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MGM goes 'all in' on logistics and gets a big payoff

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MGM Resorts International makes the right bet on enterprise-wide logistics.

MGM Resorts International leaves nothing to chance when it comes to the comfort and hospitality of guests at 15 resort properties in Las Vegas and across the country.

The payoffs of turning to UPS are numerous.

"You wouldn't believe the amount of effort that goes into delivering specialty items to our resorts," says David Jeshurun, director of Logistics and Strategic Sourcing in the Global Procurement Division of MGM Resorts International.

Those deliveries shape the look and feel of casinos, restaurants, retail shops, nightclubs, convention halls and more than 46,000 hotel rooms in Las Vegas, plus thousands more rooms worldwide.

To keep hotel and resort properties looking fabulous, MGM Resorts needs constant inbound shipments, including operating supplies and equipment (OS&E) and furniture, fixtures and equipment (FF&E).

When buying products, MGM Resorts leverages its volume and scale to procure goods at lower prices. But until recently, cost savings on inbound shipping was more of a challenge.

"The whole inbound freight piece wasn't well understood or managed in the past," Jeshurun says. "We began to believe a managed freight program could provide significant efficiencies."

In 2011, MGM Resorts chose UPS to be a strategic provider in developing its own logistics program. With its three-year agreement, UPS helped MGM pioneer a new logistics model for the hospitality industry.

Targeting control and cost
MGM Resorts implemented its new logistics initiative as part of a centralization of Strategic Sourcing and Purchasing. The resort giant felt an improved logistics process would benefit guest services, the make-or-break differentiator in hospitality. It would also bring greater efficiency and savings.

UPS already carried small parcels for most MGM Resorts properties, so it knew the opportunities a new shipping model presented the hospitality icon. An entire industry paradigm shifted the day MGM Resorts took over managing logistics for some of its categories.

"When you're directly in charge of inbound logistics, you decide when shipments arrive and the costs involved," says Seth Rasmussen, UPS major account manager. "You know who placed the order and where the costs should be allocated. All your key personnel know what's in each shipment, so everyone can perform at peak efficiency."

Put hospitality logistics to work for you
In the new arrangement, MGM Resorts benefits from less-than-truckload and full-truckload shipments as part of a multimodal transportation mix. These bundled UPS services provide more flexible inbound shipping options. Some shipments previously classified as freight, for example, now travel at ground rates.

Since MGM Resorts does not have a staff dedicated solely to manage logistics, UPS provides on-site resources to assist buyers and vendors. UPS's technology solutions streamline logistics processes, such as vendor-order visibility that ensures purchase order numbers go on all shipments. That's a boon to cost allocation accuracy… and a time-saver.

UPS also assists with vendor-routing instructions, pickup requests and shipment labeling. All shipments bill to a designated UPS account number. "UPS takes a holistic approach to logistics," says Rasmussen. "That helps MGM Resorts keep up its 5-star standards."

Keeping guests satisfied
As one all-purpose logistics provider, UPS replaced scores of specialized vendors, enabling Jeshurun to see immediate efficiencies. Instead of spending millions annually on vendor-managed shipments at full shipping costs, MGM Resorts achieves significant discounts using its UPS account.

Right-time staffing, supported by UPS tracking and vendor-order visibility, reduces the total cost of goods. The availability of UPS experts helps boost resort productivity and streamlines processes.

Better support for guests is the ace in the hole. One example: MGM Resorts uses a technology called UPS Trackpad®. The handheld tool tracks deliveries from loading dock to guest, ending fire-drill searches. Employees simply scan cartons to instantly know what's in them.

"MGM Resorts wants to provide as much value as possible to guests," Jeshurun says. "We want to satisfy guests during their stay and encourage repeat visits."

He adds: "Every good business is about value. To increase our value equation, we looked at our logistics costs and made the decision to work with UPS to leverage our shipping volume and support us in other ways. We see this relationship bringing true value to our company."

From packages to pallets, UPS delivers a full suite of services for hotels and resorts. Learn more.

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Reader Comments

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Vince
Who cares about the shippers who lost the business?... They were too expensive. Why would anyone be expected to feel sorry for a company that loses business because they are not competitive.
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Gus
On the contrary, using global logistics providers is an ideal way to move belongings on a vacation domestically or abroad, especially when a large volume of baggage is transported. Extra baggage costs using airlines is very pricey. Shipping belongings using slowest method on UPS is saving a lot. And, unlike the airlines, you can always track your movement, avoiding truly "lost" luggage at transfers, layovers, and other routine stops.
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Anonymous
Having UPS (or any logistics service provider) handle commercial airline passenger luggage will NOT work, as it would add unacceptable complexity and cost to any given individual itinerary. MGM won't pay for it, and neither would the airline. Are you going to pay extra? (Better ways to spend your money)
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Anonymous
What if UPS provided door to room delivery of your luggage for MGM properties (or other hotel operators)? Most airlines have really dropped the ball, leaving an opportunity for teaming up between resorts and shippers. Perhaps teaming up with a cruise line, since you would otherwise just need an overnight bag to take on the airline.
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Anonymous
that would be free enterprise at work keeping costs down to the consumer and keeping business goin
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Anonymous
No mention of the hardship put on the shippers who lost MGM as customers
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