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Turning Megatrends into Market AdvantagesFive global megatrends are shaping business today. Discover how smart supply chain strategies can turn these forces of change into your competitive advantage.

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Table of Contents

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Welcome: Chris Byrne, UPS Vice President,

Global Marketing

Introduction: The study, the megatrends, and

how you can use them to your advantage

Infographic: 5 megatrends shaping the future

of business

Megatrend #1: Technology Everywhere

Megatrend #2: Greater Customization

Megatrend #3: Cloud Computing

Megatrend #4: The Circular Economy

Megatrend #5: Urbanization

Learn More: Ready to prepare your supply chain

for the future? UPS can help

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CHRIS BYRNE, UPS VICE PRESIDENT, GLOBAL MARKETING

01. WELCOME

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The unrelenting nature of innovation in business today has made supply chains the most

significant competitive differentiator, to the extent that companies rise and fall on the speed

and efficiency of their supply chains.

What if you could look into the future, prepare early for the inevitable changes, and

consequently gain a market advantage from your foresight? At UPS, we want to help you

do just that.

Recently, UPS asked Euromonitor Consulting to conduct an awareness survey within six

industries in the U.S. The survey identified five developing megatrends that are challenging

organizations today—technology everywhere, greater customization, cloud computing, the

circular economy, and urbanization.

This report outlines the survey findings, and breaks down the implications for your

company’s competitiveness. It also contains UPS’s assessment of the changes, and offers

recommendations for supply chain change that may help put you ahead of your competitors.

But I also ask you to pause and consider this question: To what extent should logistics be in

your wheelhouse at all? Experts are advocating that companies should divest the increasingly

complex and demanding management of their supply chains to logistics specialists. They

argue you should be investing in making better products, not building out a supply chain.

To help you understand how you can free time and capital to focus on your core

competencies, this report also outlines how innovative solutions from UPS can help you turn

looming problems into long-term profit.

I hope you find this report a useful guide to help you navigate the future.

You can’t avoid the coming changes. So profit from them instead.

—CHRISBYRNE

UPS VICE PRESIDENT, GLOBAL MARKETING

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THE STUDY, THE MEGATRENDS, AND HOW YOU CAN USE THEM TO YOUR ADVANTAGE

02. INTRODUCTION

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UPS engaged Euromonitor Consulting1 to conduct an awareness survey2 among logistics leaders in more than 30 organizations. The purpose was to help understand the principal megatrends that were evident to these decision-makers. In addition, those surveyed were asked to reveal the challenges—and opportunities—posed to their supply chains by these forces of change, from initial sourcing to the last mile.

The survey participants’ roles and business types are represented below.

The study

BUSINESSTYPES

• Semiconductors

• Telecommunications

• Computers and Peripherals

• Electronic Equipment

• Software and Services

• Supply Chain Consulting

Who we surveyedLEADERSHIPROLES

• Supply Chain Managers

• Materials Planners

• Production Planners

• Demand Planners

• Logistics Managers

• Operations Managers

1 Euromonitor Consulting, a division of Euromonitor International, is the world’s leading independent provider of strategic market research. The company creates data and analysis on thousands of products and services around the world.

2 The awareness survey was conducted among six high tech industries in the United States. It consulted managers in semiconductors, telecommunications, computers and peripherals, electronic equipment, software and services, and supply chain consulting. The study included small- and medium-sized enterprises with less than 250 employees, and also logistics experts at select large (parent) companies. In all, UPS/Euromonitor conducted 31 in-depth trade interviews.

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The megatrends identifiedThe survey identified five megatrends that are shaping the future of business and affecting how supply chains operate.

1. TECHNOLOGYEVERYWHERETechnology with internet connectivity is now present in many everyday objects, and its prevalence will become greater. Globally, the number of connected objects and devices already exceeds the world’s population.

2. GREATERCUSTOMIZATIONCustomers increasingly demand and expect customization. The importance of customization is shown in research which reveals one in five buyers with an interest in custom products would pay a 20% premium for them.

3. CLOUDCOMPUTINGCentralized delivery of computing services over the internet (“the cloud”) can provide many advantages for its adopters. Forrester speculates that half of all global enterprises are already using public cloud platforms.

4. THECIRCULARECONOMYChanging customer expectations on returns, customer service, and sustainability are causing firms to rethink how they repair, reuse, resell, and recycle products.

5. URBANIZATIONAround the world, more people are moving into cities. The implications of this global migration are wide, including the impact upon manufacturers trying to get products into their customers’ hands efficiently.

