UPS CEO: Tech and Sustainability Will Drive Business Innovation Over the Next Decade

When Carol Tomé, took the helm of one of the largest carrier companies in the world in June 2020, she was already talking about innovation. At the time, UPS was a 112-year-old business, and Tomé knew the company needed to do more as competitors were evolving, customers were shifting, and the rate of change was accelerating.

“I came on board with lots of ideas about what we might do to lean into that change. And then, of course, the pandemic hit,” said Tomé during a conversation with Georgia Chamber of Commerce President and CEO Chris Clark at the State of American Business 2022 event.

“While the world shut down and started to shelter in place, people were ordering online. And we saw unprecedented volume flow into our network.”

UPS hired 40,000 people just to handle the pandemic volume. Hiring more people ensured that UPS could measure up to its No. 1 priority: delivering essential goods to customers around the world. From there, quick investments in customer experience, innovation technology, and health care logistics allowed UPS to keep pace with demand and innovate along the way.

Dry Ice and Drone Delivery

UPS already had robust health care logistics experience, but new innovations allowed the company to deliver over a billion vaccines in 110 countries with 99.9% effectiveness.

“We have special ways of monitoring the delivery; we have sensors so that we know where the package is at any point in our network; we have a control tower that we stood up to follow the package around the network; and we manufacture dry ice to make sure that the package is chilled as it needs to be chilled,” Tomé said.

Through the UPS Foundation, the company delivered 20 million vaccines to countries around the world—even delivering vaccines in Rwanda using drones.

While it’s still early to use drones consistently from a commercial perspective, Tomé thinks that there will come a time when drones play a much bigger role—and UPS will be on the cutting edge with pilot programs already underway.

Drones are also serving as an innovative way for UPS to meet its sustainability goals.

"We emit over 35 million metric tons of greenhouse gas every year, and most of that comes from our aircrafts,” Tomé said. “We're going to have to look at alternative fuel for airlines.”

A UPS partnership with Beta Technologies in Vermont is building an innovative, battery-powered plane that will carry about a metric ton of cargo—a smaller, but better, aircraft. UPS was also the first company authorized by the Federal Aviation Administration (FAA) to have a drone airline UPS is calling Flight Forward.

The Secret Sauce

Tomé credits UPS’ innovative projects and strong talent pipelines for keeping its labor force—what she calls “the secret sauce of the company”—intact during the country’s worker shortage crisis.

"It’s because we have career opportunities, and not just job opportunities, that we are able to bring people into our workforce in this tight labor market,” Tomé said.

“There’s a war on talent for sure. But our people are working on cool things too. When you think about people who are in the IT space, you can work on automating your facilities or drones or battery-powered aircraft. We’ve got some really cool things for people to work on.”

As for the supply chain crisis, Tomé said a totally different perspective on inventory management is needed.

“It requires, I think, more nearshoring, getting the inventory closer to the end user. I think we also have to really work on end-to-end visibility.”

Through an initiative called Project Evolve, UPS is working on being able to give customers a digital experience with end-to-end visibility, so that they understand where their product is along the supply chain from the manufacturing plant, all the way down to their distribution center, or the recipient.

The Next Decade of Innovation

Wrapping up the conversation, Tomé predicted that the trends that will drive innovation over the next 10 years will be around investments in sustainability and improvements in “tech fluency.”

“ESG is not a fad; it is here to stay. And the implications of that really will impact capital allocation,” Tomé said. “If you think about the commitments that companies like UPS have made to be carbon neutral, we’re going to need to invest to make that happen. But I believe that if you take care of the needs of all the stakeholders, the shareholders will be taken care of.”

On technology, Tomé added: “Digital literacy isn’t going to cut it. We're going to have to have digital fluency as the way we operate and the way we think. The only way we’re going to survive is to become digitally fluent.”