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  • UPS gets Lean

    Posted by Shannon Love on November 21st, 2012 (All posts by )

    I live in suburbia. Like most of suburbia, all the streets in my suburb curve or wind to slow down traffic and break up lines of sight. I live on a cul de sac.  It’s cozy and the kids can use the street at the “bottom of the bag” for football and other games without fear of being run over by through traffic.

    I rather like it.

    The people who don’t like it, are those who drive large service vehicles like the trash truck, the short school bus or delivery flat panel trucks. At least once a day, I am treated to the sight of large vehicle usually, a delivery truck, backing a filling several times to out of the cul de sac. When I hear air brakes and backup beeps and I know whats doing on. I’ve often wondered if there was a better vehicle to use, especially for the delivery trucks.

    Yep, there is. While taking a constitutional down the street to the park, I saw one of these whizzing towards me full of packages. It turned into my cul de sac so I followed and asked the driver if she was UPS (because of her uniform.)

    Yep, she was. I watched her complete a delivery and the process was much faster. Instead of having to go back in the truck for the package, she just hoped out of the cart and grabbed the package on the way by. Even getting back in the vehical was a fraction of second faster than for a truck. Then, instead of backing and filling to get out of the cul de sac, she just whipped the golf cart around with room to spare and was gone. The only snag in the process was me waving her down to confirm she was UPS.

    I didn’t have the chance to time the delivery but it was obviously a good 15 to 2o seconds faster than a delivery using the  panel van. Might not sound like much but summed over thousands of deliveries, it’s a massive time savings.

    The driver said they only use it in neighborhoods that allow golf carts which mine does because of a golf course a few streets over. It’s defiantly only a good weather system. You couldn’t use an open golf cart for deliveries in one of our infamous central Texas thunderstorms/tornadoes/hurricanes/fire-storms/alien-invasions.

    Still, heck of good idea. It saves money, time and resources which increases customer value. Heck, it’s even better for the environment. It’s safer for residents, especially children, because the driver of a golf cart is a lot less likely to back over a kid than the driver of panel van. The golf cart won’t ding cars as much either.

    Of course, certain people don’t like the idea, which says a lot I think. UPS is unionized by the Teamsters, historically the most corrupt, violent and laziest major union in America. I’m pretty sure they’ve been under continous investigation and/or oversight since the Kennedy’s went after Hoffa in the early 60s. It’s amazing UPS has been able to introduce such an innovation at all and clearly the Teamsters are fighting it.

    *Sigh* How are we supposed to compete in a global market place with these greedy millstones wrapped around out necks?

     

    19 Responses to “UPS gets Lean”

    1. pst314 Says:

      I’ve seen some fairly small (shorter and narrower) FedEx trucks lately.

    2. Bill Brandt Says:

      When you mentioned UPS getting more efficient I thought you were going to mention the Sprinter Vans – the large diesel powered vans (that get 20+ mpg) made by Mercedes. The golf car is really an innovation – but how to they carry thing thing in the UPS van? With a davit? ;-) (probably a trailer)

      UPS is an amazing company – AFAIK a closed corporation – managers can own the stock – and despite the teamsters, able to stay competitive in a cutthroat market and be innovative. I think they have the delivery routes down to a science.

      Costco is staffed by Teamsters too and like UPS seems to be thriving.

      But they are the exceptions.

      I am sure that the unions are driving many to overseas factories.

    3. pst314 Says:

      “The golf car is really an innovation – but how to they carry thing thing in the UPS van?”

      They store it locally in a pod: http://brevardcountyfl.iqm2.com/Citizens/Detail_Motion.aspx?ID=5451

    4. Robert Schwartz Says:

      UPS often runs advertisements showing how international they are. In those ads, UPS deliverymen in foreign countries are often shown driving vehicles that are quite small by US standards.

      BTW, their standard US delivery van is custom built to their specifications. It has features not found on standard vehicles like the translucent roof on the cargo area.

