Is UPS a package delivery company or a logistics and data/analytics company? Known for its ubiquitous brown trucks, the global package delivery giant has embraced IoT in just about every facet of its business, with even more projects in the works. There are IoT sensors on trucks, handheld devices, even labels that monitor everything from truck engine performance to packages flowing through the network.
During his May 15th keynote address at IOT World 2018, Juan Perez, chief information officer and chief engineering officer for UPS, said that his company has “truly transformed” the way it does business by leveraging the power of IoT technology to realize efficiencies and avoid downtime. But achieving these benefits is not a product of simply deploying sensor throughout the organization to gather random information, he said.
“I think we all recognize that IoT is data, but, very importantly, data minus analytics is just simply trivia. I get really, really worried when I hear business units … wanting more and more data in the organization without having a solid strategy as to how that data is going to help us make better business decisions.”
“Of course, trivia can cost UPS lots of money—ultimately, without the type of value that we want to generate from it. However, data plus insight helps with decisions.”
IoT has already helped UPS save millions of dollars every year. One of the best-known examples of this is optimizing driver routes. Before drivers leave the facility, they get a manifest on their handheld devices that lays out their route for the day. It’s a route that factors in numerous data signals in order to minimize the miles they drive. Sensors also track location, traffic conditions, and monitor a truck’s performance to avoid breakdowns on the roads or highway.
Juan Perez of UPS shows off the company’s E-Trikes on stage at IoT World in Santa Clara, CA
Perez has been with UPS for over 25 years, starting as a truck driver in the Beverly Hills, CA area. Juan became UPS’s CIO in 2016 and added engineering to his title in April 2017. His career has covered assignments in Operations, Industrial Engineering, Process Management, and Technology in corporate, US, and international business units.
Juan said the key between data being a trivial pursuit and an engine for driving more effective and efficient operations is analytics.
“All of these connected devices that we have at UPS collect a significant amount of data, but raw data is just useless—it doesn’t mean anything to us,” he said. “What we’ve had to do to truly extract value from our IoT strategy and from our data strategy is to get very, very effective at analytics.
“Analytics … is taking raw data and making that raw data be converted into insight, so we can make better decisions. We live by this day in and day out.”
Perez said there are three types of analytics: descriptive, predictive and prescriptive. Descriptive analytics is focused on past performance, and predictive analytics is focused on the present—both can be helpful in identifying areas of improvement within an organization, but they only help personnel make good future decisions if conditions do not change, he said.
In contrast, prescriptive analytics are focused on the future and can be adaptive to changing environments, Perez said.
“Where we want to be is in the world of prescriptive analytics,” Perez said. “The output is now allowing us to make really effective decisions and take action on the way we do work. The focus is not only on the present but also on the future. The question that needs to be asked—which is really important—is, ‘What should I do next?’
“Quite frankly, there hasn’t been a downside to UPS in focusing on prescriptive analytics.”
This approach is manifested in several areas, from package-tracking capabilities to analytics that use sensor data on vehicles to determine maintenance needs, Perez said. In addition, UPS drivers are given routes each day that have been optimized to deliver packages in the most efficient manner, he said.
Analytics crucial to effective IoT deployments, UPS exec said. Matters like route optimization might seem like a small item on the surface, but in a company with UPS’s scale–more than 454,000 employees, more than 100,000 delivery vehicles and a fleet of more than 500 airplane worldwide delivering up to 34 million packages in the U.S. during its peak period last year—even small efficiency gains can have a very real bottom-line impact, Perez said.
“We are detail-oriented,” Perez said. “Think about these numbers: If we save 1 mile per driver per day—across all of our drivers in the U.S.—in the course of a year, UPS can save $50 million. If we can save one minute in our drivers’ day that is non-value-added for our customer or for us as a company, we can save—across all drivers the course of a year–$14.6 million. If we can reduce one minute of idle time, we can reduce $515,000 in a year.
“Details matter. So, as you develop your data strategy and your IoT strategy, ensure that you remain detail-oriented.”
This mindset has altered the way UPS operates, Perez said.
“UPS has changed significantly in the last several years,” Perez said. “In fact, we’re no longer a small-package delivery company alone. Yes, we’re definitely the largest package-delivery company in the world, but we’re also a logistics company. We’re also an insurance company. We provide all kinds of freight transportation across multiple modes. And we continue to gather data on all aspects of our business and keep generating insights that can help UPS run better. So, today, we’re a very different company than we were many years ago.
“The journey to get here has been difficult. We were a paper-based company only a few years back … Today, I would make the argument that UPS is truly a technology company that happens to be in the logistics business. We deliver packages, but we are a technology company.”
“We’re working on a number of projects to bring sensors to everything. We believe data and IoT will continue to improve our business in ways that we haven’t even dreamed of.”
The exponential growth of data made possible by connected devices and the industrial Internet is creating a society that is always on and always learning. These connections are transforming entire industries as companies leverage new technologies for greater efficiency, improved service and positive environmental impact.