UPS reinvents package flow

New software, smart labels, and improved processes deliver huge ROI

UPS likes to do things big way. Last year, the company garnered a place in the InfoWorld 100 with a wireless project that will ultimately replace 55,000 scanning devices. This year, the company takes the coveted top slot, thanks to a nine-year, $600 million package flow initiative that as of October 2004 has successfully transformed 250 of the company’s 1,500 package centers.

Beginning in 2007, when the new system will be fully deployed, increases in operational efficiency are expected to save UPS that $600 million each year, says project leader Cathy Callagee, operations portfolio manager at UPS.

The improved end-to-end flow, which will ultimately be used by more than 100,000 employees, begins when the customer generates a smart label using a Web application that transmits customer and package information to UPS and preprocesses it before the driver arrives for pickup. That information then passes to UPS’s Dispatch Planning System, which charts UPS truck pickup and delivery routes.

Today, 93 percent of UPS packages have smart labels. At the package center, the smart label information is validated — at which point the system spits out another label, dubbed the preload assist label or PAL, to help human loaders route the package to the correct conveyor belt and place it in an optimal position on the delivery truck. “The PAL label makes life for the loaders in the package center so much easier,” Callagee says. “It tells the loader which car on which shelf and in what position on that shelf that package should be placed.”

The package flow software was developed in-house using COM+ components written in C, C++, and Visual Basic running on Windows 2000 Server. SQL Server maintains the planning, real-time sort, and post-sort reporting databases. The project began before .Net was mature, so Callagee is just now examining which pieces of the system UPS might want to shift to the .Net development model.

Why opt for a Microsoft solution? “One of the reasons we went down the Intel/Microsoft path was because we really needed this system to be able to scale from the very small site … that may have 10 drivers, up to running it in a site that may have 300 drivers,” Callagee explains. “We needed it to scale very easily from one little PC to several servers.” Additionally, UPS is working with Symbol Technologies on new handheld devices for drivers, which will run Windows CE.

The hardest part of the project, according to Callagee, has been integration with legacy AS/400 and mainframe systems. But the lessons she has learned from the project are of a less technical nature. Before digging into  technology, the project’s planners focused exclusively on streamlining processes — and when the new package-flow apps were ready, the company rolled out the new system slowly, so feedback from the field could be leveraged to improve the software.

Callagee’s final advice has become the refrain for modern IT. “If we don’t have a business reason … we don’t do it for technology’s sake. Unless there is a true business-case ROI, don’t do it.”

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