It is important to understand what information systems are and why they are essential for running and managing a business. It is also important to understand the diffe

UPS Competes Globally with Information Technology

United Parcel Service (UPS) started out in 1907 in a closet-sized basement office. Jim Casey and Claude

Ryan—two teenagers from Seattle with two bicycles and one phone—promised the “best service and

lowest rates.” UPS has used this formula successfully for more than a century to become the world’s

largest ground and air package-delivery company. It’s a global enterprise with more than 495,000

employees, 125,000 delivery vehicles, and 572 aircraft.

Today UPS delivers 5.5 billion packages annually in more than 220 countries and territories. The firm has

been able to maintain leadership in small-package delivery services despite stiff competition from FedEx

and the US Postal Service by investing heavily in advanced information technology. UPS spends more

than $1 billion each year to maintain a high level of customer service while keeping costs low and

streamlining its overall operations.

It all starts with the scannable bar-coded label attached to a package, which contains detailed

information about the sender, the destination, and when the package should arrive. Customers can

download and print their own labels using special software provided by UPS or by accessing the UPS

website. Before the package is even picked up, information from the “smart” label is transmitted to one

of UPS’s computer centers in Mahwah, New Jersey, or Alpharetta, Georgia, and sent to the distribution

center nearest its final destination.

Dispatchers at this center download the label data and use special routing software called ORION to

create the most efficient delivery route for each driver that considers traffic, weather conditions, and

the location of each stop. Each UPS driver makes an average of 120 stops per day. In a network with

55,000 routes in the United States alone, shaving even one mile off each driver’s daily route translates

into big savings in time, fuel consumption, miles driven, and carbon emissions—as much as $50 million

per year.

These savings are critical as UPS tries to boost earnings growth as more of its business shifts to less-

profitable e-commerce deliveries. UPS drivers who used to drop off several heavy packages a day at one

retailer now often make multiple stops scattered across residential neighborhoods, delivering one

package per household. The shift requires more fuel and more time, increasing the cost to deliver each

package.

The first thing a UPS driver picks up each day is a handheld computer called a Delivery Information

Acquisition Device (DIAD), which can access a wireless cell phone network. As soon as the driver logs on,

his or her day’s route is downloaded onto the handheld. The DIAD also automatically captures

customers’ signatures along with pickup and delivery information. Package tracking information is then

transmitted to UPS’s computer network for storage and processing. From there, the information can be

accessed worldwide to provide proof of delivery to customers or to respond to customer queries. It

usually takes less than 60 seconds from the time a driver presses “complete” on the DIAD for the new

information to be available on the web.

Through its automated package tracking system, UPS can monitor and even reroute packages

throughout the delivery process. At various points along the route from sender to receiver, bar code

devices scan shipping information on the package label and feed data about the progress of the package

into the central computer. Customer service representatives are able to check the status of any package

from desktop computers linked to the central computers and respond immediately to inquiries from

customers. UPS customers can also access this information from the company’s website using their own

computers or mobile phones. UPS now has mobile apps and a mobile website for iPhone and Android

smartphone users.

Anyone with a package to ship can access the UPS website to track packages, check delivery routes,

calculate shipping rates, determine time in transit, print labels, and schedule a pickup. The data

collected at the UPS website are transmitted to the UPS central computer and then back to the

customer after processing. UPS also provides tools that enable customers, such as Cisco Systems, to

embed UPS functions, such as tracking and cost calculations, into their own websites so that they can

track shipments without visiting the UPS site.

UPS is now leveraging its decades of expertise managing its own global delivery network to manage

logistics and supply chain activities for other companies. It created a UPS Supply Chain Solutions division

that provides a complete bundle of standardized services to subscribing companies at a fraction of what

it would cost to build their own systems and infrastructure. These services include supply chain design

and management, freight forwarding, customs brokerage, mail services, multimodal transportation, and

financial services in addition to logistics services.

UPS technology and business services are helpful to businesses of all sizes, including small start-ups.

Fondarific is a Savannah-based company that manufactures and sells fondant icings for decorating

wedding cakes and childrens’cakes. UPS made it possible for Fondarific to grow rapidly when

international sales took off. UPS set up a class in exporting to teach Fondarific how to manage

international sales and logistics and how to use its WorldShip global shipping software for UPS package

and freight services. UPS also showed the company how to integrate shipping systems with Quickbooks

accounting software and inventory software.

