SCITC 2008 Scott_Szwast


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SCITC 2008 Scott_Szwast

  1. 1. Synchronizing Global Freight May 29, 2008
  2. 2. Enabling Global Commerce <ul><li>UPS: </li></ul><ul><li>World’s largest package delivery company and a global leader in supply chain services </li></ul><ul><ul><li>Revenue of $49.7 billion in 2007 </li></ul></ul><ul><ul><li>Moves 6% of U.S. gross domestic product </li></ul></ul><ul><ul><li>Serves more than 200 countries and territories around the world </li></ul></ul><ul><ul><li>7.9 million customers daily </li></ul></ul><ul><ul><li>93,637 ground vehicles </li></ul></ul><ul><ul><li>268 aircraft - World’s 9 th largest airline </li></ul></ul><ul><ul><li>101 years of experience </li></ul></ul><ul><ul><li>UPS Supply Chain Solutions: </li></ul></ul><ul><ul><li>A global provider of integrated logistics and supply chain solutions </li></ul></ul><ul><ul><li>Revenue of $8.4 billion </li></ul></ul><ul><ul><li>Operations in 120 countries with over 1,033 facilities and 38 million square feet of warehouse space </li></ul></ul><ul><ul><li>Customs brokerage services in all major international trade locations </li></ul></ul><ul><ul><li>Global air and ocean freight forwarder and a leading Non-Vessel Operating Common Carrier </li></ul></ul>
  3. 3. <ul><li>Supply Chain Element Spend </li></ul><ul><li>Freight and Transportation - All Modes 4.36% of sales </li></ul><ul><li>Warehousing 1.8% of sales </li></ul><ul><li>Order Entry / Customer Service .55% of sales </li></ul><ul><li>Administration .36% of sales </li></ul><ul><li>Inventory Carrying Costs 2.07% of sales </li></ul><ul><li>Total Average Supply Chain Cost 9.14% of sales </li></ul>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. 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. 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. 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. 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. 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. 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. <ul><li>Retail Business Improvement Through End-to-End Supply Management </li></ul><ul><li>Reduced Stock-Outs 2%-8% improvement </li></ul><ul><li>Lower Inventory Levels 10%-40% improvement </li></ul><ul><li>Increased Sales 5%-20% improvement </li></ul><ul><li>Manufacturing Business Improvement Through End-to-End Supply Mgmt </li></ul><ul><li>Lower Inventory Levels 10%-40% improvement </li></ul><ul><li>Faster Replenishment Cycles 12%-30% improvement </li></ul><ul><li>Higher Sales 2%-10% improvement </li></ul><ul><li>Better Customer Service 5%-10% improvement </li></ul>Sources: Benchmark analysis, AMR survey
  10. 10. Thank you © 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.