DHL Logistic Assignment _ Supply Chain (YEN's Part)

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Gesto de Operaes e Logstica de Servios

DHL Logistics Analysis

Farkhat Kainazarov, Raymond Fleming, Renato Chainho, Yen Nguyen, Zarina Kenzhetayeva Porto, 2012 Index Introduction

I. The CorporationDescription of the corporationAbout Deutsche Post DHLDHL has been an innovative leader in the worldwide shipping business for more than 35 years. DHL was formed in 1969 by three friends, Adrian Dalsey, Larry Hillblom, and Robert Lynn, in San Francisco. Originally, the company was in business to take ships documentation by air from San Francisco to Honolulu (carried by the founders themselves) so that cargoes could clear customs before the ships arrived, thus saving days of waiting in the harbour while customs officials processed paperwork. The company is now part of Deutsche Post, the modern privatized German mail service. Deutsche Post acquired Airborne Express in 2003 and integrated it into DHL, creating a division now known as DHL Express.

Deutsche Post DHL is the worlds leading mail and logistics services group. The Deutsche Post and DHL corporate brands represent a one-of-a-kind portfolio of logistics (DHL) and communications (Deutsche Post) services. The Group provides its customers with both easy to use standardized products as well as innovative and tailored solutions ranging from dialog marketing to industrial supply chains. About 470,000 employees in more than 220 countries and territories form a global network focused on service, quality and sustainability. With programs in the areas of climate protection, disaster relief and education, the Group is committed to social responsibility. In 2010, Deutsche Post DHL revenues exceeded $ 51 billion.

Corporate DivisionsDHL has a range of unique services across the globe. Deutsche Post DHL offers integrated services and tailored, customer-focused solutions for managing and transporting letters, goods and information.

1. MAIL Division Service is in effect an alternative post office for the world. 2. EXPRESS Division Service deals with transporting urgent documents and goods reliably and on time from door to door. 3. GLOBAL FORWARDING, FREIGHT Division The products and services offered by DHLs Global Forwarding and Freight business units extend from standardised logistics operations to multimodal transport solutions and highly individualised industrial projects. 4. SUPPLY CHAIN Division The SUPPLY CHAIN division comprises the two business units of Supply Chain and Williams Lea. In the Supply Chain business, DHL provides contract logistics solutions along the entire supply chain for customers from a wide variety of sectors. Williams Lea is a global provider of Business Process Outsourcing and a specialist in corporate information solutions, the management of companies' information and communication processes. Due to the fact that DHL logistic company are operating in variety division, in this research we are only want to focus on DHL express to perceive their operation and what factors make them success.

Corporate StrategyIn March 2009 CEO Frank Appel unveiled his Strategy 2015 aimed at making the company fit for the future. The management board recognized that country-level managers would need to make hard-line decisions about: who should be the right customers in DHLs market what product bundles would be contracted or promised to customers via the service concept how the service components would be executed throughout the service delivery system. These three concepts represent the basics for any service operations strategy (Heskett et al. 1987, Goldstein et al. 2002, Roth and Menor 2003). A high level of strategic fit, congruence, or alignment between all three concepts usually leads to greater customer satisfaction and desirable performance.

Market Position:DHL is the world's leading provider of international postal solutions. Only in Germany, at some 20,000 retail outlets and points of sale, around 2,500 Packstations and around 1,000 Paketboxes, they are available for their customers practically everywhere to send and collect parcels and small packages at any time they like. They ship about 2.9 million of these items in Germany each working day. Their Packstations are located in approximately 1,600 towns and cities across Germany. Nearly 90% of all residents in Germany are just about ten

minutes or less away from the nearest Packstation. The German parcel market volume totalled around 7.3 billion in 2011, nearly 7% more than the prior year. For years now, e-commerce has been a central driver of growth. In 2011 Germans purchased products online at record levels, leading to another year of double-digit growth in e-commerce. This had a positive impact on growth in the mail-order and parcel services business. Overall, DHL expanded their market in the reporting year to approximately 40%.

Their core market of Germany is not only the only place in which they offer their services. They also carry mail across borders and offer international dialogue marketing services to many countries all over the world. The global market volume for outbound international mail was approximately 6.7 billion. The market is growing because the economy is recovering from the crisis and more heavy items are being shipped instead of simple letters. Despite increasing competition, DHL was able to grow with the market and maintain their share of 15.7%.

Customer segments:An understanding of the target market is fundamental to service operations and accepted wisdom recognizes that there may be advantages to segmenting markets and offering different service packages to different segments. In a B2B context, segmenting customers can be difficult and prior efforts to integrate customer requirements into operations strategies have not demonstrate significant business value. DHL applied a three-step process to select the best segment solution: (1) identify the model with the best information criterion-based fit; (2) examine the classification statistics for the preferred model to ensure that the models has an acceptably low ratio of classification errors; and (3) plot the estimates for each segment in the preferred model against one another to ensure that the segment solution is not an artefact of scale-factor differences that would result in a systematic tendency to respond to questionnaire items on a basis other than what the specific items were designed to measure. An examination of the fit statistics, classification statistics, and estimates for each segment revealed that a three-segment solution is the preferred model. Figure x shows the relative main effects for each segment. In a simple, visual way, it highlights the variation between segments based on the order of magnitude of difference for each attribute. Segment 3 is highest on the

broader value-based attribute such as customer interaction, customer service recovery, and supply chain innovation; it aligns most closely with the integrator-developer coding metric. Segment 2 is driven most noticeably by reliable performance; its score is more than twice as high as the nearest alternative group. It aligns most closely with the integrator-administrator coding metric. Segment 1 is clearly dominated by price and supply chain capacity, which aligns closest with the administrator-producer coding metric. One of the most interesting aspects of these models is that they show how segments differ both in terms of what does and does not matter to respondents. This point was critical in developing their service delivery system.

Figure x: The graph illustrates the relative importance of attributes across segment Having determined that a three-segment model provides the best statistical solution, then in Industry base, DHL includes these sectors below into their target customers: Automotive Engineering/Manufacturing Healthcare Chemical Technology Retail Consumer Goods

Competitive analysis

Strengths: Strong Brand Image: In 1997, DHL became the global express transportation company to obtain simultaneous system-wide ISO 9001 certification in international quality standards. DHL has also developed their own quality system that matches their customers standards. In the Global rankings of Brand Finance plc, London, a UK market research company, the DHL brand climbed 16 places from number 107 in 2010 to number 91 in 2011. Brand Finance calculates current brand value by benchmarking the strength,

risk and future potential of a brand relative to the competition. The study put the brand value of DHL at US $9.78 billion in 2011, up from US $7.30 billion in the previous year. Globalism: DHL operates on a global scale. They operate in more than 220 countries. They provide service that appeal to most of the world. They have such a large market in which to operate, and thus realize tremendous revenues. They can also achieve global economies of scale. E-Services and technology: DHL uses and continues to search for new technology. They spend nearly 10% of total revenues for information technology. DHL also has excellent e-Service that provide access to systems that ensure customers have control and visibility of their supply chains at all times. Products can be tracked, queried and ordered online. Creativity and innovations are encourage for improving the effectiveness of DHL Corporate symbiosis: DHL has developed its own organizational structure to serve the global market, which it has called corporate symbiosis. This approach encompasses the empowerment of the DHL personnel at a local level, at the same time recognizing the interdependence of the parts of DHL as a corporate whole. Smart-truck Project: It is the programme which allows DHL to deliver faster. SmartTruck is about dynamic route planning, in the real time. Additional, the SmartTruck is one of the solutions that will reduce CO2 emissions in their daily operations. They w