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UPS CASE STUDY

UPS Competes Globally with Information Technology

United Parcel Service (UPS) started out in 1907 in a closet-sized basement office. Jim Casey and Claude Ryan—two teenagers from Seattle with two bicycles and one phone—promised the “best service and lowest rates.” UPS has used this formula successfully for more than a century to become the world’s largest ground and air package-delivery company. It’s a global enterprise with more than 454,000 employees, over 112,000 vehicles, and the world’s ninth-largest airline.

Today, UPS delivers 5.1 billion packages and documents in more than 220 countries and territories. The firm has been able to maintain leadership in small-package delivery services despite stiff competition from FedEx and the U.S. Postal Service by investing heavily in advanced information technology. UPS spends more than $1 billion each year to maintain a high level of customer service while keeping costs low and streamlining its overall operations.

It all starts with the scannable bar-coded label attached to a package, which contains detailed information about the sender, the destination, and when the package should arrive. Customers can download and print their own labels using special software provided by UPS or by accessing the UPS website. Before the package is even picked up, information from the “smart” label is transmitted to one of UPS’s computer centers in Mahwah, New Jersey, or Alpharetta, Georgia, and sent to the distribution center nearest its final destination.

Dispatchers at this center download the label data and use special routing software called ORION to create the most efficient delivery route for each driver that considers traffic, weather conditions, and the location of each stop. Each UPS driver makes an average of 100 stops per day. In a network with 55,000 routes in the United States alone, shaving even one mile off each driver’s daily route translates into big savings: $50 million per year. These savings are critical as UPS tries to boost earnings growth as more of its business shifts to less-profitable e-commerce deliveries. UPS drivers who used to drop off several heavy packages a day at one retailer now make many stops scattered across residential neighborhoods, delivering one lightweight package per household. The shift requires more fuel and more time, increasing the cost to deliver each package.

The first thing a UPS driver picks up each day is a handheld computer called a Delivery Information Acquisition Device (DIAD), which can access a wireless cell phone network. As soon as the driver logs on, his or her day’s route is downloaded onto the handheld. The DIAD also automatically captures customers’ signatures along with pickup and delivery information. Package tracking information is then transmitted to UPS’s computer network for storage and processing. From there, the information can be accessed worldwide to provide proof of delivery to customers or to respond to customer queries. It usually takes less than 60 seconds from the time a driver presses “complete” on the DIAD for the new information to be available on the web.

Through its automated package tracking system, UPS can monitor and even reroute packages throughout the delivery process. At various points along the route from sender to receiver, bar code devices scan shipping information on the package label and feed data about the progress of the package into the central computer. Customer service representatives are able to check the status of any package from desktop computers linked to the central computers and respond immediately to inquiries from customers. UPS customers can also access this information from the company’s website using their own computers or mobile phones. UPS now has mobile apps and a mobile website for iPhone, BlackBerry, and Android smartphone users.

Anyone with a package to ship can access the UPS website to track packages, check delivery routes, calculate shipping rates, determine time in transit, print labels, and schedule a pickup. The data collected at the UPS website are transmitted to the UPS central computer and then back to the customer after processing. UPS also provides tools that enable customers, such Cisco Systems, to embed UPS functions, such as tracking and cost calculations, into their own websites so that they can track shipments without visiting the UPS site.

UPS is now leveraging its decades of expertise managing its own global delivery network to manage logistics and supply chain activities for other companies. It created a UPS Supply Chain Solutions division that provides a complete bundle of standardized services to subscribing companies at a fraction of what it would cost to build their own systems and infrastructure. These services include supply chain design and management, freight forwarding, customs brokerage, mail services, multimodal transportation, and financial services in addition to logistics services. CandleScience, based in Durham, North Carolina, is an industry leader in the candle and soap supply industry, providing raw materials such as waxes, wicks, and fragrances to candle makers around the world. UPS worked with CandleScience to accurately model shipping rates for the company and its customers and to add a freight shipping option capability to its website. UPS also helped CandleScience identify the optimal location for a new warehouse for its West Coast customers. The new West Coast warehouse in Sparks, Nevada lets the company reach some of its largest customers faster, more efficiently and less expensively.

