Distribution's Friend and Foe
BY HEIDI ELLIOTT -- 11/5/01
Electronic News
Chicago?United Parcel Service of America Inc. (UPS) is, at turns, a competitor, customer and ally to electronic component distributors.
Posed as a question?competitor, customer or ally?James Kelly, UPS chairman, told distribution executives in a speech at the National Electronic Distributors Association (NEDA) Executive Conference here last week, "The short answer is, of course, we're all three."
Kelly said the Atlanta-based company (nyse: UPS), which has grown to be the world's largest express carrier and package delivery company with $29.8 billion in revenue in 2000, thrives on competition. "It's part of our DNA," said Kelly, who joined the company as a delivery driver in New Jersey in 1964 and plans to retire at the end of this year.
UPS offers some direct competition in the supply-chain area. Its logistics group in September snagged a deal to revamp Samsung Electro-Mechanic Co. Ltd.'s global supply chain. The three-phase deal will take four years and encompasses Samsung's logistics, transportation, customs brokerage and inventory management processes around the world. The transportation competition competes with a host of other sectors, Kelly said, including logistics companies, software companies, airlines, freight forwarders and consulting companies. "Based on how deep we are in a customer's supply chain?I guess there can be a (competitive) threat," Kelly said.
UPS unleashed another competitive weapon in its arsenal last week when it announced the creation of a subsidiary, UPS Consulting, which will advise clients on supply-chain management strategies in such areas as design, sales and marketing, planning, procurement, production and cash management.
However, Kelly also noted that UPS is a customer of the electronics industry. UPS so far has spent $1 billion investing in electronics technology and upgrades to its hardware and software.
As an ally, Kelly said, "We believe it's in this area where we can do the most good. What can we do together?"
He then answered his own question. Working together, the parties can build a collaborative supply-chain and level out the peaks and valleys so prevalent in the electronics industry today. Also, companies can invest in technologies and processes that improve the overall efficiency of the supply chain. And, companies can work with UPS to eliminate customs and transportation regulations that hamper the shipping process of electronics parts. For example, shipping restrictions that require a shipment go from the country of origin directly to its destination with no stops allowed between the two end-points. "Collaboration by its very nature will improve supply chains. We have to change attitudes and trust," Kelly said. "How much are you willing to trust your supply-chain partners?
"Clearly much work needs to be done," Kelly added.
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