the world's largest manufacturer of key cards, including hotel key cards, gift cards, and customer loyalty program cards. PLI's customers require quick delivery. Although PLI had no problem fulfilling orders, shipping internationally from its Asheville, North Carolina, manufacturing and distribution location was too costly. PLI now stores inventory at UPS locations in Canada, the United Arab Emirates, and the Netherlands and will soon ship from a Hong Kong facility as well. It would have cost PLI millions to provide its own services for opening a warehouse, hiring staffing, buying insurance, and developing logistics. In addition to reducing international shipping costs, PLI realized savings of $200,000 per year by switching to UPS Customs Brokerage Services. Sources: Steven Rosenbush and Laura Stevens, "At UPS, Algorithm Is the Driver," Wall Street Journal, February 16, 2015; "Keys to Success," UPS Compass, Winter 2015; www.ups.com, accessed March 7, 2015; and Laura Stevens, "For UPS, E-Commerce Brings Big Business and Big Problems," Wall Street Journal, September 11, 2014.
answer 2 questions

1. What are the inputs, processing, and outputs of UPS's package tracking system?

2. What technologies does UPS use? How are these technologies related to UPS's business strategy?

3. What strategic business objectives do UPS's information systems address?

4. What would happen if UPS's information systems were not available?