As your customers change, so can your supply chain.

There’s only one sure way to

surmount the challenges and

capitalize on the opportunities of

megatrends: maintain a strategic,

holistic, in-depth view of your

customers—and your entire

supply chain.

Then, you can fine-tune elements

of your supply chain to meet

new challenges, keeping your

customers delighted.

UPS offers customizable solutions

that can give you the big picture,

and free you up to keep you

ahead of the competition.

—VIGNESHANANDAN

UPS MARKETING MANAGER,

GLOBAL CUSTOMER INSIGHTS

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5 MEGATRENDS SHAPING THE FUTURE OF BUSINESS

03. INFOGRAPHIC

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5megatrends shaping the future of business

1. TECHNOLOGYEVERYWHERE:A global installed base of 8.4 billion connected things has exceeded the world population

2. GREATERCUSTOMIZATION:1 in 5 consumers with an interest in custom products or services is willing to pay a 20% premium

3. CLOUDCOMPUTING:Half of all global enterprises rely on public cloud platforms

4. THECIRCULARECONOMY:More than 30% of all products ordered online are returned

5. URBANIZATION:More than 50% of the world’s population now lives in cities

Technology Everywhere• UPS® Customer Solutions

• UPS® Chatbot

• Supply chain design and optimization

Urbanization• UPS My Choice® for home

• UPS Access Point® network

Greater Customization• Ware2Go™ warehouse management

• UPS® eFulfillment

• Supplier management

The Circular Economy • UPS Returns® portfolio

• Optoro® returns platform3

• Post-sales and service parts logistics

Cloud Computing• UPS My Choice® for business

• UPS Quantum View Manage®

UPS SOLUTIONS THAT CAN HELP YOU WITH THESE TRENDS

93 Optoro is a registered mark of Optoro, Inc.

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TECHNOLOGY EVERYWHERE04. MEGATREND#1

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How it’s affecting business today The number of devices joining the Internet of Things (IoT) is growing exponentially. The implications for companies are varied, and provide many opportunities to improve your business—from materials sourcing to customer service.

As a general rule, the spread of technology—even in everyday objects—combined with connectivity means that you can use more real-time data to make better decisions than ever before. And better decision-making generates greater efficiency and drives improved customer satisfaction. These two elements alone can elevate you above the competition.

In other words, the Internet of Things is revolutionizing how businesses like yours can create products and services, while also enabling intelligent, flexible, and responsive supply chains to deliver those products more efficiently than ever—and exactly as your customer desires.

TECHNOLOGYCANIMPROVEYOURCAPABILITIESANDEFFICIENCIESIN:

• Demand forecasting

• Manufacturing

• Sustainability

• Inventory control

• Post-sales service

• Product uptime

• Supply chain management

• Customer service3.1BILLION

CONNECTED DEVICES USED BY BUSINESSES

Source: ZDNet.com

For example, the pervasiveness of technology is providing data that can enable efficiencies such as:

• More frequent, small-batch, “just-in-time” manufacturing, meaning less capital sunk into inventory that ages fast

• Better inventory control, from sourcing to delivery

• Timely stock replenishment

• Pre-failure component replacement by imminent failure prediction, reducing outages and lengthening uptime

• Improved demand forecasting

• More controllable supply chains, including the ability to predict delays and implement counter-measures

• Greater sustainability through greater efficiency

• Improved customer satisfaction through all of the above

Where UPS technology is embedded, any small customer can play big. Smart logistics is a way to level the playing field.

—KELSEYDURRETT

UPS MARKETING STRATEGY MANAGER,

WARE2GO

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How it will change the future of businessWondering how IoT technology will change your business in the next few years? Here are some perspectives on the shape of things to come from our experts at UPS.

1. INDUSTRIALANDCOMMERCIALVENTURESWILLLEADTHEMASSADOPTIONOFIOTTECHNOLOGY.This adoption is already improving business planning and driving efficiency through automation.

2. SMARTDEVICESWILLSTEADILYBEADAPTEDFORNEWENVIRONMENTSANDUSES.Technology will evolve to serve what many consider the second “big wave” of IoT: household use. Fields such as medicine and scientific research will see even broader uses, and more applications.

3. SEMICONDUCTORCOMPANIESWILLHAVECUSTOMERSPLEADINGFORCUSTOMIZEDPRODUCTS.Developments could portend a shift in chip manufacturing, with customers demanding specially designed technology for unique needs. For example, chips could be custom made for running shoes.

