Ups

Supply Chain Management Conference 2004
Logistics Strategies for a

New China
Richard Zhu
UPS Supply Chain Solutions
April 14, 2004
2 Shanghai pres.ppt
UPS |
UPS_PPT_template_scrn_0327
03_empUPS Supply Chain
Solutions
Agenda
China transportation and
logistics market overview
Four logistics strategies
3 Shanghai pres.ppt
UPS |
Solutions
Compared to the U.S., China transportation and logistics
spend is small, but a relatively large percentage of GDP
US Japan China
$10,082
$1,008
10%
$5,976
$657
11%
$1,150
$214
19%
GDP
Transportation and
Logistics Spend
Source: BEA National Economic Accounts; CSFB; Chinainfobank; European Commission; Securities
Market Size 2001
($ U.S. Billion)
4 Shanghai pres.ppt
UPS |
Solutions
Chinas transportation and logistics market exhibits low efficiency
and poor service quality attributable to four major factors
Low Efficiency and
Poor Quality
Under-developed
Infrastructure
Lack of Expertise
and Technology
Fragmented/
Segmented Market
Regulatory History
and Constraints
5 Shanghai pres.ppt
UPS |
Solutions
Hurdles are being addressed
Low Efficiency and
Poor Quality
Under-developed
Infrastructure
Lack of Expertise
and Technology
Fragmented/
Segmented Market
Regulatory History
and Constraints
WT reforms
Competition
Multinationals and
integrated services
National road and rail network
Triple container port capacity
10,000 logistics
specialists
graduating
each year
6 Shanghai pres.ppt
UPS |
Solutions
Growth of 3PL outsourcing
From in-house to third party
25-30% 3PL growth rate
More foreign-owned 3PLs establishing networks
Domestic providers to play a role
7 Shanghai pres.ppt
UPS |
Solutions
UPS Supply Chain Solutions in China
3PL air and ocean forwarding
1,000 people, 24 locations, 1.5 million sq. ft. of
warehouse space
6 weekly direct flights
8 Shanghai pres.ppt
UPS |
Solutions
Four strategies for efficient logistics management
Integrate everything
Share the pain
By-pass the DCs
Make sure you can see
9 Shanghai pres.ppt
UPS |
Solutions
Integrate everything
Fragmented suppliers hinder visibility,
increase hand-off problems
3PLs handle suppliers, for one point of contact
10 Shanghai pres.ppt
UPS |
Solutions
A High-tech Manufacturer
Worlds largest manufacturer of
hard disk drives
Vertically integrated manufacturer
heads, media, PCB, final assembly
Technology leadership and
leverage
Very competitive industry with
steep year-over-year reductions
in price
Strategic focus on R&D, marketing
and sales
VMI hubs for inbound
component parts
Airfreight (2,000+ tons/month)
Ocean freight
Customs Brokerage
LTL/TL transportation
Global finished goods distribution
Reverse logistics for
warranty/repair
Supply chain visibility
in-transit and in-site
About the Company Scope of UPS Solution
UPS |
Solutions
UPS manages the Companys China pre-manufacturing VMI
logistics, finished goods fulfillment and returns consolidation
Beijing
VMI
60+ Global
Suppliers
Wuxi EPZ
UPS |
Solutions
Beijing
Wuxi EPZ
North America
Asia Pacific
DC
VMI
60+ Global
Suppliers
UPS |
Solutions
Global Repair
Mexico
Dallas, TX
Singapore
Beijing
DC
VMI
60+ Global
Suppliers
UPS |
Solutions
The Client has reduced costs, improved performance
and simplified their supply chain
Program Results
Economics
Logistics cost per drive reduced by 25% over 2 years
Improved asset utilization and lower capital expense
5% US transportation expense reduction
Simplification
Air freight providers reduced from 6 to 2
US carriers reduced from 62 to 7
Materials reduction via site consolidation
Lower capital expense
Service Levels and Optimization
Direct fulfillment improved from 20% to 83%
Utilization of ocean for selected products
Customer error reduction
Visibility and Integration
Elimination of redundancy and wasted
communication time
2001 2002 2003
-10%
-15%
Freight Cost: $ per drive
2001 2002 2003E
-64%
-50%
Loss Management: $ per drive
UPS |
Solutions
Share the pain
Sharing regional distribution facilities with
other companies
Share costs, minimize delivery times
UPS |
Solutions
By-pass the DCs
Speed to market
UPS Trade Direct
SM
Ocean An integrated solution combining ocean freight and
customs clearance with final UPS package, TL or LTL delivery.
UPS Trade Direct
SM
Air An integrated solution for moving time-sensitive shipments
from your international origins direct to customers or stores. Combines air freight and
customs clearance with final UPS package or LTL delivery.
UPS |
Solutions
DC By-pass video clip
UPS |
Solutions
Make sure you can see
Customers demand visibility
Track products, track costs,
speed delivery
Using 4PL is one way to
achieve visibility
UPS |
Solutions
Lucent Technologies
Increased complexity in logistics coordination
Over 40 regional and 2
nd
tier warehouses
Over 14 transportation LSPs
Global industry slowdown led to organization
downsizing and cost reduction pressure
Increased competition led to lower margin
and higher service levels
Project-based deployment practice requires
greater flexibility in resources
Global realignment to the virtual
manufacturing model requires the SCN
organization to outsource
Freight forwarding
Inland Transportation
Customs Brokerage
Express Package
Freight payables
Visibility Systems
Warehousing
Transportation Management
Order Fulfillment
Inbound Process Management
Outbound Process Management
China Logistics Activities Challenges
UPS |
Solutions
Lucent Technologies
China Lead Logistics Provider
Logistics network
management and
execution
Total supply chain
visibility solutions
Management of
logistics service
providers
Lucent China
UPS |
Solutions
Logistics in China:
From a question mark to an exclamation mark!
Thank you
Copyright 2004 United Parcel Service of America, Inc. UPS, the UPS brandmark and the color brown are trademarks of United Parcel Service of America, Inc. All rights reserved.

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Logistics Strategies for a

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