12 Order Fulfillment Along the Supply Chain

EVEN EXPERTS CAN ENCOUNTER PROBLEMS

As noted in Section 12.2, in spite of UPS’ supply chain expertise and infrastructure, they were still unable to handle the peak in demand and the surge in last minute orders experienced during the 2013 holiday season. The overall volume of orders throughout December, as well as the num- ber of last minute order spurred by retailers guar- anteeing next day delivery even for orders place at 11 PM on Christmas Eve, far exceeded UPS projections and, consequently, the ability of their

supply chain networks to process and handle the orders. In response, UPS is focusing on:

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  Improved Forecasts. Online retail is growing rapidly – faster than many companies have anticipated. The methods used for forecasting demand and the impacts of this demand upstream on the supply chain no longer work in this environment. Greater collaboration is required with larger customers in order to estimate the impact of evolving consumer behavior and promotions (like guaranteed free delivery).
  
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  Network Throughput. Investments are required to update the infrastructure of a number of UPS’ distribution centers and to improve the routing capabilities of their delivery systems. Increased automation is critical to the improvement of the distribution centers, while the rollout of their On-Road Integrated Optimization and Navigation (ORION) system is key to improved routing. ORION optimizes the routes taken by delivery vehicles resulting in shortened overall distances for a given delivery cycle, improved delivery times, and more efficient fuel consump- tion (Konrad 2013). It also supports better track- ing of packages.
  
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  Shipment Visibility. With the growth of their Supply Chain and Freight business, there has been a substantial increase in the number of truck trailers that customers leave at their dis- tribution centers. UPS has limited visibility to the contents in these trailers.
  
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