4. MANUFACTURERSWILLNEEDTOPROVIDEEXCEPTIONALPOST-SALESSERVICES.IoT devices will communicate vital information, such as location, condition, and the use of equipment, allowing for better maintenance and repair services. Also, industrial asset management systems will likely become more optimized and automated as more data comes on-stream from each product. Manufacturers who use this information to help their customers after the sale will gain a competitive advantage.

Everything will be connected in the future, driving greater efficiency in production and management processes.

—DAVEROEGGE

UPS DIRECTOR OF SEGMENT MARKETING,

HIGH TECH

$300BILLION

APPROXIMATE SPENDING ON

IOT TECHNOLOGIES, APPS, AND

SOLUTIONS BY 2020Source: Forbes.com

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What this means for your supply chainThe IoT surge enables what businesses and customers both want—logistics that create transparency, boost operational efficiency, and increase customer satisfaction. Here are some UPS perspectives on how tomorrow’s supply chain is taking shape.

1. REAL-TIME,HIGHLYACCURATEINVENTORYTRACKINGlies within reach. Use of IoT sensor data integrated with other systems will steadily improve to provide a near error-free inventory of products.

2. PRODUCTSWILLBEMADEINSMALLERBATCHESthat require broader and more adaptable supply chains. Customized chip-making will require closer supplier management as manufacturers deal with diverse and unpredictable demand.

3. SUPPLYCHAINSTHATENABLETHECIRCULARECONOMYWILLGROW, since smart products are more likely to be recycled through non-traditional channels. Also, a robust reverse logistics arrangement can satisfy customer demand for sustainability and lower spend on after-sales service.

4. THESUPPLYCHAINWILLEVENTUALLYINTEGRATESUPPLIERS,MANUFACTURERS,ANDRETAILERSas increased sharing of data aggregates into an accurate picture of the complete supply chain. This will help manufacturers ensure their downstream suppliers remain compliant with their high standards.

5. CONNECTEDFLEETMANAGEMENTWILLOFFERTHEPOSSIBILITYFORDYNAMICROUTINGADJUSTMENTS.It will make supply chains more resilient against the effects of weather and other uncontrollable failures.

We’re working with small sensors

for IoT that can track and ship

packages better. Our customers

want shipments managed the

fastest, most cost-conscious

way possible.

—BALAGANESH

UPS VICE PRESIDENT,

ADVANCED TECHNOLOGY GROUP

Three tips for investing in business technology With an array of technology options to invest in, only some of which could potentially pay off, how should companies structure their forward investments? Here are some helpful guidelines:

1. Invest in areas where the ROIisgreatest for your company.

2. Balance your strategy by also investing in the customerexperience.

3. There’s no need to build out anything for yourself that a serviceprovider can do better.

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Lean on the expertise of a logistics provider

Companies must carefully assess how much capital to invest in Technology Everywhere. Many will conclude that they should incorporate IoT technology only into core competency areas, while investment in the supply chain can be left to competent logistics providers.

Companies that invest more of their capital into what they do best can still enjoy the benefits of a logistics provider’s capital investments in supply chain technology—without the cost.

—VIGNESHANANDAN

UPS MARKETING MANAGER,

GLOBAL CUSTOMER INSIGHTS

How UPS solutions can help you take advantage of technology everywhereSuccessful supply chains will run on integrated solutions and fast delivery options. UPS can help you every step of the way.

1. INTEGRATIONISYOURENABLER, and UPS Customer Solutions can help your business thrive. The key to great decisions is good data, and better data emerges when systems talk to each other to provide “the big picture.” Our team can understand your challenges and offer experience-based insights and solutions that can help you integrate your supply chain for greater efficiency—and happier customers.

2. KEEPYOURCUSTOMERSINFORMEDof when their deliveries will arrive using UPS Chatbot. They can get up-to-date delivery status simply by asking their Alexa, Google Assistant, or other smart device. And by using UPS My Choice® for home, they won’t even need to know a tracking number.

3. SUPPLYCHAINDATA-SHARINGthat links suppliers, manufacturers, and retailers—as well as logistics providers—can be integrated by businesses, but all the components of the supply chain will still require capital investment and management. More businesses are handing over these responsibilities to a capable and experienced logistics provider such as UPS. Take advantage of distribution and transportation management, post-sales and service parts logistics, supplier management, and even supply chain design and optimization.

