Agile transformation in the logistics sector
In their bid to transform into digitally-driven organizations amidst tremendous disruptive pressures, companies of wide-ranging scale and category are taking a more comprehensive approach by reviewing the entire business process and introducing new products and services to customers that may not necessarily fit into their core business model when they started.
With an annual investment of $1 billion a year on new technology to enhance business processes ranging from internal operations to customer support, UPS is illustrative of the transformation most enterprises are experiencing today: the shift towards partially becoming a software company.
UPS, which began as a messenger service in Seattle back in 1907, has greatly evolved to cover a lot of non-traditional areas of the logistics sector. While small packages remain one of the largest areas of its operations, today the company complements it with such value-added solutions as supply chain management, air freight, ocean freight, contract logistics, healthcare and distribution.
“From a UPS perspective, we take a hybrid approach. When we began way back in 1907, we were a trucking company with some technology. Today, we are a technology company that happens to operate trucks. And while the business largely drives the kind of investment that we are going to do, the reality is that technology will drive us to certain directions from the business side as well,” asserts Christopher Buono, Vice President for Information Technology, UPS Asia Pacific.
Given how significantly UPS’s access to information has changed from 20 to 30 years ago, such pool of data is pushing the company into a lot of different directions, including 3D printing. UPS had recently partnered with a 3D printing manufacturer, Fast Radius, giving it the ability to use 3D printing tools in some of its package centers. “We can get a 3D print order as late as 6 p.m. and our facilities print out whatever is being sent to us, we manufacture it overnight and deliver it anywhere in the U.S. by the next morning. Imagine the convenience it affords an airline parts manufacturer, for example—instead of keeping expensive parts in a stacking location, they can simply 3D print the part in a central location and use UPS to ship that overnight to the engineer who’ll use that part to repair whatever needs fixing,” shares Buono.
Another area UPS is at the forefront of is drone technology, where the company is currently in an international partnership with the Rwandan government in initiating a vaccine drone delivery service in the country. “We’re now part of that supply chain of actually getting vaccines to specific people in Rwanda in under 30 minutes. How that will impact our other key areas remains to be seen. As an organization through the UPS Strategic Enterprise Fund, we’re not only making investments on our own proprietary technology but also looking at investing in other companies that are looking to disrupt the market—that may shape our business model for the future,” says Buono.
Whether he foresees drones eventually taking over the last-mile delivery space, Buono avers this is largely dependent on factors that include the layout of the country and the density of the area the drones are supporting. “As drones get better, that potential does exist. They’re definitely going to add value, but the key is where? At UPS, we’re already using drones not only in our Rwanda partnership but for our internal operations as well, so it’s not new to us. But whether or not it has an impact on the final mile, I guess that still needs to be seen as the technology advances,” says Buono, adding that another technology he’s especially excited about are autonomous vehicles, which are currently on its pilot year in Singapore. “It’s going to be an interesting avenue in the next five to 10 years to see exactly where that goes—its impact in traffic patterns and on our direct deliveries. If traffic does get better because autonomous vehicles are on the road, then that’s definitely going to be an advantage for us. We’re very interested in seeing what happens there,” states Buono.
Mobile and the Internet of Things are taking up more airtime in the UPS boardroom, too. Says Buono, “We talk about IoT and the impact of getting a lot more connectivity within that space, and how it is going to push companies like UPS to actually get closer to its customers. There’s such a massive amount of data there and one of the challenges for a company of our size, of our breadth of different operations, is the ability to harness that data and figure out exactly from a B2C perspective and e-commerce how we are going to use that data to get closer to our customers? Is mobile technology really going to help that process?”
As far as keeping up with trends go, UPS constantly looks at “millions of millions of transactions” in its data centers, which processes 27 million instructions per second. Customers are tracking about 18 million packages and documents online every day globally—critical information that according to Buono empowers the company to figure out the changes they would be implementing not only to enhance their customers’ experiences but the way they continuously engage their talent.
With 450,000 global employees, UPS has a rich well of talent from which to derive innovative ideas—and Buono shares the company recognizes that its people are its strongest assets. “UPS innovation comes from all over the place and it’s supported both at the local level and the corporate level. We have internal contests that happen on a regular basis that are taking ideas from all over the world and seeing whether or not they’re sustainable for future development. That’s something we’re asking all UPSers on a regular basis—if you have a good idea, don’t keep it to yourself, let’s spring it off. That is something that we can brainstorm over, put our ideas together, and maybe come out with some new solutions that can really help us in the future,” ends Buono.