What exactly is UPS Supply Chain Solutions?

[boiled frog]

Originally Posted by tieguy

Boiled frog you do a lot of debunking, you allude to inside knowledge but so far you appear to be sparse on details. In this case isn't it the integration of Menlo and Overnight that is currently making scs unprofitable or is there more to this story that you with your vast knowledge of SCS could share?

Overnight, which is now UPS Freight, is NOT part of SCS. Its results are combined with SCS results for SEC reporting, however it is NOT part of the UPS Supply Chain Solutions business unit in any way shape or form. I'm certainly not about to share anything here that is not public information if that's what you're looking for. I'll just give you my personal observations and opinions. The problems SCS has had are due to a number of high level managers from Package (known informally as old brown stains), who weren't smart enough to know what they don't know about freight and logistics, being put in senior SCS management positions. They figured they'd just saunter into town and do things they way they always had at Package. As a result, most of SCS's most valuable customers AND employees are now gone. The bad ones remain. Some, but not all, of these managers have been moved out. But the damage has been done and recovering will be MUCH more difficult since the problems were permitted to go on for so long. I am not an SCS employee BTW, however my responsibilities for the past 5 years or so have required me to work very closely with them. And I do know a lot about what goes on there and recognize that SCS is NOT the same as Package and can't be successfully managed the same way.

Originally Posted by SCS

I work for SCS (having been acquired with Menlo), most of the unmarked UPS trucks are ex-Menlo trucks, as they didn't bother giving them a real name - the official name is SCS-Forwarding, but due to SCS's non-union policy, all the drivers ended up under a separate name, the actual name I'm not sure, and a blank white truck with a UPS logo on it.

Overnite got a brand name - UPS Freight, and Fritz/Expedite/Sonic contract 3rd party, Menlo just got whatever they could figure out (which wasn't much)

thanks i was just asking afellow coworker about the solo white truck Ive seen driving around with a UPS logo slapped on it...First thing that came to mind when seeing this vehicle was a tacky DHL look

[hoser]

Originally Posted by Salesguy

Ocean freight is so 1990...

Say that to the Chinese...

[peacock71]

One thing no one else seems to have posted here is that UPS SCS represents UPS attempting to extend our network further into our customers systems by being an extension of them, adding value each step of the way.

As Casey said, anybody can pick 'em up and deliver them, its service that makes the difference. The worst thing that could happen to UPS is that package delivery becomes a commodity and we have to strictly compete on cost.

SCS is differentiation, and a new value proposition for UPS. SCS has to make it work. UPS has to show all this logistics stuff adds scale and profits.
The market is huge.

Go UPS!
P71

[hoser]

Originally Posted by peacock71

One thing no one else seems to have posted here is that UPS SCS represents UPS attempting to extend our network further into our customers systems by being an extension of them, adding value each step of the way.

As Casey said, anybody can pick 'em up and deliver them, its service that makes the difference. The worst thing that could happen to UPS is that package delivery becomes a commodity and we have to strictly compete on cost.

SCS is differentiation, and a new value proposition for UPS. SCS has to make it work. UPS has to show all this logistics stuff adds scale and profits.
The market is huge.

Go UPS!
P71

The industry is changing, and UPS is catching onto it rapidly. Outsourcing is the trend, and UPS definitely should definitely extend its services.

[nforcr]

Simply put UPS SCS is a warehousing and distribution arm of UPS. They actually become part of the customers (Toshiba, Nikon, Sprint, etc) supply chain to help them more efficiently get their product to the customer. SCS offers a solution to the customer and every part of that solution has a price tag attached to it. You want SCS to build the corrugation for your Xbox? Ok, that'll be $$$. You want SCS to put your phone in a box with charger, earpiece and printed material? Ok, that'll be $$$$, etc. It's all based on a profit and loss statement for each account (rather than one big PnL for UPS as a whole).

Very sleek business model with big margins.

Interesting enough you are just as likely to see FedEx trucks at the docks as you are UPS trucks. Many of the customers manage their own transportation and avoid UPS because of the higher shipping rates and tend to go with smaller feeder networks to move their freight.

[drewed]

Originally Posted by nforcr

Simply put UPS SCS is a warehousing and distribution arm of UPS. They actually become part of the customers (Toshiba, Nikon, Sprint, etc) supply chain to help them more efficiently get their product to the customer. SCS offers a solution to the customer and every part of that solution has a price tag attached to it. You want SCS to build the corrugation for your Xbox? Ok, that'll be $$$. You want SCS to put your phone in a box with charger, earpiece and printed material? Ok, that'll be $$$$, etc. It's all based on a profit and loss statement for each account (rather than one big PnL for UPS as a whole).

Very sleek business model with big margins.

Interesting enough you are just as likely to see FedEx trucks at the docks as you are UPS trucks. Many of the customers manage their own transportation and avoid UPS because of the higher shipping rates and tend to go with smaller feeder networks to move their freight.

You have two different points here and they sort of contradict, you say warehousing and distribution then you say UPS will be packaging the product which I dont believe is a function of SCS

[peaches1959]

Originally Posted by FinancialPlanner

And it should be noted that UPS wentpublic to have currency to make acquisitions such as Menlo ... "Operating profit for the Supply Chain & Freight segment decreased by $34 million for the quarter, largely due to lost sales at our forwarding and logistics unit and continued integration costs associated with the Menlo Worldwide Forwarding acquisition."

From UPS 10Q on March 10, 2006 ...

