FOR ASSIGMENT QUESTION Worldport (UPS Air Hub) www.ups.com UPS Worldport Facts Overview Worldport is the largest fully automated package handling facility in the world. The operation currently turns over 130 aircraft daily, processing an average of 1.5 million packages a day with a record 2.9 million packages processed on Peak Day 2010. Worldport history Beginning in 1999, UPS undertook the largest capital project in the company's history with the $1 billion expansion of its sort facility at Louisville International Airport. The expansion more than doubled the size of the air hub and increased sort capacity from 215,000 packages per hour to 304,000. Dubbed Worldport upon its 2002 completion, the facility initially grew from about 2 million square feet to 4 million. By 2006, UPS needed to again expand Worldport. In a two-phase project, the company expanded its allpoints air hub by 37 percent to 416,000 packages per hour. The second expansion was completed in April 2010, with the mammoth facility now measuring 5.2 million square feet, with a perimeter of 7.2 miles. Looking to future possibilities, the facility's design allows for further expansion to process up to a half million packages per hour. UPS Next Day Air service initiated Louisville Air Hub History September1982 April 1999 Expansion of Louisville air hub begins, driven by strong growth in international and domestic express business; the project is dubbed Hub 2000. September 2000 The first of three phases of the expansion opens, increasing sort capacity by 30,000 packages per hour. New automated processes and education programs help to lower employee turnover and retraining costs while increasing overall productivity. July 2001 September 2002 May 2006 July 2009 April 2010 Second phase opens, adding another 30,000 packages per hour to the facility's sort capacity. The third and final phase opens, increasing sort capacity by 29,000 packages per hour. UPS announces plans for a new expansion that will increase Worldport's sort capacity by 37 percent - to 416,000 packages per hour. Phases 1 and 2 of the expansion are scheduled for completion by May 2010. UPS opens the first phase of the expansion project, increasing sort capacity to 350,000 packages per hour. UPS completes Worldport expansion. Worldport Features High-speed conveyors and "smart labels" read by overhead cameras facilitate the processing of documents, small packages and irregular-sized shipments. Automated equipment and overall process improvements reduce the amount of time employees spend lifting and lowering packages while reducing the average package cycle-sorting span. Newly developed IT systems rapidly transmit Customs information to expedite the movement of international shipments. Specially designed docks and hub floors let workers move package containers easily from one area of the building to another. The new expansion plans included two new aircraft load/unload "wings" and associated aircraft staging ramps. Additional ramp space accommodates the new 747-400 cargo planes. UPS also approved plans to build a new vehicle loading facility for its ground delivery network serving Louisville. Like the initial Worldport expansion, UPS exceeded its goal to award at least 20 percent of the latest expansion project's general construction and site work budget to minority- and women-owned businesses. Metropolitan College will continue to play a major role in helping attract and maintain employees for the expanded hub. Worldport is the worldwide air hub for UPS (United Parcel Service) located at the Louisville International Airport in Louisville, Kentucky. Although UPS has had a hub at Louisville since 1980, the term was not used officially by the company until 2002, after a $1 billion, five-year expansion. [1] Previously, the project was named "Hub 2000." The facility is currently the size of 80 football fields and capable of handling 84 packages a second, or 416,000 per hour[2]. With over 20,000 employees, UPS is one of the largest employers in Louisville, and in the Commonwealth of Kentucky. The facility mainly handles express and international packages and letters. Worldport serves all major domestic and international hubs. A one million square foot expansion was completed in Spring 2006 to integrate heavy freight into the UPS system. The expansion was prefaced by the purchase of Menlo Worldwide Forwarding, formerly Emery Worldwide. The new facility, designated "Worldport Freight Facility" (HWP), went online in April of 2006 and was the first of the company's regional hubs to begin integrating the Menlo volume into the system. Menlo's Dayton, OH facility was taken offline in June of 2006. In May 2006 UPS announced, that for the third time in seven years it would significantly expand its Worldport hub at Louisville International Airport, with a second billion-dollar investment. The second expansion was completed in April 2010, with the facility now measuring 5,200,000 square feet (483,000 m 2), with a perimeter of 7.2 miles (11.6 km). The plan was that more than one million square feet to be added to its existing facility, while another 334,500-square-foot (31,080 m2) space to be renovated with new technology and equipment. Worldport capacity to expand from 300,000 packages per hour to 416,000 packages per hour. Additionally, several ramps at the Louisville International Airport to be built or altered bringing a total increase of just over 3,000,000 square feet (280,000 m 2). Since many of the jobs are part time and overnight, UPS has hired mostly college students by offering both nationwide tuition reimbursement and a special