UPS maintains a think tank, the Operations Research Division, in Timonium, Maryland, which works on supply-chain algorithms. This “school” of mathematics is called “package flow technology,” and it is designed to constantly match the deployment of UPS trucks, ships, airplanes, and sorting capabilities with that day’s flow of packages around the world. “Now we can make changes in our network in hours to adjust to changes in volume,” says UPS CEO Eskew. “How I optimize the total supply chain is the key to the math.” The sixty-person UPS team in Timonium is made up largely of people with engineering and math degrees, including several Ph.D.’s.
UPS also employs its own meteorologists and strategic threat analysts to track which atmospheric or geopolitical thunderstorms it will have to work around on any given day. To further grease its supply chains, UPS is the largest private user of wireless technology in the world, as its drivers alone make over 1 million phone calls a day in the process of picking up and delivering packages through its eighty-eight thousand package cars, vans, tractors, and motorcycles. On any given day, according to UPS, 2 percent of the world’s GDP can be found in UPS delivery trucks or package cars. Oh, and did I mention that UPS also has a financing p. 148 arm—UPS Capital—that will put up the money for the transformation of your supply chain, particularly if you are a small business and don’t have the capital.
For example, notes Eskew, UPS was doing business with a small biotech company in Canada that sold blood adhesives, a highly perishable alternative to stitches. The company had a growing market among the major hospital chains, but it had a problem keeping up with demand and could not get financing. It had distribution centers on the East and West coasts. UPS redesigned the company’s system based around a refrigerator hub in Dallas and extended it financing through UPS Capital. The result, said Eskew, was less inventory, better cash flow, better customer service—and an embedded customer for UPS. A maker of bridal headpieces and veils in Montreal wanted to improve its flow of business with the U.S. Eskew recalled, “We designed a system for consolidated [customs] clearances, so their veils and headpieces would not have to come over [the border] one by one. And then we put [the merchandise] in a warehouse in [upstate] New York. We took the orders by Internet, we put the labels on, we delivered the packages and collected the money, and we put that money through UPS Capital into their banks electronically so they had the cash back. That allows them to enter new markets and minimize their inventory.”
Eskew explained, “When our grandfathers owned shops, inventory was what was in the back room. Now it is a box two hours away on a package car, or it might be hundreds more crossing the country by rail or jet, and you have thousands more crossing the ocean. And because we all have visibility into that supply chain, we can coordinate all those modes of transportation.”
Indeed, as consumers have become more empowered to pull their own products via the Internet and customize them for themselves, UPS has found itself in the interesting position of being not only the company actually taking the orders but also, as the delivery service, the one handing the goods to the buyer at the front door. As a result, companies said, “Let’s try to push as many differentiating things to the end of the supply chain, rather than the beginning.” And because UPS was the last link in the supply chain before these goods were loaded onto planes, trains, and p. 149 trucks, it took over many of these functions, creating a whole new business called End of Runway Services. The day I visited Louisville, two young UPS women were putting together Nikon cameras, with special memory cards and leather cases, which some store had offered as a weekend special. They were even putting them in special boxes just for that store. By taking over this function, UPS gives companies more options to customize products at the last minute.
UPS has also taken full advantage of the Netscape and work flow flatteners. Before 1995, all tracking and tracing of UPS packages for customers was done through a call center. You called a UPS 800 number and asked an operator where your package was. During the week before Christmas, UPS operators were fielding six hundred thousand calls on the peak days. Each one of those calls cost UPS $2.10 to handle. Then, through the 1990s, as more and more UPS customers became empowered and comfortable with the Internet, and as its own tracking and tracing system improved with advances in wireless technology, UPS invited its customers to track packages themselves over the Internet, at a cost to UPS of between 5¢ and 10¢ a query.
“So we dramatically reduced our service costs and increased service,” said UPS vice president Ken Sternad, especially since UPS now pulls in 7 million tracking requests on an average day and a staggering 12 million on peak days. At the same time, its drivers also became more empowered with their DIADs—driver delivery information acquisition devices. These are the brown electronic clipboards that you always see the UPS drivers carrying around. The latest generation of them tells each driver where in his truck to load each package—exactly what position on the shelf. It also tells him where his next stop is, and if he goes to the wrong address, the GPS system built into the DIAD won’t allow him to deliver the package. It also allows Mom to go online and find out when the driver will be in her neighborhood dropping off her package.
Insourcing is distinct from supply-chaining because it goes well beyond supply-chain management. Because it is third-party-managed logistics, it requires a much more intimate and extensive kind of collaboration among UPS and its clients and its clients’ clients. In many cases today, UPS and its employees are so deep inside their clients’ infrastrucp. 150ture that it is almost impossible to determine where one stops and the other starts. The UPS people are not just synchronizing your packages—they are synchronizing your whole company and its interaction with both customers and suppliers.
