Why would UPS, the shipping company that as recently as ten years ago was running just fine keeping many critical records on paper notepads, commit a billion-dollar-plus budget to wireless technology for collecting and transmitting data?
There are all the usual reasons like improved efficiency, better customer service and gaining a competitive edge over shipping rivals like FedEx and the U.S. Mail. But it all comes down to cost. The company, which ships some 14 million packages per day and handles between four and five million tracking requests from customers, figures cellular technology can slash the cost of servicing those customers.
"If you look at the traditional expense of customer service agents, you are talking about a cost of $2.40 per call," says David Ladner, director of interactive marketing at UPS. "And if you look at the automatic tracking from the Internet or wireless devices, the cost is about 10 cents per query."
This kind of cost savings has been the motivation for UPS over the past ten years to regularly update the equipment its drivers carry, as well as the means by which its customers can track their packages. Today, UPS offers a host of ways for customers to track packages over its corporate Web site or from wireless devices.
Its customer Web site at MyUPS.com enables customers who are serious about on-time delivery to sign up for a its PDA Solutions service in which they can check on their packages from a cell phone or a pager. These wireless services also enable customers to use mobile devices to calculate shipping rates, compare transit times for different shipping options that UPS offers, and find drop-off locations - all things that once had to be handled by a call center staff.
"We recognized that mobile use was growing significantly and we saw the need to for these mobile users to have access to this package information," says Ladner. "It really came out of our group recognizing the migration of the customer."
To offer an idea of how much this new technology has changed UPS, consider that as recently as 1991 the company had just dipped his toe into technology, and was dispatching most drivers with little more than paper pads, pens and clipboards.
"If you had a ground package being delivered and say it went to the wrong building and you called up to track that package, some driver somewhere would literally have had to go through sheets and sheets of paper to try to locate the package," explains UPS spokeswoman Joan Schnorbus. "And if they had been out in the rain, there might not be any legible records."
But providing customers instant access to information works only if the company has the means to keep the information constantly current. No small feat for a business that must log data on millions of packages each day. That is where the latest equipment for UPS drivers comes into play.
In 1999, UPS introduced the DIAD III, a device for manufactured by Motorola Corp to UPS specifications. This third generation DIAD, which stands for Delivery Information Acquisition Device, is the first and only handheld computer in the industry that can both collect and transmit delivery information in real time. This means that customers can learn the status of the delivery while the driver is still at the delivery site.
The DIAD III is equipped with an internal packet data radio, which sends delivery information to a UPS data repository as soon as drivers scan the package bar code. However, to insure that the real-time delivery information is available to customers, the DIAD was built to be able to transmit data over three different networks: the internal packet data radio, as well as an adapter in the delivery truck that connects to a cell phone, and an internal acoustical modem that can move data over a regular telephone, and can be used as a backup.
The latest DIAD caps more than ten years of commitment by UPS to move away from the old paper clipboard an invest in technology to simplify the drivers' jobs while getting more accurate information to customers. The company in 1990 came out with its first DIAD, which was little more than an electronic clipboard.
That device captured delivery information and customer signatures, but was incapable of transmitting the data. Typically, when the driver ended his route and returned to the UPS Center at the end of the day, he or she would then upload all the data from the last shift. The original DIAD was a big improvement over the old paper system, and provided customers fairly timely information, but not real-time or even same-day data.
Two years later, in 1992, UPS began deploying TotalTrack, a delivery tracking system that enabled information to be uploaded to the UPS data repository from the delivery trucks. Again, a big step forward that let many customers to access delivery information within minutes of a package delivery. However, for a lot of drivers who work in city environments and can spend hours in a single office building, the docking station back in the truck was not an adequate means of keeping the data current.
The DIAD III, in addition to giving drivers the means of transmitting data while they are away from their trucks, also enables two-way communications between the driver and dispatcher. Package dropped of at the wrong location? Dispatch can contact the driver and let him correct the error before he proceeds too far along on his route.
UPS says the ever-improving DIAD technology has been critical to it improving its competitive position. The company employs one DIAD or another in 28 countries around the world. Since only 11 of those countries have the infrastructure to transmit data wirelessly, it uses the older models in more remote locations.
Keeping up with the times
Yet already the latest technology is deployed widely enough so that data on some 2.1 million packages are transmitted daily using cellular technology. The company says one of its goals going forward will be to streamline its different technology around the world. "We've used a lot of different products from different vendors," says Schnorbus.
"They all work seamlessly as far as the customer is concerned, but to help keep our costs down and make things more efficient, we are always looking at areas where we may be able to standardize our technology." To that end UPS is testing a new generation of wireless computers using Bluetooth technology to be introduced at all of its 2,000 package facilities around the world.
With all this technology in place, UPS finds itself facing other challenges, like getting customers comfortable with the Internet and the wireless services it provides. When UPS introduced the wireless technology, it partnered with a number of Internet portals like Yahoo and Lycos to help link customers to its own site where they could download the information. It is also partnering with several big e-commerce sites to help attract customers who are already somewhat Internet savvy.
Has it worked? If you consider the five million packages that are tracked over the Internet, the answer would seem to be yes. But even UPS is more conservative than to suggest that all of those five million queries would have been fielded through customer service agents if the wireless technology did not exist. Rather it says many customers who probably never would have bothered to check on the whereabouts of their packages have started to do so, because it is so simple.
"A lot of people do it just because they can," says Schnorbus. "We know that probably not all these people would be calling customer service." Still, she says that the volume of calls to its customer service agents has remained flat since 1997, when the company introduced online package tracking. "We're frankly quite pleased with that," she said.
Along with all the things like care packages that need not arrive before 10 AM, UPS handles a lot of mission critical deliveries: equipment and parts for engineers, or medical equipment, for example. UPS has always tried to accommodate these customers by offering multiple delivery options such as shipments guaranteed to arrive by the end of a given business day, or before 10:30 in the morning. It says the new and improved tracking methods help deliver on more of its shipping promises.
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From Silicon Valley, Andrea Orr covers developments in the mobile world for TheFeature. She is also a correspondent for Reuters in the Palo Alto, California, bureau.