program called Metropolitan College, where University of Louisville and Jefferson Community and Technical College students who work part time overnight can receive 100% tuition reimbursement. Currently, over 75% of workers at Worldport are students. UPS Worldport Once the containers are loaded on the plane, the plane carries them to Worldport -- the UPS Global Operations Center -- in Louisville, Kentucky. Worldport is where the sort happens. Worldport is enormous, bigger than the adjacent Louisville International Airport's passenger terminal, and an upcoming $1 billion expansion will make it even bigger. Currently, eighty football fields could fit inside, and if you walked all the way around the perimeter you'd travel five miles. Worldport is too enormous to be air conditioned efficiently, so its exterior is painted white. Its interior resembles a rain forest made of roller coasters. At most airports, people use brightly-colored cones or flares to manually direct the pilots as they land and taxi. But at Worldport, pilots steer the plane to a painted box marked with the model of the plane. Mirrors attached to the buildings give pilots a better view of where they need to go. Once the airplane stops, employees unload the containers and remove the packages. Usually, this is one of only two times that people touch the packages in the Worldport facility. To start them through the sort, a UPS employee scans your packages' labels and places them on three different conveyors: The tickets are in a flat letter envelope, which goes with the smalls. Most smalls are letters and other documents. Each small goes into its own tray on a conveyor belt. The Batmobile is in an ordinary, 6-sided box, so it goes with the other 6-sided packages on another conveyor belt. The lightsaber definitely isn't a small, and it's too long to go on the conveyor with the 6-sided boxes. It goes with the other irregularly-shaped packages, known as irregs. Each irreg goes under elastic straps on flat cars that carry them along the conveyor belt. Sorters used to have to memorize lists of zip codes and addresses so they could make sure packages went onto the right conveyor belt. Now, all they have to do is sort packages into smalls, irregs and 6-sided boxes and place them on a conveyor belt with the label facing up. This is because scanners and computers keep track of every package inside Worldport. To do this, the computers make 59 million database transactions every hour. If the package's label isn't facing up, the computer can't figure out where it's headed or where to send it. Once your packages are on their conveyors, they start the sort. We'll look at what the sort involves in the next section. The UPS Sort If you've seen the movie "Monsters Inc.", you've seen a fair approximation of the sort. Packages are sorted into logical categories by moving along a series of conveyor belts that look, to most people, anything but logical. There are 17,000 conveyor belts in the Worldport sorting facility. If stretched from end to end, they would reach 122 miles. These belts make a series of loops and twists to fit into the 4 million square feet of available space in Worldport. The path a package takes through Worldport varies a little based on whether it's a 6-sided box, a small or an irreg. But one general rule covers all three types -- conveyor belts do almost all of the work. Worldport has seven primary conveyor belt loops, and each one has 364 stations at which a package can move to another belt. This might be another one of the primary belts, or it might be a smaller conveyor that carries only packages destined for a specific city, state, zip code, street or block. When a package begins its journey, it moves from belt to belt at a speed of about one mile every two and a half minutes. Irregs and smalls -- the lightsaber and tickets -- stay on trays. Six-sided packages like the Batmobile move from belt to belt when air-powered rubber levers known as hockey pucks swing out to push them over. Since the computer knows exactly where each package is, how big it is and how much it weighs, it knows exactly how many hockey pucks are needed to move the package to another belt. Your packages travel through Worldport for about 15 minutes, and they wind up with other packages that are bound for similar destinations. When the envelope with the tickets gets to its destination, the tray carrying it tips it into a canvas bag full of other sorted smalls. When the bag is full, and employee removes, closes and replaces it. At the end of the sort, the bag full of smalls, the lightsaber, the Batmobile and all the other packages sorted into the same pile go back into a container. Most of the time, this is the second and last time that a person handles the packages while they're at Worldport. The container goes into a plane, which takes the packages to a regional sorting facility. Your packages' last stop before delivery is a local or regional shipping facility. There, employees scan the labels one more time and print a pre-load assist label, or PAL. The PAL tells employees which conveyor belt will carry the packages to the correct package car. It also tells the people who load the cars exactly where the packages should go, down to which space on which shelf. This helps make it easier for drivers to find and deliver packages. Once the packages are loaded into the package car, the UPS driver makes his way to your friends' home using route-planning software that helps him find his way and conserve gas. When the driver arrives, he retrieves the packages and scans them with a delivery information acquisition device (DIAD). The DIAD is a rugged, brown handheld computer retrieves package information and stores signatures. When the delivery person arrives at the door, one of your friends signs the DIAD and claims the packages. That's the end of your packages' story, and their journey may have taken as little as a day. But delivering packages isn't all there is to UPS. We'll look at some of its more surprising business offerings as well as its culture in the next section. The Business of UPS UPS started out in 1907 in Seattle, Washington, as American Messenger Company. Its founder, Jim Casey, borrowed $100 from a friend to start a package delivery business. Casey delivered packages by bicycle and on foot. The company's name changed to UPS in 1919, when it expanded its operations into Oakland, California. UPS unveiled an air express delivery service in 1929, but next-day air delivery didn't arrive until 1982. UPS has been a publicly traded company since 1999. In 2005, it reported $42.6 billion in revenue. It has partnered with businesses like Amazon and eBay to provide shipping options to customers. The company also has multiple retail locations where customers can do things like drop off packages, rent mailboxes make photocopies. These locations include: 4,400 UPS Stores 1,300 Mail Boxes Etc. stores 100 UPS Customer Centers 17,000 authorized outlets Customers also view 18.5 million pages and make about 10 million package tracking requests at www.ups.com every day. But picking up and delivering package is not all that UPS does. It carries mail and packages for one customer that most people would think of as a competitor - the United States Postal Service. In addition, UPS Supply Chain Solutions oversees some surprising jobs for other companies. Basically, UPS takes care of warehousing, shipping, delivery, logistics, repair and customs brokerage for businesses. It also offers consulting services to businesses to help them refine their warehousing, shipping and logistics practices. One such company is Toshiba. If you buy a Toshiba laptop and it breaks, UPS will: Send you a return-shipping box that your laptop will fit in Repair the laptop Ship it back to you In other words, everyone who handles your laptop works for UPS, not Toshiba. UPS is also in charge for inventory and shipping for several other companies, including Rolls-Royce. Some companies don't publicize their relationship with UPS, but if you order underwear from Jockey or a baseball bat from Louisville Slugger, your purchase will come straight from UPS rather than the company you ordered from. The UPS Culture As a company, UPS focuses its attention on: Safety: The company spends $38 million a year on safety training, which covers everything from proper body mechanics at work to proper nutrition and exercise at home. As a result, UPS has lowered the number of workdays lost due to injury by more than 50 percent since 1995. Employee education: Many UPS employees at Worldport and other sorting locations are college students. UPS encourages mentors and recruiters from nearby colleges to visit and work with its employees, and it provides additional benefits and perks for college students. Diversity: Minorities make up 35 percent of UPS' U.S. employees and 30 percent of its executives. It's also recognized by Fortune magazine as one of the 50 best companies for minorities The Environment: Delivering packages all over the world and moving them between distribution centers requires an enormous amount of fuel. UPS uses several methods to reduce its fuel consumption and its environmental impact. For example, it has developed a hydraulic hybrid package car, and its drivers use routeplanning software to minimize the amount of time they spend idling in traffic and making left turns. UPS pilots also fly at the most fuel-efficient speeds possible to meet their delivery deadlines and run only one engine when taxiing to conserve fuel. UPS has also established the UPS Foundation, which provides grant funding to nonprofit organizations, particularly those that focus on literacy, hunger and volunteerism. UPS has also at times been the target of less glowing publicity. In July of 2006, for example, UPS and competitor FedEx received subpoenas in a price-fixing probe. The company has also experienced several labor disputes, including a 15-day strike in 1997. UPS and its pilots also announced a tentative labor agreement in July of 2006 after four years of negotiations, which nearly led to a strike. You can learn more about UPS's financial information and daily operations at the UPS Web site. To learn more about related topics, check out the links on the next page. ADDITIONAL INFORMATION It is the largest fully automated package handling facility both locally and internationally in the world. Worldport handles an average of 1.5 million packages a day and turns about 130 aircrafts daily. It commands the land size of about 5.2 million feet ( size of about 90 soccer fields). What makes UPS unique? 1. The Delivery Information Acquisition Device known as D.I.A.D drivers are provided with more detailed directions to pick-up and delivery points for customer services enhancement. color-coded messages transmitted on the device alerts drivers with urgent pick-ups. Improved customer service - the device battery lasts for an entire day. The device sends the delivery information to the UPS data repository as soon as the delivery information is captured. The signature of the receiver is electronically captured in the device. On demand service (ODS) enables communication with the driver as every driver is able to automatically logs on the system first thing in the morning. The device enable the dispatchers and center management to access the drivers through text messages anytime of the day. The drivers days start with a list of predefined customer pickup locations for the day. Saves a lot of paperwork. Global Positioning Satellite technology provides drivers with directions Comprehensive and powerful device in the delivery industry. 