“This is no longer a vendor-customer relationship,” said Eskew. “We answer your phones, we talk to your customers, we house your inventory, and we tell you what sells and doesn’t sell. We have access to your information and you have to trust us. We manage competitors, and the only way for this to work, as our founders told Gimbel’s and Macy’s, is ‘trust us.’ I won’t violate that. Because we are asking people to let go of part of their business, and that really requires trust.”
UPS is creating enabling platforms for anyone to take his or her business global or to vastly improve the efficiency of his or her global supply chain. It is a totally new business, but UPS is convinced it has an almost limitless upside. Time will tell. Though margins are still thin in this kind of work, in 2003 alone insourcing pulled in $2.4 billion in revenues for UPS. My gut tells me the folks in the funny brown shorts and funny brown trucks are on to something big—something made possible only by the flattening of the world and something that is going to flatten it a lot more.
Flattener #9: In-forming
Google, Yahoo!, MSN Web Search
My friend and I met a guy at a restaurant. My friend was very taken with him, but I was suspiciously curious about this guy. After a few minutes of Googling, I found out that he was arrested for felony assault. Although I was once again disappointed with the quality of the dating pool, I was at least able to warn my friend about this guy’s violent past.
—Testimonial from Google user
p. 151 I am completely delighted with the translation service. My partner arranged for two laborers to come and help with some demolition. There was a miscommunication: she asked for the workers to come at 11 am, and the labor service sent them at 8:30. They speak only Spanish, and I speak English and some French. Our Hispanic neighbors were out. With the help of the translation service, I was able to communicate with the workers, to apologize for the miscommunication, establish the expectation, and ask them to come back at 11. Thank you for providing this connection . . . Thank you Google.
—Testimonial from Google user
I just want to thank Google for teaching me how to find love. While looking for my estranged brother, I stumbled across a Mexican Web site for male strippers—and I was shocked. My brother was working a
s a male prostitute! The first chance I got, I flew to the city he was working in to liberate him from this degrading profession. I went to the club he was working at and found my brother. But more than that, I met one of his co-workers . . . We got married last weekend [in Mexico], and I am positive without Google’s services, I never would have found my brother, my husband, or the surprisingly lucrative nature of the male stripping industry in Mexico!! Thank you, Google!
—Testimonial from Google user
Google headquarters in Mountain View, California, has a certain Epcot Center feel to it—so many fun space age toys to play with, so little time. In one corner is a spinning globe that emits light beams based on the volume of people searching on Google. As you would expect, most of the shafts of light are shooting up from North America, Europe, Korea, Japan, and coastal China. The Middle East and Africa remain pretty dark. In another corner is a screen that shows a sample of what things people are searching for at that moment, all over the world. When I was there in 2001, I asked my hosts what had been the most frequent searches lately. One, of course, was “sex,” a perennial favorite of Googlers. p. 152 Another was “God.” Lots of people searching for Him or Her. A third was “jobs”—you can’t find enough of those. And the fourth most searched item around the time of my visit? I didn’t know whether to laugh or cry: “professional wrestling.” The weirdest one, though, is the Google recipe book, where people just open their refrigerators, see what ingredients are inside, type three of them into Google, and see what recipes come up!
Fortunately, no single word or subject accounts for more than 1 or 2 percent of all Google searches at any given time, so no one should get too worried about the fate of humanity on the basis of Google’s top search items on any particular day. Indeed, it is the remarkable diversity of searches going on via Google, in so many different tongues, that makes the Google search engine (and search engines in general) such huge flatteners. Never before in the history of the planet have so many people—on their own—had the ability to find so much information about so many things and about so many other people.
Said Google cofounder Russian-born Sergey Brin, “If someone has broadband, dial-up, or access to an Internet café, whether a kid in Cambodia, the university professor, or me who runs this search engine, all have the same basic access to overall research information that anyone has. It is a total equalizer. This is very different than how I grew up. My best access was some library, and it did not have all that much stuff, and you either had to hope for a miracle or search for something very simple or something very recent.” When Google came along, he added, suddenly that kid had “universal access” to the information in libraries all over the world.
That is certainly Google’s goal—to make easily available all the world’s knowledge in every language. And Google hopes that in time, with a PalmPilot or a cell phone, everyone everywhere will be able to carry around access to all the world’s knowledge in their pockets. “Everything” and “everyone” are key words that you hear around Google all the time. Indeed, the official Google history carried on its home page notes that the name “Google” is a play on the word “ ‘googol,’ which is the number represented by the numeral 1 followed by 100 zeros. Google’s use of the term reflects the company’s mission to organize the immense, seemingly infinite amount of information available on the p. 153 Web,” just for you. What Google’s success reflects is how much people are interested in having just that—all the world’s knowledge at their fingertips. There is no bigger flattener than the idea of making all the world’s knowledge, or even just a big chunk of it, available to anyone and everyone, anytime, anywhere.
“We do discriminate only to the degree that if you can’t use a computer or don’t have access to one, you can’t use Google, but other than that, if you can type, you can use Google,” said Google CEO Eric Schmidt. And surely if the flattening of the world means anything, he added, it means that “there is no discrimination in accessing knowledge. Google is now searchable in one hundred languages, and every time we find another we increase it. Let’s imagine a group with a Google iPod one day and you can tell it to search by voice—that would take care of people who can’t use a computer—and then [Google access] just becomes about the rate at which we can get cheap devices into people’s hands.”
