UPS: RFID is our network's eyes and ears and AI is the brain

United Parcel Services is betting that RFID, an older digital tracking technology, can be paired with AI to drive returns on its network.

Speaking on UPS' second quarter earnings call, CEO Carol Tome said the company has been investing in RFID as it also spends on AI to bridge the physical and digital worlds. Here's how Tome described the combination:

"Think of RFID as the eyes and ears within our network, and AI as the brain. RFID generates data from billions of package movements. Our AI transforms that data into decisions, predictions and actions. In fact, we believe RFID is the most significant package visibility advancement in a decade. We're using it to move from a scanning-based network to a sensing network, eliminating hundreds of millions of manual scans every year. We've completed deployment of RFID sensing technology across all of our U.S. delivery facilities and package cars. And now we're moving internationally. We're also enabling our customers with RFID label printers, and every package shipped at our 5,500 UPS stores is RFID-enabled."

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Tome added that the goal is to create a real-time data flywheel. "These capabilities are generating rich, real-time data about the packages in our network. Now pair that data with the AI-powered digital twin of our network, including all modes, facilities, vehicles, aircraft and package flow data," said Tome, who added that AI will optimize planning, routing and execution.

The plan for UPS is to use the RFID-AI flywheel to deliver premium volume for SMB, healthcare and B2B customers. Going forward, UPS will aim to expand its RFID and AI efforts internationally.

UPS reported second quarter earnings of $604 million, or 71 cents a share, on revenue of $14.93 billion. The results were better than expected as UPS successfully wound down lost volume due to the end of a contract with Amazon.