This is an older article wrote years ago that I published here since I believe the concept is still relevant.
Did UPS completely fail this Christmas?
Was it a complete failure?
Was it 100% the fault of UPS?
Was it a complete failure?
Was it 100% the fault of UPS?
Is getting the GOVERNMENT involved in the business of another private corporation the ONLY solution?
This Christmas season many people ordered gifts right before Christmas that were shipped via UPS air. However a small (yet large enough to be noticed) percentage of those packages went undelivered until after the holiday had passed. The #UPSFail was created on social media, stories broke out all over the news, and even Senator Blumenthal (D-CT) put himself into the situation by issuing an ultimatum for refunds (http://talkingpointsmemo.com/livewire/blumenthal-sets-dec-31-deadline-for-ups-fedex-answer-on-refunds).
UPS, with its large global delivery fleet and billions of dollars of infrastructure is equipped to handle large amounts of volume. If there was a model for proper operations management, UPS would be it. Having once held an operations leadership position with the company, I know just how serious they take perfect service. Having trained many drivers, I have stressed perfect service over and over day in and day out. Numerous times I have said one package missed is too many. Having to explain why a driver in my group had a missed piece the previous day was the last way that I wanted to start a morning. I know that this perfect service philosophy does not only extend to the northeast region of the US. Their operations managers and supervisors across the country and the globe do all that they can to make certain that there is an attempt on every piece every day.
If all of this is true the next question should be: SO WHAT HAPPENED?
Before we can try to get into what happened, I want to establish a little bit of how the system works.
The industrial engineering department at UPS issues a volume forecast for every package delivery center. The forecast comes from proven internal metrics, market trends, long-planned pickups, as well as other things I cannot disclose, in the interest of honesty because I never worked in IE. The local delivery centers, at their weekly staff meetings schedule their weeks around these forecasts. Driver training, safety observations and training, as well as supervisor on job supervision (OJS) with drivers are all dependent on the forecast because the local management team needs to know how to best and most effectively manage their time. Ok so there is a forecast, but you still did not receive your package so you’re still asking: Since they had a forecast, they knew what was coming, WHAT HAPPENED?
Before I can offer an explanation, I want to get into just how a package gets through the system. Think of a package and its transit through the system from beginning to end. It is substantially more complicated than ‘pickup, ship, deliver’. In most of the facilities that I had the opportunity to work in, a driver returning at the end of the day had the opportunity to see the amount of stops and pieces that had already populated in the system for his/her route the next day. This is because the minute a package is scanned into the system, it populates electronically into the selected route that will deliver it, on the day it will be delivered.
This is the case for shipments on air and ground delivery, domestic next day air packages being last to populate because they are usually not picked up until late the previous night. Furthermore, the drivers DIAD (Computer board you sign) on the day of delivery has the number of stops to be delivered, the order they need to be delivered, how many pieces per stop, and their location in the truck. All of this is for perfect service, a scan on every package every day; it also makes the process substantially more efficient. When the pre-load supervisor arrives between 00:00 and 02:00 they can see whether or not the volume is matching the forecast and adjust routes on the fly and make changes necessary to balance 8 hour work days between the drivers. So now you are asking, they had a forecast and they could balance out their work days between drivers; WHAT HAPPENED?
Since no one but upper senior management of UPS will know entirely the full story of what happened, I will attempt to offer two layman (yet informed by prior experience) explanations. If either of the following scenarios happened, it could cause delays on arrivals of packages at any time, Christmas or not. What is also important to note is that these widespread delays hit the air package delivery system, packages shipped via UPS ground were reported to be for the most part on time.
The first cause for delay is weather; anyone flying from NYC to Miami knows that a persistent thunderstorm in Miami could delay their flight a good few hours. During the run up to the holidays there was a large ice/snow storm impacting the Central and Midwestern portions of the US. This snarled air traffic in the regions hit the worst. Passenger air traffic was not the only thing that was impacted, air transport for domestic and international logistics was impacted as well. As the winter storm named Gemini (Weather Channel’s given name) was taking shape across the nation, it was doing so during the busiest days for air package transport and delivery. Regardless of whether we want our package right now, or can wait, it is impossible to fly and land airplanes in these storm conditions. A winter storm at the right time can cause big problems, it appears that happened here. If anyone was flying into or out of these areas and was forced to deal with delays, it is logical to assume that happened to any parcels they may have had to move through the impacted areas as well.
While I was doing online shopping of my own this Christmas, I noticed that while it was November, I could have something delivered ‘in time for Christmas’. I thought to myself, why would I want to wait until the 21st-23rd of December? I’d just rather have it shipped now. Having established that parcels for delivery populate in the system the moment they are scanned in, I would bet that combined with a heavier than planned forecast (http://abcnews.go.com/blogs/business/2013/12/online-shopping-surge-causes-christmas-gift-delay/), that this produced a lot of additional unplanned volume.
Abnormally heavy volume, a forecast that was below the actual projections and a winter storm that made the flight of many airplanes impossible all contributed to pieces not being delivered on time. Living in the age of social media, articles like this: (http://abcnews.go.com/blogs/headlines/2013/12/ups-overload-leaves-miffed-customers-short-of-presents-meals/) were written showcasing tweets from people who claim that their Christmas was ruined.
Articles like this seek to sensationalize what happened and turn UPS into the big brown monster. I conclude that UPS is only partially to blame due to their much lower than planned volume forecast, and that 50% of the missed pieces would have arrived had there not been weather delays as well. Let us all note that in the event of heavy volume, during the holidays, spare trailers are in far greater supply than spare airplanes. Due to the bad internal volume forecast and the poor weather, it was impossible for UPS to have the airplanes in the right places at the right times.
The FREE MARKET Solution
Seeing a senator use this as an opportunity to grandstand, get microphone/TV time, and issue ultimatums does absolutely nothing to solve the problem. UPS is a private company and they will solve it on their own. If customers had guaranteed air delivery and it was not on time, they will get a refund. This will happen because the press has been bad enough, UPS is incentivized through the free market to get it right in the end or lose business. Besides, does anyone really want the government getting involved into the business of UPS? Let me remind the readers that the USPS, which is run by the government, has lost money 6 out of 10 years from 2001 to 2010 (http://usgovinfo.about.com/od/consumerawareness/a/Postal-Service-Loses-By-Year.htm).
Also, how great is the government handling healthcare? UPS has had a brief lapse in efficiency; here in the US, the words government and efficient are two words that could never go together. No government solution or intervention is necessary here.
At the end of the day UPS will answer to its shareholders, should someone or more than one person need to be fired, it will be handled internally. It is a certainty that their internal forecasting methods and models will be modified going into next year; they will be better and wiser next time. Remember that there is a free market in shipping; people can choose FedEx, or the USPS instead of UPS. The free market works by the consumer choosing to vote for their preferred shipper with their dollars. If they are truly hurt and feel wronged by their Christmas package(s) arriving late, they can give their money to FedEx or USPS, who I am sure, would be happy to take it. That’s the benefit of capitalism and the free market. I would also hope that consumers (regardless of what service they choose to use) order items as early as possible (Christmas or not), to avoid a situation like this in the future in the event of weather related delays.
NOTE: While I, your author, am no longer a salaried employee of UPS, I spent enough time at the company to become familiar with its systems and wanted to offer a critique of what occurred. I wanted to stay away from sensationalizing with crazy tweets of ruined Xmases and offer readers a unique take from someone with inside fairly recent knowledge of how the company moves parcels from facility to facility on time. This is what I surmise may have probably happened and caused pieces to be missed in time for Christmas.