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KCB ID: 14508, UoW ID: 1092227299339 – Tolga KOYMEN

University of Wales (Kensington Collage of Business) MBA


ASSINGMENT TITLE: Critically evaluation of using of the Managing Information Systems at UPS

LECTURER NAME: ATHAR NAQVI Tolga KOYMEN KCB ID: 14508 UoW ID: 1092227299339 DATE OF SUBMISSION: 30/09/2011 – 3pm

KCB ID: 14508, UoW ID: 1092227299339 – Tolga KOYMEN

Table of Contents
1. Introduction ... 2
1.1. Package Delivery and Logistics Services Industry and Information Systems ... 2 1.2. United Parcel Service Inc and Information Systems ... 2 1.3. Supply Chain Management Solutions for Other Companies ... 3

2. Literature Review ... 3
2.1. Managing Information Systems ... 4 2.2. Strategic Information Systems (SIS) and Competitive Advantage ... 4 2.3. Enterprise Content Management (ECM) ... 5 2.4. Cloud Computing and Web based Interactive Session ... 5

3. Analysis ... 5
3.1. Technology used by UPS ... 5

4. Recommendation ... 6
4.1. Industry Based Problems ... 6 4.2. Solutions for Problems ... 7

5. Conclusion ... 7 References ... 8 Bibliography ... 8


KCB ID: 14508, UoW ID: 1092227299339 – Tolga KOYMEN
Case study about UPS related to MIS. For this report you are required to draw on your knowledge how information systems has helped businesses use synergies, core competencies, and network based strategies to achieve a competitive advantage? In addition to that conclude your discussion with detailed recommendations (1000 – 1500 words) by explaining the challenges posed by strategic information systems and how they should be addressed.

1. Introduction
1.1. Package Delivery and Logistics Services Industry and Information Systems Logistics Industry manages the movement of the valuable things and services between the starting point and the usage point for providing the requirements of individuals and corporations. The industry includes the reliable mixture of the elements of raw materials and goods handling, transportation, inventories, storage, packaging, information systems, and security. The main expectations of the stake holders of this industry are “best service” and “lowest costs and rates”. Suitable, reliable, appropriate and correct usage of the information systems on logistics industry can be one of the main drivers to meet the expectations of the stake holders. The targets of the logistics industry, such as realizing of the short delivery times, lowering the inventories level, making higher of the capacity usage and reliability, can be provided by the integration of the information systems at all level of the logistics services business activities. Creation of the information systems for making more efficient and more flexible industry’s core business activities, has made the industry a technology driven industry. It has given new business opportunities and also focusing on emerging business areas. 1.2. United Parcel Service Inc and Information Systems UPS (United Parcel Service Inc) is the biggest worldwide organization in the packages and the freight delivery services, the specialized transportation services and the logistics services industry. According to the Fortune Magazine at Fortune 500 - 2011 ranking list, the Atlanta - USA based company is the 48th biggest company in USA by generating $ 49,545 million revenues and $ 3,488 million profits. Also United Parcel Service Inc is the 166th biggest company all over the world. (Fortune, 2011) The company has 400,600 employees, 91,196 motor vehicles and 225 aircrafts to operate its business successfully. Its daily worldwide packages and documents delivery volume is 15.6 million in the service area for over 220 countries and territories. In 2010, United Parcel Service Inc delivered 3.94 million packages and documents. The company services daily 8.5 million customers and it faces daily 26.2 million online tracking requests. The company’s operation is based on 12 air hubs, 1801 operating facilities, over 20.000 retail points of access and 40.000 drop boxes. In the recent two decades, as the company implements its worldwide operations in package delivery and logistics services, specialized transportation and supply chain management, there is a huge technology behind its business operations. The growing demand of the short time delivery services forced the 1907 established company to develop its technology for maintaining its efficiency, reducing its costs, providing new customers, and keeping its prices competitive.