    5. Shannon Love Says:

      Bill Brandt,

      I don’t follow the delivery industry but diesels seem a poor choice for a start and stop delivery vehicle because the efficiency of a diesel plummets with start and stop. Are they perhaps some kind of diesel hybrid because that would work well.

      Costco is staffed by Teamsters too and like UPS seems to be thriving.

      Superior companies can overcome any drag, including the Teamsters. If the Teamsters were an inevitable death sentence, America would have imploded back in the early 60s.

      The problem comes when a company isn’t so hot and frankly most of them aren’t. To reuse an analogy from my previous post, a good company is like a Coast Guard Rescue swimmer and the Teamsters are like 30lbs of weights strapped to the swimmer. Just because the Rescue swimmer can deal with the added weight doesn’t mean it’s a good idea to go down to the local public pool or beach and start strapping weights on people and tossing them in water.

      I am sure that the unions are driving many to overseas factories.

      Unions are a problem but the work rules more than the wages. The real problem with manufacturing in America is the time it takes to get a plant built owing to zoning, public commentary, shifting environmental laws and random lawsuits. You can build a factory in China, conception to operation in less than six months. In America is something like 2 1/2 to 3 years, especially in a blue state. (I think its like a year in Texas.)

      One business writer a few years ago wrote, with only slight exaggeration, that Apple had to make the iPad in China because they couldn’t have gotten an iPad factory built in the US, before the iPad 1 became obsolete.

      Even worse, a company might commit to a factory approval process and slog through for months or years just to be told they can’t build at all so they have to start all over again. Building a factory or even retrofitting one in America has become a slow, expensive and high risk process. Smaller companies can die if they don’t get a factory operation quick enough.

      I think that is one reason why non-manufacturing companies like Costco and UPS have become so propionate in the last few years. They are less vulnerable to random interference in the facilities. It’s easier to set up a box store or warehouse than a factory.

    6. Shannon Love Says:

      Robert Schwartz,

      …their standard US delivery van is custom built to their specifications. It has features not found on standard vehicles like the translucent roof on the cargo area.

      Yes, that was considered quite the innovation when it first appeared. It shows up repeatedly as an example of thoughtful innovation in a lot of business writing.

      They’re clearly a dynamic and innovative company. That lets them compensate for the teamsters. They’re probably like Ford as well in that they innovate out of country and then badger the American unions into eventually accepting the innovation.

    7. Dan from Madison Says:

      We used to use diesel box trucks for deliveries (a lot of highway miles here due to the rural nature of our state) and recently bought a Ford Transit. Fantastic vehicle and will pay for itself in only two years just from fuel, not to mention cheaper oil changes, repairs and all the rest.

    8. Bill Brandt Says:

      Shannan – because I am at work I will have to read your thoughtful reply more in detail this evening. On diesels – in our club magazine (MBCA Star) one of the hotshot dealer techs ran a cost study on the differences between a Mercedes diesel (sedan?) and its equivalent gas.

      I think it was the ML. Diesels have come a long way – they are quiet now and because the torque really develops far sooner, are better suited for city driving – that is why they are so prevalent in Europe as taxis. In Europe, for efficiency, the taxi drivers will leave the engines constantly at idle when waiting because they use so little fuel idling, and they are more efficient (lest time to warm up again0 . But a lot of other factors have entered tjhe “cost to operate” equation over here.

      Because the die4sel (ther ML) used run flat tired (the spare tire space used by the Ad Blue tank, a special concoction diesels have to use now that injects into the converter – the diesel actually cost more to run than the equivalent gas, by about 10%. At least the MB ML320.

      And I wanted to mention an interesting talk I had with an old Flight Attendant from PSA some years ago, which used to be California’s airline. They were so innovative – really fun to fly on – and I mentioned to her after the crash in San Diego (1978) they really started to lose their “specialness”.

      She replied that that was the time union activists were trying to take over the airline – even beating up a few of the managers.

      The airline was bought out by US Air and disappeared.

