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Logistics

What Is Logistics?

Logistics before 1950s was thought of in military terms and had to do with procurement, maintenance, and transportation of military facilities, materiel, and personnel. A few authors before this time began talking about trading one cost for another, such as transportation costs with inventory costs, and discussed the benefits to the firm of getting the right goods to the right place at the right time.

An article from 1898 (Simpson and Weiner, 1989) discussed logistics as:
“Strategy is the art of handling troops in the theatre of war; tactics that of handling them on the field of battle”. Also, the French, describe logistics as, “the art of moving and quartering troops”.

The common definition for logistics is: “the individuals actively working in logistics as a profession are involved with the transportation of goods”. Therefore logistics involves the movement of physical goods from one location to another. Logistics on functional basis, consists of the integrated management of purchasing, transportation, and storage, and on channel basis consists of the management of the pre-production, in-production, and post-production channels. Council of Logistics Management (CLM), the professional organization most closely associated with the logistics profession defines logistics as:

Logistics can be define as controlling the goods and efficient flow of them , the services about your stock from the start point till the end point and their consumption according to the customer requirements, He further added that the planning and implementing of process all comes under logistics., and return of materials for environmental purposes (CLM 1998). Cavinato (1982) has defined logistics in a proper business manner as: Logistics is the management of all inbound and outbound materials, parts, supplies, and finished goods.
Logistics in brief from the above definitions and discussions can be explained as:

Logistics is the process of planning and controlling the flow and storage of goods and services from the point of origin to the customer, conforming to customer requirements. This definition is generally considered to include inbound, outbound, internal and external movements, and return of materials to the company and the movement of both raw material and finished goods.
1.2 DHL A Global Market Leader

The No 1 in logistics and even closer to business, DHL, a global market leader has nearly 285,000 employees in its 6500 offices, in more than 220 countries, providing customers with instant access to state-of-the-art logistics solutions, high quality services and expert advice. Having more highly experienced professionals at more locations in more countries than any other provider makes DHL the global leader in logistics. DHL has more than 160,000 contract logistics, transport and freight forwarding professionals, plus the world’s largest logistics vehicle fleet. DHL offers a full range of customised solutions, from express document shipping to supply chain management and world's leading in air freight, ocean freight and contract logistics. Presently DHL is performing its logistic services in Asia, Gulf, USA and many other European, and African countries.

Ensuring timely shipments meant transforming DHL’s global logistics network with 6,500offices delivering parcels to more than 120,000 destinations worldwide, DHL’s operations are vast, complex and nonstop. The company’s vans pick up shipments at the customer site and take them to local Service Centers. Those sites forward the material, which can be documents, parcels or large palette consignments, to a country gateway. The shipments are loaded into aircraft or truck containers and transported to larger hubs where they are sorted by destination and transported long distance by DHL Network Global. DHL delivers around 800,000 consignments each day, the seamless and smooth flow of information is paramount.

1.3 DHL and Supply Chain Management and Logistics

1.3.1 Global logistic

A logistic company that operates from more than one country and performs all its logistic related activities in different countries is known as a global logistics company. Based on the earlier definitions of supply chain management and logistics, it is important to understand the hierarchy of the relationship between logistics as a profession and supply chain management. Supply chains include all the activities involved in delivering a product from raw material to the customer, including sourcing raw materials and parts, manufacturing and assembly, warehousing and inventory tracking, order entry and order management, distribution across all channels, delivery to the customer, and the information systems necessary to monitor all of these activities. Supply chain management links all of the partners in the chain including departments within an organization and the external partners including suppliers, carriers, third-party companies, and information systems providers.

DHL and Strategic Supply Chain

Strategic supply chain are supply chains where the “members are strategically, operationally and technological integrated” and are anticipated for long-term stable relationship with the ability to change to the demands of the environment (Hult at al. 2004, p.241). DHL’s SCM involves striking the right balance between ‘cost’ and ‘service’. DHL’s Supply Chain is the recognized market leader in outsourced contract logistics services, and has the skills and resources necessary to take on warehousing, distribution and complex supply chain management assignments around the world with the aim of forming long-term customer partnerships. Globalisation is creating ever more complex supply chains where logistics are involved. DHL's combination of global reach and local knowledge is a key competitive edge. This enables them to offer a wide range of standardised services as well as tailor-made industry solutions.

1.4 Major divisions of DHL

To stay ahead of all its rivals in the business, DHL offers a number of courier services and logistic solutions to its customers globally it is organized in four divisions:

DHL Express

DHL Global Mail

DHL Global Business Services

DHL Logistics (further sub-divided into):

DHL Global Forwarding

DHL Exel Supply Chain

DHL Freight & Contract Logistics

1.4.1 DHL Express

DHL, the leader in courier, express and parcel delivery services, both domestically and internationally, offers instant pickup and delivery of urgent shipments. Also offers reliable door-to-door delivery within few days for less urgent shipments. DHL Express is the perfect partner for all customers in worldwide express and parcel distribution. Express services offered by DHL:

Same Day

Day Definite

Time Definite

DHL also offers to its customers, a range of non-standard import and export clearance and handling services, when sending high-value/multi-content shipments requiring special paperwork and handling.

