Improving Logistics Every Step of the WayThu, 12/01/2016 - 12:51
Q: In what ways do UPS’ services as a logistics provider facilitate local manufacturing?
A: We have a comprehensive solutions portfolio that includes air, ground and ocean transportation for packages of all sizes and weights. In Mexico, we are emphasizing the optimization of cross-border solutions as 76 percent of national exports go to the US. Our UPS Exports in Mexico: Challenges and Opportunities study of Mexican exporters found that half of the surveyed decision-makers were using one logistics provider and the other half used two, three or more. Among the first group, 95 percent reported satisfaction with the service, while only 55 percent of those that use two or more logistics providers were satisfied. This indicates that involving a larger number of transport companies increases complexity in the supply chain, hence the possibility of discontent with the services.
Ground cargo to the US represents US$20 billion. Beyond ground, air and maritime cargo, UPS offers warehousing, after sale, redistribution and inventory management. We have aerospace facilities to increase speed, flexibility and efficiency to meet the needs of the sector. Likewise, UPS has distribution centers specialized in other industries such as automotive and pharmaceutical.
Q: What are the main challenges Mexican makers face when exporting?
A: Mexico has improved its road infrastructure but there are still some obstacles on major highways. One of the challenges for Mexican exports via road and air is the efficiency of customs procedures. This is one of the most difficult areas for the logistics industry because truckloads repeatedly may have to wait weeks at the border before they can cross. Along with other logistics companies, we are approaching government officials to help them understand the needs of our industry and to promote streamlined processes, which would facilitate the movement of aerospace exports and imports.
Customs would benefit from establishing preclearance processes to expedite the transport of products. Another solution would be to incorporate new technologies such as Target Search, which allows the organization of companies under certain criteria. UPS has developed several technologies to streamline these procedures, which are already in use in many countries.
Q: What solutions is UPS developing for manufacturers and how are they being developed?
A: Last year we surveyed over 470 decision-makers from the aerospace, technology and automotive industries who ranked speed and reliability of deliveries as their main concerns, followed by product integrity and efficiency in customs procedures. Our portfolio of solutions is aligned to solve these challenges. Clients are often unaware they are using incorrect logistics solutions and they incur costs as a result. Recently we spoke with an aerospace company in Queretaro that thought they were using the incorrect logistics solution. By optimizing its processes, the company reduced its costs by 15 percent annually. We have helped many clients find the appropriate logistics solutions to their needs. In addition, by choosing UPS as their only customs agent, companies can reduce waiting times and third-party participation.
Since the process at the border can be long and complex, most export companies prefer to make a single trip. Therefore, they often need to consolidate several suppliers. When more than one supplier is used, customer satisfaction can be impaired. UPS offers diverse guaranteed services to avoid this need for several providers.
When it comes to the aircraft manufacturing industry, a missing part can stop a production line, causing immense financial strain. The local aerospace industry requires fast and specialized solutions to ensure that essential pieces arrive on time and UPS can provide them. When exporting, it is necessary to analyze both the size of the package and its urgency. Transportation time can range from a day to a week depending on these factors. Some clients prefer to spend up to US$80,000 in charter flights to send a set of pieces in a day and avoid production loses. However, they could shift to UPS Worldwide Express Freight, which provides this overnight service at a fraction of the cost.
This service is growing strongly, as emergencies are common in a sector without a consolidated supply chain.
Q: What were the main advantages of UPS’ acquisition of the company Coyote Logistics?
A: Coyote Logistics is driven by technology and not based on assets. With its acquisition, UPS coordinates the transport of goods across the border. Many major and medium suppliers send their loads to Mexico or the US and return with an empty truck. Coyote Logistics has a database to identify the origin and destination of trucks. With this information, it can connect clients without a truck fleet interested in transporting their products. This creates extra profit for truck owners who would have made the trip either way. Coyote Logistics used to operate mostly in the US but after its acquisition, we are building a Mexican client database. This will bring immeasurable benefits to transportation companies and their clients. For UPS, it will also reduce the need for extra trucks during peak season, before Christmas, for example.
Q: What are the company’s plans to grow alongside local aerospace companies?
A: The structure of the aerospace industry is comprised of a few OEMs supported by Tier 1s that are in turn supported by Tier 2s and so forth. While Tier 1 and 2 companies generally have a global presence, Tiers 3 to 5 can be of any size, even SMEs. We hope to improve the way products are transported. Carriers sometimes wait up to a week for a truck to be full before crossing the border, upping inventory costs, which are not usually considered. UPS uses a method of Supply Chain Mapping to optimize the logistics procedures of companies to reduce expenses and position their products anywhere in the world.