    9. Bill Brandt Says:

      Man I am sorry for the typos – once you hit “submit comment” it is all over ;-) Will try to write when I have more time and proof read more -

    10. Shannon Love Says:

      Bill Brandt,

      I’ll defer to your superior knowledge about contemporary diesel technology. I haven’t fiddle with diesels since I left the farm. I know they were still consider in city busses because of their inability to burn fuel efficiently as the fuel levels in the pistons change quickly. ( IIRC, it has to do with diesels lower vapor pressure and the use of compression for ignition.) But that might have been smoke blown by those trying to sell NG busses.

      It would be good if diesels could be used for small vehicle urban driving. In a lot of ways diesels is a superior fuel and the engine simpler and more reliable. I’ve been surprised that they don’t show up in hybrids more. With the batteries to buffer start and stop, the high diesel could hum along at its most efficient rpms and be far superior to a gasoline engine.

      But like I said, I’m out of the diesel game and don’t follow cars much at all.

    11. dearieme Says:

      It’s reminiscent of the old British “milk floats”.
      http://en.wikipedia.org/wiki/Milk_float

    12. Michael Kennedy Says:

      I don’t remember horse drawn milk wagons but I do remember horse drawn ice wagons during the war when ice boxes were still being used because no one could get refrigerators.

      I had a VW diesel rabbit, which was squashed by a drunk driver one night who came crashing into my driveway when I lived at the beach. He hit four cars with one crunch that left his car sitting on top of a row of half barrel planters. It was 4 AM and I went out to see what made the racket. I helped him out of the car and then a short while later he told a policeman that he hadn’t been driving ! He said his car (a loan car from a dealer) had been stolen. The cop asked me and I told him I had helped the guy out of the car.

      The insurance company totaled the rabbit but only offered me something like $1300. I said “No Thanks, I’ll keep it.” I could use it for spare parts for my boat which had a VW diesel marine conversion as power. Of course, they had already sold it. I demanded it back and they finally settled for about $2500.

      The VW diesel was a good little engine. Both the car and the marine conversion, which was called the “Pathfinder.”

      Bill, if true that means that PSA wasn’t the first airline unions killed. Eastern was the premier domestic carrier and the mechanics union killed it off.

    13. James Bennett Says:

      I used to live in California and commuted at least weekly between the Bay Area and LA for several years while PSA and its local upstart competition Air Cal were dominating the route. Perhaps the unions were putting pressure on PSA and made them more likely to sell out, but it was a case that USAir made them an offer they couldn’t refuse, as American did to Air Cal (which I believe was non-union) shortly afterward. When Federal economic regulation of the airlines ended, the local California-only airlines, which were deregulated within the state, lost that advantage, and the national airlines were eager to invade that market. I liked them both but I liked Air Cal the best.

      They were both advertisements for the Hayekean concept of local knowledge. PSA served all the airports in both metro areas, even little ones like Long Beach, and the airline staff that dealt with the public knew both areas very well. I loved dealing with their reservations staff because they had the knowledge and could work your reservation as a dynamic problem. You could say “I need to leave Palo Alto early and I have a meeting halfway between LAX and Burbank at 10; so I can go out of either SFO or SJC and into either LAX or BUR. I’m driving myself to the airport so whichever one I go out of, I’d prefer going back to. But I can arrive at BUR and go back out of LAX or vice versa.” And they’d work the problem, even knowing which direction of the ground segment had the worse traffic at what time of day, and which airport pairs didn’t have a return surcharge between them, as was the case with LAX and BUR.

      After USAir and American took over the local airlines, they destroyed almost all of the local knowledge. Skippy the MBA fresh out of Harvard Business did a cost analysis on his KayPro and decided it was cheaper to merge the reservation function with their national system, and suddenly you had somebody in God knows where saying “Well, sir, was it San Francisco or San Jose you wanted to go to? Which is it?” or worse they’d offer you the schedule to San Jose, Costa Rica. The cabin crews started getting replaced by people from other areas, and soon there was no reason whatsoever to prefer them. As I recall neither national airline got much benefit from their acquisition.

