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Motor Co。 turned over its snarled and slow distribution network to UPS； allowing UPS
to come deep inside Ford to figure out what its problems were and smooth out its supply
chain。
〃For years； the bane of most Ford dealers was the auto maker's Rube Goldberg…like
system for getting cars from factory to showroom；〃 BusinessWeek reported in its July
19； 2004； issue。 〃Cars could take as
147
long as a month to arrive…that is； when they weren't lost along the way。 And Ford
Motor Co。 was not always able to tell its dealers exactly what was coming； or even
what was in inventory at the nearest rail yards。 'We'd lose track of whole trainloads
of cars；' recalls Jerry Reynolds； owner of Prestige Ford in Garland； Tex。 'It was
crazy。'〃 But after UPS got under Ford's hood； 〃UPS engineers。 。 。 redesigned Ford's
entire North American delivery network； streamlining everything from the route cars
take from the factory to how they're processed at regional sorting hubs〃… including
pasting bar codes on the windshields of the 4 million cars coming out of Ford's U。S。
plants so they could be tracked just like packages。 As a result； UPS cut the time
it takes autos to arrive at dealer lots by 40 percent； to ten days on average。
BusinessWeek reported： 〃That saves Ford millions in working capital each year and
makes it easy for its 6；500 dealers to track down the models most in demand 。。。 'It
was the most amazing transformation I had ever seen；' marvels Reynolds。 'My last
comment to UPS was： 'Can you get us spare parts like this？'〃
UPS maintains a think tank； the Operations Research Division； in Timonium； Maryland；
which works on supply…chain algorithms。 This 〃school〃 of mathematics is called
〃package flow technology；〃 and it is designed to constantly match the deployment of
UPS trucks； ships； airplanes； and sorting capabilities with that day's flow of
packages around the world。 〃Now we can make changes in our network in hours to adjust
to changes in volume；〃 says UPS CEO Eskew。 〃How I optimize the total supply chain
is the key to the math。〃 The sixty…person UPS team in Timonium is made up largely
of people with engineering and math degrees； including several Ph。D。's。
UPS also employs its own meteorologists and strategic threat analysts to track which
atmospheric or geopolitical thunderstorms it will have to work around on any given
day。 To further grease its supply chains； UPS is the largest private user of wireless
technology in the world； as its drivers alone make over 1 million phone calls a day
in the process ofpicking up and delivering packages through its eighty…eight thousand
package cars； vans； tractors； and motorcycles。 On any given day； according to UPS；
2 percent of the world's GDP can be found in UPS delivery trucks or package cars。
Oh； and did I mention that UPS also has a financing
arm…UPS Capital…that will put up the money for the transformation of your supply chain；
particularly if you are a small business and don't have the capital。
For example； notes Eskew； UPS was doing business with a small biotech company in Canada
that sold blood adhesives； a highly perishable alternative to stitches。 The company
had a growing market among the major hospital chains； but it had a problem keeping
up with demand and could not get financing。 It had distribution centers on the East
and West coasts。 UPS redesigned the company's system based around a refrigerator hub
in Dallas and extended it financing through UPS Capital。 The result； said Eskew； was
less inventory； better cash flow； better customer service…and an embedded customer
for UPS。 A maker of bridal headpieces and veils in Montreal wanted to improve its
flow of business with the U。S。 Eskew recalled； 〃We designed a system for consolidated
＇customs＇ clearances； so their veils and headpieces would not have to come over ＇the
border＇ one by one。 And then we put ＇the merchandise＇ in a warehouse in ＇upstate＇
New York。 We took the orders by Internet； we put the labels on； we delivered the
packages and collected the money； and we put that money through UPS Capital into their
banks electronically so they had the cash back。 That allows them to enter new markets
and minimize their inventory。〃
Eskew explained； 〃When our grandfathers owned shops； inventory was what was in the
back room。 Now it is a box two hours away on a package car； or it might be hundreds
more crossing the country by rail or jet； and you have thousands more crossing the
ocean。 And because we all have visibility into that supply chain； we can coordinate
all those modes of transportation。〃
Indeed； as consumers have become more empowered to pull their own products via the
Internet and customize them for themselves； UPS has found itself in the interesting
position of being not only the company actually taking the orders but also； as the
delivery service； the one handingthe goodsto the buyer at the front door。 As a result；
companies said； 〃Let's try to push as many differentiating things to the end of the
supply chain； rather than the beginning。〃 And because UPS was the last link in the
supply chain before these goods were loaded onto planes； trains； and
trucks； it took over many of these functions； creating a whole new business called
End of Runway Services。 The day I visited Louisville； two young UPS women were putting
together Nikon cameras； with special memory cards and leather cases； which some store
had offered as a weekend special。 They were even putting them in special boxes just
for that store。 By taking over this function； UPS gives companies more options to
customize products at the last minute。
UPS has also taken full advantage of the Netscape and work flow flat…teners。 Before
1995； all tracking and tracing of UPS packages for customers was done through a call
center。 You called a UPS 800 number and asked an operator where your package was。
During the week before Christmas； UPS operators were fielding six hundred thousand
calls on the peak days。 Each one of those calls cost UPS 2。10 to handle。 Then； through
the 1990s； as more and more UPS customers became empowered and comfortable with the
Internet； and as its own tracking and tracing system improved with advances in
wireless technology； UPS invited its customers to track packages themselves over the
Internet； at a cost to UPS of between 5（2 and 100 a query。
〃So we dramatically reduced our service costs and increased service；〃 said UPS vice
president Ken Sternad； especially since UPS now pulls in 7 million tracking requests
on an average day and a staggering 12 million on peak days。 At the same time； its
drivers also became more empowered with their DIADs …driver delivery information
acquisition devices。 These are the brown electronic clipboards that you always see
the UPS drivers carrying around。 The latest generation of them tells each driver where
in his truck to load each package…exactly what position on the shelf。 It also tells
him where his next stop is； and if he goes to the wrong address； the GPS system built
into the DIAD won't allow him to deliver the package。 It also allows Mom to go online