DHL: Logistics Company For The World

DHL, being one of the market leaders in the international express, air, ocean freight and road and rail transportation, contract logistics and international mail services, is very well-known for its agility and global network. Following its vision of reaching every part of the world, DHL has set up its own networks as Global and Local Hubs. While Leipzig, Hong Kong and Cincinnati are globally networked, Bangkok, Singapore and Hong Kong function as the local Asian network. DHL Thailand, both being a gateway for import and export shipments and being a hub for transit shipments for the Indo-China countries, has gained its reputation in the business community in Thailand for 30 years. There are more than 70 DHL service locations covering 76 provinces and 9 service centers in the country. All the shipments starting from documents to containers are delivered by 5,300 DHL staff. DHL offers value to its customers by catering services according to their needs. The maximum customer service satisfaction is guaranteed by its respective expert business divisions (DHL Express, DHL Global Forwarding, DHL Exel Supply Chain) by offering the convenience of one-stop-shop service for logistics solutions. Especially, DHL Thailand has facilitated Thailand exporters and importers by providing supply chain management expertise so that those businesses can focus on their core businesses. DHL having a very good close relationship with Thailand Customs Bureau, having local expertise with global coverage and with the excellent Quality Control Committee (QCC) for crisis management and designing backup plans have helped DHL Thailand to differentiate itself well enough among its competitors. Furthermore, DHL aims to support Thailand economy by facilitating the logistics process, upstream from raw materials to manufacturing, as well as downstream from the production line to store shelves and even further, to any customers all around the world.

Key information about the distribution center (Size, Throughput, Types and number of delivery trucks?)

DHL Express Bangkok Hub is one of DHL’s six Asia Pacific hub that operates on over 12,000 sq. m.located in BFS Warehouse. 9,000 sq. m.of the space is used for warehousing. This space is said to be located in a free zone area. Having a space in this location has helped DHL to do their job efficiently. Previously it was estimated that after touchdown it used to take around 45minutes to ship materials into the conveyer belt but now due to easier access to the vehicle, shipping is done within 5mins after the touchdown.

The whole area is installed with 90 surveillance cameras. In Thailand they cover 76 provinces, 38 locations, 1 hub and gateway, 1 office, 27 service points and 9 service centers. They manage 420 commercial flights per week for both inbound and outbound express shipments.

DHL Express is capable of handling 4,800 inbound shipment and 3,000 outbound shipment per hour. Annually they manage more than 5.7 million shipments.

DHL Express uses a special shuttle trucks for delivery. They have around 140 vehicles, 1 truck for each service center. These trucks are usually outsourced to some other company. Recently a company named Mon Transport Co. Ltd had won the bid for providing DHL with their new trucks for operations. Not all trucks of DHL which we see are outsourced. The trucks used to deliver goods from the service center to the respective customers are company owned vehicles. Only the ones that operate from the hub to the service centers are outsourced. DHL has 4, 6 and 18 wheeled trucks/ lorries.

DHL is considered to be the biggest logistic partner who can deliver freight of any kind, to any place via air, ocean, road or rail, but capable of giving its customers the personal attention they need.

Question 3:

Describe the key operational measurements (or KPIs) at the distribution center and the delivery operations.

In the express business, customers consider on-time delivery as an important indicator of quality. That is why DHL has a system to standardize and monitor the processes throughout their entire organization. They determine on-time delivery, analyze delays in individual processes and establish ways to deliver to customers even more quickly. Consistently high quality of service is crucial for a global network operator. DHL has developed an operations performance monitoring system that they use to measure and improve the quality of their services. Reliability and speed are key indicators of the quality of their logistics services.

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The logistics view is directed horizontally at the flow of goods and contracts, and they require key indicators that include the factor of time. As a result, DHL uses a time-based system of efficiency measurement that complements the measurement approach based on input-output ratios. Hence, DHL has a number of times based KPIs at the distribution center but it was not dealt in depth during the field visit.

Few KPIs mentioned during the field trip are as follows:

For their Express operation their shipment movement process follows CIA (clean in the air) process. It means that before shipment arrives to their DC all the documents must be cleared. This reduces the time for their delivery operation

The other KPI that DHL follows to ensure on-time delivery is that within 5 minutes of the aircraft touching the ground the shipment is loaded to the conveyer in the receiving area.

Same day delivery of all shipments is 100% achieved by DHL. The entire process of the arrival of the shipment, the picking, the securing of the cargo, loading, transport and unloading at the destination must be done on the same day.

The call center in the DC has its KPI. All calls are received within 10seconds. They have been able to achieve 100% of this KPI.

All shipments for a day must reach the service centers by 6:00 PM from their DC.

The KPIs for their sustainable program is not covered under this as we were not provided any information on this.

Delivery operation in DHL Hub:

DHL Express is a division of Deutsche Post providing international express mail services. In our field visit focus was laid on this division, hence, the delivery operations for DHL Express division located in Suvarnabhumi airport is explained in brief:

All DHL inbound flights land just outside the DHL DC at 05:00 am and 9:00 pm every day. Some commercial flights may also arrive at other times. Within 5 minutes of the landing containers from the aircraft are downloaded and sent to the unload conveyors. All material travels throughout the facility on conveyor belts though there may be some non-conveyable shipments (NCS). After sorting and inspecting the shipment is transferred to the outbound area from where it is transferred to flights or shuttle trucks to transport it to the final destination service centers from where it is delivered to the customers on the same day. The design of their flow process has allowed DHL to stay very competitive over the years by allowing them to add on to the current hub when it is needed. Every shipment can be tracked and the customer can be notified at all times.

