In 1974 when Dave Abney joined UPS part-time as a college student loading and unloading packages, the brown uniformed UPS drivers and the clean brown UPS package cars represented the company's brand.  Managers and executives used slide rulers and calculators to handle many office functions. Many things at UPS have changed in 35 years. Abney has held many positions throughout his UPS career, from division manager in New Jersey to his current position as chief operating officer. The brown uniformed UPS drivers and the clean UPS package cars still play a key liaison role between customers and UPS. Today, conserving vehicle fuel and driver time have been critical issues for UPS. Meanwhile, UPS' initial public offering in 1999 gave the company funds to grow from being a shipping company to becoming a $50 billion global transportation and provider of third-party logistics services. UPS has leveraged its customer data, and a customer-based network of integrated systems to offer new package delivery services, to make drivers more efficient, and to pursue new business opportunities.

Enterpriseleadership.org recently sat down with Abney to discuss the UPS' disciplined approach to operational efficiencies, technology spending, and new business development.  Here is what he had to say:

EL. What are you doing to make your drivers more productive and your vehicles more energy efficient?

DA. What you mentioned has been very central to our operational excellence. We have been demonstrating it since 1907. Because fuel is a big part of our fleet and our costs, we have always focused on conservation. Any mile that we do not drive saves fuel and does not cause a carbon footprint. We have probably got as good at that as just about anyone.

Our network is very different from some of our competitors. We do not send different drivers out to take care of air, ground, and residential. We handle everything on one network. This method provides much visible efficiency. Some small initiatives also contribute to our efficiency. For example, we have received much publicity for our no-left-turn policy. In fact, some of my neighbors and friends have asked me how they can get to work without making left turns. Going right or what we call loop dispatch is an efficient way to run our network. It also saves much time especially in heavy traffic. You may think a couple of left turns would not make a difference. On the other hand, if we talk about 90,000 people driving their vehicles all day long, those fuel savings and time savings translate to meaningful numbers.

Our package flow technology allows us to dispatch in efficient ways. Before the packages ever get to an operation, we know what is coming in and can dispatch based on that. In the past without technology, we had to wait until we got the packages, split the packages up, and them assign them to the different package cars. If things did not make sense, we often had to make changes at the last minute and just move packages around. Our package flow technology alone has allowed us to save 30 million miles, three million gallons of fuels, and 32,000 tons of carbon emissions.

You may have read about our alternative fuel vehicles. By the end of this year, we will have more than 2,200. We have traveled almost 200 million miles with these vehicles. We are using all different types of technologies -- hydraulic hybrids that operate off the breaking power. We also have electric hybrid cells. I cannot say if that one particular example fits all conditions at this point. The hydraulic hybrid seems to work well in metro areas where you have many stops and starts. We look at different technologies for the different situations.

EL. What technology do you use to map no-left-turn routes for drivers?

DA. We have installed telematics technology on about 10,000 of our vehicles. Our no-left-turn technology and our package flow technology consist of knowing where the packages are going. Drivers do not use a GPS device that alerts then to the route as they drive. Instead, each driver follows a pre-designated route based on our technology. The dynamic dispatch we are working on would use GPS with factors that might happen mid-route.

EL. Are you leveraging technology to make your customers operate more efficiently?

DA. Absolutely! Until 1998, we focused on running the tightest ship in the shipping industry. We were the best at small package delivery. We still are. As the world started to change, we decided to overhaul our business strategy to enable global commerce to meet our customers' needs. World trade was starting to development, emerging countries were starting to play roles in those trade lanes, and supply chains were becoming longer and more complex.

The paperless invoice is a prime example of how technology has affected our customers. It allows them to ship packages around the world, -- across country borders  -- without having to complete the complex paper invoices, or keep dozens of duplicate copies. In the past, if those copies got lost of if you did not provide complete information, your package could gets held up at the borders. The electronic capture of information eliminates many errors. Because we transmit the information so the country receives it in advance of the package, we provide a smoother transition across the country border.

EL. Is UPS getting into new businesses that will complement package delivery?