4. THESPEEDYOUNEED,when you need it, can be a saving grace—though even in the most competitive industries not everything has to be transported at light speed. That’s why a portfolio of shipping services, like those offered by UPS, is an asset that allows you to match a shipping service to any degree of urgency, whether you’re shipping across the country or around the globe.

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GREATER CUSTOMIZATION05. MEGATREND#2

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How it’s affecting business today You’ve more than likely noticed that customers today expect highly personalized products and services designed to suit their needs. They have become used to rapid innovation and blistering product cycles that support massive customization.

This drive to give customers exactly what they want, when they want it, can complicate both your manufacturing process and your supply chain. To succeed, you’ll need flexible, real-time, consolidated platforms that can scale quickly.

But the challenges of customization have their payoffs. For instance, one in five consumers with an interest in custom products or services is willing to pay a 20% premium for them. Plus 22% of consumers say they are happy to share data in return for a more personalized product or service.

Investing in customization can help you: • Increase your revenue

• Increase customer loyalty

• Meet customer needs and preferences

• Create a seamless customer experience

• Improve customer data and analytics

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How it will change the future of businessMeeting each customer’s individual needs will take some effort. Here are a few thoughts on what UPS sees coming in the future for customization and how it could affect your business.

1. SECONDARYMARKETSWILLGROWMOREIMPORTANTas greater customization is tied to changing customer tastes and greater volatility of demand, which will ultimately result in unsold merchandise that still has significant value.

2. INSOMEMATUREPRODUCTCATEGORIES,CUSTOMIZATIONISSHIFTINGFROMHARDWARETOSOFTWARE.Services based in the cloud are leading to the energetic customization of software that can be downloaded with the touch of a screen.

3. COMPANIESWILLHAVETOTHINKGLOBALLY,BUTBUILDLOCALLY.Closer proximity to customers will allow companies to understand their tastes and preferences, and build products best suited to each market.

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What this means for your supply chain Supply chains will have to deal with the shorter product life cycles and just-in-time delivery needs that customization brings, as well as provide greater flexibility in returns and post-sales services.

1. INMANUFACTURING,CUSTOMIZATIONWILLMOVEFINALASSEMBLYNEARERTOCUSTOMERS.Inventory stores and stockpiles of legacy tech will shrink. Some planners see 3D printing making inventory available onsite with the push of a button.

2. COMPANIESWILLCUSTOMIZELOGISTICPROCESSESFORDIFFERENTCUSTOMERSANDCHANNELS.For example, a large international pharmaceutical company has completely reengineered its supply chain to flexibly customize deliveries with specialized logistics at a higher cost for some products vs. providing optimized logistics and lower cost for others. It also improved its delivery speed and gathered richer information for sensitive shipment drugs.

3. SENSORANDCLOUD-BASEDSYSTEMSWILLENABLEGREATERSUPPLYCHAINTRANSPARENCY.This transparency will be needed as the longer, more diverse supply chains demanded by customization may prove vulnerable to gaps in supply.

4. SUPPLYCHAINSWILLNEEDTHEFLEXIBILITYTODEALWITHSPIKESANDDROPSINCUSTOMERDEMAND,even as customers continue to expect high quality and speed for expensive custom orders.

5. RETURNS/REVERSELOGISTICSWILLGROWINIMPORTANCEdue to unpredictable demand and as more products get sold in secondary markets.

The ability for UPS to use 3D printing to produce customized inventory, on demand and near the customer, has the potential to disrupt the supply/demand model forever.

—CHARLIECOVERT

UPS VICE PRESIDENT,

CUSTOMER SOLUTIONS

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How UPS solutions can help you take advantage of greater customizationTo be successful with customization, companies will need supply chains that reliably deliver speed, flexibility, and control. Let UPS provide the solutions you need.

1. MAKEYOURSUPPLYCHAINMOREFLEXIBLEANDSCALABLEwith on-demand warehousing from Ware2Go, a UPS company. You’ll get warehouse space where you need it around the country, allowing you to extend your business and scale up or down as your needs change. With inventory management, pick, pack and ship fulfillment, and real-time tracking, Ware2Go™ services make it easy to meet your customers’ expectations.

2. MARKETPLACESPROVIDETHEBESTOPPORTUNITYTOSELLCUSTOMIZEDPRODUCTS, but keeping track of all those orders has its challenges. Let UPS® eFulfillment make it easier. Our e-commerce management platform integrates all of your marketplaces and online store, giving you visibility into your orders and inventory. And with your inventory in one of our strategically located eFulfillment centers, we’ll efficiently process and ship orders out for you.

