Business use of technology is all about improving the bottom line - especially when your company spends $1bn a year on IT.

When you invest that much money, a good awareness of financial accounting helps. Fortunately for Ken Lacy, chief information officer of package delivery specialist UPS, he is an old hand in this area.

'Before I moved over to the IT side in 1994, I grew up on the accounting side of UPS. For that reason, everything I do has to do with the bottom line,' he says.

Innovation is a high priority at UPS. Lacy is spending big bucks on a range of leading-edge parcel distribution and wireless systems to improve the 'last mile' of UPS package delivery.

'The things we're doing for customers, and all the technology that's already been put in place, is helping us to enable our processes,' he says.

'But the warehousing systems, the just-in-time inventories and the brokerage operations are helping us create an end-to-end supply-chain. I think you're going to see some interesting technology coming out as we make the last mile more efficient.'

Wireless technology

Last month, UPS announced plans for the European phase of a $100m (£55m) worldwide wireless technology roll out (Computing, 1 July).

The system, which is already operational in the US, will be deployed across 118 countries by 2007.

UPS staff use small Bluetooth scanners, worn on the middle finger, which send package tracking data to UPS's computer network via WiFi terminals attached to their belt.

The global roll-out of the scanning system coincides with the deployment of Diad IV, the company's latest version of its handheld computer for delivery drivers.

As with the ring scanning system, UPS is aiming for standardisation on handheld computers, and plans to offer a Windows CE-based device to 10,000 European employees in 2005.

'We try to build ahead of the curve so that we can have the newest technology in place - but we don't want to go so far ahead of the curve that we can't take advantage of it,' says Lacy.

Web-based applications

XML is another technology UPS hopes will offer customers a smoother supply-chain process.

The company is using XML to build web-based applications that allow clients to easily integrate with its back-end systems.

The courier works with as much as 229Tb of customer delivery data on a daily basis.

The aim is to provide more visibility - and, most importantly, relevant information - to its customers by offering a smoother interface between systems.

'We can give customers too much information - and it becomes overload,' says Lacy.

'Technology should be about managing the use of information and providing the ability to manipulate the data. Every big company has already installed technology in their supply chains. They're not necessarily going to upset all their systems to work with you.'

Quantum View, a web-based proactive visibility system, allows customers to filter delivery data so they receive only the information relevant to their business.

'If you're shipping 5,000 packages a day, you only want to know about the exceptions, the packages that didn't get there and why. That's the key to visibility,' says Lacy.

Flex Open View is another web-based tool that provides a comprehensive view of orders, customs clearances and inventory management data.

'We deliver around 13 or 14 million packages every day,' says Lacy. 'Flex Open View is a specialist package that involves customers who move less transactions but it helps us deal with the deliveries of greater volume.'

Automated parcel sorting

UPS is also pursuing a high-technology approach to parcel sorting at airports.

The company spent $1.1bn building its Worldport hub at Louisville International Airport in Kentucky.

Packages arrive at Louisville in the early hours from more than 200 countries, and can be processed and forwarded automatically to US destinations in as little as eight minutes.

UPS is keen to roll the Worldport model out across the rest of the world.

'Catch-up has been our biggest challenge. We've perfected the technology and now we're starting to deploy those systems a piece at a time,' says Lacy.

UPS opened its first automated air hub in the UK last Christmas.

The 30,000 square foot site, based at Stansted Airport's World Cargo Centre, has a sorting capacity of 6,000 packages an hour, compared with 2,500 packages per hour its former manual facility.

Work continues apace and other venues in Europe will soon benefit from UPS's leading-edge technology. The Cologne hub, which the company is planning to unveil in the first quarter of 2005, will also use automated technology.

'We can't just take a hub out for six months,' says Lacy. 'We still have to move on millions of packages every day while we fit that hub with the relevant technology.'

Smart labels

The new centres rely on state-of-the-art 'smart labels' fixed to the top of boxes and envelopes, which are read by overhead scanners, allowing packages to be automatically sorted.

As many as 95 per cent of UPS customers in the US - and between 80 and 85 per cent of Europeans - already use smart labels.

'I don't know whether we'll get 100 per cent. And even if we get 100 per cent, something can break, such as the label application fails or a package gets sorted upside down. You're always going to have exceptions,' says Lacy.

'Some customers already have a process in place that they've spent millions of dollars on. You've got to give them a value proposition that makes them want to change - maybe when they're upgrading their own back-end systems.'

For now, Lacy is convinced UPS's range of wireless and web-based supply-chain systems are helping to improve the company's parcel distribution.

And after 10 years shaping technology at UPS, Lacy is far from finished on his personal venture.

'It's been a great ride, a great challenge and I still really enjoy it,' he says.