The move towards digitization in supply chains will help companies become more flexible, faster, efficient, granular, and accurate. [1].\u00a0 This future requires each company to have visibility into each link in the supply chain.\u00a0 Manufacturers, wholesalers, distributors and retails are the links in the supply chain; logistics and transportation firms connect them all.\u00a0 UPS will need to provide constant and reliable information to their customers to support a digitized supply chain.\u00a0 UPS already estimates expected arrival time, but weather conditions, customs issues, and simple operational issues like lost paperwork limit UPS\u2019s ability to consistently deliver on time.\u00a0 Freight shipping still operates largely on a paper-based system [5], making it difficult to recognize missing customs information and update delivery times.<\/p>\n
UPS recently joined the Blockchain in Trucking Alliance (BiTA) to help address some of these issues.\u00a0 Blockchain is a digital platform that distributes information across multiple computers but ensures all computers have the same information.\u00a0 This redundancy makes the information more easily accessible and more difficult to corrupt.\u00a0 It also allows any user to update information and leaves a track record [2].\u00a0 While originally used for tracking transactions for digital currencies, UPS sees promise in its customs brokerage business to improve accuracy by replacing the current paper-based system [3].\u00a0 Shipment originators and insurers can access the database and update shipment information for the US Customs agencies to see, eliminating UPS\u2019s need to be involved in handling that information.\u00a0 Digital systems are far better at recognizing when missing information may hold up shipments at the border, expediting shipments overall.\u00a0 Lastly, customers have real-time visibility into the status and waypoint location of a shipment and can flag delayed shipments ahead of time [4].\u00a0 This transparency allows customers to more closely track their supply chain.<\/p>\n
Blockchain allows the easy transfer of information between stakeholders, but as customers continue to demand added transparency, UPS will be wise to invest in additional digital infrastructure to more closely track shipments. First, GPS-enabled (or driverless) trucks will allow UPS to observe delays sooner and better forecast arrival times in the event of a delay.\u00a0 Second, predictive analytics using external information, such as weather forecasts, will improve the reliability of UPS\u2019s delivery commitments.\u00a0 Third, UPS can consider using RFID tracking within its freight facilities to observe when pallets are misrouted or to find lost material.\u00a0 In addition to improving shipment accuracy, this location information could be leveraged to improve operations and material flow in their facilities.\u00a0 UPS has been exploring the use of RFID tags since at least the early 2000\u2019s, but has not adopted them for widespread use [9].<\/p>\n
<\/p>\n
UPS managers should also focus on innovating in the small parcel shipping space.\u00a0 Added visibility and increased digitization in small parcel shipping would benefit shippers and customers as well.\u00a0 Currently, a package shipping from Boston to New York will travel from the originator\u2019s warehouse to a Boston sortation facility, then to a New York sortation facility, then to the end destination. \u00a0If UPS learned earlier in the process where packages were destined to, originators could pre-sort packages in their own facility based on destination and UPS could eliminate one sort step, shaving up to a day off delivery.<\/p>\n
Today, some companies side step one sortation facility stop by trucking directly from their facilities [6].\u00a0 Companies with scale can afford to do this, but UPS leaves on the table an opportunity to serve smaller originators who whose customers would benefit from quicker delivery.\u00a0 In addition, there is clear demand to hasten the shipping process.\u00a0 Amazon is developing their own carrier infrastructure to ensure reliably delivery during the peak season, but if successful could utilize their system for most shipments to cut costs [7, 8]. \u00a0By not acting, UPS risks foregoing business to Amazon.<\/p>\n
Outside of automating it\u2019s facilities [10], UPS seems to have little in the pipeline to address potentially huge disruptors to its business.\u00a0 Amazon\u2019s development of drones [11], Amazon\u2019s move into the delivery space [12], and UPS\u2019s hands-off approach to driverless cars [13] may prove to be prudent preservation of shareholder capital, or could lose UPS the edge in the small parcel shipping space.<\/p>\n
<\/p>\n
To what degree will disruptive technologies, like Amazon\u2019s drone delivery and driveless cars, be a threat to UPS\u2019s business?\u00a0 Will they be able to easily adopt these technologies, or will they be left behind?<\/p>\n
[732 words]<\/p>\n
[1] https:\/\/www.mckinsey.com\/industries\/consumer-packaged-goods\/our-insights\/supply-chain-4-0-in-consumer-goods<\/a><\/p>\n [2] https:\/\/blockgeeks.com\/guides\/what-is-blockchain-technology\/<\/a><\/p>\n [3] http:\/\/www.supplychaindigital.com\/technology\/ups-joins-alliance-create-blockchain-standards-logistics<\/a><\/p>\n [4] http:\/\/www.businessinsider.com\/ups-joins-blockchain-initiative-2017-11<\/a><\/p>\n [5] http:\/\/www.digitaljournal.com\/tech-and-science\/technology\/usajoins-group-bringing-blockchain-to-the-shipping-industry\/article\/507591<\/a><\/p>\n [6] My own experience from a previous employer.<\/p>\n [7] https:\/\/www.wsj.com\/articles\/amazons-newest-ambitioncompeting-directly-with-ups-and-fedex-1474994758?mod=rss_whats_news_technology<\/a><\/p>\n [8] https:\/\/arstechnica.com\/information-technology\/2016\/09\/amazon-wants-to-challenge-ups-and-fedex-with-its-own-delivery-system\/<\/a><\/p>\n [9] https:\/\/www.secureidnews.com\/news-item\/upss-rfid-initiative\/<\/a><\/p>\n [10] http:\/\/www.dcvelocity.com\/articles\/20160801-ups-to-fully-automate-30-largest-us-hubs\/<\/a><\/p>\n [11] https:\/\/www.digitaltrends.com\/cool-tech\/amazon-prime-air-delivery-drones-history-progress\/<\/a><\/p>\n