UPS provides both financial and shipping advice and services to Flags of Valor, a small business based in Ashton, Virginia, which sells hundreds of hand-crafted wooden flags each day to online customers. Using UPS Quantum View Manage® technology, the staff can view and monitor outbound packages and immediately respond to customer questions about order status. UPS Capital®, the financial service division of UPS, showed the company how to protect its cash flow and assets by moving to a comprehensive insurance plan.

Sources: Paul Ziobro, “UPS’s $20 Billion Problem: Operations Stuck in the 20th Century,” Wall Street Journal, June 15, 2018; www.ups.com, accessed February 7, 2018; “Igniting Growth with CandleScience,” UPS Compass, May 2017; and “Stars and Stripes Flying High,” UPS Compass, December 2017.

NFL CASE STUDY

Data Changes How NFL Teams Play the Game and How Fans See It

All professional sports teams today collect detailed data on player and team performance, fan behavior, and sales, and increasingly use these data to drive decisions about every aspect of the business—marketing, ticketing, player evaluation, and TV and digital media deals. This includes the National Football League (NFL), which is increasingly turning to data to improve how its players and teams perform and how fans experience the game.

Since 2014 the NFL has been capturing player movement data on the field by putting nickel-sized radio frequency identification (RFID) tags beneath players’ shoulder pads to track every move they make. The information the sensors gather is used by NFL teams to improve their training and strategy, by commentators on live game broadcasts, and by fans attending games or using the NFL app on the Xbox One.

The NFL’s player tracking system is based on the Zebra Sports Solution developed by Zebra Technologies, a Chicago-based firm specializing in tracking technology that includes the bar codes on groceries and other consumer goods and radio frequency identification (RFID) technology. The Zebra Sports Solution system records players’ speed, direction, location on the field, how far they ran on a play, and how long they were sprinting, jogging, or walking. The system can also determine what formation a team was in and how players’ speed or acceleration affects their on-field performance. Want to know how hard Eli Manning is throwing passes or the force with which a ball arrives in the hands of receiver Odell Beckham? The system knows how to do all that.

NFL players have RFID chips in their left and right shoulder pads that transmit data to 20 radio receivers strategically located in the lower and upper levels of stadiums to collect data about how each player moves, using metrics such as velocity, speed in miles per hour, and distance traveled. From there the data are transmitted to an on-site server computer, where Zebra’s software matches an RFID tag to the correct player or official. The football also has a sensor transmitting location data. The data are generated in real-time as the game is being played. Each sensor transmits its location about 25 times per player.

It takes just two seconds for data to be received by the motion sensors, analyzed, and pushed out to remote cloud computers run by Amazon Web Services for the NFL. From the NFL cloud computers, the data are shared with fans, broadcasters, and NFL teams. The data captured by the NFL are displayed to fans using the NFL Next Gen Stats website, NFL social media channels, and the NFL app on Windows 10 and the Xbox One. The data are also transmitted to the giant display screens in the arena to show fans during the game.

The data have multiple uses. NFL teams use them to evaluate player and team performance and to analyze tactics, such as whether it might be better to press forward or to punt in a particular fourth-down situation. Data transmitted to broadcasters, to stadium screens, to Next Gen Stats, and to the Next Gen Stats feature of Microsoft’s Xbox One NFL app help create a deeper fan experience that gets fans more involved in the game.

Some of the statistics fans can now see on Next Gen Stats include Fastest Ball Carriers, Longest Tackles, Longest Plays, Passing Leaders, Rushing Leaders, and Receiving Leaders. Next Gen Stats also features charts for individual players and videos that explain the differences and similarities between players, teams, and games based on the data.

While the data may be entertaining for fans, they could prove strategic for the teams. Data markers for each play are recorded, including type of offense, type of defense, whether there was a huddle, all movement during the play, and the yard line where the ball was stopped. The NFL runs custom-created analytics to deliver visualizations of the data to each team within 24 hours of the game, via a custom-built web portal. The system displays charts and graphs as well as tabular data to let teams have more insight. Each NFL team may also hire its own data analyst to wring even more value from the data. The data are giving NFL fans, teams, coaches, and players a deeper look into the game they love.

