Chip Synopsis

SYNOPSIS ON “SERVICE DISTRIBUTION

IN UNITED PARCEL SERVICES”

SUBMITTED TO:

Mr. Neeraj Singhal

SUBMITTED BY:

Anjali Bhatia IB/02/07

INTRODUCTION UPS' Parcel Network is based on a hub and spoke model. UPS operates centers that feed parcels to hubs where parcels are sorted and forwarded to their destinations. Centers typically are the point of entry for parcels and send the parcels to one or more hubs. A hub is a location where many centers send packages to be sorted and sent back out to other centers or hubs. For example, a parcel being shipped from Wilmington, North Carolina to San Francisco, California is picked up by a driver and taken to the 23rd Street center in Wilmington, where it is loaded on a trailer and driven to Raleigh, North Carolina. At Raleigh, the package would join packages from all over North Carolina and be forwarded to the Chicago Area Consolidated Hub in Hodgkins, Illinois. After arriving there, it would be loaded onto a trailer and sent by rail (trailer on flat car in most cases) to the North Bay, California hub in San Pablo, California, where it would then be forwarded to the delivery center, loaded onto the delivery vehicle, and transported to its final destination. UPS' air network runs similarly to the ground network through a hub-and-spoke system, though air hubs are typically located at airports so packages and planes can quickly be unloaded, sorted, and loaded again. Centers feed packages to facilities at airports (called gateways), which in turn send them to an air hub to be sorted and put on another plane to a final destination gateway, and then from there to a center. For instance, a package traveling from Seattle, Washington to Atlanta, Georgia, would be loaded onto an air container at Boeing Field just south of Seattle and flown to the UPS Air Hub at Chicago Rockford International Airport in Rockford, Illinois. From there it would be sorted to a container heading to Atlanta to Hartsfield-Jackson International Airport, and taken by truck from the airport to the delivery center. UPS reports their operations in three segments: U.S. Domestic Package operations, International Package operations, and Supply Chain & Freight operations.

U.S. Domestic Package U.S. Domestic Package operations include the time-definite delivery of letters, documents, and packages throughout the United States.

International Package International Package operations include delivery to more than 200 countries and territories worldwide, including shipments wholly outside the United States, as well as shipments with either origin or distribution outside the United States.

Supply Chain & Freight Supply Chain & Freight (UPS-SCS for UPS Supply Chain Services) includes UPS's forwarding and contract logistics operations, UPS Freight, and other related business units. UPS's forwarding and logistics business provides services in more than 175 countries and territories worldwide, and includes worldwide supply chain design, execution and management, freight forwarding and distribution, customs brokerage, mail and consulting services. UPS Freight offers a variety of less than truckload (“LTL”) and truckload (“TL”) services to customers in North America. Other business units within this segment include Mail Boxes Etc. (the franchisor of Mail Boxes Etc. and The UPS Store) and UPS Capital.

LITERATURE REVIEW UPS's Parcel Network is based on a hub and spoke model. The hub and spoke distribution paradigm (or model or network) is a system of connections arranged like a chariot wheel, in which all traffic moves along spokes connected to the hub at the centre. The model is commonly used in industry, in particular in transport, telecommunications and freight, as well as in distributed computing. Benefits of the Hub and Spoke Model According to scholar the small number of routes generally leads to more efficient use of transportation resources. “For example, aircraft are more likely to fly at full capacity, and can often fly routes more than once a day.”

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In the scholar’s terms complicated operations, such as package sorting and accounting, can be carried out at the hub, rather than at every node whilst on the other end spokes are simple and new ones can be created easily.

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“Customers may find the network more intuitive. Scheduling is convenient for them since there are few routes, with frequent service.”

On the other hand Lawrence (2004) presents the following as the drawbacks of the hub and spoke model: •

Lawrence states that because model is centralised; day-to-day operations may be relatively inflexible. “Changes at the hub, or even in a single route, could have unexpected consequences throughout the network. It may be difficult or impossible to handle occasional periods of high demand between two spokes”.

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He further adds that route scheduling is complicated for the network operator. Scarce resources must be used carefully to avoid starving the hub while stating that careful traffic analysis and precise timing are required to keep the hub operating efficiently.

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“The hub constitutes a bottleneck in the network. Total cargo capacity of the network is limited by the hub's capacity. Delays at the hub (caused, for example, by bad weather conditions) can result in delays throughout the network. Delays at a spoke (from mechanical problems with an airplane, for example) can also affect the network.” adds Lawrence.

