September, 2015
The Road to Optimization
Jack Levis – Senior Director of Process Management

Challenges
• Increased B to C shipments
– Less Density
(Pcs per Stop & Geographic)
• Increased demand for personalization
• 55,000 well compensated drivers
3
Operations Technology Has Been Key in Meeting
Challenges

Basic Facts
1 mile is worth
$50M*
1 minute is worth
$14.6M*
1 minute of idle time is worth $515K**
Note: Figures are per driver per day across the US for a year
* Small Package P/U and Delivery drivers
** Small Package P/U and Delivery, Freight and Tractor / Trailer drivers

5

3%
16%
30%
70%
Research shows a hierarchy of impact through the use of analytics

8
Chasing Big Data

9

11

12
DIAD I
1990
DIAD II
1993
DIAD III
1999
DIAD IV
2004
UPS has been utilizing Big Data for over 20 years
DIAD V
2011

13
Telematics provides additional sources of data

Engine Data
Merging Multiple Data Sources
GPS Data Sensor
Data
DIAD Data Map Data
1. Automotive
Vehicle Diagnostics Data, Fault
Codes, and Usage Cycles can be used to anticipate part failure and predict vehicle breakdowns.
2. Safety
Through GPS, DIAD, and Sensor
Devices (Seatbelt, Bulkhead Door, and Reverse), a driver’s driving habits can be monitored and areas of improvement can be displayed visually on maps.
3. Dispatch Planning
Dispatch Planning process may be enhanced and simplified through
“Work Area” Concept. Dispatch planning & address validation processes may be enhanced and simplified through GPS data.
4. On-Road Performance
Combining GPS and DIAD data displayed on maps, allows us to monitor and analyze daily driver travel paths and highlight excess miles and dispatch inefficiencies.
5. Work Measurement
Using GPS, DIAD, and Map data, has allowed us to enhance, automate and simplify several steps in On-Road time study and work measurement processes.
14
Visibility on primary and behavioral characteristics that affect fuel consumption
Integrated Data
Allows for Diverse Usage

Engine Idling
Seat Belt Usage
Backing Satellite Context
15
Descriptive Analytics
Analysis time reduced from 9 hours to 45 minutes

Combined information about each shipment to analyze service or cost deficiencies
Descriptive / Diagnostic Analytics
Service Improvement

Coolant Temperature
107441
115901
115903
130506
130659
131304
131307
131330
131332
131337
131343
131370
131371
131373
131377
132688
132722
135435
135437
135566
135608
135613
135874
136215
137431
137434
137939
176865
50
5/21 - 5/25
100 150 engine coolant temperature
200 250
Battery Voltage - T444E - 1995 - 1996 - Oregon Ave.
130079
136111
136116
136118
655141
655143
655146
655157
655444
655689
655691
655692
655694
6
August 28 - Sep 1
8 10 battery voltage
12 14
Engine Speed to Road Speed - MBENZ - Roswell
134356
134370
134404
134416
134425
140120
661578
662783
663314
663481
663502
663547
664034
664049
664452
664463
0
August 28 - Sep 1
500 1,000 1,500 2,000 2,500
01 Oct 06
Percent Engine Load: Vehicle 131370
01 Nov 06 date avgofpercent engine load
01 Dec 06 engload_ucl
01 Jan 07
Diagnostic Analytics
Fleet Information
23 May 07 24 May 07 dtdatetime
23 May 07 24 May 07 dtdatetime

18
Descriptive Analytics
Looking at Yesterday Limits Ability to Affect Change

19

10- 205
10- 245 10- 145
10- 005
1118
10- 240
10- 405
10- 320
10- 455
10- 200
10- 365
10- 140
10- 325
10- 450
10- 600 10- 400
10- 360
To reduce driver time and miles, packages are loaded in a general order of delivery

Service
Customer
Address
(USPS)
Vehicle
UPS Data
Infrastructure
Geography
(Map)
GPS
Regulatory
UPS
Proprietary

Simplification through Package Level Detail (PLD)
ABC Company
2775 Chestnut Run Road
Suite 242
York Pa 17402 - 2558
UPS Smart Labels act as a “trip ticket” to carry packages through the network and the final mile

Each package planned on the right vehicle for the right day

Address
Information
Tasks
Number of
Packages
Shelf / Load
Location
Additional Activity
(COD, signature, etc.)
Local
Time
Commit Time
25
Changing the DIAD from an Acquisition device to a driver Assistant for making better decisions

Street # Stree
3924 PLANDOME RD
------------------------------------------
Col Amt Ship # ID#
#000000 675 CAL
Remark
26
Changing the DIAD from an Acquisition device to a driver Assistant for making better decisions

