Integration of GIS Into UPS Business Operation Research Paper

Excerpt from Research Paper :

Integration of GIS into UPS Business


Integration of GIS into UPS Business Operation

In a contemporary competitive business environment, organizational information systems have become an integral part of the organizational strategic advantages. Many organizations have integrated information system to achieve competitive business advantages. Adoption of many components information systems has been viewed to enhance business efficiencies since business would face challenges in running business successfully without the integration of information systems. Organizational information systems are the application of information technology (IT) to support major functions of business organizations. In the present competitive business environment where organizations are facing challenges in order to expand customer base, many organizations employ IT infrastructures to enhance organizational efficiencies as well as delivering superior services to customers. Modern organizations have been able to use of information systems as source of business intelligence for enhancing organizational decision-making. (Leidner, Elam 646-647). Despite the benefits that organizations derive from the integration of information systems, many organizations still face challenges in managing the IT systems.

Fundamental objective of this paper is to explore new trend in information systems and identify how the IT trend could benefit United Parcel Service (UPS).

United Parcel Service (UPS)

United Parcel Service (UPS) is a global package service delivery company that offers time-definite delivery letters, small packages, documents and ground service for its customers at over 220 countries. UPS global enterprises employ more than 425,000 employee and control over 93, 000 vehicles with the world's ninth largest airline. UPS has been able to become a global leader in the package delivery through the integration of advanced technology in the company business process. With adoption of leading-edge technology, UPS has become a global leader in application of sophisticated technology to optimize the shipping and logistics in the company business process at lower costs. Since 1992, UPS has introduced innovative technological systems to assist customers to track their parcels. With the integration of information systems, UPS has been able to track over 26 million packages daily. (UPS Annual Report, 8). To make business more customers oriented and efficient, UPS invests in array of information technologies, which include bar code, wireless networks, scanning systems and several pieces of tracking software. Efficiency of UPS is anchored on the package tracking systems making the company to be more efficient and more customers oriented. UPS uses tracking system to identify package en route as well as providing package delivery report. To maintain its global leadership in the parcel delivery service and streamlines its overall operations, UPS invests over $1 billion yearly on technology. UPS uses scannable bar- coded to provide customer with overall information about the package delivery. UPS also uses hand-held computer system such as Delivery Information Acquisition Device (DIAD) to capture customer's signature. With the integration of information systems, UPS is able to manage its global logistic and supply chain activities.

Despite the array of technology that the company has implemented and the advantages that UPS has derived from the information systems, UPS has faced challenges in managing the logistics and supply chain activities due unstable fuel prices and the issue has made the UPS to incur rise in costs in the transportation activities.

Technological Challenges facing UPS

Unstable fuel price has made UPS to incur rising costs for the UPS transportation services. Transportation is very essential for the UPS business activities and UPS employs transportation system to deliver the parcels to customers. Transportation represents more than one-third of the company logistic costs. One of the biggest challenges facing UPS is the strategy to manage transportation system to cut costs. Typically, UPS has an extensive distribution system that includes 93,000 vehicles, and 268 airplanes making UPS to be second largest freight airline in the world. To save considerable amount of transport costs, UPS needs to integrate sophisticated transport computer software to optimize the routing and facilitate package tracking.

Recommendations of new Technology for UPS

With identification of logistic challenges facing the UPS, this study recommends a built-in geographical information system (GIS) to assist UPS to plan the route efficiently. Moreover, "implementation of transportation computer software system is also effective in reducing the mileage of the company's delivery fleet by more than 100 million miles per year, saving about 14 million gallons of fuel."(Eric, Ankit, Stephen 24).

There are several benefits that UPS will derive from the implementation of the new technology. First, UPS will be able to efficiently manage its package delivery system. The company will be able to reduce its mileage by more than 100 millions miles per year.

More importantly, the new technology will make UPS to reduce the fuel costs due to reduction of the mileages, and the system will make the company to cut costs and increase the company revenues.

Another benefit of the new technology is that UPS will be able to deliver value to customers with reduction of the time taking to deliver the parcels to customers. The new technology will make UPS to enhance competitive market advantages because UPS will able to deliver the packages to customers lesser time than the competitors.

Method to adopt new Technology

To adopt the new technology into the company business process, UPS needs to implement pilot test about the technology to evaluate the efficiency of the new technology. UPS will also need to implement a pilot test to evaluate the economic justification of the new technology. To implement the pilot test, UPS will need to select a particular location to evaluate the cost effectiveness of the new technology. To conduct the pilot test, UPS should identify one city in the United States where the company business activities are always higher than other cities. For example, UPS might select New York City or Los Angeles for the pilot test. The pilot test will evaluate the new technology based on the following criteria:

With pilot test, the UPS will be able to test whether the new technology has reduced the transport mileages of the test location.

Moreover, the test will evaluate whether the new technology has been able to reduce the fuel consumption of UPS fleet of vehicles at the test location.

Additionally, the pilot test will make the UPS to evaluate whether the company has been able to reduce costs of managing the company fleet of vehicles.

The findings of the tests will make the UPS to decide whether to implement the new technology at all states in the United States as well as global implementation. To implement the new technology there is a need to provide evidence of an organization that has successfully implemented the GIS and transportation computer software system to manage the company fleet of vehicles

Evidence of an organization using GIS and transportation computer software system

Case of DHL express in Europe is an evidence of a company that has successfully implemented GIS and transportation computer software system. DHL is a global company operating in 220 countries. In 2002, DHL tackled challenges of transportation costs and streamlined the pick up and delivery system. In Sweden, DHL has over 1400 vehicles and costs of managing the vehicles represent 40% of the company daily operations. The costs include costs of long mileages covered by vehicles and fuel costs, and the issue was having impact on the company productivity. To address the problem, DHL integrates ESRI geographical information system to efficiently route the company fleet of vehicles to reduce the mileage covered and costs of fuel consumed by the vehicles. Typically. DHL has been able to "optimize the number of tours per terminal and this helps DHL minimize its fleet and the driving distances of each vehicle. Routes has been optimized daily, which greatly reduces the effort and resources needed during peak shipment periods such as the winter holiday season." (ESRI, 2).

With optimization of transportation, DHL has been able to lower transportation costs…

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