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Taking Stock: interview with Derek Irving, director of UPS Contract Logistics


Derek Irving has been with UPS for 20 years, and has spent all of that time working in contract logistics. But if that sounds like a long time to you, it’s the blink of an eye in UPS terms, which has been around for almost 110 years.
Since its humble beginnings in Seattle in 1907, owned and operated by four guys offering delivery services to department stores, UPS has grown to be one of the world’s largest delivery concerns, spanning 230 countries and territories, delivering an average of 17 million packages and documents a day to more than six million addresses, and employing more than 435,000 people. It has 100,000 delivery vehicles, 2,700 locations, and is also the ninth largest airline in the world.

The Contract Logistics division of UPS was set up over 20 years ago and focuses primarily on industry sectors such as high-tech, retail, healthcare, automotive and manufacturing, and has campuses of warehouses in the UK, in the Netherlands and in Germany.

eDelivery caught up with Derek to hear about UPS Contract Logistics, his thoughts on the industry as a whole, and what the future might hold in store.

eDelivery: Everyone understands the size and scale of UPS, but how else are you able to add value to your clients?

Derek Irving, UPS Contract Logistics

Derek Irving, UPS Contract Logistics

Derek Irving: I guess I’m lucky in that I’ve had 20 years with UPS so I’ve seen the ecommerce marketplace really from its inception all the way through to where it is today. And it’s really basically since the inception of ecommerce we, as an organisation, have become vigilant about ensuring we’re developing products and services that are relevant today but also remain relevant to customers in that particular marketplace; not only relevant but actually adding value.

In terms of the landscape of ecommerce, one of the things that we pride ourselves in doing to add value is being able to give our customers insight in terms of developments that we see in some of the research that we undertake. We don’t just gather up research data and keep it all in a dark room, we use it to consult and advise our customers. Some examples would be that 71% of businesses from our research across all markets regard online sales via their website as their most important exporting channel. But we also know that apps and mobile are becoming increasingly important for European customers.

Now clearly as a carrier we want to be able to foster those exports, but we don’t just stop there. The advice we give to our customers is you have to make sure your content is optimised for mobile devices and that it’s fresh.

So we provide that kind of background knowledge for our customers as part of our portfolio of services to them.

eD: where does contract logistics fit in the evolving delivery landscape?

DI: We see ourselves as an enabler for businesses of all size, allowing them to take advantage of our global network and the products and services we offer. So because of the proximity of our hub network, our campus warehouses can offer, for example, later cut-off times so that enables our customers to offer a wider trading window. Also our scale affords SME customers the same sort of global infrastructure as a multinational.

We recently hosted a visit by one very significant multinational to our Coventry facility on behalf of an SME customer of ours; this is a customer that has six employees. Our customer was bidding against an established multi-country supplier to that multinational, so the question of global presence wa important. But as soon as they saw the infrastructure we were able to place at the disposal of our client it was no longer an issue. The one thing that we also add into businesses is agility. We already have that global presence and we can use that to very good effect.

eD: The issue of returns is a priority for many businesses engaged in ecommerce, how are you helping your clients with it?

DI: We commissioned surveys of ecommerce customers that gave us a whole raft of data, and I can pick out one particular example with regards to returns. From the survey data, we learned that 52% of shoppers, for example, are satisfied with the ease of making online returns and exchanges. But what we’re effectively saying here is that 50% of people are dissatisfied. That begs the question what can we do to help our customers have a more comprehensive returns policy?

We now offer a returns consolidation service that allows the customer to return items to our warehouse. The product may have been shipped from mainland Europe to a UK address, but if that customer wants to return or exchange that item they just send it back to our Coventry facility, for example, where we consolidate those returns and send them back to the retailer’s facility in mainland Europe at a frequency that is convenient for them.

We can also even re-ship that product out as a new item for the retailer, if it’s in untouched condition. That gives the e-tailer a number of clear benefits, from shipping visibility – they can see it coming back through the UPS network, that’s our warehouse – through to coupling that with a more financially viable returns mechanism, so shipment back to mainland Europe is far more economic than an individual package shipment.

And let’s not forget the delivery piece as well, over the course of the past three years we’ve established a network of access points which enable our clients’ customers to collect from over 3,000 locations across the UK, locations that provide extended hours and, in most cases, weekend collections. As it stands now, 91% of the UK population is within 5km of a UPS access point, which is a great testament in terms of the speed with which we’ve assembled this particular network.

eD: What will the delivery firm of the future look like?

DI: In my opinion, the delivery firm of the future effectively offers customers large and small that same great service across a global network. But the delivery firm of the future also needs to become an integral part of the customer’s business; providing expert advice across a range of aspects affecting that customer’s business, whether that’s export, customs, inventory management, or returns management.

There also needs to be a continual focus on adding value be it technology, better processes, or improved network facilities. And underpinning all of that has to be service excellence. If you can’t do that last bit then the other parts don’t really figure anymore. That’s the one thing that UPS has always stood for and always will.

eD: Looking to the future, will we see UPS using things like drones, self-drive vehicles, or warehouse robots?

DI: The development and use of technology has essentially been a hallmark of UPS over the years. A good example is that back in the early ‘90s UPS were actually the first company to provide paperless POD signature technology. Just think how widespread that is now.

In investment terms, globally we spend over a billion dollars a year just on technology. So our centres all have pretty extensive automated systems, but what we always do is we strike the balance between the fixed capacity of an automated system and also our ability to upscale with human capital when peak activities take place. On average UPS delivers 17 million packages and documents a day, but that’s dwarfed by the 34 million per day that we delivery during peak. No business can afford to have that 100% of redundancy in their particular network, so we’ve always got to strike that balance, that’s kind of the backdrop to that, and I think it’s actually a great testament to the great people that UPS has that we’ve maintained such a great service during those periods of volume upsurge.

We don’t necessarily see one particular branch of technology as a magic pill, if you like. We’ll continue to look at all forms of technology over the course of our development but we’re always cognisant of the fact that, at the end of the day, it’s our ability to upscale during times of peak that set us apart.

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