Park at Dock Only
Mailroom
Check in with Security
Use freight elevator
No Indirect/Reroute/LA
28
Changing the DIAD from an Acquisition device to a driver Assistant for making better decisions

29
Proprietary Geographic Information

30
Proprietary Geographic Information

31
250 Million Global Data Points

32
Improving Service
Every delivery at the right location

Remaining
Work
Current
Location
Completed
Work
Current
Location
33
Efficiently serve the customer by making decisions based on where resources will be

34

Virtual and Physical Network Linkage
Allows New Products
• Delivery Alerts
• Delivery Planner
• Reschedule Delivery
• Hold for Will Call
• Authorize Shipment Release
• "Leave at" Instructions (Driver Instructions)
• Leave with Neighbor
• Deliver to a UPS Store ®
• Deliver to Another Address
• Approx. delivery time
• Confirmed Delivery Window (2-hour)

Real time final mile delivery decisions
37

38
8 million gallons of fuel reduced
85 million miles driven reduced yearly
85,000 metric tons of emissions reduced
levels in history in loader training time
>99.9% seatbelt usage
First of their kind product offerings
Real world results
E + I < E
8 Billion fewer manual entries by drivers

40

ORION builds upon UPS’s rich technology foundation
Analysis Tools
Operations
Technology
Foundation
Advanced
Algorithms
UPS Data Model DIAD
Customized
Map Data
Telematics

• “Optimal” delivery / pickup order accounts for:
‒
Service commitments
‒
Individual customer needs
‒
Business rules
• Implementable cost based decisions balancing all rules and constraints
42
ORION “sorts the list” from a General order to a
Specific order for the day’s specific conditions

ORION
“This initiative, called ORION (On-
Road Integrated Optimization and
Navigation) is arguably the world's largest operations research project.”
Thomas H. Davenport
Big Data in Big Companies
<#>
Recognized Technology Innovation

Approximate age of the Earth (in Seconds):
ORION
Number of ways to deliver 120 stops:
6,689,502,913,449,135,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,
000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,
000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,
000,000,000,000,000,000
Why is this a breakthrough?
Why is this so hard?
46

47
What is the most cost effective way to serve these customers?

Which route has fewer miles?

Can David Pogue beat ORION?

51
Business rules add additional complexity

Subtle differences can mean large savings

Sustained Gains at Scale
55

Sustained Gains at Scale
56

Sustained Gains at Scale
$300M to $400M
(7 to 8 Miles per Driver)
100M miles / year
25,000
20,000
15,000
10,000
5,000
0
58

10M gallons of fuel reduced
100M miles driven reduced yearly
$300M - $400M saved annually
100K metric tons of emissions reduced

Average nearly 20 years of service
•
ORION showed new ways to deliver area
•
Mileage reduction
•
Real time optimization
– Clairvoyance
• Strong management and metrics required
60
Moving from Knowledge to Wisdom and beyond

<#>

62

63
Best Practices
• Embrace Change Management
• Communicate, Educate… Early and Often
• Change conversations!!!
• Build Analytics into the process
• Understand / mitigate data limitations
• Create new leading indicator metrics
• Ensure the right skills are in place
Achieving gains means changing behavior

64
Enriched map data adds to UPS’ robust data infrastructure

65
Enriched map data adds to UPS’ robust data infrastructure

66
Enriched map data adds to UPS’ robust data infrastructure

ORION Online
Knowledge Management
Over 1,500 users
More than 6 hours of detailed education

69
Achieving gains means changing behavior

Degree in Geek
Mathlete
Suit-Able
Curiouser and
Curiouser
Agile and
Adaptive
Problem Solving
Prowess
Insight
Whisper
Quantastic

<#>

Analytics Certification Analytics Maturity Model Continuing Education
72

Address
Information
Number of
Packages
Commit
Time
Shelf
Location
Additional Activity
73
Changing the DIAD from an Acquisition device to a driver Assistant for making better decisions

Street # Stree
1
3924
------------------------------------------
1 Col Amt
Mailroom
Check in with Security
Use freight elevator
RD
CAL
Remark
No Indirect/Reroute/LA
Edit Dup Ship#<6 PreRec Ovrride
Edit Dup Ship#<6 PreRec Ovrride
74
Keeping our promise to the customer
Enabling more services

75
Improving Service
Every delivery at the right location

76
Finding a “needle in a 22M package haystack”
Each scan provides a customer connection

Real time final mile delivery decisions
77

• “Optimal” delivery / pickup order accounts for:
‒
Service commitments
‒
Individual customer needs
‒
Business rules
• Implementable cost based decisions balancing all rules and constraints
78
ORION “sorts the list” from a General order to a
Specific order for the day’s specific conditions