UPS provides both financial and shipping advice and services to 4Moms, a Pittsburgh-headquartered

company with 80 employees that makes innovative baby products using consumer technology. 4Moms

uses UPS Trade Direct, which enables companies to reduce freight and inventory costs by bypassing

distribution centers and shipping their goods directly to retailers. The UPS Cargo Finance service helps

4Moms manage the cost of inventory as it is shipped around the world.

The City of Mississauga Goes Digital

The City of Mississauga, a Toronto suburb, is Canada’s sixth-largest city and a leading user of digital

technology to improve its operations and services. It tries to integrate technology into its operations and

strategic and business planning, with technology roadmaps for each municipal service defined in

business plans and budgets.

Mississauga has a vibrant multicultural population and a thriving central business district, with many

Canadian and multinational corporations headquartered there. Since 1970, however, the Greater

Toronto Area, including Mississauga, has experienced a noticeable increase in low-income families and a

similar decrease in middle-income families. Mississauga developed a Smart City Master Plan to provide a

vision and framework to guide the city’s adoption of digital technology. The city’s leaders believe that

digital technology should be available for everyone and provide opportunities to startups, schools, and

households at risk.

Mississauga has been a leader in technology initiatives such as social media and “bring your own device”

(BYOD), which allows employees to use their own mobile devices for their jobs. Mississauga’s website

and online services are hosted in remote cloud computing centers accessible via the Internet. In

deploying these technologies, the city tries to focus on usability, a high-quality customer experience,

and making information technology and technology services available to residents of all income and

educational levels.

Mississauga is trying as much as possible to go paperless, with meetings and collaboration via

videoconferencing where participants can “attend” meetings and share documents remotely. These

efforts have significantly reduced paper use and the need to travel via car or airplane to meetings.

Mobile tools have made it possible for city staff, including transit operators and work operations staff in

the field, who previously lacked computers, to access employee information and operational data to

support real-time operations and decision making. Working with cellular provider Rogers Wireless,

Mississauga connected over 600 buses that are collecting information about bus operations and routes,

so that the public has real-time information about bus locations. The bus data collected also are used for

timing maintenance, warranty, and mileage routines so that buses can be removed from service at

optimal times to minimize service interruption.

Mississauga has additionally connected 700 city vehicles such as fire trucks and vehicles for snow, public

works, and parks operations, and facility maintenance to provide real-time location-based information.

For example, connected snow vehicles provide real-time snow plow information to the public as well as

the expected level of service for snow removal. Onboard sensors track when snow blades are active,

where and when salt or sand is applied, and the rate at which these materials are applied. Mississauga

recently implemented an Advanced Traffic Management System (ATMS), which connected over 700

traffic intersections using its own high-capacity fiber optic and wireless Wi-Fi networks (see Chapter 7)

along with the Rogers cellular network.

A City Hall pilot project created individual workspaces and collaboration units on the fifth floor so that

staff can choose where they want to sit and work. Over 90 percent of the staff on that floor have no

defined desk or desk phone, but they do have mobile technology to connect anywhere. A mobile

working environment has helped the city attract younger employees, and it has transformed the way

top management works as well. The city manager, commissioners, and directors are trading desktops for

mobile devices.

Partnering with three other municipalities, Mississauga built its own high-speed fiber optic network

known as the Public Sector Network (PSN). It is the largest municipally owned fiber optic network in

Canada. This supports a citywide high-speed fiber network for transmitting large quantities of data and a

wireless Wi-Fi network that supplies wireless connectivity to the public for many city services. Enterprise

networking giant Cisco Canada helped the city build an extensive Wi-Fi network for all its community

centers, libraries, arenas, and many outdoor locations such as parks and small business areas. This free

Wi-Fi network is available as a “virtual campus” to college and university students around the world. In

2018 over 8 million hours of free public Wi-Fi were used across the City. Providing public Wi-Fi access in

so many locations across the city is one way for Mississauga to level the “digital divide” between

residents who are technology “haves” and those who are technology “have-nots.”

