Richard Ivey School of Business Case # 907D02
Camelia Indah Murniw Murniwati ati Jejen Nugraha
1406513376 1406589114
Muhammad Yuriansyah Putra Nasrul Nabil Sangadji
1406514100 1406589303
In 1907, James E. Casey founded American Messenger Messenger Company which delivered messages and small packages in the Seattle area mainly by foot and bicycle. In 1919, Company had new name: United Parcel Service (UPS) and made its first expansion into Oakland, California. w orld’s number number Decades later, UPS, the world’s one package delivery company, delivery company, delivered more than 14 million packages a day in more than 200 countries c ountries and territories worldwide. UPS leveraged its giant global delivery network: offering customer firms a wide range solutions for supply chain needs.. needs In 1995, UPS formed UPS Supply Chain Solutions (UPS-SCS) which is enable “syncronized commerce” process.
Supply Chain Design & Planning
Logistics & Distributions Services
UPS Services Transportation & Freight Services
International Trade Management
Hewlett Packard (HP) – one of the largest global information inform ation technology (IT) companies in the world. HP strategy: offer hi-tech and low cost products, services, and solutions, and deliver the best customer experience. In 2002, HP’s acquisition of Compaq Computer Corporation (another customer of UPS) created a leading global provider of products, technologies, solutions, and services for consumer and business.
Scope of Services Agreed Upon by HP and UPS (3-year contact) o
Courier / NFO (Next Flight Out)
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Field Stocking Locations (FSL) – (FSL) – United United States and Canada
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Information Technology (IT) – (IT) – for for scoped services
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Request Fulfillment – Fulfillment – call call centers / help desk
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Reverse Logistics – Logistics – defective defective warehousing, free trade zone
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Package Transportation – Transportation – domestics domestics and international, hold for pick-up
Teams within and across each firm were structured to define individual roles and reporting responsibilities. Structuring tools: 100 individual Service Level Agreements (SLAs). (SLAs). A financial metric metric by which which success could be evaluated aimed at a 12 per cent reduction in spending for HP over the 3-year contract period. period.
After the acquisition of Compaq, UPS assisted HP in merging the operations in Asia. UPS worked worked with Original Design Manufacturers (ODM) to coordinate the flow of materials.
UPS set up a central parts distribution center in Tokyo and 15 stocking locations around.
UPS warehousing facility at Pudong Airport in Shanghai for finished notebook computers before exported, documentation facilities, & as a freight forwarder out of China.
UPS vital service: allowing customers such us HP to deal with exogenous forces. E.g: UPS managed international returns through Free Trade Zone (FTZ) in Louisville, Kentucky.
Centralized Warehousing & Distribution Facility in Chicago & Los Angeles, Atlanta, Dallas, New York (4 additional destinations).
UPS coordinated with customs, retrieved in bulk & coordinated with some of HP largest customer (Circuit City & Best Buy)
UPS provided visibility of the entire process with Flex Global View.
On March 23, 2004, Pat Grace, Grace, of UPS Supply Chain Solutions (UPS-SCS) and Mark Colaluca, Colaluca, of Hewlett Packard (HP), were leading their teams in a lively discussion during a quarterly business review. The teams reviewed quarterly performance metrics pertaining to predetermined Service Level Agreements (SLAs) created at the beginning of the partnership.
Being efficient in process while still agile and responsive. Create infrastructure to meet various requirement of individual customer. How to create the best coordination structure between HP and UPS.
Transportation o
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Transportation offers Transportation offers time time and and place utility to utility to consumers. Transportation function is function is an opportunity opportunity f for or supply chain managers to minimize cost and cost and improve profitability. profitability.
Carriers -> UPS o
Moves products to products to geographically distanced markets to provide people all people all over the world with world with access access to to a wide variety of goods from various countries. countries .
Those who provide transportation services to services to move goods from one point to point to another .
Shippers -> HP o
Those who require transportation services. services .
Overview Overvi ew of Carrier Operations
Supply Chain Design and Planning
Logistics and Distribution Services
• Transportatio n and Site Organization • Distribution Center Design
• Order Fulfillment • Critical OrderFulfillment • Reverse Logistics • Parts Planning
Transportation and Freight Services
International Trade Management
• Air – North American • Air – Air – International • Urgent • Ocean • Rail/Intermodal • Road
• Trade Consulting • Custom Brokerage • Managed Services • Import/Export Technologies
Motor Carrier
Railroad
Air Freight
Water Carrier
Containers
Intermediaries vs Intermediaries vs Strategic Partnership o
Intermediaries • Lack Lack accurate accurate demand forecast forecast from from carriers • Inffective Inffective information information systems • Short-term Short-term relationships relationships provider (Third-Party Logistics) • 3PL 3PL provider
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Strategic Partnership operational flexibility • Greater operational • Moderately decentralized • Long-term Long-term relationships relationships • Sharing both risk • Shipper can can focus to its core competence competence -> -> Technolo echnology gy innovation • 4PL providers (Fourth-Part (Fourth-Party y Logistics)
3PL vs 3PL vs 4PL o
3PL • Firms that manage manage & & execute execute certain certain value-add logistics logistics and and transportation functions transportation functions on behalf of of their customers customers,, using their own assets and assets and resources resources.. • Offer an an array of logistics services services (carrier (carrier selection, route scheduling, shipment storage, partial assembly of parts and transortation).
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4PL • Emerged to cover cover informational informational technology technology needs needs in transportation. • A supply chain integrator that that synthesizes and manages manages the the resources,, capabilities resources capabilities and and technology technology to to deliver an e-commerce supply chain solution to its customers. • Provides strategy-consulting strategy-consulting,, reviews reviews and and redesign its customer’s business process, integrates integrates various various technologies technologies and and leverages human resources. resources.
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Summary • 4PL provider 4PL provider is a strategic partner instead instead of tactical transportation such as 3PL provider. service provider such
Agile infrastructure infrastructure o
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Allow customization for each customer customer Companies Corporate Strategy
Sharing information o
Intensively but selectively
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Frequency of communication
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EX: Release dates of new products, Innovation(Technology) Innovation(Technology)
Collaboration Improvement Projects o
Help customer with their internal processes
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Joint improvement activities
Create team concentrating on each aspect Ability to explore explore other opportunities when it comes to their: o
Processes
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Methods
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Infrastructure
Balance of current strategy and Innovation opportunities o
Competitors
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Industry best practice
Evaluations o
Internal
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Customer
Criteria o o
Amount of SLAs o o o
Consolidate SLAs Concentrate on certain at a time Categorize
Monthly Scorecards o o o
Based on corporate strategies Ex: Delivery and Innovation
Measure progress on a monthly basis KPIs Ex: # of ideas, Meetings on a monthly basis
Why? o
Measurement tool for the partnership
Major Feature/ issue facing the relationship between HP and UPS: 1. 2. 3. 4.
Being efficient in process while still remaining flexible Efficiently manage new and old process Create adaptable infrastructure to meet the diverse needs of individual customer Internal and external communication and coordination
Strategy to deal the issue: 1. 2. 3. 4.
Elimination duplicate service servic e in HP, HP, thereby concentrating on core competency Interaction of various departments of UPS and HP to make use of tailored services Design an information pathway between UPS and HP where practices and processes could be shared across industries. Making UPS a part of the HP strategic team in deciding suppliers from a supply chain viewpoint.
Derive value by personalizing attention toward the customer (Tailored or customized services) Intense training of employee’s and creative utilization of technology Strategic partnership agreements : o
Trust
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Collaborative profit goal
