Logistics Management Group News Editor Jeff Berman recently caught up with UPS Chief Sales and Solutions Officer Kate Gutmann to discuss UPS’s rollout of various new services geared towards small and medium sized businesses, in helping them to identify and participate in global trade opportunities. These new offerings included: the launch of the UPS My Choice for Business Service Platform; a major extension of the UPS Access Point network; the introduction of a new offering called UPS Worldwide Economy, a deferred, lower-priced international option geared towards small businesses; UPS Extended Hours Pickup for Next Day Ground Delivery, which will reduce transit times and provide extended late hours for pickup for customers that need it, for next-day delivery by ground; new seven-day pick-up and delivery services, expanding its current Saturday pick-up and delivery services for residential and business locations and also add new Sunday pick-up and delivery options; and the launch of its new drone subsidiary, UPS Flight Forward. A transcript of the interview follows below.
Logistics Management (LM): What were some of the key steps and planning that went into these new offerings? Let’s start with the shift to seven days a week delivery.
Kate Gutmann: It really was part of what we call a holistic strategy. As you know, we are the leader in e-commerce for our customers, but what you may not know is for more than ten years we have been researching consumers and shippers and actually anticipated some of the needs we are seeing play out now and, therefore, the solutions ahead of time. At our Transformation conference, we talked about our strategic growth imperatives and while did not talk about them publicly we foreshadowed that we would be making some announcements this year because they were already in development. It was anticipated but then what happened was that there was a structural change in the market to a one-day delivery commitment and we started to utilize next-day ground expanded hours in April. It really was great timing and development ahead of time in anticipating the needs of our customers.
LM: Looking at the new My Choice for Business offering, how will this be approached by smaller enterprise and SMB customers?
Gutmann: A lot of UPS’s 60 million consumer customers that are My Choice members are business owners, and they know the experience it offers, as our My Choice for home customer satisfaction is very high. Those happy consumers are also business people and becoming users of My Choice for Business. We see the correlations and anticipate the same high growth we saw with the original product.
LM: The drone-related news is very interesting in that it is being applied to healthcare. What are some of the longer-term plans as this entity evolves over time?
Gutmann: Our focus with this is healthcare. We are starting with WakeMed in Raleigh, N.C. but are getting inquiries from other hospitals and campuses specific to their healthcare needs. Prior to WakeMed, The UPS Foundation initially formed a partnership with the Global Vaccine Alliance and Zipline and funded and supported the use of drones in Rwanda. We were also on the commercial side of that partnership, where we were providing initial advice and also monitoring the flights, so we have learned a lot through our operation with them.
LM: The expansion of UPS’s Access Points through its partnerships with Michaels, CVS, and Advance Auto Parts is significant, coupled with UPS having access to 90% of the U.S. population through its Access Point locations. Was this expansion driven by past successes, as these three retailers bring a lot of reach?
Gutmann: We started our Access Points in 2011, with The UPS Store as our anchor store and a national retail outlet, with 5,000 locations. The majority of apartments in the U.S. do not have door staffers so they prefer an Access Point delivery. We looked at these three retailers, their hours of operation, their weekend coverage, and also their brand consistency and security levels, as we go through a qualification. They were a great match.
LM: Shifting gears away from the new UPS offerings for a moment, how do you see Peak Season prospects shaping up? This year has a different feel, due to trade tension and tariff concerns, it seems.
Gutmann: Our earnings call highlighted the fact that we are focused on operating leverage and profits were matching the demand, with capacity moving around as needed. That has played out well, as seen in our numbers. Also, we have seen an in the number of discussions with our customers on how they should modify their supply chains because of trade risks or rewards. We focus on being customer-facing, and we go out to help redesign their supply chains. In this case, as it relates to trade, we are helping them to do different sourcing programs, shifting their product availability to different countries. This has helped quite a few customers, and we expect it will continue.
LM: Do you think Peak Season will be more active in 2019, given the onus on next-day or one-day shipping?
Gutmann: I think the calendar change in compression is going to show up definitely [this year’s peak period has five fewer days between Thanksgiving and Christmas than last year], but I will tell you…we start working on peak for the next year in January on a cross-functional basis, as there is a customer focus, as well as engineering and operations. We have been working with customers, done trend lines for them, and we feel good about this upcoming peak. Also, we are running our operations at unprecedented levels right now. It is a great way to start.
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