2. UPS Worldport expansion showing great tangible benefits. Share holders dividends increase Increased capacity from 37 percent to 416 000 packages per hour Increased number of conveyers from 19000 to 33245 Loading positions expanded from 1100 to 1520 Unloading also increased from 218 to a 325 Added two new aircraft staging ramps 3. The efficient delivery of packages through the bar-coding. Easier deliveries to the customer for all packages handled Faulty parcels are quickly identified through the system and rectified The Dimensioning Weighing Scanning machine (DWS). The parcels are scanned and weighed as soon as they reach the conveyer belt The DWS takes the height and width of parcels through the camera and lasers installed and sort the parcels according to the post codes The traffic congestion and weight overloading are avoided on the conveyer belt as the system provides a specific route a parcel should take 4. Global leader in Supply Chain Management Goods are not only managed at UPS, the information and funds with the goods are managed as well. Online tracking requests reach a record high of 6.5 million a day A streamlined supply chain solutions that provides logistics, global freight, financial and mail services for improved performance Why built Worldport? 1. Growth / Expansion increased package handling by 37 percent expansion enabled general construction projects and site work to minority and women-owned businesses accommodate new aircraft load/unload wings and associated aircrafts staging ramps specially designed docks and hub floors let workers move packages easily newly developed IT systems rapidly transmit customs information to expedite on international shipments the average package cycle-sorting span is reduced the time employees spend lifting and lowering packages is reduced high speed conveyers and small labels read by overhead cameras facilitate the processing of documents, small packages and irregular sized shipments 2. Worldport was built to be a center of UPS's hub, bringing everything together from outside branches for processing under one roof. 3. The facility was to feature the latest in technology and state of the art equipment. The technology allows packages to virtually sort themselves over 155 miles of conveyers in an average time of just thirteen minutes. How did UPs gain advantages in the US? 1. Speed good customer service drives repeat business the DIAD IV expedites delivery tracking number helps with delivery expeditions overnight air delivery service in the next day by 8am the amount of time reduced of the employees lifting packages due to automated equipment and overall process combined packages addressed to a certain neighbourhood into one delivery truck trucks taking only a right turn reach the destination quick 2. Flexibility drivers are reached through the On Demand Service at any given time capability of re-routing delivery of shipments already on the road the DIAD technology can be color-coded to alert drivers 3. Quality customers receive packages in a good and original order Quickbooks software reduced errors in data entry and increase efficiency Fuel consumption kept at a minimum due to truck turning only to the right 4. Reliability UPS helps grow businesses, manage costs and improve their customer service. automated online scheduling of day specific air freight deliveries online tracking of freight movements in real time time critical, charter and last mile delivery services available 24/7 consistent, reliable service is what people most value, hence always react on their customers feedback to improve service and technology. Lessons learnt and how SA can apply them. A business can begin very unrecognizable and small but with a constructive focus and vision, it can reach new and higher heights. A correct and accurate capital injection in any business can result in greater and tangible benefits. Good management of business can create a wealth for the shareholders and subsequently grow and drive the business to profitable results. Republic of South Africa can redirect their resources to where they are needed most and by so doing the society can experience some element of fulfillment to a certain degree. If for instance, South Africa realizes that its population struggled not to empower certain individual but the whole country. Service delivery can improve to particularly those who desperately need it i.e the needy communities of the country. In June 2011 UPS was ranked top for consumer delivery services due to a fact that customer have access to their systems at any given time and the technology is user friendly. If RSA government can exercise more transparency to information, great country in a democratic dispensation can be born. CONCLUSION From its humble origin UPS has grown to be the world's leader in supply chain management due to its reputation for intergrity, reliability, innovation, employer ownership and best customer service. It is bound to remain the global leader for as long as it exist. Sound decision making will move it from strength to strength. Analyse the case study and answer the following questions: QUESTION 3 (40) Explain, with the aid of a diagram, the value chain for UPS. (2000 words)