United Parcel Service (UPS) is one of the largest delivery services in the world. Founded in 1907 by two teenagers using bicycles and a $100 loan, UPS has grown to become one of the most successful package delivery companies in the world. On an average day, UPS will deliver 20 million packages to customers all over the globe. With a workforce of over 191,000 drivers running its varied fleet of trucks, vans, tractors and motorcycles, it goes without saying that effective fleet management is key to the company’s success. But what tools does UPS use to achieve such a degree of success? And what can other managers learn from the UPS model?
Dedicated to Data
The first step to improving operational efficiencies in your fleet—according to the UPS model—is to collect data. UPS gathers an astonishing amount of data related to transport and delivery, including vehicle-related detail such as engine status, fuel consumption, driver behaviour and route choice. The resulting insights save UPS an estimated $300 to $400 million annually.
Using Data to Optimize Routes
UPS’ proprietary route-optimization system, called On-Road Integrated Optimization and Navigation (ORION), analyzes collected data to create efficient routes on a daily basis. ORION consists of over 250 million unique address points—which are analyzed in concert with customers’ shipping requirements—and a customized set of map data. The solutions UPS employ are sometimes unexpected; for example, the company purportedly instructs drivers to avoid turning through oncoming traffic to save time and avoid costly accidents. The result of all of this data crunching? The ORION system saves UPS 10 million gallons of gas and 100,000 metric tonnes of greenhouse gas emissions per year.
Scaling Up Over Time
For UPS, the adoption of dispatch technologies didn’t happen overnight. While the company began developing ORION in 2003, the program wasn’t fully implemented in the U.S. until 2016. They took a similarly gradual approach when it came to data analysis—a fact that should encourage fleet managers at all stages of data literacy. Managers looking to improve their analytics can follow UPS’ path through the datasphere:
- UPS started their data analysis efforts with descriptive analytics to understand where they were in the moment and where they’d been in the past. The company tracked package deliveries and truck telematics to assess their existing system flow and maintenance schedules.
- They then moved on to predictive analytics, where past data allowed teams to anticipate where they might be in the future. Existing parcel data, for example, helped the company identify potential upcoming swells in delivery demand.
- They rounded off their data survey with prescriptive analytics, which went beyond forecasting to recommending specific action steps. ORION is a perfect example of a prescriptive analytics tool: it gives drivers a best course of action to execute in real time.
Improving Customer Experience Through Data
Beyond providing a strong argument for route planning and optimization, UPS is also using data to bring tangible benefits to its customers through the use of apps and online platforms. UPS uses an online platform and mobile app called My Choice, which allows recipients to pre-sign for deliveries, choose when their delivery arrives and designate where it is left. My Choice depends on robust route optimization to ensure that drivers are provided schedules that align with their customers’ requirements.
Going beyond simply collecting data and optimizing their fleet is what makes UPS stand out from the crowd. Specifically, the ability to turn their data into something that a customer can actually use and appreciate is a major factor of UPS’ continued success.
Lessons for Fleet Managers
Not all companies can be UPS—the company spends around $1 billion a year on ORION—but everyone can take note of industry best practices. Fleet managers should begin by implementing telematics systems that can perform similar functions to UPS’ ORION: in-vehicle technologies like mSlate will help fleet managers learn about their fleets and how they are being deployed. Of course, simply collecting data is not enough to upgrade your fleet to the next level; the data needs to be analyzed and applied. Like UPS’ ORION system, a configurable and cost-effective dispatch system that can take advantage of this data is the next step towards a fully optimized fleet.
With over 100 years of experience, UPS is a model to look to when it comes to fleet optimization. Fleet managers should be paying attention and applying what UPS has learned to their own fleets — even if those fleets are not at quite the same scale yet.
Image: Shutterstock / Vytautas Kielaitis