3. SMALL-BATCHMANUFACTURINGinvolving longer and more complex supply chains can create a need for extensive supplier management. Engage UPS’s supplier management expertise, facilities, and technology so you can sprint past challenges like different time zones, languages, carriers, and distances, moving your core business forward.

You can customize your shipping systems to meet your specialized needs with UPS technology. We offer simple, solid tools that don’t require a large IT investment.

—RODPETTUS

UPS AREA MANAGER,

IMPLEMENTATION GROUP

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CLOUD COMPUTING06. MEGATREND#3

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• Automation

• Cost savings

• Risk mitigation

• Customer service

CLOUD-EMBEDDEDINTELLIGENCEWILLDRIVEGREATER:

How it’s affecting business today While cloud computing has been available for years now, 2019 marks a tipping point. Consultancy firm Forrester speculates that, at the start of this year, half of all global enterprises were using public cloud platforms. If your company isn’t among them, you may want to ask yourself why not. This movement opens entirely new paths to innovation in logistics, as well as market differentiation.

As more and more companies move operations and IT-related activities to cloud-based “software as a service” (SaaS) models, they are optimizing manufacturing and running centralized global supply chains with end-to-end visibility and near real-time adjustment.

Cloud-based systems are the glue that binds together all of the other megatrends. The IoT and customization of products with all the added complexity (smaller batches, more frequent batches, expanded supply chains, etc.) will succeed or fail based on the control and optimization only available in a cloud system.

One electronics manufacturer

uses the cloud to connect

more than 25,000 pieces of

manufacturing equipment at

50 factories. The payoff? Full

manufacturing and supply

chain visibility, giving them

the ability to continually

improve speed, quality, and

overall performance. The

firm’s systems can also be

modified on the f ly, all at lower

manufacturing costs.

Quick Case Study: Electronics

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How it will change the future of businessCloud computing brings great opportunities and efficiencies, as well as a few challenges. Here is what our experts at UPS see coming for this changing landscape.

1. THEFORMATIONOFSTANDARDPLATFORMSWILLDEMOCRATIZESERVICESANDPUTMOREPRESSUREONCOMPANIESTODIFFERENTIATETHEMSELVES.Companies that have a deeper understanding of their customers will win. Delivery options, returns, maintenance and repair services, and other elements of customer service will become even more important.

2. REVENUESTREAMSWILLMIGRATEFROMHARDWARETOSOFTWARE,since it is easier to provision services using infrastructure managed by someone else. Software and telecom firms, the heart of the cloud, stand to gain the most from the shift to cloud computing.

3. THEREISINCREASEDRISKOFSECURITYANDINFRASTRUCTUREFAILUREin the cloud that could come from bad infrastructure management or cyberattacks. As cloud systems become more mission critical, they will need to be secure and resilient. Companies will have to take proactive steps to prevent failure and have a backup plan for emergencies.

66%OF IT PROFESSIONALS SAY

SECURITY IS THE TOP CONCERN IN ADOPTING CLOUD COMPUTING

Source: Forbes.com

4. FOCUSONINCREASEDCONNECTIVITYACROSSTHESUPPLYCHAINWILLMAKECLOUDSOLUTIONSTHEBESTOPTIONfor seamlessly connecting global manufacturing for a single company, or global workflows for an entire industry.

5. THEULTIMATEGOALOFCLOUD-BASEDSYSTEMSWILLBETOALLOWBUSINESSDECISIONSTOAUTOMATICALLYDRIVEOPERATIONALCHANGES.Self-reporting machinery, blockchain, optimization through machine learning, and advanced human-machine interaction will become basic to manufacturing and supply chains.

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What this means for your supply chain Our experts see cloud adoption as central to the digitization and control of global supply chains, especially as those supply chains become more real-time and data dependent than ever.

1. SUPPORTEDBYTHECLOUD,MORECOMPLEXSUPPLYCHAINSARESEEINGTHECONVERGENCEof Enterprise Resource Planning (ERP), Transportation Management Systems (TMS), and Warehouse Management Systems (WMS), enabling unique logistics solutions. The resulting cloud-based architecture allows scaling a supply chain without overhaul, and the easy addition of new services and solutions.