Mississauga is working with the United Way, Region of Peel, University of Toronto at Mississauga,

Sheridan College, and its Business Improvement Areas (BOAs) to build a mobile-friendly ecosystem

across the city that can deliver services and digital technology to the entire community. The plan divides

Mississauga into 23 defined communities, with one Hub center and 500 mobility kits to residents

enrolled in social support programs per community. Each mobility kit consists of a connected laptop.

Hubs will be developed jointly with several of the large technology firms with Canadian headquarters in

Mississauga and they will provide coworking spaces where their employees can do their work.

Eventually the city will have 100 Hubs. The city is also planning to build 500 “Connects” across its 23

communities that will provide indoor and outdoor spaces with voice-supported digital screens and free

Wi-Fi access. A “Connect” could be in a park, beside a bus stop, or inside a mall, and there citizens will

find free Wi-Fi, a place to sit, and access to services and programs.

Shipping Wars

Shipping and delivery have been vital to the success of e-commerce, both for retailers and for the

shipping companies themselves. FedEx, UPS, and the United States Postal Service (USPS) have earned

many billions of dollars handling the massive amount of products ordered from Amazon and other e-

commerce sites. Convenient and seamless online ordering and shipping processes, along with free or

low-cost delivery or two-day delivery, are a source of competitive advantage for online merchants over

traditional brick-and-mortar retailers.

Especially important in logistics is the “last mile,” which refers to the last step in a delivery that takes the

package to the customer’s doorstep. Instead of using the USPS, FedEx, or UPS for the last mile, Amazon

is building a fleet of delivery vans and expanding its fleet of Boeing 737 and 767 airplanes for this

purpose. Amazon Air is a cargo airline operating exclusively to transport Amazon packages. By 2021,

Amazon Air will have at least 70 cargo aircraft operating out of over 20 air gateways in the United

States. Amazon additionally expanded its airport hub operations, building a $1.5 billion hub at

Cincinnati/Northern Kentucky International Airport. Amazon also has operations at Fort Worth Alliance

Airport and Chicago Rockford International Airport.

Amazon taking over the “last mile” will drain billions of dollars of business away from the US Post Office

(which handles 62 percent of Amazon’s packages), UPS (handling 21 percent), and FedEx (handling 8

percent). Amazon is not trying to replace these shippers but does want to gain some control over

logistics in order to guarantee that Amazon Prime members get their two-day shipping on time and that

it has capability to handle very large sales volumes during the holidays or bad weather periods. Amazon

will also save on costs. According to Morgan Stanley, Amazon saves $2 to $4 per package, amounting to

$2 billion annually, when it uses its own fleet. Additionally, having total control over the entire shipping

process makes it possible for Amazon to provide a better customer experience. It is easier to track lost

packages and respond immediately to customer inquiries if Amazon does not have to work through

another shipper. Amazon’s shipping policies have been a principal driver of its rapid retail growth.

When Amazon announced one-day shipping for Prime members in April 2019, FedEx canceled its

express delivery contract with Amazon, redefining its business strategy. Management believes FedEx

doesn’t really need Amazon to flourish, since Amazon accounted for less than 1.3 percent of FedEx’s $70

billion in consolidated annual revenues and had been one of FedEx’s least profitable customers on a

margin basis. Management also believed that working with Amazon was cannibalizing FedEx’s own

business. The direction FedEx has chosen calls for focusing on its ground delivery service and

establishing new partnerships with other retailers and brands to serve the broader e-commerce market.

For example, in June 2019 FedEx and Dollar General announced a strategic alliance to offer new,

convenient access to FedEx drop-off and pickup services at thousands of Dollar General stores. The

effort is designed to increase access to FedEx for all customers, particularly those living in rural

communities where Dollar General has a large footprint. FedEx and Dollar General began rolling out the

service in more than 1,500 Dollar General stores in late summer 2019, and will be in more than 8,000

stores by the end of 2020. The Dollar General alliance will expand the FedEx Retail Convenience

Network to more than 62,000 retail locations. That move will put more than 90 percent of Americans

within 5 miles of a FedEx hold retail location. Customers will be able to drop off prepackaged and

prelabeled FedEx Express or FedEx Ground shipments at Dollar General stores and pick up packages sent

to their neighborhood Dollar General stores.