Operating Profit

The following table sets forth information showing the change in operating
profit, both in dollars (in millions) and in percentage terms, as well as the
operating margin for each reporting segment:



Three Months Ended
March 31, Change
2006 2005 $ %
Reporting Segment
U.S. Domestic Package $ 1,185 $ 1,028 $ 157 15.3 %
International Package 395 348 47 13.5
Supply Chain & Freight (25 ) 9 (34 ) (377.8 )

Consolidated Operating Profit $ 1,555 $ 1,385 $ 170 12.3 %


Three Months Ended
March 31,
2006 2005
Reporting Segment
U.S. Domestic Package 15.9 % 15.1 %
International Package 18.3 % 18.9 %
Supply Chain & Freight (1.3 %) 0.7 %
Consolidated Operating Margin 13.5 % 14.0 %




Supply Chain & Freight Operations Supply Chain & Freight revenue increased $664 million, or 53.9%, for the quarter. UPS Freight, formerly known as Overnite Corp. (acquired August 2005), provided $477 million or 38.7% of the increase in revenues. UPS Freight offers a variety of less-than-truckload (LTL) and truckload services to customers in North America. The results of operations have been included in the Supply Chain & Freight reporting segment since the August 5, 2005 acquisition date. UPS Freight generally reported improvements in its operating performance measures in the post-acquisition period versus the same period a year ago when it was not a part of UPS, including improvements in average daily LTL shipments and average LTL revenue per LTL hundredweight.
Forwarding and logistics revenue increased 16.1% for the quarter, largely due to ongoing changes in the business model for this unit. The forwarding and logistics business is continuing to move towards a model that places more transactional ownership risk on UPS including increased utilization of UPS-owned assets. This has the effect of increasing revenue as well as purchased transportation expense. The increased revenue associated with these forwarding transactions was offset by lost sales due to customer turnover. In addition, revenue decreased by $22 million during the quarter due to currency fluctuations.
The other businesses within Supply Chain & Freight, which include our retail franchising business and our financial business, increased revenue by 1.3% during the quarter. This revenue growth was primarily due to increased revenue at our financial services unit.
Operating profit for the Supply Chain & Freight segment decreased by $34 million for the quarter, largely due to lost sales at our forwarding and logistics unit and continued integration costs associated with the Menlo Worldwide Forwarding acquisition. This decrease was partially offset by the operating profits generated by UPS Freight. Currency fluctuations did not affect operating profit during the quarter.

I would like to know how they decreased. After gouging their delivery agents they should be on the up side.

[Tiny Panda]

Originally Posted by nforcr

Simply put UPS SCS is a warehousing and distribution arm of UPS. They actually become part of the customers (Toshiba, Nikon, Sprint, etc) supply chain to help them more efficiently get their product to the customer. SCS offers a solution to the customer and every part of that solution has a price tag attached to it. You want SCS to build the corrugation for your Xbox? Ok, that'll be $$$. You want SCS to put your phone in a box with charger, earpiece and printed material? Ok, that'll be $$$$, etc. It's all based on a profit and loss statement for each account (rather than one big PnL for UPS as a whole).

Very sleek business model with big margins.

Interesting enough you are just as likely to see FedEx trucks at the docks as you are UPS trucks. Many of the customers manage their own transportation and avoid UPS because of the higher shipping rates and tend to go with smaller feeder networks to move their freight.

What he said

UPS SCS basicly control your whole supply chain (hence the name) Here in the UK SCS have a contract with the countries biggest shop/catalogue company. We essentially control all their imports from country of despatch on board ship to when it arrives into the country, take care of all the customs stuff then transport it their distribution warehouses. Go past one of them and you'll see loads of the SCS trailers parked up there.

SCS started off after the purchase of Fritz and a company in the UK called Haulfast, Fritz was the worldwide part of it and Haulfast was the domestic transport network, it was later renamed UPS logistics before being rebranded SCS. This part of the company seems to be taking forever to rebrand, i still see the blue tractor units from time to time although they have now been de-logo'd






They also operate in customers livery

[UPSNewbie]

I really love the look of those rigs...

[Tiny Panda]

Sadly they're rather boring now, plain white tractor with the UPS logo's and the normal grey trailer.

I'm invisaging a change to UPS Freight for part of it if we win the bid for TNT as they have a large road network in Europe

[UPSNewbie]

Originally Posted by Tiny Panda

Sadly they're rather boring now, plain white tractor with the UPS logo's and the normal grey trailer.

I'm invisaging a change to UPS Freight for part of it if we win the bid for TNT as they have a large road network in Europe

I was talking as apposed to US rigs. What's driven in UK I've always thought was really cool looking.

[UPS UK]

Originally Posted by Salesguy

Ocean freight is so 1990...

SCS is not about ocean freight that we rent , its about Express pallet loads. By air. When we find a way to keep SP from Air Freight then we will be sorted. I worry that SCS can send 3 pallets, 1000kg air, for £1000 less than I can send the same Expedited... with the best discounts I can give... on a 2 day quicker service. Comprimise is needed because SCS are taking lots of SP parcels.

[BLACKBOX]

Originally Posted by drewed

You have two different points here and they sort of contradict, you say warehousing and distribution then you say UPS will be packaging the product which I dont believe is a function of SCS

I'm not too sure if UPS-SCS is not involved in packaging the product,because if we are offering services like repairing laptops for Toshiba it doesn't make sense to outsource the packaging to a non-UPS company.

I think everything is kept "in-house" and part of the whole spiel to make customers want to use UPS-SCS. For one, I don't think FDX or other SCS companies offer what UPS can in its logistics.