Sources: Jason Hiner, “How the NFL and Amazon Unleashed ‘Next Gen Stats’ to Grok Football Games,” TechRepublic,February 2, 2018; Teena Maddox, “Super Bowl 52: How the NFL and US Bank Stadium Are Ready to Make Digital History,” TechRepublic, February 1, 2018; Brian McDonough, “How the NFL’s Data Operation Tracks Every Move on the Field,” Information Management, December 7, 2016; www.zebra.com, accessed March 15, 2017; and Mark J. Burns, “Zebra Technologies, NFL Revamp Partnership For Third Season,” SportTechie, September 6, 2016.

SMART PRODUCTS -COMING YOUR WAY CASE STUDY

Smart Products—Coming Your Way

If you don’t use a smart product yet, you soon will. Your shoes, your clothing, your watch, your water bottle, and even your toothbrush are being redesigned to incorporate sensors and metering devices connected to the Internet so that their performance can be monitored and analyzed. Your home will increasingly use smart devices such as smart thermostats, smart electrical meters, smart security systems, and smart lighting systems.

Under Armour, noted for performance clothing, spent $710 million to scoop up mobile apps such as MyFitnessPal, Map My Fitness, and Endomondo, which enable it to tap into the world’s largest digital health and fitness community, with more than 225 million registered users. According to company data, Under Armour’s connected fitness users have logged more than 500 million workouts and taken 7 trillion steps since the company started tracking the data. Analyzing these data has provided insights such as 3.1 miles being the average distance for a run and that May is the most active month for exercise.

Under Armour is trying to enhance its performance clothing with digital technology. The company now sells connected running shoes. The shoes come in several models and feature a built-in wireless Bluetooth sensor that tracks cadence, distance, pace, stride length, and steps, even if the runner does not bring a smartphone along. The data are stored on the shoe until they can sync wirelessly to Under Armour’s Map My Run app for iPhone, iPad, and Android devices. Users can also connect to the app on third-party devices such as AppleWatch, Garmin, or Fitbit, to incorporate metrics such as heart rate that can’t be tracked by the shoes. The shoe’s analytics will let users know when it’s time to purchase new shoes and sensor batteries have to be charged.

Under Armour has recently added a digital coaching feature for the connected running shoes and Map My Run app. Runners will be able to monitor their gait and stride length mile after mile, and see how that impacts their pace and cadence. By analyzing these data, along with data about the runner’s gender, age, weight, and height, Map My Run will be able to provide a runner with tips on how to improve his or her pace and splits, by taking shorter or longer strides while running, for instance.

Under Armour can generate revenue from in-app ads, including ads from other companies, and purchases from app users referred to its products. The platform delivers unprecedented depth of information and insight about fitness- and health-oriented consumers, creating numerous opportunities for Under Armour and other brands to engage with potential and existing customers. For example, Map My Fitness collects data about a user’s name, e-mail address, birth date, location, performance, and profile if the user connects to the app using social media. Under Armour does not sell identifiable personal data about individuals to third parties but does provide advertisers with aggregate information about app users. Under Armour is hoping that daily use of its smartphone apps will build stronger ties to customers that will lead to stronger sales of its own apparel, footwear, and other athletic gear. The company is clearly benefiting from bringing the power of software to its physical products.

Smart products are also finding their way into people’s homes. Between 2017 and 2022, Con Edison, which supplies electrical power and natural gas to the New York City metropolitan area, is installing 3.6 million new electric smart meters and 1.2 million new gas smart meters in all its customers’ homes and businesses. A smart meter is a digital meter that communicates between a residence or business and Con Edison through a secure wireless communication network. The smart meter records and transmits each customer’s energy consumption regularly throughout the day. The smart meter transmits data to a system of access points on utility poles, which send the usage information to Con Edison.

The smart meter will let the company know when a customer loses service, resulting in faster repairs, and will also provide real-time billing information to customers based on energy usage, enabling them to pinpoint areas for energy savings. They will also permit more definitive voltage regulation, enhancing electric distribution-system efficiency, reducing costs, and providing savings that ultimately get reflected in lower customer bills. Data from the new meters will let Con Ed set prices based on customers’ time and level of use. Rates might jump during summer hours when hot weather makes people turn on their air conditioners, or drop overnight when power use is lowest.

