UPS Logistics Group wins global supply chain contract with Samsung Electro-Mechanics

UPS Logistics Group has been chosen by
Samsung Electro-Mechanics Co., Ltd. (SEMCO), a division of Samsung, to
reengineer and manage its global supply chain.
The three-phase project will redesign SEMCO's logistics, transportation,
customs brokerage and inventory management for both raw materials and finished
goods covering North America, Asia, Europe and Latin America.
At least four different UPS units are expected to be tapped for the project,
including UPS's small package express operation, UPS Air Group, the recently
acquired Fritz Companies and UPS Logistics Group. With all phases in
operation, UPS Logistics Group could be managing up to a half billion dollars
in total logistics expenditures over the five years, according to SEMCO.
The planned first phase of the project is to design and implement a global
information technology infrastructure that will add supply chain visibility to
the flow of SEMCO's raw materials, sub-components and finished goods as they
move from suppliers through manufacturing and on to customers. The phase also
will include the reengineering and management of SEMCO's North American
distribution network that connects manufacturing centers in Asia and Latin
America with customers in North America. Phases II and III will add Europe,
Asia and Latin America over the next four years.
The announcement was made in a ceremony today at UPS's corporate headquarters
by Hyung-Do Lee, Vice Chairman and SEMCO CEO; Jim Kelly, CEO and chairman of
UPS, and Dan DiMaggio, CEO of UPS Logistics Group.
"SEMCO is a very progressive company that realizes the competitive advantages
that UPS's worldwide integrated services can bring," said Kelly. "This
contract illustrates the power of UPS's supply chain management services and
how we can help multinational companies gain superior supply chain
performance."
"We believe that superior logistics and supply chain management are the keys
to being competitive in today's economy," said Vice Chairman Lee. "UPS
Logistics Group is charged with adding efficiency and responsiveness to our
global distribution network."
Korea-based Samsung Electro-Mechanics Co. manufactures, markets and
distributes more than 50 product types used in a variety of telecommunications
and audio-video devices, computers and computer peripherals. SEMCO sells 80%
of its products outside Korea.
"Through technology and new network management practices, we aim to add
efficiencies and cost savings," said DiMaggio. Targets for improvement include
faster cycle times for finished goods, better customs clearance practices for
both raw materials and finished goods, improved inventory and order accuracy,
lower returns and lowered inventory carrying costs.
SEMCO's parent, Samsung Group, is the largest company in Korea with net sales
of $119.5 billion in 2000. "In Korea, Samsung has a reputation for being a
leader in change and innovation. We are sure that many companies in Korea and
elsewhere will be looking to our project as a model for how to add competitive
strength in the global marketplace," added DiMaggio.
According to a 1999 Korean Ministry of Transportation and Construction report,
logistics costs in Korea for transportation, storage, unloading and packaging
reached $60.1 billion in 1999, accounting for 16.3 percent of the gross
domestic product. This is considerably higher than comparative rates in the
U.S. (9.9%) and Japan (9.58%).