1.4.2 DHL Freight

DHL Freight moves their customer’s cargo from point A to point B in a cost competent and trustworthy way. DHL Freight offers a variety of dedicated and multi user transportation solutions, and places a high priority on integrating logistics operations.

DHL Freight Services Include:

Overland transport – road, rail and intermodal

Dedicated and multi-user options

Groupage domestic and international

Part and full-truckloads

Special transport

Hazardous goods transport

Customs services and brokerage

Pallet networks

Trade fairs and events

Value-added support

Transport audit and consultancy

1.4.3 DHL Global Forwarding

Globalization is continuing to stimulate demand for high quality and reliable international freight forwarding solutions. DHL Global Forwarding offers customised worldwide logistics solutions for air and sea freight, regardless of size and weight DHL Global Forwarding has a rich history in this sector and offers freight forwarding services of consistent quality from a single source. DHL is the worldwide leader in air freight forwarding, with more than 10% of the market and are the international No 1 in ocean freight not only in full container loads, but in less-than-container load traffic too.

1.4.4 DHL Exel Supply Chain

Exel, a leading contract logistics provider is part of the Logistics Division of Deutsche Post World Net (DPWN), the world's leading logistics group. On December 13, 2005 by acquiring 100% of Exel made it a part of DHL and itself become the global No. 1 in air freight, ocean freight and contract logistics. DHL Exel Supply Chain provide a number of tailor-made contract and industry-specific logistics solutions ranging from consulting to integrated supply chain design, from inbound logistics, distribution and aftermarket services, improving inventory management, reducing total operating costs and sales logistics to production, order management and specialist services like:

Environmental Compliance Solutions

4CX - a procurement and logistics partnership

Property Services
Publishing Solutions

1.4.5 DHL Global Mail

The joint effort of DHL with Deutsche Post Global Mail, the international leader in cross-border mail transforms, Global Mail Business. They collect all paper-based mail e.g. letters, flats, small parcels and small packages and then pass it on to Deutsche Post Global Mail which carry out rest of the supply chain process. Global Mail also offers a complete international mail services and provides outstanding expertise in international direct marketing services and publication solutions with total convenience and better quality. To function successfully in Global market, DHL owns its own cargo airlines.

1.4.6 DHL Airlines

European Air Transport:

EAT, the major DHL airline used to carry out its functions and operations in Europe and
Africa and Middle East, operates from Brussels Airport which was selected as the location for its European Hub by DHL in 1986 after the co-operation between EAT and DHL. Due to the success, DHL decided to make EAT part of the DHL group, and thus became a major DHL. Boeing 757SF/PF and Airbus A300B4 aircraft are the planes used to carry out the functions.
DHL Air UK:

Previously known as Elan Air and currently owned by Deutsche Post World Net, became DHL’s Air in August 1989 is based at East Midlands airport in the United Kingdom. It operates with around 270 employees to provide services on DHL's European Network using Boeing 757SF aircraft.

Middle East airline

Using regional aircraft and based at Bahrain International Airport, the Middle East airline offers services to a wide variety of Middle East destinations including Afghanistan and Iraq.

DHL's Latin American airline:

Based in Panama City is used to provide services to different destinations in Central and South America.

1.5 Integrated logistic

A logistic company engaged in providing more than one logistic service e.g. transport and warehouse, is contemplated as an integrated logistics company. Integrated logistics in a commercial context is coordinating logistics activities with other functional areas of the firm and with customers and suppliers. Integrated logistics management ties all logistics activities together in a system which simultaneously works to minimize total distribution costs and maintain desired customer service levels. (Kenderdine, J.M., Larson, P.D. (1988). Integrated logistics is generally considered to include planning, allocating, and controlling the financial and human resources committed to manufacturing support and purchasing operations as well as physical distribution. (Bowersox, D.J., Closs, D.J., Helferich, O.K. (1986).

1.5.0 DHL’s integrated logistic activities

DHL’s ambition is to build strong, long-term partnerships with customers by providing world class services, across all of its operations. DHL is first choice for companies looking to outsource freight forwarding, warehousing, distribution, transport and supply chain management. DHL is providing a Varity of integrated logistic services. Some of them are discussed below.
Transportation
DHL offers domestic and international transportation services to world wide destinations. Transportation capabilities include shared-user fleet, carrier management, and time-defined services and customs clearance. Industry-specific and specialist transport services are provided for the movement of chilled and frozen goods, hazardous chemicals and temperature-sensitive pharmaceutical products.

