Let's Talk Freight

Maryann Cassidy Kearns
e-Commerce Sales
United Parcel Service

January 24, 2001

Facing a virtual reality?

Importance of Fulfillment

Christmas 1999 "items arrived later than promised-and some didn''t arrive at all. It became apparent that E-business success depends more on capable back-end fulfillment systems than on flashy Web sites".

--Information Week, September 2000

A Tradition of Watching Our Customers' Back-Ends

Technology vision looks first at the back-end
$11 billion investment

The UPS Perspective

13 million packages each day
Seven percent of US GDP
A decade of applying technology to commerce

Supply chains are being transformed...

graphical diagram showing the shift from supply chains to pull value chains

...into pull value chains

Combining Three Flows.of Commerce

Goods
Information
Funds

Characteristics of the new electronic supply chain

Customized products and services
Global visibility
Agile
Lightning velocity
Managing multiple suppliers seamlessly

Integration Throughout the Customer's Business Process

Flowchart of the customer's business process

Order Entry

Select Service
Rate & Validate
Tracking
Reference Number Tracking
Time in Transit

Account Process

Proof of Delivery
Electronic Payment

Customer Service

Tracking Service Information
Tracing Proof of Delivery
Service Availability

Inventory

Interface to Inventory Systems

Pick, Pack, & Ship

Print Shipping Labels
Send Shipping Detail
Ship Notice to Facilitate Pmt
Send Tracking Number and Package Count to Merchant
Initiate Pickup

Returns

Initiate pickup at customer's location
Verify pickup address
Confirm pickup and route notice to merchant

Integration = Process Improvement

Tracking	Direct Integration Inbound and Outbound Real Time Visibility	Improve Customer Service
POD	Days Sales Outstanding Cash Flow	Enhance Corporate Financials
TNT	Planning and Forecasting accuracy	Improve Inventory Turns
Electronic Billing	Integrate transportation into enterprise finance system	Eliminate Freight Bill Audit

Two Strong Forces Creating Revolution in Commerce

Globalization
Consumer Pull

The UPS View: Drop the "E" in E- Commerce

Computers can't cough up packages
Technology can combine three commerce flows

Applying Technologies For Customer Value

Target the Right Customers

screen shot of UPS e-commerce web site

Streamline business processes that impact the customer

Total Peak Day.Customer Inquiries

bar chart showing increase in customer inquires 1996-1999

Let customers help themselves

screen shot of a customer tracking software program

Our Customers' Cost of Tracking a Package:

Phone - over $2.50 /occurrence
Internet - under $0.10 /occurrence
Help customers do their jobs

Ford and UPS Have A Better Idea
- Track vehicles from factory floor.to dealership
- Reduce costs; improve customer service
- Manage Ford's transportation system to shorten time to market by 40 percent

In Summary...

Enabling Commerce
Supply Chains are changing rapidly
Evaluate all business processes for effectiveness and efficiency...

Process Improvement is the Key to Value Creation

photo of a dog with a rocket strapped to its back

Strapping New Technology to Old Business Processes Will Negatively Impact Value.