KCB ID: 14508, UoW ID: 1092227299339 – Tolga KOYMEN
The company’s package tracking systems technology -which was firstly set up on 1992 by attaching a scannable bar-coded label to the packages for electronic tracking- includes handheld devices, specially designed vehicles, global computer and communication systems, networks, data management processors, worldwide web site and user friendly softwares. Based on its information systems technology, UPS can record, upload, and monitor the detailed delivery information immediately. And the customers can also receive real time information about their deliveries through the UPS web site by using their own computers. It’s the successful implementation of the cloud computing on logistics industry. The detailed information on the electronic label is transmitted to company’s computer centres by using the handheld devices Delivery Information Acquisition Device (DIAD). Then the information is processed and stored for using when it would be used. The electronic labels and the handheld devices are also used for creating the most efficient route, keeping distance from traffic and weather conditions, efficiently arranging the changed collection schedules etc. However UPS spent tens of billions of dollars to develop its information systems technology, it benefits from its information systems technology investment. The electronic label -which can also be created and printed by customers online- gives the opportunity to the company to create the most efficient routes even before the delivery pick up. According to UPS’s estimation, the company saves approximately 28 million miles and millions of gallons of fuel every year. 1.3. Supply Chain Management Solutions for Other Companies In the late 1990s the UPS management discerned that the company’s expertise in despatching and tracking can be used to manage logistics and supply chain activities of the other companies instead of building their own logistic services. In 1995, The UPS Logistics Group was formed, and the company began to offer supply chain management solutions and consultancy to the other companies. This solution helps the companies to provide their logistics activities, package delivery and freight activities, financial, and mail services to increase their business activities and develop their worldwide supply chains. In the year of 2010, UPS made $ 8.7 billion net revenues from supply chain management and freight activities. It’s almost one in five of the total annual revenues. And also UPS acts as the consultant of the logistics services activities for thousands of major enterprises in globe. The expertises in logistics give the opportunity to UPS to be the default dispatcher of growing e-commerce businesses. In 2000s, UPS launched its Supply Chain Management (SCM) software -UPS Road Net Transportation Suite- which offers distributor companies independently planning their own delivery routes daily. The software -which based on the expertise of UPS- provides the opportunity to distributor companies reducing their distribution costs and fleet miles, increasing resource utilization, knowing the actual cost per stop, setting and checking drivers’ standards, decreasing routing time, contingency planning and reporting that evaluate companies’ successes. The other service of UPS is UPS Document Exchange, an internet based system, allows over thousands of businesses to securely deliver their critical and important documents, files and softwares in the interactive virtual area. United Parcel Service Inc makes alliances with leading technological companies to prepare itself for the beyond and for taking necessary steps to continue its industry dominancy and growth.

2. Literature Review
As it is said before in heading 1.1, UPS is the world’s largest company in transportation and logistics industry. The rivals in this industry, such as FedEx, US Postal Service, Airborne Express – DHL, CH Robinson Worldwide Inc., TNT and others, force UPS to improve its business activities efficiently by developing its managing information systems. The rivals have improved their managing information


KCB ID: 14508, UoW ID: 1092227299339 – Tolga KOYMEN
systems simultaneously with UPS. But the goals and the future prospects of the United Parcel Inc will leverage the company’s position. As the package delivery, freight and logistics services industry continues to grow there is no obstacle that UPS will not continue to be the industry’s dominant leader with its wide range of divisions and company’s managing information systems technology developments. 2.1. Managing Information Systems The mandatory of the sustainability of the company beyond the random and chaotic business world and the stiff competition with rivals, has shown the importance of the improvement of the Managing Information Systems to making decisions prudently and reasonably. Managing Information Systems (MIS) -as a mixture of the elements that collect, process, store and distribute information to help decision making and control- supports decision makers, staffs and customers to coordinate, control, analyze, and visualize issues while the business activities are being realized. (Laudon, 2007) Managing Information Systems (MIS) refers to providing data, collecting in a systematic way, processing, storing, widening and enhancing of the information to execute the activities in an effective way and profitably. It objectives to facilitating the decision making, providing the essential information from entire sections, emphasizing the critical points, making reasonable decisions. (Laudon, 2007) The Managing Information Systems (MIS), ultimately goals the optimization, has to have the characteristics of providing relevant information for all levels of management from top to down, directing actively by the management, covering all the functions of the organization, having the common data flow to avoid the overlapping and reiteration, being in a long term planning at least 3 to 5 years, flexible and user friendly. It must not be forgotten that the well quality of the inputting data, well designing of the process and the system, and well managing of the processing system directly affect the quality of the necessary information which enables the organization to become productive and profitable. It’s must not be confused that MIS and Information systems are the same term. The information systems don’t include the decision making systems. MIS is widely used to totalize the information based management systems. These are Supply Chain Management (SCM), Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), Decision Support Systems (DCS), Project Management, Knowledge Management and Executive Support Systems. (O`Brien, 1999) The technology of MIS is based on Hardware/Software, Data Capturing and Management Technology, Networking and Telecommunications Technology. MIS plays a significant role all level of the pyramid of business activities such as operational, management or strategic (decision making and executive) levels. (Laudon, 2007) 2.2. Strategic Information Systems (SIS) and Competitive Advantage SIS is developed to implement business strategies by using information systems and computer systems simultaneously in response for adding businesses initiative. The objectives may be lower cost, differentiation, focusing on a nishe market, innovation, new product, new services or new business models, customer and supplier intimacy. The companies which use effectively SIS may have significant competitive advantage. SIS is the systems such as Decision Support Systems (DCS) which customize the information from databases to fix the problem and make decision, or Executive Support Systems (ESS) which quickly reports to executives for all levels of the organization.