    14. Bill Brandt Says:

      Shannon – I am hardly an expert on diesels but know in Europe they are favored almost as much as gas autos. And a car with a small diesel – like a VW – could before all the EPA mandated things – get mileage in the high 40s –

      Diesels – and gas – autos have had a minor revolution with the advancement in fuel injection technology –

      Over in the US though I think with the EPA rules on emissions has really put a dent in diesel efficiency.

      That Mercedes tech said that equivalent MLs – the MB SUV – between their 3.5 liter gas and 3.2 liter diesel – the diesel – while a bit more efficient in mileage – because of other factors was actually more expensive to run than the equivalent gas version.

      I’d imagine UPS has delivery expenses down to a fine art – but they are using some Sprinter Vans here in some markets. The old vans we are used to – a lot of them are running natural gas – far less efficient – but runs a lot cleaner – and cheaper by the BTU

    15. Soviet of Washington Says:

      Here in the Pacific NW, UPS has returned to it’s 1903 roots for the past 3-4 years and has a fleet of
      bicycle delivery drivers. Here’s a video from Salem, OR in 2008. Watch all the way through for the weather finale.

    16. Norm Says:

      No one has mentioned the biggest hazard UPS faces here: Theft.

    17. Bill Brandt Says:

      Norm – I figure that they figure it is cheaper to pay off the occasional theft claim and let the drivers leave the stereo equipment by the front door – than to come back.

      It’s like credit cards – figure that the overwhelming amount of theft occurs from people calling in a card number on the phone to buy an item – and banks allow it because of the profitability – I would “assume”

    18. Bill Brandt Says:

      James – how right you are about PSA. Air Cal, I think, was headquartered in Newport Beach; PSA – San Diego. I think PSA was started by 3 wartime buddies and a surplus C47.

      When they were taken over things just “disappeared” and your explanation makes the most sense.

      Skippy the MBA has ruined a lot of things. My family use to have a business that involved service stations, and Skippy, starting in the 1970s, decided they should get out of the auto servicing business. When Chevron divested itself of Atlas products I knew that was the end. Atlas was a vestige of John D Rockefeller’s Standard Oil Company – it was the common parts brand.

      Even when Standard Oil was broken – the new parts – Exxon (Standard of NJ), Amoco (Standard of Indiana), Mobil (Standard of NY), Chevron )Standard of CA) all owned Atlas and used their parts.

      With today’s climate that makes sense – the complexity of cars – but in the 70s it didn’t.

      One “Skippy” thought service stations should go back to their roots – being a general store that sold gasoline.

      Arco was the first to go this route – and the early Arco dealers had fabulously profitable units – now everyone is selling Twinkies – or whatever now ;-)

      As to PSA, this page takes you back – I had forgotten they had an L1011 – they were really expanding in the west –

      http://www.psa-history.org/flying/stew.php

    19. Shannon Love Says:

      Norm,

      No one has mentioned the biggest hazard UPS faces here: Theft.

      In the specific case of the carts, they cache the packages in a “pod” trailer which is secured but I’ve been thinking about that as a general problem in package delivery because the drivers routinely just leave packages on doorsteps. I think theft is a relatively major because:

      (1) The packages are left in plain view on porches and the like. A thief stands a good chance of being observed taking the package and these days, of being videoed.

      (2) If the thief doesn’t know what is in the box, they will be less likely to chance a theft. If they know it’s 3,000 of computer parts, they’ll take the risk but know body wants to risk jail time stilling a hand knitted scarf from grandma.

      I think the inability of thieves to know what is in packages before they steal them has been reducing package theft for as long as their has been package delivery at all. US mail theft was relatively rare in part because you had to steal a lot of mail to find enough valuable items to make it worth the risk. Conversely, thieves will steal mail if they think the value high e.g. when credit card companies used to mail new cards out in prominently labeled envelopes.