Question 4: Are there any sustainability considerations built in their operations?

Even though DHL is the global leader in logistics, it still aims to be more sociably responsible by integrating corporate social Responsibility (CSR) into its operations, the society and the environment. To achieve this, DHL, has 3 specific programs called GoGreen, GoHelp and GoTeach, which also support DHL’s local projects and initiatives.

“GoGreen”

To achieve the strategic goal of Corporate Responsibility, DHL launched “GoGreen” program in 2008 to handle the climate change problems, and it is the first global logistics service provider that sets the measurable targets on Coâ‚‚ efficiency to alleviate the environmental impacts. DHL works on building sustainability into its operations through five key attributes: striving to increase its resource efficiency with the focus on CO2, mobilizing its employees, offering its customers green solutions, being transparent about what it does and preparing for regulatory changes.

The first attribute is “Increasing Coâ‚‚ Efficiency”. The scope does not mainly focus on decreasing the carbon footprint throughout the operations and subcontractors, but also includes the pollution, waste, noise, and other impacts that occur in the operations. First, the fleet (air transport, sea transport, and road transport) must be managed efficiently; especially the ground fleet that creates substantial impacts upon the carbon footprint. According to operation site visit, DHL Thailand has set detailed specifications of transport subcontractors to meet the requirements of subcontractor management in sharing the responsibility for carbon footprint. It was claimed that the majority of road vehicles are applicable for CNG consumption. Second, it improves the efficiency of facilities, warehouses, and offices by reducing the consumption affecting the carbon footprint. In addition, DHL Thailand expands the sustainability coverage to its clients by providing alternatives for them to use recycle packaging.

“Mobilizing the Employees” is the second attribute which aims to increase the awareness and engage employees in lessening the environmental impacts. To do so, the company can encourage employees to share ideas to improve environmental performance such as energy saving, water saving, and so on.

The third attribute is “Generating Value by offering customers Green solutions”. DHL has developed a large variety of GOGREEN climate-friendly products and services, which are produced using less carbon intensive forms of transport such as sea or rail, or where CO2 emissions are offset by the DHL Carbon Management team. Thus, through DHL’s value-added GOGREEN products and services, DHL shares responsibility for tackling climate change. In 2009, DHL introduced the GOGREEN carbon neutral express shipping options in nearly 30 countries and sent more than 700 million shipments GOGREEN. DHL also continued to implement green logistics solutions jointly with its customers.

“Providing transparency” is the 4th attribute. DHL has already set up a Carbon Accounting team and has agreed on the methodology for calculating its footprint in a more structured way, such as by setting up a carbon accounting system linked to its financial accounting system to improve data collation. DHL has also issued guidelines based on the Greenhouse Gas Protocol and the ISO 14064 Standard. Since 2009, DHL is able to provide some CO2 emissions data on a highly accurate level, and its reporting and transparency has been rewarded for entering into the Dow Jones Sustainability World Index, with top scores in the environmental ranking.

The final attribute is “Preparing for regulatory changes”. DHL engages with policy makers to help shape regulations that are relevant to its business and its industry’s impact on the environment. DHL is a member of the “3C” (Combat Climate Change) initiative, which is comprised of business leaders from over 50 global companies who want urgent action on climate change. Through 3C, DHL actively advocates a global framework that supports market-based solutions to climate change. In 2009, DHL developed four global policy positions for its Group: With these positions, DHL addresses a global framework for carbon pricing, industry-driven standards for transparency, incentives for green investments and R&D for low-carbon solutions.

“GoHelp”

Through its “GoHelp” program DHL strives to improve people’s living conditions, by using its core logistics expertise and by partnering with the United Nations, DHL provides effective emergency aid in different areas affected by natural disasters and organizes training programs in at-risk regions, in order to prepare for logistics challenges in emergencies. Some core activities include Disaster Response Teams, Disaster preparedness and Partnering with UNICEF.

“GoTeach”

Through its “GoTeach” program, DHL strives to commit to providing better education and equal opportunities for education. Education is a prerequisite for social progress, which is why DHL is promoting and building initiatives that support individuals in their development and expand their skills. This enables them to act responsibly, receive further education or training, and improve their opportunities in the job market. At the same time, DHL improves its ability to attract and retain qualified employees for the company.

Observations and Recommendation

As much as DHL claims to be a very sustainable company through its sustainability reports, website and advertising; during our field trip, not much was emphasized about it’s the incorporation of sustainability in its operations and 3 programs of GoGreen, GoHelp and Goteach.

With regards to the first attribute of CO2 efficiency, this activity was somewhat seen during the visit, through the campaign notices available in many places such as on the walls and announcement boards. Also we were told that DHL recycles some of its packaging, during our trip to the distribution center.

With regards to employee mobilization, during the field trip, when asked about the sustainability, only particular persons were aware about the sustainable operations. For sustainability to be fully integrated in the company, DHL should focus on mobilizing their employees within the company, just like they say they do, so that all will be aware about their sustainability strategies of CO2 efficiency and have the chance to share their ideas.

No mention was done about the “Green solutions” that DHL Express offers to its customers, it would have been interesting to find out more from its employees about the different sustainable services that are offered.