KCB ID: 14508, UoW ID: 1092227299339 – Tolga KOYMEN
2.3. Enterprise Content Management (ECM) Enterprise Content Management is a process which the MIS based on it. It is the strategies, methods and tools that used for capturing, storing, managing, keeping and delivering contents and documents related to the organizational processes. Its components are capturing, managing, storing, keeping, and delivering. (AIIM, 2010) 2.4. Cloud Computing and Web based Interactive Session Cloud computing is the delivery of computing as a service whereby resources, softwares and information are provided to computers and other devices, such as smart phones or PDAs, as a utility over a network. (Gruman, 2008) Web based interactive session is the permanent interactive interchange, dialogue, meeting or conversation in a particular network, between a computer and a user. Sessions use cookies and cryptic technology for security and storing as much data on the server. This process must guaranteed confidentiality, data integrity and authenticity.

3. Analysis
In the early 1990s, the sensitivity of the customers about ‘package tracking’ caused the companies on package delivery and logistics industry to make investments on tracking capability. Before these investments all the companies, as well UPS, hired a few employees on their IT departments to support their urgent IT needs. Now, UPS hired over 5000 IT employees, and the most importantly all the employees from top to down use information systems technologies on their daily business activities. 3.1. Technology used by UPS The technology used by UPS is based on computers, hardwares, softwares, Data Capturing and Management Technology, Networking and Telecommunications Technology and IT Infrastructure. These are drivers’ handheld devices -Delivery Information Acquisition Device (DIAD)-, smart bar coded labels, barcode recognition devices which is integrated with handheld devices, wired networks, wireless networks, cellular phone networks, individual computers, central computers, data storage and backup technology, softwares that manage the enterprise closed circle data, softwares that using by customers, web based tracking system and so on. Known as the industry’s most comprehensive handheld device, DIAD, contains data capturing, collecting and transmitting technologies, as well digital signiture capturing. The smart bar code label includes the information of sender, destination and arrival time. Once the label is recognized and the signiture captured by DIAD, it takes 60 seconds the information available on the UPS web site. The inputs such as receiver’s signiture, package data, and billing are processing in the central computer and then become outputs for customers. The hand held device uses cellular phone network to transmit the data to UPS’s central computer. The technology on this enterprise content management process has known as Bar Code Recognition Technology. All the vehicles such as trucks, aircrafts, trains and ships are tracking by GPS technology, The DIAD and GPS technology are used during the process of package transportation and the customer tracks the package movement. According to a study at UPS IT Department, the capturing data by DIAD, saves 30 minutes per day on per driver. If it’s thought about over 70.000 drivers, it is a huge amount of savings for the company. Since UPS launched its world wide web site the company has improved its internet based technology from static situation to ‘click-and-mortal’ interactive session situation. In 2011, the customers are able to track their package real time in virtual area. The layers of customer, application, platform, infrastructure and server of cloud computing makes possible to get the real time information about their deliveries for customers.


KCB ID: 14508, UoW ID: 1092227299339 – Tolga KOYMEN
The UPS Package Tracking Systems are able to monitoring performance, to speeding customers delivery actions, to tracking the deliveries of each steps of the movement, to estimating the cost of the delivery, and so on.

4. Recommendation
The stiff competition on the package delivery services and logistics industry is still based on focusing on the research for quicker and safer delivery methods. And the customers still demand more expectations on package tracking. The technological developments either cope with the needs of costumers or leverage customer expectations. 4.1. Industry Based Problems The industry’s core element is the packages which need to deliver from the first point to the usage point quickly and safely. The target must be treating each package like it’s the only one package that must be delivered. The problems are still mainly based on the package tracking. They are caused by lost packages, damaged packages, stolen packages (even by the staffs), return packages, wrong or incomplete destination addresses, unavailability of receiver, return packages, unexpected delays according weather, natural disaster and traffic conditions, and uncollected payments. Especially lost packages, damaged packages, and stolen packages cause companies to pay huge amount of compensations. Also the reputation of the company badly affects by these problems. Even if the companies hugely invests package tracking systems, they still spend huge amount of their budgets for compensation and fixing their reputation. Even if the hand held devices are so clever or the labels on the packages are smart, the package tracking system is still based on bar code capturing. As the delivery process runs, If any of the hand held device does not capture the bar coded label, actually the package is not under control. On the other hand, the senders generally don’t care about declaring the exact destination address, even if they are very sensitive about their packages. The receivers often aren't informed about the package delivery by senders. This problem caused companies spending huge amount of their budgets to cope with return packages. For the deliveries except US and UK, once a destination address identify by the sender, it is not be verified. Especially return packages for the international destination deliveries, which are relatively costs more, causes to spend huge amount of budgets for the companies. Although the package tracking system is focused on giving real time information to the senders, there is a gap to inform the receivers. The international destination address verification and the interactive package tracking system from the enterprise to receiver are still the gaps of the information systems of the industry. When it’s searched on web, it can be observed that the large portion of the complaints about the industry comes from the receivers. The receivers widely complaint about the lack of the exact delivery times. The companies generally offer daily 9am to 5pm for US and UK deliveries, and weekly Monday to Friday for deliveries except US and UK. It should be considered that it’s inconvenienced for the receivers for wasting their time to wait their deliveries. There must be an information system that available to interactively inform the receivers for the range of the reasonable delivery times in reasonable times. The unexpected delivery times for the deliveries based on the unexpected weather, traffic jams and disaster conditions are the other problems for the companies. The expectations of the customers are so spoiled that they don’t care about any natural disaster on any side of the globe. The customers are in the expectation of being have a secondary emergency plan for all unexpected conditions. Existing delivery and tracking systems are not available to cope with the really unexpected


