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China； and while there I was afflicted with jet lag one night and was watching CNN
International to pass the wee hours of the morning。 At one point； a commercial came
on for UPS； and its tag line was UPS's new slogan： 〃Your World Synchronized。〃
The thought occurred to me： That must be what Nandan was talking
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about！ UPS； I learned； was not just delivering packages anymore； it was synchronizing
global supply chains for companies large and small。 The next day I made an appointment
to visit UPS headquarters in Atlanta。 I later toured the UPS Worldport distribution
hub adjacent to the Louisville International Airport； which at night is basically
taken over by the UPS fleet of cargo jets； as packages are flown in from all over
the world； sorted； and flown back out again a few hours later。 （The UPS fleet of 270
aircraft is the eleventh largest airline in the world。） What I discovered on these
visits was that this is not your father's UPS。 Yes； UPS still pulls in most of its
36 billion in sales by shipping more than 13。5 million packages a day from point
A to point B。 But behind that innocuous facade； the company founded in Seattle in
1907 as a messenger service has reinvented itself as a dynamic supply…chain manager。
Consider this： If you own a Toshiba laptop computer that is under warranty and it
breaks and you call Toshiba to have it repaired； Toshiba will tell you to drop it
off at a UPS store and have it shipped it to Toshiba； and it will get repaired and
then be shipped back to you。 But here's what they don't tell you： UPS doesn't just
pick up and deliver your Toshiba laptop。 UPS actually repairs the computer in its
own UPS…run workshop dedicated to computer and printer repairs at its Louisville hub。
I went to tour that hub expecting to see only packages moving around； and instead
I found myself dressed in a blue smock； in a special clean room； watching UPS employees
replacing motherboards in broken Toshiba laptops。 Toshiba had developed an image
problem several years ago； with some customers concluding that its repair process
for broken machines took too long。 So Toshiba came to UPS and asked it to design a
better system。 UPS said； 〃Look； instead of us picking up the machine from your
customers； bringing it to our hub； then flying it from our hub to your repair facility
and then flying it back to our hub and then from our hub to your customer's house；
let's cut out all the middle steps。 We； UPS； will pick it up； repair it ourselves；
and send it right back to your customer。〃 It is now possible to send your Toshiba
laptop in one day； get it repaired the next； and have it back the third day。 The UPS
repairmen and …women were all certified by Toshiba； and its customer complaints went
down dramatically。
packages delivered or goods repaired quickly anywhere in the world； you can act really
small。
In addition； by making the delivery of goods and services around the world
superefficient and superfast…and in huge volumes…UPS is helping to level customs
barriers and harmonize trade by getting more and more people to adopt the same rules
and labels and tracking systems for transporting goods。 UPS has a smart label on all
its packages so that package can be tracked and traced anywhere in its network。
Working with the U。S。 Customs Service； UPS designed a software program that allows
customs to say to UPS； 〃I want to see any package moving through your Worldport hub
that was sent from Cali； Colombia； to Miami by someone named Carlos。〃 Or； 〃I want
to see any package sent from Germany to the United States by someone named Osama。〃
When the package arrives for sorting； the UPS computers will then automatically route
that package to a customs officer in the UPS hub。 A computerized arm will literally
slide it off the conveyor belt and dump it into a bin for a closer look。 It makes
the inspection process more efficient and does not interrupt the general flow of
packages。 These efficiencies of time and scale save UPS's clients money； enabling
them to recycle their capital and fund more innovation。 But the level of collaboration
it requires between UPS and its clients is unusual。
Plow & Hearth is a large national catalog and Internet retailer specializing in
〃Products for Country Living。〃 P&H came to UPS one day and said that too many of its
furniture deliveries were coming to customers with a piece broken。 Did UPS have any
ideas？ UPS sent its 〃package engineers〃 over and conducted a packaging seminar for
the P&H procurement group。 UPS also provided guidelines for them to use in the
selection of their suppliers。 The objective was to help P&H understand that its
purchase decisions from its suppliers should be influenced not only by the quality
of the products being offered but also by how those products were being packaged and
delivered。 UPS couldn't help its customer P&H without looking deep inside itsbusiness
and then into its suppliers' businesses…what boxes and packing materials they were
using。 That is insourcing。
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Consider the collaboration today among eBay sellers； UPS； PayPal； and eBay buyers。
Say I offer to sell a golf club on eBay and you decide to buy it。 I e…mail you a PayPal
invoice； which has your name and mailing address on it。 At the same time； eBay offers
me an icon on its Web site to print out a UPS mailing label to you。 When I print that
mailing label on my own printer； it comes out with a UPS tracking bar code on it。
At the same time； UPS； through its computer system； creates a tracking number that
corresponds to that label； which automatically gets e…mailed to you…the person who
bought my golf club…so you can track the package by yourself； online； on a regular
basis and know exactly when it will reach you。
If UPS had not gone into this business； someone would have had to invent it。 With
so many more people working through horizontal global supply chains far from home；
somebody had to fill in the inevitable holes and tighten the weak links。 Said Kurt
Kuehn； UPS's senior vice president for sales and marketing； 〃The Texas machine parts
guy is worried that the customer in Malaysia is a credit risk。 We step in as a trusted
broker。 If we have control of that package； we can collect funds subject to acceptance
and eliminate letters of credit。 Trust can be created through personal relations or
through systems and controls。 If you don't have trust； you can rely on a shipper who
does not turn ＇your package＇ over until he is paid。 We have more ability than a bank
to manage this； because we have the package and the ongoing relationship with the
customer as collateral； so we have two points of leverage。〃
More than sixty companies have moved operations closer to the UPS hub in Louisville
since 1997； so they can make things and ship them straight from the hub； without having
to warehouse them。 But it is not just the little guys who benefit from the better
logistics and more efficient supply chains that insourcing can provide。 In 2001； Ford
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
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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