2. THECLOUDOFFERSINNOVATIVESAASFUNCTIONSTHATCANYIELDFULLSUPPLYCHAINTRANSPARENCY.With full inventory transparency, functional silos could come to an end. There would no longer be a need for different gatekeepers to report what’s in stock, where it’s stored, how long it has been there, and where it’s going. Visibility on a global level is only achievable with cloud integration.

3. WITHTHEHELPOFCLOUDCOMPUTING,FUTUREREGULATIONWILLLIKELYTASKMANUFACTURERSWITHCRADLE-TO-GRAVERESPONSIBILITYFORTHEIRPRODUCTS.This will require cloud systems that integrate across the entire supply chain, from suppliers to manufacturers to retailers.

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How UPS solutions can help you take advantage of cloud computing

1. SMALLTOMEDIUM-SIZEDBUSINESSESCANPROACTIVELYMANAGEEVERYSHIPMENTthrough the interactive dashboards of UPS My Choice® for business. This free service lets you monitor inbound and outbound shipments, receive estimated delivery windows and notifications, and answer customer inquiries with a single click.

2. LARGERENTERPRISESWITHMORECOMPLEXSHIPPINGANDTRACKINGREQUIREMENTSwill appreciate the benefits of UPS Quantum View Manage® software. This free, web-based service gives you consolidated visibility into your package and freight shipments, so you can proactively manage your supply chain. You also get to control when, where, how much, and even who receives information about shipments.

Visibility will be the great equalizer with cloud computing. As different products are personalized and customization becomes the name of the game, an ability to see the full supply chain and quickly control it will make all the difference.

—DAVIDO’LEARY

UPS VICE PRESIDENT, SERVICE

PARTS LOGISTICS OPERATIONS

Cloud computing makes visibility king. You can gain more visibility and control over your supply chain, and keep customers well informed of when their shipments will arrive, by using these free tools from UPS.

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THE CIRCULAR ECONOMY07. MEGATREND#4

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How it’s affecting business todayThe circular economy, with its focus on reuse, regeneration, and sustainability, is gaining traction, and every industry can find ways to adopt and benefit from it.

The high tech industry, for example, requires circular thinking to address such issues as shorter product shelf lives, planned obsolescence, and changing customer preferences, which cause tons of equipment to be discarded and replaced rather than repaired and reused. In the U.S. alone, more than 400k mobile devices and 120k computers are discarded each day, leaving enormous value on the table.

Even if your company wants to be part of the circular economy, it can be confusing to know where to start. Despite the rising mountains of waste and growing calls for responsibility, there are no set industry standards, so current reverse logistics efforts vary on a company-by-company basis.

To fully embrace the circular economy in your supply chain, here are some things to consider doing:

1. Improve your ability to repair and upgrade your product, increasing its value to your customer.

2. Make it easy for customers to return products, which creates loyal customers and allows you to tap into the value of the return and resell the product sooner.

3. Sell refurbished products in secondary markets where older products maintain value for customers who are price conscious.

4. Optimize your reverse logistics operation with better visibility, network and warehouse optimization, and data analytics.

Customers are coming to us with challenges around handling returns and getting products back at end of life. We play an important role in enabling our customers’ circular strategies, so they look to UPS as a partner to create reverse logistics solutions that enhance service and contain costs, while advancing their sustainability initiatives.

—SUZANNELINDSAY-WALKER

UPS CHIEF SUSTAINABILITY OFFICER

METRIC TONS OF ELECTRONIC WASTE GENERATED IN 2016

Source: International Telecommunication Union

44.7MILLION

40% OF URBAN CONSUMERS RETURN ONLINE PURCHASESSource: UPS Pulse of the Online Shopper

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One electronics manufacturer has gone

beyond recycling to make their supply chain

more circular. They have located a plastic

recycling facility next to their factory which

allowed them to return 97% of collected

materials back into the supply chain and

decrease the collection time for end-of-life

products by 50%.

Quick Case Study: Electronics

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How it will change the future of businessThis new circular way of thinking will create big shifts in how business gets done. Here are some ideas on the shape of things to come from our experts at UPS.

1. MANUFACTURERSWILLHAVETOTAKEONMORERESPONSIBILITYas shrinking product lifecycles and growing sustainability expectations change the cost of doing business.

2. COMPANIESWILLNEEDTHECAPABILITYTOTRACKORIDENTIFYPRODUCTSFROMCRADLETOGRAVEto efficiently manage products and components through secondary markets.