Con Ed customers can use an online My Account dashboard with tools to track their daily energy consumption down to 15-minute increments. They can analyze their usage by comparing hour to hour, weekday versus weekend, or day versus evening use to see where they can save, and they can receive high bill alerts if they are using more energy than usual. Con Ed also offers a mobile app for iPhone and Android smartphone users so that they can track their detailed energy usage while they are on the go.

Sources: Jen Booton, “Under Armour’s New HOVR Smart Shoe Will Automatically Track Your Run,” SportTechie, January 26, 2018; Edgar Alvarez, “Under Armour’s HOVR smart running shoes are more than just a gimmick,” Engadget, February 9, 2018; www.coned.com, accessed March 28, 2018; Edward C. Baig, “Under Armour and HTC Team Up on Connected Fitness,” USA Today, January 5, 2016; www.underarmour.com, accessed April 20, 2018; and John Kell, “Why Under Armour Is Making a Costly Bet on Connected Fitness,” Fortune, April 21, 2016.

ARE CARS BECOMING BIG BROTHER ON WHEELS? CASE STUDY

Cars today have become sophisticated listening posts on wheels. They can track phone calls and texts, record what radio stations you listen to, monitor the speed at which you drive and your braking actions, and even tell when you are breaking the speed limit, often without your knowledge.

Tens of millions of drivers in the United States are currently being monitored, with that number rising every time a new vehicle is sold or leased. There are 78 million cars on the road with an embedded cyber connection that can be used for monitoring drivers. According to research firm Gartner Inc., 98 percent of new cars sold in the United States and Europe will be connected by 2021.

Since 2014, every new car in the United States comes with an event data recorder (EDR), which records and stores over a dozen data points, including vehicle speed, seat belt use, and braking activation. EDR data are available to any auto maker as well as to insurance companies, which use these stored EDR data to help establish responsibility for an accident or to detect fraud.

EDRs are mandated and regulated by the U.S. government, but other data-gathering software in today’s cars is not. Such software underlies numerous sensors, diagnostic systems, in-dash navigation systems, and built-in cellular connections, as well as driver-assistance systems to help drivers park, stay in their lane, avoid rear-ending another car, and steer for short time periods. All of this software keeps track of what drivers are doing. Newer cars may record driver eye movements, the weight of people in the front seats, and whether the driver’s hands are on the wheel. Smartphones, whether connected to the car or not, can also track your activities, including any texting while driving. Auto makers are able to mine all this information, as are app developers and companies such as Google or Spotify.

With the exception of medical information, the United States has few regulations governing what data companies can gather and how they can use the data. Companies generally are not required to conceal names or other personal details. In most cases the driver must consent to allowing his or her personal information to be tracked or monitored. Many people unwittingly provide this consent when they check off a box on one of the lengthy service agreement forms required to register a car’s in-dash system or navigation app.

Collecting such large amounts of personal data generated by drivers has raised concerns about whether automakers and others are doing enough to protect people’s privacy. Drivers may welcome the use of information to relay helpful diagnostic information or updates on nearby traffic jams. But they do not necessarily endorse other uses, and automakers have refrained from commenting on future data collection plans and policies.

Automakers argue that the data are valuable for improving vehicle performance and vehicle safety and soon will be able to reduce traffic accidents and fatalities. Amassing detailed data about human driving behavior is also essential for the development of self-driving cars. But privacy experts believe the practice is dangerous. With enough data about driver behavior, individual profiles as unique as fingerprints could be developed. Trips to businesses reveal buying habits and relationships that could be valuable to corporations, government agencies, or law enforcement. For example, frequent visits to a liquor store or mental health clinic could reveal information about someone’s drinking habits or health problems. People obviously would not want such confidential data shared with others.

Sources: Peter Holley, “Big Brother on Wheels: Why Your Car Company May Know More About You Than Your Spouse.” Washington Post, January 15, 2018; Christina Rogers, “What Your Car Knows about You,” Wall Street Journal, August 18, 2018; John R. Quain, “Cars Suck Up Data About You. Where Does It All Go?” New York Times, July 27, 2017; and Russ Heaps, “Data Collection for Self-Driving Cars Could Be Risking Your Privacy,” Autotrader, September 2016.