1.5.2 Air Freight

DHL Global Forwarding operations which are managed from over 150 countries provide a worldwide network for all air cargo requirements. With a wide array of time-defined and specialist services, supported by preferred carriers, DHL can offer the customer the flexibility between standardised connections with fixed schedules or air charter.
DHL Global Forwarding Air Freight capabilities include:

Customs clearance

Document preparation

Airport-to-airport

Door-to-door

Guaranteed capacity

Time-defined services

24x7 time-critical

Special handling (temperature-controlled, high-value, oversized)

Restricted and dangerous goods

1.5.3 Ocean Freight

Extensive global network of DHL offices along with carrier partnerships ensures that they cover their customers all transportation needs worldwide. Finding the optimal route coupled with the best time-to-cost variation and analysis of the transportation task helps DHL handle small non-containerized cargo, consolidate Less than Container Loads (LCL) and organize Full Container Load shipments (FCL) depending on their customers requirements. A comprehensive range of capabilities are available for inbound, outbound and cross-trade movements. Information Management Systems take care of shipment information messages to your in-house IT system. DHL specialists have extensive experience of freight forwarding and sophisticated tools to solve the logistics challenges.

1.5.4 Road and Rail Freight

DHL provides rail freight service to move single wagons, wagon groups or complete trains. Intermodal solutions play a vital role when freight offers block trains and mixed trains. DHL RAILEUROPE moves their customer’s goods by rail from siding to siding as well as entire train compositions across Europe. Value-added services include truck transfer from terminal to train and in reverse, and transport of chemicals with special safety provisions.

1.5.5 DHL's Logistics eServices

DHL's Logistics eServices provide access to systems that ensure our customers have control and visibility of their supply chains at all times. Products can be tracked, queried and ordered online. To enter these systems and ensure security of information, log-in details and passwords are required. The system accepts a variety of electronic data interface (EDI) transactions from suppliers, customers and carriers to maintain real-time data on the pipeline and includes Agile Connect which allows customers, supplier and carriers to track, trace and update data on shipments in their control.

1.6 Warehousing:

A warehouse is a commercial building for storage of goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses and customs. DHL offers a complete warehouse management system fully integrated into wide supply chain, work with best in class technological partners, with the state of the art equipment to monitor and control the complex warehouse processes. DHL offers comprehensive warehousing management solutions including order management, inventory management, replacement, despatch, returns, bonded warehousing, vendor managed inventory and value added services. DHL warehousing looks up customer service level, stock accuracy and redundant stock costs. DHL Warehouse Management System records all events and actions in the receipt, handling and storage of products and orders in a warehouse environment. DHL also provides transportation facilities and distribution operations- including time and space allocations- plus communications with relevant authorities and customers

1.6.0 DHL also offers integrated warehousing solutions as:

1.6.1 Ambient warehousing: Used by DHL for handling receipt, storage, order processing, inventory management, pick, pack and dispatch solutions including management and operations of distribution centers, as well as design, fit out and construction

1.6.2 Automated Warehousing: DHL run semi-automated warehouses and distribution centers for customers with suitable volumes and product profiles, which may incorporate automated unloading and put away, automated retrieval, hanging garment systems, auto sorting systems and automated load building. DHL can build/offer specialized warehousing solutions with single or multi temperature ranges, for hanging and palletised products.

1.6.3 Specialized Storage: DHL also operates and manages specialized storage for some particular product categories and sectors. DHL provide graded warehousing for the pharmaceutical, life sciences and healthcare industries that meets all security and operational standards.

1.6.4 Temperature Controlled Warehousing: DHL operates these warehouses to deal with receipt, storage, order processing, inventory management, pick, pack and dispatch solutions including management services for chilled, frozen and deep frozen merchandize and offering two or more temperature ranges for temperature controlled products.

1.6.5 Advanced Security Systems: DHL has established standardized security procedures with carriers and other logistics partners for protection of the consignments throughout the supply chain.

1.6.7 Bonded Warehousing: DHL’s one the type of free trade zone warehouses, where the payments of duties can be deferred until the goods are handed over to the customers. .

1.6.8 Technical Distribution: This type offers technical support for the deployment of electrical and electronic equipment from the point of order to their destination.

1.6.9 Inventory Management: Effective inventory management drives inefficiencies out of supply chains, reducing overall costs, resulting improved service levels. DHL manages an effective and efficient inventory management system. The strategic inventory management system ensures the delivery of urgent shipments even at short notices.

