FedEx & UPS Changes and 3D Printing Supply Chains

[Source:  EpicTop10 ]

[Source: EpicTop10 ]

Charles Goulding of R&D Tax Savers takes a look at logistics companies’ supply chains and lessons for 3D printing companies.

UPS and FedEx are powerhouse logistics companies that can react and counter the Amazon juggernaut. Interestingly, both companies are currently experiencing important changes.

At UPS, Carol Tome has just been appointed CEO. Tome is the highly respected long-time CFO of Home Depot. Tome remained through 5 CEO changes at Home Depot, which in itself is a feat of endurance.

At FedEx, Rajesh Subramaniam, a long-standing senior executive and engineering-trained strategist, is embarking on a project to integrate its massive air and ground networks. Raj’s submission to the FedEx board for this approval involved hundreds of pages of documents.

UPS has historically promoted from within, so this portends major changes at a time when UPS has been criticized for its heavy dependence on Amazon. FedEx has long resisted integrating these two separate networks, which is now occurring soon after FedEx severed ties with Amazon. The integration should eliminate duplication and optimize efficiency.

Companies who don’t want to make Amazon privy to their proprietary supply chain activities should be able to benefit from the deep expertise and major changes at UPS and FedEx.

The supply chain and logistics industry is a major user of R&D tax credits.

The Research & Development Tax Credit

Enacted in 1981, the now permanent Federal Research and Development (R&D) Tax Credit allows a credit that typically ranges from 4%-7% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

  • Must be technological in nature

  • Must be a component of the taxpayer’s business

  • Must represent R&D in the experimental sense and generally includes all such costs related to the development or improvement of a product or process

  • Must eliminate uncertainty through a process of experimentation that considers one or more alternatives

Eligible costs include US employee wages, cost of supplies consumed in the R&D process, cost of pre-production testing, US contract research expenses, and certain costs associated with developing a patent.

On December 18, 2015, President Obama signed the PATH Act, making the R&D Tax Credit permanent. Since 2016, the R&D credit can be used to offset Alternative Minimum Tax (AMT) or companies with revenue below $50MM and, startup businesses can obtain up to $250,000 per year in cash rebates that can be applied directly to payroll taxes.

Conclusion

It is good to see large companies confronting adversity are implementing changes. The 3D printing industry needs to be part of this global supply chain adjustment process.