Interview with Bob Stoffel, Senior VP UPS Logistics Group
UPS Logistics Group, a wholly owned subsidiary of United Parcel Service Inc. in Atlanta, provides comprehensive global supply chain solutions aimed at reducing costs, improving customer service, reducing inventory investments and speeding up delivery. WM recently spoke with Bob Stoffel, senior vice president of UPS Logistics Group — Service Parts Logistics, regarding ways to sustain a business's core competencies while providing expanded services to develop and maintain continued growth.
Q. What is the key to reducing costs at an organization as large as UPS Logistic Group?
A. When reducing costs, it's important to stay focused on fulfilling your service and solution commitments to clients. In the end, quality, automation and standardization are significant drivers of cost reduction for us. It's no coincidence that improvement in these elements also ensures better service to our customers — and ultimately their customers.
Q. What were some examples of the enhancements initiated as a result of your cost-saving measures?
A. One prime example would be operational network design. We spent much of 2000 optimizing our worldwide field support network. We now handle multiple manufacturing clients at 420 distribution facilities throughout the world. Technology provides opportunities for cost reduction as well. We are continuously increasing the percent of transactions coming to us via EDI and the Web. The beauty of this type of cost program is that it improves accuracy, speed and other quality metrics.
Q. How important is a strong reverse logistics program?
A. With a strong and accurate reverse logistics program, an organization can minimize having to store excess inventory. In our case, two out of three items leaving our facility were never used by our customers' technicians and were eventually returned to the warehouse in new condition. Without the implementation of an effective reverse logistics system, we would have spent an enormous amount of time, money and space replacing and replenishing items that were already sitting idle somewhere in the pipeline.
To improve this process, we use intelligent labels on individual parts. This initiative allowed for the ease of inventory tracking both in the facility and while in transit. By using our bar code label system, parts can be returned to active inventory within seven to 10 days — down from over 40 days. As an added benefit, we were able to route returning damaged goods to our reclamation centers to be repaired and sold as refurbished items. Once again, this cost program supports our underlying customer service objectives.
Q. What are some of the major challenges that UPS Logistics Group has faced regarding customer service?
A. Customer service is a challenge for everyone in the logistics business. Wider use of the Internet, wireless and other new technologies has increased customer expectations for immediate status and rapid resolution of problems. It is essential to invest heavily in IT infrastructure and skilled employees to respond to this compressed service window.
Q. How can warehouses remain competitive if a recession looms in the future?
A. Warehouse companies must redefine themselves as client partners and solution creators, and move away from their position as unavoidable cost components in the eyes of the customer. In the post-sales logistics business, logistics companies shouldn't sell shelf space, but offer clients closed-loop solutions to their logistics challenges. We also believe that a slowing economy offers opportunity for logistics providers who can help clients shed assets and fixed costs.
Send us your ideas on warehousing and logistics leaders you'd like us to interview. Call Jim Whalen at (617) 558-4723 or send e-mail to [email protected]
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