Published Monday 21st January 2019
United Parcel Service, one of the world’s leading logistics groups with a 2017 revenue of over $65 billion, is at the forefront of the modern Christmas trade. With online shopping accounting for around one-fifth of all retail sales in the UK, the pressure on delivery organisations to perform is increasing in line with the number of orders being received. Rising demand has, in the past, put a strain on outdated distribution methods, with global organisations coming unstuck in previous years. However, in December UPS declared a superior on-time delivery performance for the first half of the peak holiday season.
The multinational company declared that their improved Christmas period was, in no small part, down to the integration of new technologies in its distribution chain. In a statement, UPS said that “2018 was a banner year for innovation and technology deployment,” and that its innovation was the main reason behind its success.
The Technology that is Transforming Distribution
UPS has faced a lot of challenges over the previous twelve months, or so. Rising fuel prices early in 2018 threatened to cut through UPS profit estimates, something which saw shares in the business continue the slide that had been fairly consistent since peaking in January. While revenue increased by 10% during the quarter to June – pushed by increasing demand for online shopping – the company’s operating profits fell by 13%. While fuel costs were affecting this figure, it was also down to increased investment in its network infrastructure.
Noticing the importance of technology to its future growth, UPS decided to spend significant resources on ways to streamline their operations. This has, as UPS put it themselves, played a huge role in their festive period successes, which have seen shares in the company rise once more.
According to reports, UPS added around 20 new technologies as part of its global operations in December. In a press release by the company highlighting their innovation in 2018, they focused on five particular additions that were at the forefront of their improved distribution performance. These fall under two broad categories: warehouse sorting and delivery to the customer.
The most widely talked about upgrade to the UPS distribution chain was UPSNav, an update on their previous navigation system known as ORION. UPSNav allowed drivers much greater accuracy than previously and helped to boost delivery efficiency. Just as important was their upgraded mobile tools, which not only improved on-road productivity but also played a crucial role in speeding up the training period for additional festive drivers.
Network Planning Tools (NPT) was perhaps the most complex and important addition for UPS in 2018. Combining analytics, historical data and artificial intelligence, NPT helped to coordinate all UPS traffic between its sorting hubs, to support the efficiency of this stage whilst reducing bottlenecks. Similar to the mobile tools, UPS also created Dynamic Sort Instruction, which streamlined the sorting process at hubs while, again, aiding with the training of festive support staff.
Streamlining Distribution Chains
UPS is not the first and will certainly not be the last company that has profited from streamlined operations. In fact, we recently looked at how telematics could transform fleet management. Praising its use of analytics, artificial intelligence and the internet of things, UPS has set a standard that many other corporations will be expected to follow over the next few years. In the long-term, this will hopefully lead to a reduction in distribution costs for businesses, as more efficient and scalable methods of delivery are introduced.
ERA can help
Distribution costs can often be one of the largest cost areas for major businesses and keeping those expenses at a reasonable level can sometimes be a challenge. Here at ERA, we are experts at helping major businesses reduce distribution costs in the long-term. Our experts will assess and refine your distribution chain to create savings in a range of cost sectors, from parcel delivery to freight. Our dedicated team have worked with companies in a variety of industries, so if you are interested in refining your distribution strategies this year, get in contact with us today.