Operations Management: Presentation on DHL

Group VI Alok Kumar Shukla Anand Bhaskar Anuj Gupta Arun Yadav Ashutosh Karan Abhishek Kurchania

25NMP04 25NMP05 25NMP09 25NMP10 25NMP11 12EM01

Introduction
DHL are the first letters of the last names of the three company founders, Adrian Dalsey, Larry Hillblom and Robert Lynn. The DHL Network continued to grow at an incredible pace. The company expanded westward from Hawaii into the Far East and Pacific Rim, then the Middle East, Africa and Europe. By 1988, DHL was already present in 170 countries and had 16,000 employees. At the beginning of 2002, Deutsche Post World Net became the major shareholder in DHL. By the end of 2002, DHL was 100% owned by Deutsche Post World Net.In 2003, Deutsche Post World Net consolidated all of its express and logistics activities into one single brand, DHL

The world's largest express and logistics Network DHL is the global market leader in international express, overland transport and air freight. It is also the world's number 1 in ocean freight and contract logistics. DHL offers a full range of customised solutions - from express document shipping to supply chain management. Below are the global facts and figures that show you the scale of the world's largest express and logistics network. Global Facts and Figures Number of Employees: around 285,000 Number of Offices: around 6,500 Number of Hubs, Warehouses & Terminals: more than 450 Number of Gateways: 240 Number of Aircraft*: 420 Number of Vehicles: 76,200 Number of Countries & Territories: more than 220 Shipments per Year: more than 1.5 billion Destinations Covered: 120,000

Reasons for the success of DHL

Project Management DHL manages projects according to a six-step process:

o Initiation: The formal start of the project o Design: The formal agreement on how to approach the project and its deliverables o Planning: Following agreement, a detailed plan is created o Execution: After detailed planning and preparation, the project goes 'live' o Closing: Gradually phase out and prepare for handover of the deliverables o Handover: The formal end of the project

Reasons for the success of DHL (Contd..)

INTEGRATED LOGISTICS Logistics is viewed as the competency that links an enterprise with its customers and suppliers. Information from and about customers flows through the enterprise in the form of sales activity, forecasts and orders. As products and materials are procured, a value added inventory flow is initiated that ultimately results in ownership transfer of finished products to customers. Thus the process is viewed in terms of two inter-related efforts, inventory flow and information flow.

Inventory and Information Flow

Inventory Flow

Suppliers

Physical Distribution

Manufacturin g Support

Procurement

Information Flow
Customers

Inventory and Information flow at DHL

Inventory Flow DHL is completely service oriented therefore it does not have its own material movement but that of the customers the sender, the receiver and also the intermediaries. That means it only involves physical distribution and procurement. The materials or the goods collected from the senders are weighed, checked for condition, and depending upon its various characteristics it is packed. The goods are then dispatched to their destinations. There is no value addition to the material. Information flow Information flow identifies specific locations within a logistical system that have requirements. Information also integrates the three operating areas. The primary objective of developing and specifying requirements is to plan and execute integrated logistical operations.

Logistical information involves two major types of flows: Coordination flows Operation flows 1. Coordination flows : Coordination is the backbone of the overall information system

Strategic objectives: : Strategic objectives detail the nature and location of customers, which are matched to the required products and services to be performed.
DHL implies estimating the time requires for collecting the goods from the door step of the sender and then estimating the time for the goods to reach the final customer.

Forecasting : It utilizes historical data, current activity levels, and planning assumptions to predict future activity levels. Logistical forecasting is generally concerned with relatively short term predictions. The overall purpose of information planning/coordination flow is to integrate specific activities within a firm and to facilitate overall integrated performance. DHLs whole business is dependent on the vital point of timely delivery. Based on the distance to the final receiver, the accessibility, the documentations and procedures that need to be handled etc they have fine tuned the process of delivery. They can accurately gauge how much time it will take for the goods to reach its end destination.

2. Operational flows : The second aspect of information requirements is concerned with directing operations to receive, process, and ship inventory as required supporting customer and purchasing orders. Operational requirements deal with Order management Order processing Distribution operations Inventory management Transportation and shipping Procurement DHL owns its success for the efficiency with which the operations are carried out. Here not only the company but the sender and sometimes the receiver can track the goods through their information center. They are given a certain password which they can use to trace via online or their customer service helpline. DHL WEB SHIPPING is the on-line express shipping tool that helps customers prepare documents, book pick-ups, store contact details and track their deliveries. Ideal for busy office managers, business travelers or receptionists, DHL WEB SHIPPING needs no special software or training. Purpose of DHL Web Shipping: DHL WEB SHIPPING's new, simplified navigation guides customers, quickly and easily, through the entire process. So they can respond to any shipping request within minutes.With a click of a mouse customers can: o Select the right shipping and value-added services for each shipment o Prepare air waybills and customs documentation on-line o Get the latest service bulletins and customs information o Book collections and track shipments on-line o Save up to 300 customer addresses o Access shipment records for 99 days o Alert recipients and other interested parties DHL WEB SHIPPING is also perfect for telecommuters. You can order a pick-up, check service availability or track your shipments from any location, in real time, direct from your wireless laptop.

