CIO Update Q&A with UPS - Page 2

Jul 14, 2006

Allen Bernard

At UPS, four conditions, what we call the 4C’s of innovation, must be in alignment to make transformation through innovation a sensible course of action: customers drive it; a new direction must be connected to the company’s core competency; clarity must exist throughout the new business model; and IT must be embraced by our culture.

For example, in the early 20th century, UPS pioneered the hub model for package delivery operations. We are continuing our innovation tradition with the development of a suite of technology that will make more than 1,000 package centers in the U.S. smarter and more efficient in sorting and loading packages on delivery trucks.

Called package flow technology (PFT), it is a combination of technology and business process changes.

What's the bottom-line benefit of undertaking PFT initiative? It's my understanding that UPS runs just fine the way it is.

What we needed was the optimization of the loop, of the driver's day. And we needed to know what was the best way to take that driver through his or her day.

(UPS delivery van loaders have) … a tough job. Well this made it a lot simpler. It made it easier for our employees (loaders); it made it easier for us as an organization because we didn't have to spend time in training; it also reduced the cost of that particular operation; and the best thing that it did was it now has such rich data about all those packages we are now exploiting.

If we don't take the time to really put business process changes (the driver's loop) and sit down prior the implementation of the technology to say what parts of our dispatch do we need to change. It's like anything else: garbage in, garbage out.

We could throw all kinds of technology out there but if we don't get that business process change right, (technology) will help us but it won't get us to the degree it's gotten us to today.

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