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Package Flow Technology at UPS

April 1, 2005
For parcel delivery companies, building customer loyalty begins with sortation.

How do you ensure each of your 7.9 million customers feels like they are your only customer? "Our long-term strategy," says Donna Barrett, technology manager UPS (Atlanta) "is to establish environments in which we create more personalized experiences for the customers. Technology is the great enabler of that strategy." And since the package delivery person is the company face most customers see, personalization has to start with him or her. Whether package delivery is viewed as the beginning or end of the personalization process, sortation, getting the right package to the right place at the right time, is the element that makes it possible.

A key part of that technology at UPS is the program called Package Flow Technologies. It has at its center, daily sortation of millions of packages down to a granular level unknown in most areas of material handling. Along with productivity improvements and cost reductions, the Package Flow Technologies program will, in the long-term says Barrett, allow drivers to focus more on being a service provider and developer of customer relationships than they are currently.

Given the growth of online shopping and catalog orders, it's no secret that all small-parcel carriers have seen dramatic increases in their businesses. In any competitive market, customer loyalty is more important than customer satisfaction says industry guru Jeff Gitomer. "Think of it this way," says Gitomer, "would you prefer your spouse to be loyal or satisfied?" As usual, Gitomer makes his point with an unconventional, highly visual metaphor. The point, however, is valid and companies like UPS are recognizing the need to build customer loyalty by enhancing their service offerings.

"Package Flow Technology is a combination of software and re-engineered process changes that permits us to automate that last leg of the delivery process," says Barrett.

UPS has invested $600 million in the vast initiative to optimize its domestic package network. When the process is complete in 2007, it expects to realize annual cost savings of $600 million.

Using historical, forecasted and exceptions information, Package Flow Technologies creates a dispatch plan for every driver working out of a package distribution center. The system helps the package center management ensure that drivers are not over-dispatched and that last minute load changes to a driver's package car are minimized. This is important because, unlike other carriers, UPS delivers multiple services using the same driver.

Barrett explains the process: Packages arrive at the package center in feederslarge semi-trailers and have to be further sorted for loading into the package car, the ubiquitous brown trucks we all know.

Previous to Package Flow Technologies, the pre-loader, the person who puts the packages into the package car, had to be intimately familiar with the streets and addresses on the route of each truck he was loading. To make the driver's job more productive and less stressful, packages must be loaded into the package car in the order they will be delivered. Getting the right packages in the vehicle is only part of the challenge. Each item has an assigned spot on the shelves inside the truck as well.

Promise of the premise
"The premise of Package Flow Technology is relatively simple," says Barrett. "We've taken the sortation knowledge that was in the head of the employee and put it into a hand-held computer." UPS began using hand-held computers, delivery information acquisition devices (DIAD), in 1991. The well-known tablets were a precursor to its Package Flow Technology program and another piece of the sortation puzzle. Over the years there have been numerous upgrades to the wireless devices, the most recent being the EDD, or enhanced DIAD download. This internally developed piece of software enables an electronic manifest to be downloaded into the driver's hand-held at the start of the day.

The end-result of the program has been that it's taken a lot of stress out of the job for the pre-loader and driver, and put more accuracy into the delivery process.

When packages are delivered to the package center, the last point of automated sortation the packages encounter before they're loaded, they now receive an additional label. The pre-load assist label (PAL), as it's known, carries no product information, only routing information known to the pre-loader and driver. The label has been generated through software that carries all the routing information, plus level-of-service commitment information for every package going to every one of 7.9 million customers, every day.

"The PAL tells the pre-loader which chute to send the package down for loading into the correct package car," says Barrett. The label is human readable so the pre-loader can decipher its numeric information to know exactly where to put the package is the package car.

This final step in UPS' highly automated sortation system works around a lot of human challenges such as illness, holiday volume service spikes in delivery and part-time employees not knowing the routes.

Now, when the driver picks up his hand-held computer, which is essentially an electronic manifest, his day is mapped out. "The cool thing about the electronic manifest is that part of the software is the dispatch-planning piece," says Barrett. "Drivers' routes have to be dynamic since we do more than other carriers, like pickups as well as deliveries as well as different levels of service commitment."

She explains that if there is road construction in a known area, the route can be planned around that. In the near future, the hand-held units will have GPS (global positioning system) capability and the driver will be able to download maps to avoid traffic accidents, for example.

Sortation and customer service
Ultimately, says Barrett, sortation at all levels is a part of customer service. "It's really about improving customer service by eliminating things like misdirected packages in the package car, or eliminating missed and late deliveries."

The driver's DIAD shows him the exact location of packages within the package car. With a properly sorted load, the electronic manifest assures the driver he is delivering the correct package, in the correct quantity, to the correct customer. It means taking the potential for human error out of the process as much as possible.

"Certainly the back-office things like productivity and efficiency improve through time-tested benefits like cost reductions and savings," says Barrett. "But up front, where the packages go out the door, it's still revolutionary."

This innovative program has sorted out some things besides packages. When fully implemented in 2007, Package Flow Technologies will reduce the mileage of package cars by more than 100 million miles each year. The program is expected to save UPS 14 million gallons of fuel annually. Thus the environment becomes a winner since this fuel savings translates into an annual reduction of 130,000 metric tons of carbon dioxide emissions.

Automated sortation for packages going to the package centers is done at the hub with bar code labels and UPS' Maxi Code label.

Pre-loaders in the package centers now read the pre-load assist label as the final part of the sortation process to get the package in the precise spot in the package car for the driver.

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