FedEx thinks it can overtake Amazon and become the fastest, most cost-efficient e-commerce delivery

service. In December 2018 FedEx announced its Extra Hours’ Delivery Options for Retail Customers,

which will provide next-day and overnight shipping to e-commerce customers. FedEx is also initiating

package delivery seven days a week to further compete with Amazon.

How does United Parcel Service (UPS) stack up in this competitive arena? Unlike FedEx, UPS is

deepening its ties to Amazon. It wants to stay neutral, whereas FedEx has broken away from Amazon in

favor of courting the brick-and-mortar retailers. UPS is also relying more on the U.S. Postal Service,

especially for Sunday deliveries. FedEx is now delivering on its own about 2 million packages per day

that it had formerly handed to the U.S. Postal Service for last-mile delivery. By handling an increased

volume of packages on its own, FedEx believes it can make better use of its more than 600 sorting and

delivery facilities around the United States to help retailers with shipments from stores to residences.

However, analysts such as Morgan Stanley’s Ravi Shanker are not sure that increasing the volume of

short-haul deliveries will generate the kind of returns FedEx is seeking.

Which company will win the retail shipping wars? The outcome could determine the future direction of

the entire e-commerce retail industry.

Your Smartphone: Big Brother’s Best Friend

Every minute of every day, all over the world, dozens of companies are tracking the precise locations of

tens of millions of people with mobile phones and storing the data in gigantic data repositories. One of

those being tracked could be you. Anyone who has accessed these data can see whom you’ve met,

where you spent the night, where you pray, or whether you visited a psychiatrist’s office or massage

parlor.

Google Maps, with over one billion users, is perhaps the most popular location-based app in the world.

Most of its users are having their locations tracked. Google, Facebook, and other large tech companies

are more likely to keep the location data they collect for internal use. But many smaller companies, such

as Reveal Mobile, operating behind the scenes in mobile apps, also collect location data from your

phone’s sensors, with your knowing or unknowing consent.

The location data have many uses, such as providing maps and driving directions, facilitating payments,

analyzing urban traffic patterns, and identifying where Americans have—and haven’t—been practicing

social distancing during the coronavirus pandemic. However, location data are often sent to marketing

companies to create targeted advertising. Once companies have legally obtained location data, there

are few legal restrictions on what they can do with them, including selling the data for profit. Every app

is potentially transmitting data to five or ten other apps. Your data are being combined with other data

to learn more about you. It’s difficult to know which apps are sharing and profiting from peoples’

location data.

How is this allowed to go on? When downloading an app, a mobile phone user “consented,” by clicking

on an “I agree” screen to the terms of service in order to use the app. Downloading the app and

agreeing to terms of service are potentially allowing the user’s sensitive information to be exposed to ad

networks, data brokers, and other technology companies. There are some location-using apps that do so

with clear disclosures, but many don’t. Some companies even collect the data for one purpose while

using it for another.

By law, location-tracking companies are only required to describe theirpractices in their privacy policies,

which tend to be dense legal documents that are very difficult for the average person to understand. If a

private company is legally collecting location data, it is free to distribute or share the data however it

wants. Location-tracking companies assert that the location data they work with are anonymous, but

comprehensive records of time and place are still able to identify real people.

It is often nearly impossible to know which companies receive your location information and what they

do with it. Since collection of location data is largely unregulated, some of these companies can legally

obtain access to phone location sensors and then buy and sell the information. Smaller location-tracking

companies are able to insert their tracking programs into established apps from larger app developers

using software development kits (SDKs), small programs that can be used to build features within an

app, including location-tracking capabilities. SDKs are embedded in thousands of apps. The categories of

app most commonly working with SDKs include travel, entertainment, maps and navigation, social

networking, shopping, games, and sports.

In a New York Times Opinion test, the music app iHeartRadio asked users to allow location services “to

get your favorite DJ.” The iHeart app then sent the precise geolocation of the user’s phone to the data

company Cuebiq for analysis such as measuring whether people visited a store after seeing an online ad.

iHeartRadio stated its use of location data complies with “all applicable laws” and that its privacy policy

includes “fulsome disclosure around location use.” iHeartRadio revised the consent screen for a later

version of the app that includes more details.