3. ANEWSERVICE-BASEDSECTORis emerging now to extract value from old components that can be refurbished and reused.

4. POLICYMAKERSMAYPASSLAWSgoverning the treatment of e-waste within the next 10 years. Companies can get ahead of the curve by adopting standards already established by the European Union.

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What this means for your supply chainThe supply chain could change substantially, as more and more products have to move in reverse and find a second life somewhere new.

1. SUPERIORSHIPPINGANDRETURNSPOLICIESCANDIFFERENTIATEE-COMMERCEFIRMS.In fact, companies with the best returns policies appear optimally positioned for success.

2. RETURNSAREJUSTTHEBEGINNING.Returned products can be refurbished, resold, remanufactured, and recycled, moving them back through the supply chain. Companies have much to gain by improving the ability to process and analyze the value of returned merchandise.

3. REGULATIONCOULDGENERATEASIZEABLENEWREVERSELOGISTICSSUPPLYCHAIN,with standards supported by large manufacturers and supply chain partners. The new supply chain will have a strong financial impact and will generate significant growth in the volume of shipped items.

The real discussion is about moving back into product design — developing alternatives that make it easy to do something with a return at its end of life, rather than just throwing it away.

—JIMBRILL

UPS PRODUCT MANAGER,

REVERSE LOGISTICS

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How UPS solutions can help you take advantage of the circular economy

1. AROBUSTREVERSELOGISTICSOPERATIONwill be essential to service the needs of the evolving circular economy. And, when you do it right, you can turn returns management into your competitive advantage with capabilities such as omnichannel management, process automation, and e-commerce site integration. Our end-to-end supply chain services can help improve security, speed cycle time, and enhance inventory management, so you can build customer satisfaction and loyalty.

2. TAPINTOTHEVALUEOFRETURNEDANDEXCESSINVENTORYwith the assistance of UPS ally Optoro, the world’s leading returns optimization platform. Optoro’s cloud-based solution can help you decide whether returned products should go back on sale, be sold to a secondary marketplace, or returned to the vendor for a refund, which can help increase your profitability while reducing operational and environmental waste.

3. KEEPYOURCUSTOMERS’EQUIPMENTUPANDRUNNINGWITHthe help of UPS’s more than 900 global field stocking locations. We’ll inventory service parts at our warehouses and ship them as needed for pickup by your service technicians. By eliminating the need for you to maintain your own parts network, you can save money and improve customer service, plus you’ll have less parts inventory and obsolescence.

UPS has a strategic alliance with Optoro that provides our customers with a returns-optimization platform that uses machine learning and predictive analytics to route returned and excess inventory to the next best home, reducing financial, operational, and environmental waste.

—ROBBROOKS

UPS MANAGER, GLOBAL RETAIL AND

E-COMMERCE STRATEGY GROUP

The best circular supply chains will be prepared for everything—from building products to last, to being prepared to repair them, to reselling and reusing them. UPS offers a variety of solutions to help you along the way.

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URBANIZATION08. MEGATREND#5

31TREND 01 02 03 04 05

How it’s affecting business today With more than half the world’s population now living in cities—and the migration expected to continue in the years ahead—new solutions will be needed to serve these growing urban centers. City services, transportation, and logistics will all have to be optimized to keep cities clean, comfortable, and efficiently run.

This opens up a world of opportunity for businesses to be highly involved in creating the smart, connected cities of the future. In fact, global transportation and logistics spending on the IoT devices vital for these reimagined cities is expected to jump from $10 billion in 2015 to $40 billion in 2020.

$40BILLION

EXPECTED GLOBAL SPENDING ON IOT IN 2020 FOR

TRANSPORTATION AND LOGISTICSSource: Statista

A variety of major companies are already sponsoring ambitious smart city efforts. Their work to digitally transform cities ranges from cloud-based city data analysis to the linking of systems for energy, water, infrastructure, transportation, public safety, tourism, recreation, and government administration. Some of the solutions that are being considered include dynamic traffic routing, on-demand deliveries through mobile apps, and programmable city streets.

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How it will change the future of businessTechnology and communications will play major roles in how urban areas will change to serve their growing populations. The cities of tomorrow will be connected with smart energy grids, telecom networks, and distributed infrastructure. And they will need smart supply chains to keep them operating efficiently.

1. SMARTCITIESWILLBEBUILTONINNOVATIONINTECHNOLOGIESlike IoT, artificial intelligence, 5G, and cloud computing. The IoT explosion of sensors and data will enable more dynamic, on-demand service delivery and optimization.

