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UPS's $20 Million Investment

The company has a big IT effort under way to streamline the daily process of sorting millions of boxes and letters.
Shipping giant UPS said Tuesday that it's deploying new logistics software at its shipping hubs that will let its package handlers more easily and quickly sort the millions of boxes and letters the company handles every day while giving drivers the means to serve their routes more efficiently.

Under the initiative, UPS will use internally developed software that aggregates ZIP code information to more precisely map out how packages should be loaded onto trucks and the order in which they should be delivered. The software will drive the printing of new shipping labels that will bear information telling sorters which truck a package should be placed on and where in the truck it should sit.

Currently, UPS loading dock workers need to memorize hundreds of ZIP codes within their delivery area to make sure the right packages get on the right trucks. CIO Ken Lacy says the new system will reduce errors and cut down training time for shippers from months to weeks. "We'll realize significant, tangible savings," Lacy says. With trucks loaded more precisely, UPS, which handles more than 13 million packages per day worldwide, also hopes to save as much as 14 million gallons of fuel per year by reducing the distances covered by its drivers by 100 million miles.

Lacy says UPS spent about $20 million developing the software in-house. He expects the system to be fully deployed at all UPS facilities by 2005.