CIO — FedEx and UPS are always seeking a competitive edge over one another. And as the two companies are encroaching on each other’s primary businesses (UPS on overnight delivery and FedEx on ground delivery), they are concurrently stepping up their wireless deployments as well. The reason: operational efficiency?a critical business requirement aimed at shaving costs, increasing reach and doing more with the same resources.
Their approaches to deploying wireless technologies over the past 15 years have been markedly different?FedEx has led the way with cutting-edge applications, while UPS has been slower and more deliberate. UPS refreshes its technology base roughly every five to seven years, when it rolls out a unified system in stages that it synchronizes with the life span of the older system. FedEx deploys new technologies as soon as it can justify the cost and demonstrate improved efficiencies and customer benefit. But the goal is the same for both companies: to utilize next-generation wireless technologies in order to better manage the delivery of millions of packages that flow through dozens of sorting facilities every day. "FedEx is in a startup way, while UPS is fairly staid," says Kevin Tynan, a senior equity analyst at Argus Research. "They have two different ways of ending up at essentially the same point." Recently, these two pioneers in wireless applications utilization have increased their use of off-the-shelf solutions. The two companies are exploiting new wireless technologies in their differing attempts at aiding the two main components of their operations: pickup/delivery and packaging/sorting. Both are also looking ahead to potential applications of radio frequency identification and GPS wireless technologies (see "New Technologies Hit Mainstream," Page 30).
The Wireless Advantage
UPS and FedEx have used various forms of wireless technology since the late 1980s, usually proprietary processes developed with vendors. But in recent years, both have switched to standards-based technologies such as 802.11b wireless LANs, Bluetooth short-range wireless links and general packet radio service (GPRS) cellular networks that provide lower development and maintenance costs, greater throughput and security, and lower acquisition and deployment costs.
"Wireless data connectivity is something we’ve done for many years. But we had to provide our own bandwidth and we had to develop technology to manage it. Now that commercial products are out there, we have alternatives," says FedEx Executive Vice President and CIO Rob Carter. But as with their overall approaches to technology, the companies’ wireless strategies differ. "You only have a six-month advantage in this industry. The technology is not a secret, it’s what you do with it," says UPS Senior Vice President and CIO Ken Lacy.