1.6. 10 Cross Docking: One of supply chain techniques designed to drive down stockholdings, improve storage space utilization and raise the effectiveness of delivery fleets also known as bulk with order. The process for the products like slower-moving lines, fast-moving bulk products, chilled and frozen food, and product lines where sales are skewed geographically, takes place without stock going into storage. (www.dhl.co.uk)

Diagram 1.0 – Diagram showing Supply Chain model (Adapted from www.dhl.co.uk)

1.7.1 Benefits to shippers:

DHL’s clearly stated and settled terms and conditions do not affect shipper’s statutory rights and entitlements.

DHL provides improved and better service.

There is a total ease for a shipper to transact his business dealing with only one firm

One firm’s responsibility for the entire transaction makes the claims settlement, filing or tracing easy.

Greatly simplifies paper work requirements – only one document is needed for the shipment.

Increased control over shipments.

Reduced staffing requirements

Provides full insurance for the consignment

DHL, on customer’s behalf completes any documentation needed, and pays any duties or taxes required.

Returns the refused or undelivered goods back to the customers safely.

1.7.2 Benefits to carriers:

Increased business.

Increased market share.

Survival in the competitive international environment.

Management and co-ordination are greatly facilitated.

Economies of scale/scope lead to lower cost structures and higher profits.

The idea of sharing across all stages of the logistical process as observed from different vantage points.

The transfer of goods in a continuous flow through the entire transport chain in the most time effective way. This means capitalizing on the relative advantages of various modes in each segment of the trip.

Greater choice of routeing and flexibility.

The No 1 in logistics and a global market leader might have these problems which I regard as the disadvantages.
1.7.3 Disadvantages
Management integration problems at carrier companies

Heavy startup costs

Air and surface modes particularly difficult to integrate

Need for a “niche” strategy

Need for sophisticated communications networks

Resource allocation among modes/segments is prone to sub optimization

1.8 Conclusion

The evaluation has resulted in a conclusion that the logistics profession involves planning, implementing and controlling efficient, effective flow and storage of goods and services from the beginning point of external origin to the company and from the company to the point of consumption for the purpose of conforming to customer requirements. Logistics is generally viewed as within one company, although it manages flows between the company and its suppliers and customers. Supply chain management includes the logistical flows, the customer order management and production processes and the information flows necessary to monitor all the activities at the supply chain nodes. Well according to my point of view DHL has right infrastructure transportation, air freight services and fleets to explore and provide highest service levels to its customers globally; with its global, pan-European, country supply chain services and logistic management approach including vendor and product quality. Restructuring process of DHL can provide an optimized supply chain while reducing lead time and improving service level. This will help in utilizing the latest visibility tools to track any shipments and products. It makes it easy for the customer to check the shipment status at any time. However, DHL might be expensive for few people to pay all shipment charges, storage charges, duties and taxes owed for services provided by DHL. It has also been highlighted that restructuring carried out by DHL and their customer focused approach enables DHL offer their customer best quality services and products. DHL's Logistics eServices provide access to systems that ensure our customers have control and visibility of their supply chains at all times. Products can be tracked, queried and ordered online. To enter these systems and ensure security of information, log-in details and passwords are required. Our research at DHL shows that the restructuring business model of DHL is a crucial factor inherent in the company’s capability to maintain competitiveness and growth under turbulent and uncertain conditions.

My observation derived from this study shows that the company exemplifies strong management values, especially in areas pertaining to human asset development and in integrated and global logistic services. The service provides a quality alternative to traditional spot-hire and can be booked on a daily, weekly or monthly basis dependant on your requirements. It offers real value to customers by:

Maximizing fleet flexibility

Reducing costs through optimizing core resource levels

Guaranteeing resource provision to drive increased sales

Delivery profile optimization

References:

Bowersox, D.J., Closs, D.J (1996), Logistical Management: The integrated Supply Chain Process, McGraw-hill Companies, New York, NY.

Bowersox, D.J., Closs, D.J., Helferich, O.K. (1986), Logistical Management, Macmillan, New York, NY, pp.3.

The Traffic Service Corporation, (1982), in Cavinato, J.L (Eds) Washington, DC.

Council of Logistics Management (CLM) (1998) What it’s all About, Oak Brook, IL, Vol. 4 No.6

CLM (2000) What It’s All About, (Oak Brook, IL: Council of Logistics Management).

(1998), in Cox, J.F., Blackstone, J.H, Spencer, M.S (Eds),APICS Dictionary, 9th ed, The APICS Educational and Research Foundation, Falls Church, VA.

www.dhl.co.uk

Kenderdine, J.M., Larson, P.D. (1988), "Quality and logistics: a framework for strategic integration", International Journal of Physical Distribution and Materials Management, Vol. 18 No.7, pp.5-10

Simpson, J.A, Weiner E.S.C. (1989), The Oxford English Dictionary 3, Clarendon Press, Oxford.

 

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