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54 Part One Organizations, Management, and the Networked Enterprise

UPS is now leveraging its decades of expertise warehouses that service multiple pharmaceutical
managing its own global delivery network to manage companies at once, with freezers for medicines and
logistics and supply chain activities for other compa- high-security vaults for controlled substances.
nies. It created a UPS Supply Chain Solutions division UPS has partnered with Pratt & Whitney, a world
that provides a complete bundle of standardized ser- leader in the design, manufacture, and service
vices to subscribing companies at a fraction of what it of aircraft engines, space propulsion systems,
would cost to build their own systems and infrastruc- and industrial gas turbines, to run its Georgia
ture. These services include supply chain design and Distribution Center, which processes 98 percent
management, freight forwarding, customs brokerage, of the parts used to overhaul Pratt & Whitney jet
mail services, multimodal transportation, and finan- engines for shipment around the world. UPS and
cial services, in addition to logistics services. Pratt & Whitney employees together keep track of
In 2006, UPS started running the supply chains of about 25,000 different kinds of parts and fulfill up to
medical device and pharmaceutical companies. For 1,400 complex orders each day—ranging from a few
example, at UPS headquarters in Louisville, Kentucky, nuts and bolts to kits comprising all the parts needed
company pharmacists fill 4,000 orders a day for to build an entire engine. On the receiving side of
insulin pumps and other supplies from customers the 250,000-square-foot building, UPS quality inspec-
of Medtronic Inc., the Minneapolis-based medical- tors check newly arrived parts against blueprints.
device company. UPS pharmacists in Louisville log Sources: Jennifer Levitz and Timothy W. Martin, “UPS, Other Big
into Medtronic's system, fill the orders with devices Shippers, Carve Health Care Niches,” The Wall Street Journal, June
stocked on site, and arrange for UPS to ship them 27, 2012; “Logistics in action: At Pratt & Whitney Facility, Silence
Is Golden,” UPS Compass, August 2012; Bob DuBois, “UPS Mobile
to patients. UPS's service has allowed Medtronic to
Goes Global,” UPS Compass, January 27, 2011; Jennifer Levitz, “UPS
close its own distribution warehouse and significantly Thinks Out of the Box on Driver Training,” The Wall Street Journal,
reduce the costs of processing each order. UPS and April 6, 2010; Agam Shah, “UPS Invests $1 Billion in Technology to
Cut Costs,” Bloomberg Businessweek, March 25, 2010.
other parcel delivery companies are investing in giant

CASE STUDY QUESTIONS

1. What are the inputs, processing, and outputs of 3. What strategic business objectives do UPS’s
UPS’s package tracking system? information systems address?
2. What technologies are used by UPS? How are these 4. What would happen if UPS’s information systems
technologies related to UPS’s business strategy? were not available?

Using a handheld computer
called a Delivery Information
Acquisition Device (DIAD), UPS
drivers automatically capture
customers’ signatures along with
pickup, delivery, and time card
information. UPS information
systems use these data to track
packages while they are being
transported.

© Bill Aron/PhotoEdit

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