In what has become a classic outsourcing move in other industries, Philips Medical has contracted with UPS to redesign and operate its global parts logistics network. The goals of this new business arrangement are to improve customer service and no doubt lower costs for Philips Medical.
UPS has been given the task of ensuring Philips Medical customers
in 50 countries around the world receive parts according to service
level agreements, including same day delivery for critical parts
delivery and return services. That contrasts with the current practice
of next business day service. The UPS-designed network will replace a
regional response system utilizing 12 logistics providers in about 40
As part of the global SPL contract, UPS will
provide material storage and inventory management, order fulfillment,
inbound and outbound transportation, global visibility and reporting,
as well as inspection, re-packaging and labeling.
Both outsourcing and off shoring were embraced by other tech industries a few years ago. The extensive world wide communications infrastructure, that was a unintended consequence of the Internet bubble of the late 1990s, provides a commodity platform for enabling lots of different outsourcing, offshore or otherwise, between companies. In addition to parts logistics, UPS is also transporting and installing cardiovascular and x-ray equipment for Philips.