2. URBANTRANSPORTATIONISALEADINGFOCUSOFSMARTCITYDEVELOPMENT,ripe for optimization as urban centers continue to grow with limited space. Solutions range from smart parking and dynamic traffic control to better management for disrupted public transportation. The groundwork is already being laid for autonomous vehicles, even as cars morph from transportation to mobile work/entertainment centers.

3. ANECOSYSTEMOFPUBLICANDPRIVATEENTITIESwill partner in the creation of these connected cities, ramping up collaboration across supply chains. For example, the U.S. Department of Transportation has already leveraged nearly $350 million in public and private funds to invest in smart cities and advanced transportation technologies to help move people and goods more quickly, efficiently, and cost-effectively.

4. ELECTRONICDEVICESWILLPERFORMMISSION-CRITICALFUNCTIONSthat significantly impact quality of life as they proliferate in buildings, roads, vehicles, and public infrastructure. With this increased complexity, even small device failures can cascade and disrupt millions. Devices will therefore need much higher uptime and processes that allow them to be quickly repaired or replaced.

Behaviors and expectations of patients have evolved. Everyone from seniors to millennials is expecting better choice and convenience in how and where healthcare products and services are delivered, whether it’s at a location of their choice on the way home from work, remotely via digital channels (telehealth), or delivered right to their doorstep.

—MARKTAYLOR

UPS DIRECTOR OF HEALTHCARE STRATEGY

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What this means for your supply chain The urban logistics of tomorrow will be faster, more agile, and much more reliant on innovations in technology. With its dense population, the urban environment is the best and most cost-effective setting for the latest last-mile solutions to take hold.

1. INNOVATIVELAST-MILEDELIVERYSOLUTIONSare already being tested along the supply chain. UPS is experimenting with drones to evaluate potential efficiencies on delivery routes. A drone can make a delivery even as a driver continues along a route. Drones could save thousands of miles of driving each day, minimizing congestion and fuel burn of the delivery vehicle.

2. SUPPLYCHAINSWILLNEEDSMART,CENTRALIZEDSYSTEMSable to optimize processes for real-time updates. As cloud-supported systems grow capable of real-time monitoring and management, companies will be able to continually feed data into logistics management systems, adapting them in new ways to meet urban needs.

3. SUPPLYCHAINSMAYALSONEEDTOACCOMMODATEDYNAMICPRICINGOFSERVICESbased on real-time supply and demand, peak load, cost, product/electricity supply, and bidding systems that let stakeholders quantify the value of the service.

4. CURRENTSUPPLYCHAINSMUSTBEDESIGNEDTOBEFLEXIBLE,AGILE,ANDSCALABLE,since smart city implementation will evolve over decades. Deliveries will become smaller, higher volume, and higher precision. And delivery times will be measured in hours, not days.

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How UPS solutions can help you take advantage of urbanization

1. WORRIEDABOUTPORCHPIRATES?This is where the UPS Access Point® network comes in handy. It provides more than 24,000 alternate delivery locations across North America and Europe. Simply add UPS Access Point locations to your online checkout as a delivery option. Your customers will appreciate picking up their packages when and where it’s convenient for them—without worrying about someone stealing a package from their doorstep.

2. CUSTOMERSENJOYCONTROLOVERTHEIRSHIPMENTSwith UPS My Choice® for home. They can track multiple packages at once, get estimated and confirmed delivery windows, and even leave instructions for the driver. And if the timing isn’t convenient, they can reroute or reschedule their delivery.

We launched our UPS Access Point network in 2014 to serve customers in urban and super-urban areas. Being a solution for congestion and final mile delivery is a challenge and a delight.

—DANO’CONNOR

U.S. NETWORK MANAGER,

UPS ACCESS POINT NETWORK

The more complicated the urban environment, the more convenience and personalization your customers will want. UPS has invested in fulfillment services and alternate delivery locations to meet these needs, while helping your company increase business and customer loyalty.

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UPS SOLUTIONS, SERVICES, AND EXPERTISE09. LEARNMORE

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Ready to prepare your supply chain for the future? UPS can help.When you need experts that understand the megatrends shaping business now and in the future, we’ve got you covered. UPS offers consulting, plus a full array of supply chain services—from design and optimization, to warehousing and fulfillment, to post-sale services and reverse logistics. Combine these with our wide array of reliable delivery options that reach across the country and around the globe, and you’ll be ready for all of the opportunities the future holds.

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