With the current intense news cycle involving global supply chain management developments, on this Friday. Supply Chain Matters has elected to group a series of noteworthy announcements which involve both UPS and Tesla Motors.
United Parcel Service (UPS) Replaces CEO
Global parcel logistics and transportation provider UPS announced this week that current CEO David Abney will be stepping down from his current role effective June 1st. Abney will be succeeded by former Home Depot CFO and current UPS board member Carol Tome`.
Mr. Abney, who also serves as board chair will reportedly assume the role of executive chairman and retire from the board entirely on September 30. Like many CEO’s before, Abney was considered a UPS career employee starting in his college days as a part-time package loader. Abney was appointed CEO in September 2014, which likely implies that this change is part of the firm’s long-range CEO succession plan.
UPS further indicated that William Johnson, lead independent director and former CEO of H.J. Heinz will assume the role of executive chairman on September 30.
The real significance of this announcement is twofold. First, even though Tome has been a company board member since 2003, the appointment represents the first outsider (non-lifer) appointed to lead the package carrier. Further, and likely more noteworthy, also the first female to lead a major global-wide transportation carrier, the latter often viewed as predominantly male-dominated in senior management ranks.
In its reporting of the appointment, The Wall Street Journal observed that Abney’s exit follows on the heels of the departure of the carrier’s Chief Operating Officer, Jim Barber, who retired in January. Barber was seen as the likely succession candidate to being CEO. Further, the COO role has not be filled since the announcement which likely implies that Tome` will have the ability to influence that appointment.
These executive leadership moves come as parcel carriers continue to address the growing influence of Amazon.com in global transportation and logistics as well as retail and B2B customer fulfillment capabilities. While UPS continues to embrace Amazon as a key customer, investors have become increasingly concerned to the exposure of that strategy. Rival FedEx has elected to cut all ties with the online shopping provider and is instead working on a broad strategy to be a major player in the online fulfillment logistics and transportation area. The reality however is that UPS has had 10x more revenue generation from Amazon as was its competitor, and the carrier benefitted from that position during last quarter’s holiday fulfillment period.
In 2017, Supply Chain Matters initially alerted our readers to what we believed was pending changes for UPS direction. That came with the appointment of a former Walmart Vice President the newly created role of Chief Transformation Officer. In our commentary we noted: UPS itself has always prided itself in nurturing leadership from within its own ranks and with an outsider being appointed to lead in corporate transformation implies a conscious decision on the part of the firm’s senior leadership team.
At the time of creating the Chief Transformation Officer role. The carrier indicated: “The company is establishing this role to accelerate its transformation by identifying strategies to prioritize resources and direct investment for the greatest strategic benefit and long-term shareholder return.”
We sense that this new CEO appointment is another step in the pending transformation of UPS.
Tesla to Construct a Second U.S. Automotive Assembly Plant
Electric automotive and truck manufacturer Tesla Motors announced this week that the company is scouting locations for a second U.S. automotive assembly facility most likely to be located in the middle of the country.
Chief Executive Elon Musk took to Twitter to make the announcement, indicating that the facility would be dedicated to building the Model Y compact sport-utility vehicle as well as the previously announced pickup truck model dubbed the CyberTruck.
Musk indicated to The Wall Street Journal that state and local incentives and overall logistics costs would provide a major influence in the ultimate site selection. Further indicated on Twitter was that the proposed plant would serve Model Y demand from U.S. East Coast customer.
With production capacity literally straining at the auto maker’s California assembly facility, a second U.S. facility makes sense, especially in considering the different vehicle configurations destined for this new U.S. facility.
The decision to move forward with a second U.S. production assembly facility would grow Tesla’s footprint to four global assembly footprints, including the exiting manufacturing complex in Fremont California. It would include the newly opened Shanghai China facility dedicated to Model 3 production, a newly announced European facility to be located near Berlin Germany, and now this second U.S. facility. In addition to the potential four manufacturing assembly sites, the electric auto maker also has the presence of the termed battery manufacturing Gigafactory located near Sparks Nevada.
Tesla is obviously benefitting from a reversal of fortune led by both the rapid introduction and operationalization of the China facility in less than a year, and a rapid run-up of the company’s stock leading to $2 billion in increased capitalization by issuing new equity.
The company has targeted a 36 percent increase in vehicle deliveries this year, and of late, has been addressing logistics and transportation bottlenecks in overall global delivery of individual vehicles.
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