UPS Logistics Group
Atlanta, Georgia USA
May 18, 2001
Dan DiMaggio, CEO
Lynette McIntyre, Marketing Director
Dan Silvernale, Investor Relations Manager
Dan DiMaggio is upbeat about UPSL’s prospects. He should be! UPSL has made a series of key purchases that fill geographical and operational holes.
Burnham’s critical parts addition is one of several UPSL has made as it develops its strategic advantage in this large and profitable global sector. Livingston not only adds coverage in Canada but provides competency in the high value health care sector. Fritz will be an important synergistic, sister company.
And then, there is the advantage of just being UPS. Tremendous brand recognition, a universe of customers and a host of parent company plusses like capital and IT can’t hurt. The affable DiMaggio is a prototypical UPS exec. He’s smart, hard working and he earned the job. He is an ex UPS industrial engineer who is committed to not overselling the business. Work measurement and activity-based costing are being quickly developed and added for major accounts. Within two to three years, UPS will excel in knowing its operating costs and have superior modeling capabilities similar to its brown-shirted parent.
The emphasis at UPSL will be on Value-added Transportation Management, not warehousing. UPSL has made huge investments in IT to make this happen. Not only does it have i2’s TMS software, but it has a host of in-house developed systems.
To handle the Ford finished auto business, UPSL has its own system, Car Tracker™ which grew out of its standard track and trace code. For transportation management, Global Track Master provides the coverage. Site selection is done primarily with an optimzer developed off of Road Net technology.
Purchased transportation is about 20% of UPSL’s current $1 billion in gross revenue. Growth will be more than 20% for 2001. About half will come from existing business – half from new accounts. Profitability should be restored in 2001 as IT costs are covered. Margins should improve steadily thereafter.
No wonder DiMaggio smiles more quickly and often these days.
Sources: A&A Primary Research, http://www.ups-scs.com/