Some of the supply-chain services have been around for a while. For example, UPS has provided field stocking for critical spare parts fulfillment in the U.S.A., Mexico, Europe and Asia since the 1990s. Others, such as equipment recycling, have been launched within the last few years.

		“Inventory visibility is especially important in the post-sales arena because of the focus on speed, and the need to know where the inventory is at all times.”
— Dave Barnes, CIO, UPS

“The number of customers and transactions have grown each year since UPS began offering the services,” says Phil Corwin, Director, Marketing, UPS Supply Chain Solutions. “We started with one or two large customers, and now it’s pretty broad based, and includes many smaller companies that don’t want to — or can’t — build and manage their own post-sales infrastructure,” he adds.

Corwin declines to provide a revenue figure for the post-sales services, but says they’re playing an increasingly significant role for UPS. “We feel it’s one of the areas [where] there’s a significant opportunity to leverage the assets of UPS, including the small-package network, pickup capabilities and ability to manage supply-chain networks,” he says.

UPS’s IT department has played a key role in supporting the new services, including providing multiple applications such as a supply-chain visibility tool called Flex Global View, which connects suppliers and manufacturers to UPS. “Inventory visibility is especially important in the post-sales arena because of the focus on speed, and the need to know where the inventory is at all times,” says Dave Barnes, CIO at UPS. “Knowing where inventory is, allows us to meet customers’ service-level agreements — for things such as on-time performance and quality — because customer service is of utmost concern in the post-sales world,” he adds.

Customers of the UPS offerings include Cisco Systems, Hitachi GST, Alcatel and Silicon Graphics. “Providing these services makes for a very intense business model, because there are especially high expectations among corporate customers,” says Corwin. “When you think of the role of UPS in post-sales, we’re supporting someone else’s service levels. When an OEM hires us to do this we become the face of that customer to [its] customer, so this business is very different from many businesses of the 3PL world. When we fail, we’re failing our customer and their customer,” he adds.

One of the fastest growing new service areas for UPS according to Corwin is asset recovery and recycling management, which the company began offering about 18 months ago. The emergence of laws such as California’s Electronic Waste Recycling Act, which puts the onus on companies to recycle electronics products at a higher level, is creating a need for support in that area. Other new regulations, such as the European Union’s Restriction of Certain Hazardous Substances (RoHS) and the Waste Electrical and Electronic Equipment (WEEE) directives, will likely fuel even more demand for recycling services, opines Corwin. “We’re seeing all sorts of efforts by major OEMs from consumer electronics to PCs focusing in on this area. We [tell] customers that UPS is a major recycler of its own electronic equipment. We will ensure that material is recycled appropriately and efficiently,” says Corwin.

Another of the newer offerings is the computer product repair service UPS operates out of its two million square-foot repair center in Louisville, Ky., where certified technicians diagnose and fix computers and components. The facility is located next to the UPS Worldport global air hub, which makes it possible for a laptop to be received, repaired and shipped back to the owner within the same day, for delivery as early as the next morning.

The repair program uses the UPS store retail network for packaging and delivering customers’ laptops, the UPS package delivery network for movement of computers, and UPS’s parts management and technical repair capabilities. “What’s intriguing [about the service] is the bundling of three distinct capabilities that we hadn’t brought together before in an integrated manner,” says Corwin.

One customer, the Digital Products Division of Toshiba America Information Systems, Irvine, Calif., has used the service for repair of its laptop computers since 2004. Toshiba partnered with UPS as part of a customer-service initiative designed to improve service in the highly competitive PC market.

Among the key goals were to reduce the turnaround time for laptop repairs — leading to more satisfied Toshiba customers — and cost savings through the streamlining of service operations, elimination of multiple transportation steps and improved inventory visibility.

To get a Toshiba laptop repaired, customers call the company’s toll-free customer service center to get repair consent and the address of the nearest UPS Store. From the store, the computer is shipped to the repair center. Toshiba can also send customers packages that can be shipped via UPS or another carrier.

“Toshiba so far is pleased with the results of the repair program,” says Dave Norris, VP, Service for the Digital Products Division. Norris says that the turnaround time for the average laptop repair job has dropped to about a day and a half from two days since UPS took over repairs from another service provider. UPS engineers working at the repair center can identify problems faster than technicians did in the past.

Customer satisfaction has increased by a percentage point, based on customer surveys Toshiba conducts after each repair transaction. “One percentage point doesn’t sound like much, but it’s a significant amount for customer service,” adds Norris. He says other metrics, such as supply-chain savings and increased sales due to improved product-repair service, are difficult to track.