UPS offered a special voluntary separation opportunity to approximately 650 employees at its headquarters and in its Supply Chain Solutions division in the United States as part of the company’s ongoing effort to eliminate redundant positions. The voluntary separation opportunity is in addition to the job reductions at UPS Supply Chain Solutions announced in October.

The impact of the voluntary separation opportunity on financial results will not be determined until after the personal election period is completed on Jan. 29, 2007. The company will discuss any significant financial impact from this action during its fourth quarter earnings call on Jan. 30, 2007.

Those receiving the offers are at least 50 years old and have at least 10 years of experience, spokesman Norman Black said Monday. The company did not disclose a goal of how many people it hoped would take the severance offers, and Black declined to say whether there would be any forced layoffs if not enough people take the offers.

The personal election period ends Jan. 29. The company said it will discuss any significant financial impact from the cuts during a fourth-quarter earnings call with analysts the next day.

The cuts are in addition to the 1,200 jobs UPS announced in October that it would shed in its Supply Chain Solutions business, which handles air freight and logistics services.

At an investor conference last month, Chief Financial Officer Scott Davis told analysts there might be more cuts as the company evaluated the best way to deliver non-operating functions such as human resources, finance and accounting, engineering and network planning. UPS has been undergoing a restructuring meant to reduce costs and align transportation services and planning across the company.

Chief Executive Mike Eskew said at the investor conference that the company is confident its growth strategy is working amid competitive and economic challenges, but it must improve the performance of its logistics business, adding, “We know that we have to execute better than we have.”

UPS announced in October that it will be cutting jobs in its Supply Chain Solutions unit in an effort to cut costs and reduce redundancies, according to wire reports. SCS offers shippers various services, including transportation and freight, logistics, international trade, and consulting. UPS SCS director of public relations Susan Rosenberg told Logistics Management that specific numbers for job cuts are not yet available, because the company is still in the process of what the actual numbers will be. She added that some employees will be repositioned and reassigned. ?This will not affect any of our facilities or operational distribution services, such as fulfillment and value-added services,? said Rosenberg. Rosenberg noted that UPS SCS has approximately 2,000 employees in the group’s campus in suburban Atlanta, Georgia.These employees work in variuous departments, such as management, administrative, information technology, field stocking/critical parts, and air freight stations. There is no major distribution operations facility at the Atlanta location. She added that UPS’ Louisville, Kentucky location is is the largest of its distribution and logistics campus operations locations, as well as the air freight hub, brokerage services.There are more than 2,000 employees at the Louisville SCS campus, which is comprised of more than 3.8 million square feet in multiple buildings with many clients. She also noted that UPS has already made significant moves to streamline operations this year with some of its freight forwarding and transportation services. ?We have already closed the Dayton, Ohio hub facility that was the base of operations for the Menlo Worldwide Forwarding freight hub this this summer,? said Rosenberg. ?And we have been opening new air freight hubs that have been adjacent to our package express hubs where the UPS airlines operate.? And in those markets-in some cases-those employees are now attached as a part of package operations employees, added Rosenberg. The company?s main airfreight facility in Louisville is attached to UPS Worldport but it is a separate facility and we have opened five regional airfreight hubs over this summer in Philadelphia, Pa., Rockford, Ill., Columbia, S.C., Dallas, Texas and Ontario, California. ?As this has happened, we have shifted some of the back end technology platforms for more efficient freight processing and visibility linkages, which is transparent to our customers,? said Rosenberg. ?It is more of a back end operation, but it has enabled us to streamline for some more efficiency, too.?

While Rosenberg noted that things are smooth for UPS SCS from an operational standpoint, reducing costs are the main driver behind the company?s decision, said Dick Armstrong, president of Armstrong & Associates, a 3PL consultancy. ?UPS? stockholders are not very happy with the fact that they have not shown improvement towards achieving their target of having operating ratio,? said Armstrong. ?The pressure [with these cuts] is to rationalize operations there. It is a large business that contributes-over $4 billion-and it contributes $1 billion to the parent company each year, but?analysts and investors think SCS should have significantly better results going forward, and they have not seen the progress.? And from a service level perspective, Armstrong described SCS as a solid operation, but he said there is room for improvement and it will come over time. ?The rest of UPS is big on industrial engineering and running quality processes, and it is time that those same kinds of impacts are felt in SCS,? said Armstrong. ?I think the two of them will go together. Operations will get better, and they certainly will get more profitable. We have been waiting for this to happen at UPS for some time, given what the parent company operations are.?

Sources: UPS and Logistics Management

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