Supply Chain Management

Supply chain management is the management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole.

Supply Chain Optimization for DHL: Good design is at the heart of an effective supply chain solution. DHL has developed a reputation for consistently developing innovative solutions that streamline operations and improve control. Their in-house teams have contributed to the solutions design of some of the world's leading brands and enabled to win key contacts. DHL solutions design team offers a wide portfolio of expertise and services, from logistics network strategy, transport design, warehouse design and simulation, through to operational improvement and inventory analysis. o o o o International Supply Chain Extended Supply Chain Services Implementation Services Outsourcing Projects

International Supply Chain

DHLs international supply chain management solutions are focused on helping customers take increased control of international inbound supply chain to maximize the value of international and global sourcing. DHL helps customers: Give visibility of the upstream supply chain, and enable earlier decision making Create a more agile supply chain, better able to respond to changes in consumer demand Reduce lead times, inventories, and associated storage costs Customer-focused solutions are built up from the following core services: Origin management, including: vendor management; supplier collections; customs brokerage; consolidation services and value-added services Global forwarding, including: air/ocean/road/rail freight forwarding and management; European managed transport Destination management, including: port and demurrage management; customs brokerage; de-consolidation and pre-retail services; port to distribution centre transportation; direct store delivery (US only) Supply chain visibility and management, including: purchase order management; RFID product tracking; exception management; planning and forecasting; inventory management. Global forwarding services are provided across all major routes. Logistical services that are offered. o Reverse Logistics o Service Logistics o Inbound to Manufacturing o Medical Device Distribution o Distribution to Stores Management o Engineering Response

Reverse Logistics DHLs reverse logistics solutions help customers plan, implement and control flow of materials and manage related information, back up the supply chain to recapture values and ensure the safe disposal of goods. Items include the recovery of obsolete or non-operational white goods such as refrigerators, plus the removal of old furniture on delivery of new or replacement products. Services include: Roll in Management: de-installation of finished goods at the customer's site Returns Management: receiving, sorting, verifying and managing returned products Express Delivery: Exchange of Dead On Arrival products

Service logistics Service and replacement parts

DHLs service and replacement parts service involves the management of manufacturers' replacement parts delivered to and from customers according to pre-defined service levels or warranty agreements on a one-, two-, four- or eight-hour and next-day basis, 24 hours a day, seven days a week. DHL works closely with customers to overcome common issues such as: Poor parts availability High inventory investment Long lead times, accentuated by global sourcing High levels of customer returns Poor visibility, reporting and control Cost control of the demand chain

Inbound to Manufacturing Inbound to manufacturing is the complete end-to-end logistics management of inventories, facilities and labor associated with the inbound flow of materials from vendors and supplier origins to consumption points in manufacturers production lines. The service encompasses: Network, transportation and facility design Inventory optimization Supplier management Transportation management In-plant services Key to the service is integrating manufacturers' forecasting, order management and supply chain execution processes with their component suppliers. DHL implements warehouse management and supply chain event management systems to manage just-in-time deliveries and allow supply chain participants to exchange forecast requirements in real time. Value is created for manufacturers and component suppliers throughout the world by: Enabling a robust and cost-effective supply chain Providing the necessary visibility so that the location of all components within the supply chain is known to all supply chain participants Reduce inventory and investment costs Improve delivery times Co-ordinate multiple components more efficiently

Medical Device Distribution DHL country-based warehouses for a number of manufacturers to service a local customer base. This includes the receipt of product from local or global manufacturing sites and downstream distribution to hospitals. Distribution to stores management DHL distribution to store services are focused on helping retailers create efficient and flexible supply chains to deliver product to retail outlets at high levels of service. These solutions are built from several core services: reverse logistics collections; sortation; processing; repair/refurbishment; value recovery; disposal and compliance.

Engineering Response
Through our Engineering Response services, we manage the materials supply chain from works planning and inbound goods through to on-site works, delivering stock out to engineers, builders and construction workers in the field.

Extended Supply Chain Services

DHL not only provides physical logistics services but also manages other enhanced supply chain services, improving efficiencies and reducing costs. o Order Management Receipt, management, execution, sequencing and dispatch of orders in a timely manner. o Call Centre Management A Call Centre manages orders, monitors sales activities, provides customer services and functions as a Help-desk. o Global Inventory Management DHL gives the customer a global view of inventory, thus enabling informed decisions regarding the disposition of stock. o Consolidated Billing Services The creation of a consolidated and categorized invoice, based on all services performed in a specific time-period by more than one service provider, made available in an agreed format. o Freight & Customs Solutions DHL's many years of experience with international trade requirements and formalities, combined with the European Competence Centre and country expertise, gives customers the leading edge in service, quality and management in cross border transactions.

