What can Brown Do For You? UPS Logistics Turns Brown to Gr$$n

By Joe Francica

DM: Can we start with a brief overview and background of UPS Logistics services and solutions in the commercial routing and fleet management industry?
Len Kennedy (LK), Vice President: UPS Logistics is a wholly owned subsidiary of UPS Supply Chain Solutions.We have been in business since 1986; 1400 systems are out there and about 1000 companies use our product everyday.Our product line is routing scheduling dispatching systems primarily for people with private fleets and wholesale distribution: food service distributions such as Sysco Food Service or US Food Service; or Pepsi Cola and Anheiser Busch distributors.

Our products are in primarily two areas: routing and scheduling, and wireless dispatching and tracking systems. Probably your audience would be most interested in the MobileCast piece: that is the dispatching and real-time tracking using GPS technology. What that is about is fleet management.Real-time visibility is what MobileCast helps people do.It is a combination of a backend server that a dispatcher would use; a wireless handheld device such as Symbol or Intermec "ruggedized" device.Alternatively, you can use a WAP phone.You don't need to have a ruggedized device.

DM: So you separate different components of the solution between a routing and scheduling and an "in-vehicle" component
LK: The reason we do is that they are focusing on two different things.The routing and scheduling creates routes today for delivery tomorrow.It's all a planning activity.For example, the order for products come down to a Roadnet routing system at a certain time of day and then you develop your routes for tomorrow's delivery.The MobileCast component allows you to manage the routes that you developed the day before.So, they are solving two different problems

DM: Do you try to provide a perspective client with an ROI for this type of solution?
LK: Well for the routing and scheduling solution, we conservatively quote them between 5% and 9% reduction in their fleet operations.On the dispatching end, it is a little bit different, because you have the aspect of real-time visibility, and you know what's going on, but in some cases, how do you quantify being able to react quickly to a customer delivery emergency or operation.That is sometimes tough to quantify.

DM: Give me a perspective on the market for your solutions.It seems like they are more focused on product delivery as opposed to field service management.
LK: We are probably an anomaly from UPS Supply Chain Solutions since the bulk of that is providing transportation services or warehouse management or provide service parts logistics or emergency medical equipment; it is more service provided and third part centric solutions.We're unusual in that we are a software company and we provide products to the marketplace.The bulk of UPS Supply Chain Solutions is on providing those service solutions to large companies like Boeing and Papa Johns.

DM: And how are your software products packaged to the user?
LK: We provide them to run on our customers own systems.For MobileCast, we provide the solution to run on our customer's own network.

DM: Who is the typical user?
LK: It is typically the dispatcher. In some cases, it could be the President of the company or the VP or the transportation people.Because they have visibility from a real-time standpoint, they may be the ad hoc user.The dispatch may be using the product minute to minute, but you have the other users that have visibility and they can go in, have a look at it, and see how things are going.

DM: Is the interface centered around a map? Or more tabular based?
LK: Yes, some users orient themselves in different ways.Some people want to have the map come up and show the icons; others the tabular list.More typically, they have both of them up there.From an operations standpoint, when I go watch what people do, they are typically looking for the exceptions in a tabular standpoint. The map is great, but you want to know who is behind schedule, assume everybody else is fine, I'm going to look for the exception.

DM: What are the components in the solution.Can you go through the "punch list" of the technologies that are typically integrated into your solution?
LK: For MobileCast, it would be the server piece that we built from the ground up.It has a mapping component and within that people and drag and drop things between map lists.That is built by us.The geocoding piece we built over the course of time.Our map databases typically come from Geographic Data Technology (GDT), although if someone has a preferred map vendor, we can work with those as well. With the MobileCast piece, you have a handheld computer, GPS (Garmin is typical), and the wireless network would be Artis or the Motion Network or Nextel data network.There are other things we run on such as Oracle or SQL Server or Access; we are pretty agnostic when it comes to that kind of stuff.

DM: How do you differentiate yourself between someone like @Road, which is a totally web-based solution?
LK: We consider them to be AVL (automatic vehicle location) and certainly part of our system has that component of vehicle location.What we provide is getting real-time visibility and tracking what was planned, has actually happened.Because that's the strength.You can look at an AVL and say, well, he's there or she's there, but is that what you planned for the day? Where you behind schedule; ahead of schedule? Should I make any changes along the way for that route? So, we know how your routes were supposed to be, but how are they performing? So, at the end of the day, you take you take those actual performances from your fleet (the statistics) and push them back into the routing system.And at that point, you get better statistics to come up with better planned delivery times for your deliveries the next day.It is an iterative process.

DM: How do you compare to ESRI's ArcLogistics Route or Giro?
LK: We run into ArcLogistics once in a while; not too often because we have our own vertical niches: Food Service, Wholesale distribution, Beverage Service.I'm sure ArcLogistics is good in certain markets, but for the ones we are in, we don't see a whole lot of acceptance.That's not to say that we don't see them.They are also slightly different because in who supports them.If you buy ArcLogistics, are you supported by the VAR or supported by ESRI.Our customers want a single point of contact.Ours is a turnkey solution.

DM: Do you have a certain threshold of vehicles that your solution is particularly well suited or could you take a 25-vehicle company and do virtually the same thing by scaling down the solution?
LK: Yes, we scale down.We have people in the New York area with 25 trucks.And they like the visibility. And, we have a customer in the New Jersey area with 841 trucks.So, it seems to scale OK.We don't reduce any of the functionality.We assuming that if you have a bigger fleet that the ROI would change and the pricing would be changed.

DM: Do you see the market for fleet logistics has seen a slow down with the reset of IT spending?
LK: Yes, we have certainly seen a slowdown.People have said to us that we like what you are showing, but from our standpoint, we are not making any purchases just yet.We have not lost business; just deferred.This is a highly referenced sale.Tell me someone who has the system working; I'm going to go see them; and let me know how it is working.And they will physically go check them out. At the end of the day, they are going to go talk to someone in their market, or somebody they've worked with before.That's why it is important, that when we install something, we better get it right, because if we don't, they are going to go back and tell someone.

DM: What is the typical scenario for rolling out routing and scheduling solutions?
LK: No one goes out and buys for their whole operation.If you happen to have a 1000 truck operation, you are not going to buy for 1000 trucks.Here's what you are going to do. You're going to find one of your locations; you're going to make a pilot project.You've got 25 trucks.You're going to put it in and see how it works.OK, that looks good, I'm going to roll it out to the next 25 or 30.And that's what we will see.We are looking at one customer with 800 trucks, it going to take a year and one-half.They are going to grow gradually and have checkpoints along the way.

Published Friday, December 6th, 2002

Written by Joe Francica

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