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SCITC 2008 Scott_Szwast

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  • 1. Synchronizing Global Freight May 29, 2008
  • 2. Enabling Global Commerce
    • UPS:
    • World’s largest package delivery company and a global leader in supply chain services
      • Revenue of $49.7 billion in 2007
      • Moves 6% of U.S. gross domestic product
      • Serves more than 200 countries and territories around the world
      • 7.9 million customers daily
      • 93,637 ground vehicles
      • 268 aircraft - World’s 9 th largest airline
      • 101 years of experience
      • UPS Supply Chain Solutions:
      • A global provider of integrated logistics and supply chain solutions
      • Revenue of $8.4 billion
      • Operations in 120 countries with over 1,033 facilities and 38 million square feet of warehouse space
      • Customs brokerage services in all major international trade locations
      • Global air and ocean freight forwarder and a leading Non-Vessel Operating Common Carrier
  • 3.
    • Supply Chain Element Spend
    • Freight and Transportation - All Modes 4.36% of sales
    • Warehousing 1.8% of sales
    • Order Entry / Customer Service .55% of sales
    • Administration .36% of sales
    • Inventory Carrying Costs 2.07% of sales
    • Total Average Supply Chain Cost 9.14% of sales
    The Cost of the Global Supply Chain Freight and transportation accounts for an average 4.36% of Cost of Goods Sold (COGS). This is the largest and most actionable area for near-term supply chain improvement. Sources: CASS, Stephens, Herbert W. Davis
  • 4. Average Shipper Freight Spend by Mode Twice a decade 100,000 businesses across all freight shipping segments are asked to quantify their transportation spend across modes. Sources: Shipper Surveys, U.S. DoT / U.S. DoC Average Freight Spend, International and Domestic
  • 5. Freight Routing: Different Modes for Different Needs These modes each deliver a different balance of Effectiveness (speed and precision) and Efficiency (shipment expense and per-carton cost) Effectiveness Efficiency 10x Cost 10x Time
  • 6. Freight Routing: One Size Does Not Fit All Time in Transit 3 5 6 7 16 26 28 40 Customer Ready Store Ready Pooler Ready DC Ready Shelf Life Margin Seasonal Geography Demand High Margin Merchandise Seasonal Merchandise High Velocity Merchandise Replenishment Merchandise
  • 7. Example: An Integrated, Mode-Shifting Solution Freight and individual packages are picked up and consolidated Consolidated shipment crosses the border in a single customs clearance Freight moves via LTL Packages enter UPS package delivery network Package and LTL shipments are delivered direct to multiple retail stores and/or end customers PICKUP / CONSOLIDATE SHIPMENTS CLEAR CUSTOMS DECONSOLIDATE SHIPMENTS FINAL DELIVERY FULL VISIBILITY: End-to-end tracking provided throughout the supply chain.
  • 8. Progression of Global Freight Management Strategy Single Mode Focus Potential economy of scale at cost of agility and responsiveness Multi-Modal Management SKU level routing optimization, maximum utility with lowest opportunity cost, heightened agility, decreased disruption Mode-Shift Capabilities Sea-Air, Trade Direct, DC bypass, transload, in-transit VAS application, shortened transit, heightened value Full Supply Chain Management End-to-end global supply chain cohesion, total distribution cost management, active management of suppliers, integrated customer and regulatory compliance
  • 9. Global Freight is Not a Level Playing Field Effective management of end-to-end freight and ancillary functions can reduce total distribution cost by up to 5%, with the same impact on profit as a 30% increase in sales.
    • Retail Business Improvement Through End-to-End Supply Management
    • Reduced Stock-Outs 2%-8% improvement
    • Lower Inventory Levels 10%-40% improvement
    • Increased Sales 5%-20% improvement
    • Manufacturing Business Improvement Through End-to-End Supply Mgmt
    • Lower Inventory Levels 10%-40% improvement
    • Faster Replenishment Cycles 12%-30% improvement
    • Higher Sales 2%-10% improvement
    • Better Customer Service 5%-10% improvement
    Sources: Benchmark analysis, AMR survey
  • 10. Thank you www.ups.com © Copyright 2008 United Parcel Service of America, Inc. UPS, the UPS brandmark and the color brown are trademarks of Untied Parcel Service of America, Inc. All rights reserved.

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