KCB ID: 14508, UoW ID: 1092227299339 – Tolga KOYMEN
conditions. The ash cloud disaster on 2010 uncovered the gap of the secondary plans of the industry companies. As the years of 2000s, the global terrorism affected all industries, as well package delivery and logistics industry. The industry is one of the most mouth watering channels for the global terrorist organizations. Finally a global terrorist organization tried to use the industry for attacking its target. In the early 2010, a delivery from Middle Africa territory to US via Europe, contained an explosive in a printer machine. Fortunately the explosive deactivated, before it is burst. The package delivery and logistics companies don't actually know about the consisting of the packages. The companies don’t have any technology based strict security control for the packages which they run for delivering. 4.2. Solutions for Problems It is recommended that the bar coded capturing system, which the package tracking system is based on it, can be changed with RFID (radio frequency identification) capturing system. The radio waves are used to transmitting data even from several meters. While the delivery is in progress, the packages can be track by using the RFID label on the packages. The lost or stolen packages problem can be prevented by this technology’s simultaneously check. Once a package embedded with any vehicle or a warehouse by using the RFID technology, the package will be kept in safe there. The address verification system for the declared destination addresses except US and UK addresses can prevent the return delivery problems. This system can be related with automated message service for receivers. The unavailability of the receiver can be partially prevented by this improvement. Also the wide range of the expected delivery time intervals can be minimized. The electronic security checking systems can be adapted on the delivery systems to prevent of partial illegal goods delivery.

5. Conclusion
UPS is the biggest package delivery and logistics service firm of the industry for a long time because of its differentiation on managing information systems. The differentiation on MIS helps UPS for its core competencies, using synergy, giving opportunity to entering new emerging markets, and achieving a competitive advantage.

Total word count excluding Cover Page, Question and References: 3067


KCB ID: 14508, UoW ID: 1092227299339 – Tolga KOYMEN
AIIM. What is Enterprise Content Management (ECM)? Association for Information and Image Management. [online]. Available at: <URL:> [Accessed: 27th September 2011] Fortune Magazine, 2011. Global 500 Ranking 2011 Full List. Fortune. [online]. Available at: <URL:> [Accessed: 27th September 2011] Gruman, G., 2008. What cloud computing really means. InfoWorld. [online]. Available at: <URL:> [Accessed: 27th September 2011] Laudon, J. and Laudon, K., 2007. Management Information Systems: Managing Digital Firm and Multimedia: Pearson Education. O`Brien, J.A., 1999. Management Information Systems – Managing Information Technology in the Internetworked Enterprise: Irwin McGraw-Hill.

Adewoye J.O. and Somuyiwa, A.O., 2010. Managing Logistics Information System: Theoretical Underpinning: Asian Journal of Business Management 2(2): 41-47, 2010. ISSN: 2041-8752 Anderson, D.L. and Post, G.V., 2006. Management Information Systems: Solving Business Problems with Information Technology 4th ed.: Irwin McGraw-Hill. McLeod, R. and Schell, G.P., 2007. Management Information Systems 10th ed.: Pearson Education Ross, J., 2001. United Parcel Service: Delivering Packages and E-Commerce Solutions. MIT Sloan School of Management.[online]. Available at: <URL:> [Accessed: 27th September 2011] Official Web Sites UPS [online]. Available at: <URL: > [Accessed: 27th September 2011] FEDEX [online]. Available at: <URL: > [Accessed: 27th September 2011]