DA. Yes, that is part of our new strategy in enabling global commerce.  Since 1998, many things have happened. The funds from our 1999 initial public offering have allowed us to invest in more than 40 acquisitions. Some of these acquisitions have given us brokerage capabilities, such as freight forwarding. For example, we acquired one of the largest third-party logistic providers in the world. It can start from the very beginning of the process by helping customer to manage their transportation needs. It can manage raw goods coming in-bound, and run the warehouse, taking care of distribution.  It could also move all of a customer's transportation needs either through our network or via a shipping line. While we do not own any ships, we would provide all of the information along with the packages to the shipping lines.

EL. Would you assemble a product and then package it for shipping, say to retail stores?

DA. Yes, we do the packaging of computers and other product lines. We even go one step further for our customers. UPS employees repair Toshiba laptops. If your Toshiba laptop malfunctions while you are traveling, you can drop it off at a UPS facility or a UPS store. We will pack it up and send it to our hub in Louisville, Kentucky, where we will do the repairs. We will then pack it and deliver it to your hotel. No one other than a UPS employee touches your laptop during the entire process which takes anywhere from 28 hours to 48 hours, depending on the repair.

EL. What impact has the economic downturn had on some of these businesses?

DA. The economic downtown has affected our customers in some industries, such as retail, more than others. We live in a time that many of us have never seen before. We have a decline in industrial production and a reduction in consumer spending. Like many businesses, we need to make good decisions, not only about reducing costs, but also about how to grow our revenue in these tough times. Being a 103-year old company has some advantages. We know how to manage during uncertain times. We survived the depression, several world wars, and countless economic cycles. We know how to manage change. We have just to make sure we feel very comfortable about it.

We have a responsibility to maintain our financial soundness. We are in a great position to do that. We have to be prudent to hold ourselves accountable. We feel that there are opportunities out there. We know we can take advantage of those opportunities. If we see a business that would answer the needs of our customers, we can invest in it.

EL. Your company leverages much technology to be in different businesses.  and to be really efficient and agile. How do you make technology investment decisions?

DA. First, we measure everything. We use this information to decide where we need to implement technology and where we need to invest in the business. We constantly monitor trade lane information, and the needs of our customers. We then look to see where we need to make investments and answer the needs of our customers. We invest about one billion dollar a year in technology. We look at what the project will cost, what type of a return we might get, and how it will take us to get a return on that investment.

EL. What is the governance process for looking at these capital investments?

DA. We have a governance process around any major investment that we would do. It starts with our management committee, which is the way we manage our business. The committee consists of the CEO, me, and about nine other people. Our people do the analysis to see if the investment would give us the return we need and if it will answer our customers' needs. We then decide whether or not to approve the investment.

EL. How often do you review your business strategy?

DA. It is absolutely an ongoing process. At one time, you could look at our strategy three to five years out. That's not good enough today because the world keeps changing. Our executive level strategy steering committee meets monthly to talk about where we are, where we need to go, how we see the markets changing, and how do we react to those changes.

EL. Have you invested additional dollars in analytics?

DA. We have invested in analytics to ensure sure that we have the capacity to analyze much information, and that we can funnel it to where we need to make our improvements. Analytics is something we have been doing since I got here 35 years old. Back then we used slide rulers and calculators.

EL. Do you have a formal methodology for looking at capital investments in technology?

DA. Yes. We have a committee that meets monthly. We have a set format for how we look at this information, especially how it shows the rate of return, the cost of the project, and how quickly we think we can get a return on that investment. Key members of the committee include the Dave Barnes, the CIO, our CFO, me, and nine other executives. Because our offices are near each other, we are constantly talking to each other. Each morning we go to breakfast together to make sure we catch up with each other. We do the same thing at lunch. We have weekly and monthly meetings.

EL. Do you have a committee that handles acquisitions?

DA. We have a group that looks at mergers and acquisitions. It has close ties to our strategy group. We first look at what the acquisition would provide. If we think it has potential, we then look at what synergies the acquisition would provide us.

EL. What is your feeling about using social media to get closer to your customers?

DA. Our way for communicating back and forth with customers has been through our drivers. They function as ambassadors to our company and our customers. As the company has grown, we started to branch out and advertise. For years, our best form of advertisement was our uniformed drivers and a clean package car vehicle that appeared in front a customer's door every day. We have tailored more and more programs for the Internet. We have expanded our interaction with customers to include social media. We are experimenting with things like twitter. We like being able to interact directly and quickly with customers. Social media will also give us much customer service intelligence about how we can do better job. Again, social media is fertile ground for us.

Elizabeth M. Ferrarini - She is a free-lance writer and IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.