UPS heralds its new Total Service Plan

On its second quarter earnings call last week, UPS leadership highlighted a new initiative focused on ensuring smoother network operations, in tandem with upping its already very strong service levels.

Entitled the Total Service Plan, which went into effect on July 11, UPS CEO Carol Tomé said on the earnings call that the Total Service Plan approach creates a more predictable operating environment enabling UPS to take more cost out and make its industry-leading service even better.

Tomé added that the Total Service Plan is a formative initiative for UPS.

“It’s really running our integrated network the way it was designed to run,” she said. “And to make that real for you, sometimes we're a little light with feeder arrivals and departures. And with the initiative that we just kicked off on July 11 is about getting back on time and to dimensionalize that for you, a 10-minute improvement within the integrated network is worth $257 million. So, we're really excited about this. Nando [UPS Executive Vice President (EVP) and President U.S. Nando Cesarone] and his team had to have one-on-one conversations with 64,000 drivers in our company, talking to them about their individualized service plan because some people want to get home for dinner at night and some people want to have some overtime. So, we've built individualized plans for our drivers, and we retrained hundreds of thousands of people in our methods. And we're very, very excited about the Total Service Plan.”

And Cesarone added that it is based on a predictable environment, where UPS operators can plan with a lot of confidence on start time, finish time, sorts, and how UPS can better utilize its automated facilities and move volume from legacy facilities to its newer and more automated facilities, as well as move volume from legacy facilities to its newer and more automated facilities.

“In addition to that, we've catered a very unique dispatch for our full-time drivers,” he noted. “And, so, we expect that the efficiencies coming out of those customized dispatches and the service we provide are going to allow us to run a really, really great efficient network for our customers and our employees.”

UPS CFO Brian Newman said on the earnings call that a key objective of the Total Service Plan is to run a precision on-time network so UPS does not have late deliveries or late departures, adding that it is part of the company’s various actions, which are geared towards driving productivity and efficiency.

These actions include things like its Smart Package/Smart Facility, which is part of its Smart Logistics Network, focused on digitally and physically connected facilities, fleet, and information systems, through the usage of real-time data, artificial intelligence, machine learning, and other technology, optimize tracking and processing of packages and freight, and synchronize the UPS transportation fleet, according to UPS.

UPS plans to deploy Smart Package/Smart Facility technology into 100 buildings in its network, with the expectation that in advance of Peak Season it will bring two automated facilities online, including the first two phases of its new Harrisburg, Pa.-based 800,000 square-foot regional hub.

Rick Watson, Founder and CEO of New York-based RMW Commerce Consulting, told LM that the UPS Total Service Plan is a great idea.

“Carol Tome' continues to find more ways to make UPS service better and more efficient,” he said. “On the call, she mentioned that a 10-minute reduction in wait times and efficiency improvements result in a $257M cost savings across the network.  Not to mention, their drivers appreciate the ability to have some control over their schedule.”