How does searching fit into the concept of collaboration? I call it “in-forming.” In-forming is the individual’s personal analog to open-sourcing, outsourcing, insourcing, supply-chaining, and offshoring. In-forming is the ability to build and deploy your own personal supply chain—a supply chain of information, knowledge, and entertainment. In-forming is about self-collaboration—becoming your own self-directed and self-empowered researcher, editor, and selector of entertainment, without having to go to the library or the movie theater or through network television. In-forming is searching for knowledge. It is about seeking like-minded people and communities. Google’s phenomenal global popularity, which has spurred Yahoo! and Microsoft (through its new MSN Search) also to make power searching and in-forming prominent features of their Web sites, shows how hungry people are for this form of collaboration. Google is now processing roughly one billion searches per day, up from 150 million just three years ago.
The easier and more accurate searching becomes, added Larry Page, Google’s other cofounder, the more global Google’s user base becomes, and the more powerful a flattener it becomes. Every day more and more people are able to in-form themselves in their own language. Today, said p. 154 Page, “only a third of our searches are U.S.-based, and less than half are in English.” Moreover, he added, “as people are searching for more obscure things, people are publishing more obscure things,” which drives the flattening effect of in-forming even more. All the major search engines have also recently added the capability for users to search not only the Web for information but also their own computer’s hard drive for words or data or e-mail they know is in there somewhere but have forgotten where. When you can search your own memory more efficiently, that is really in-forming. In late 2004, Google announced plans to scan the entire contents of both the University of Michigan and Stanford University Libraries, making tens of thousands of books available and searchable online.
In the earliest days of search engines, people were amazed and delighted to stumble across the information they sought; eureka moments were unexpected surprises, said Yahool’s cofounder Jerry Yang. “Today their attitudes are much more presumptive. They presume that the information they’re looking for is certainly available and that it’s just a matter of technologists making it easier to get to, and in fewer keystrokes,” he said. “The democratization of information is having a profound impact on society. Today’s consumers are much more efficient—they can find information, products, services, faster [through search engines] than through traditional means. They are better informed about issues related to work, health, leisure, etc. Small towns are no longer disadvantaged relative to those with better access to information. And people have the ability to be better connected to things that interest them, to quickly and easily become experts in given subjects and to connect with others who share their interests.”
Google’s founders understood that by the late 1990s hundreds of thousands of Web pages were being added to the Internet each day, and that existing search engines, which tended to search for keywords, could not keep pace. Brin and Page, who met as Stanford University graduate students in computer science in 1995, developed a mathematical formula that ranked a Web page by how many other Web pages were linked to it, on the assumption that the more people linked to a certain page, the more important the page. The key breakthrough that enabled p. 155 Google to become first among search engines was its ability to combine its PageRank technology with an analysis of page content, which determines which pages are most relevant to the specific search being conducted. Even though Google entered the market after other major search players, its answers were seen by people as more accurate and relevant to wh
at they were looking for. The fact that one search engine was just a little better than the others led a tidal wave of people to switch to it. (Google now employs scores of mathematicians working on its search algorithms, in an effort to always keep them one step more relevant than the competition.)
For some reason, said Brin, “people underestimated the importance of finding information, as opposed to other things you would do online. If you are searching for something like a health issue, you really want to know; in some cases it is a life-and-death matter. We have people who search Google for heart-attack symptoms and then call nine-one-one.” But sometimes you really want to in-form yourself about something much simpler.
When I was in Beijing in June 2004, I was riding the elevator down one morning with my wife, Ann, and sixteen-year-old daughter, Natalie, who was carrying a fistful of postcards written to her friends. Ann said to her, “Did you bring their addresses along?” Natalie looked at her as if she were positively nineteenth-century. “No,” she said, with that you-are-so-out-of-it-Mom tone of voice. “I just Googled their phone numbers, and their home addresses came up.”
Address book? You dummy, Mom.
All that Natalie was doing was in-forming, using Google in a way that I had no idea was even possible. Meanwhile, though, she also had her iPod with her, which empowered her to in-form herself in another way—with entertainment instead of knowledge. She had become her own music editor and downloaded all her favorite songs into her iPod and was carrying them all over China. Think about it: For decades the broadcast industry was built around the idea that you shoot out ads on network television or radio and hope that someone is watching or listening. But thanks to the flattening technologies in entertainment, that world is quickly fading away. Now with TiVo you can become your own TV edip. 156tor. TiVo allows viewers to digitally record their favorite programs and skip the ads, except those they want to see. You watch what you want when you want. You don’t have to make an appointment with a TV channel at the time and place someone else sets and watch the commercials foisted on you. With TiVo you can watch only your own shows and the commercials you want for only those products in which you might be interested.
The World Is Flat Page 18
