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Technology is driving UPS

Those big brown trucks delivering millions of packages a day worldwide are guided by a technological vision, according to United Parcel Service chairman and CEO Michael L. Eskew, who spoke Feb. 20 at the Industry Leaders in Technology and Management lecture series in Wong Auditorium.

That technological vision drives the company's e-business advances and its success as the nation's third largest employer generating $30 billion in revenues a year.

United Parcel Service's (UPS) innovation began in 1907 when its message-delivery service was rendered obsolete by a new technology, the telephone. During the 20th century, the company transformed itself from a Seattle package-delivery service into the world's largest transportation company moving goods, information and funds. Today UPS is a technology company focused on enabling global commerce, Eskew said. In fact, UPS spent $12 billion over the past 15 years on technology, more than it spent on trucks.

To keep abreast of emerging technologies, UPS works with MIT research groups including the Center for eBusiness, the Center for Transportation Studies, the Auto ID Center and the Center for Information Systems Research. The evolution of wireless communications and radio frequency technologies, for instance, is key to tracking UPS pickup and delivery in 200 countries.

"Moving information is just as important to us as moving goods," Eskew said. "UPS moves 14 million packages through the system every day and scans each of those packages three to five times so the packages can tell us where they are."

The title of his talk, "When to Seed, When to Harvest: the Four Quads of Innovation, Growth," describes his leadership team's vision of how to expand internal ventures and launch new external ones. Their new internal efforts include home grocery delivery and e-logistics.

The company approaches mergers and acquisitions as opportunities to expand existing expertise through external enterprises, such as with the recent purchase of Mailboxes Etc. New external ventures include investments in businesses that offer new expertise, such as innovative packaging for perishable goods that will allow UPS to ship biological materials.

Using technology to advance supply chain management and e-logistics is a major company commitment, Eskew said.

"No matter what you do, your supply chains are going to win or lose for you," he said. "You think about different companies competing in different spaces. The companies with the best supply chains win."

UPS is focusing now on the $3.2 trillion worldwide logistics market, he said.

The MIT Leaders in Technology and Management Lecture series is co-sponsored by the Office of Corporate Relations and the Center for Technology, Policy and Industrial Development .

A version of this article appeared in MIT Tech Talk on March 6, 2002.

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