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He also mentions that cargo must pass through the hub before reaching its destination, requiring longer journeys than direct point-to-point trips. “This is often desirable for freight, which can benefit from sorting and consolidating operations at the hub, but not for time-critical cargo and passengers.”

Lawrence (2004) Analysis conducted on UPS’s operations show that the company operates centers which feed parcels to hubs where parcels are sorted and forwarded to their destinations. “Centers typically are the point of entry for parcels and send the parcels to one or more hubs. A hub is a location where many centers send packages to be sorted and sent back out to other centers or hubs. For example, a parcel being shipped from Wilmington, North Carolina to San

Francisco, California is picked up by a driver and taken to the 23rd Street center in Wilmington, where it is loaded on a trailer and driven to Raleigh, North Carolina.” The source further indicates that at Raleigh, the package would join packages from all over North Carolina and be forwarded to the Chicago Area Consolidated Hub in Hodgkins, Illinois. “After arriving there, it would be loaded onto a trailer and sent by rail (trailer on flat car in most cases) to the North Bay, California hub in Richmond, California where it would then be forwarded to the delivery center, loaded onto the delivery vehicle, and transported to its final destination.” The authors own observations also note that UPS's air network runs similarly to the ground network through a hub-and-spoke system, though air hubs are typically located at airports so packages and planes can quickly be unloaded, sorted, and loaded again. “Centers feed packages to facilities at airports (called gateways), which in turn send them to an air hub to be sorted and put on another plane to a final destination gateway, and then from there to a center.” The company has created multiple business diversification schemes and global growth by forming formidable business networks the world over. UPS move goods, information, and funds between individuals and companies. “Their operations provide delivery by land and by air and offering services at customer shipping centres, as well as online through UPS.com” He further notes that the company operates in more than 200 countries worldwide, does business in 15 different languages and dialects, and deliver an average of 13.2 million packages per day. This presents an ideal opportunity for considering the feasibility of implementing strategies of multi-dimensionalism in the company’s global networks. DOMESTIC COURIER Operational Processes play a major role in domestic courier. Any fault at operations end can cause delay in the delivery of the shipment. There are many processes involved in the entire phase of shipment being picked up from the Customer’s premises (Shipper) and then being delivered at Customer’s Delivered (Consignee). In the process, the shipment travels from one

city to another, at the same time there are few operational processes involved in it. (Few important checkpoint that are created on Stratos by Operations are : AR – Arrival CM – Company Shifted BA – Bad Address AF – Arrival Facility DF – Departure Facility WS – With Scan WC – With Courier OK – Delivered PH – Payment Handover to Commercial HP – Payment on Hold RD – Refuse Delivery GS & SS – Ghost Airway bill or Wrong Airway Bill No. (Stop Shipment) DS – Destroyed DM – Damaged TP – Forwarded to Third party

INTERNATIONAL COURIER In case of International Courier, AFL WiZ Express tries to keep its operations very strict. In this context, the shipments are picked up by AFL WiZ Express, and then after all the processing (UPS worldship), the shipment is handed over to UPS and then UPS takes care of the entire operations of shipment being uplifted from origin to destination and then delivering the shipment at the destination address. AFL WiZ Express has a strategic alliance with UPS (United Parcel Services) for all the international shipments. There are several standards of UPS to be followed for the international shipments like UPS Worldship is software from UPS to process the shipment with an unique tracking number of 1Z …… series. It also has a unique way of packing the shipments – Express Envelope: for all the documents and Express Pak: For Samples and small freight shipments.

METHODOLOGY USED SECONDARY DATA ANALYSIS Secondary Data available on net and some information that company could share has been analyzed and treated as problem recognition and some alternatives have been derived from the same method. CASE STUDIES Data has been analyzed to get an overview of the problems existing in the organization which has creates problems for the Organization Department for basic functionality of the unit.

OBJECTIVES •

To understand the service distribution model of United Parcel Services. How they serve their customers.

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To understand the functional processes during domestic and international courier.

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To analyse the cases of UPS and study the problems and improvements in functioning of UPS.

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To understand the delivery process in international UPS shipment.

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To understand the process flow in UPS.

REFERENCES http://en.wikipedia.org/w/index.php? title=Special:Search&search=courier+industry accessed on 3rd November 2010 http://www.ups.com/ accessed on 7th November http://in.finance.yahoo.com/q/pr?s=ups accessed on 10th November