Implementation Services
o Implementation and Project Management Implementation starts by defining project aims, setting the targets and describing the deliverables in detail. The major topics in implementation include business processes, engineering, real estate, IT systems, migration, HR, finance and legal considerations. o Quality Management Total Quality Management is a management strategy that integrates quality orientation into the whole structure and workflow of a company by using methods and techniques of quality management Corporate Policy for Quality, Environment, Health and Safety (QEHS) is based on five corporate values: o Customer satisfaction: Providing our customers and their customers with excellent, high value logistics solutions o Employee motivation: Building on the know-how and stimulation of individual potential in multi-cultural teams o Operational excellence: Continuous improvement of processes and services to fulfil or exceed expectations o Corporate citizenship: Acting as a responsible corporate citizen in all countries o Shareholder reward: Developing a sustainable business to provide increasing shareholder value Globally, DHL management systems are certified according to the international standard for quality management systems ISO 9000 in almost every operating unit. o Performance Management : Performance management is a key part of the supply chain. Measured elements are reviewed as a system, as each component interacts with all the other parts around it. Performance measuring not only records historical performance but also provides early indication of any service slippage. In this second role, the measures provide a valuable contribution to DHL's Continuous Improvement Programme.

 Outsourcing Projects
Outsourcing involves DHL taking over and managing previous in-house logistics operations, including:
o o o o o Distribution centers Transport operations Back-office functions Supply chain management functions After sales services

Innovative Supply Chain Development

Supply Chain Management services are delivered across industry sectors and provide expertise, knowledge and resources in terms of personnel and supply chain tools. All services are targeted at optimizing logistical operations in both process and strategy, and are aligned to the client's commercial expectations.

The services are as follows:

o o o o o o o o o Strategic Logistics Consulting Lead Logistics Provider Consulting and providing Transport optimization: Route-Pro and Trans-Pro Consulting and providing Supply Chain Design Consulting and providing Transportation Engineering, optimization and re-engineering Implementation and Project Management Process Management Outsourcing

DHLs consulting services also offer re-organisation of customer facilities, project management for customers, implementation of new IT Systems, creation of tender documents and tender processing. o Supply Chain Re-engineering DHL works with customers to review supply chain efficiencies. One of the main tasks is to evaluate cost efficiency to ensure that costs are being driven down throughout the contract duration. Data analysis allows DHL to provide customers with 'what if modeling' or the impact of changing the business rules. o After Sales Optimisation Optimizing return logistics and spare parts logistics as well as maintenance and repair services. o Vehicle Management Services Our vehicle management services focus on the management of sales and marketing support programmes for automotive manufacturers. Combining a range of services and systems to deliver a global response, we help you overcome challenges at the end of the automotive supply chain. o Distribution to Stores Management DHLs distribution to store solutions are focused on helping retailers create efficient and flexible supply chains to deliver product to retail outlets at high levels of service. These solutions are built from several core services including reverse logistics: logistics network strategy warehouse design and simulation transport modeling.

TRANSPORTATION
Transport Functionality Transportation is one of the most visible elements of logistics operations. Transportation provides 2 major functions: product movement & product storage. Whether the product is in the form of materials, components, assemblies, work-in-process, or finished goods, transportation is necessary to move it to the next stage of the manufacturing process or physically closer to the ultimate consumer. A primary transportation function of product movement is moving up and down the value chain. Since transportation utilizes temporal, financial, and environmental resources, it is important that items be moved only when it truly enhances the product value. Transportation involves the use of temporal resources because product is inaccessible during the transportation process. Such product, commonly referred to as in-transit inventory, is becoming a significant consideration as a variety of supply chain strategies such as just in time and quick response practices reduce manufacturing and distribution center inventories. Transportation uses financial resources because internal expenditures are necessary for private fleets or external expenditures are required for commercial or public transportation.

Transportation uses environment resources both directly and indirectly.

In direct terms, it is one of the largest consumers of energy (fuel and oil) in the domestic United States economy. In fact, it accounts for close to 67% of all domestic oil use. Indirectly, transportation creates environmental expense through congestion, air pollution and noise pollution. The major objective is to move product from an origin location to a prescribed destination while minimizing temporal, financial and environmental resource costs. Loss and damage expenses must also be minimized. At the same time the movement must take place in such a manner that meets customer demands regarding delivery performance and shipment information availability

Principles There are two fundamental principles guiding transportation management and operations. They are economy of scale and economy of distance. Economy of scale refers to the characteristic that transportation cost per unit of weight decreases when the size of the shipment increases. Economy of distance refers to the characteristic that transportation cost per unit of distance decreases as distance increases.

Transport Infrastructure Transportation infrastructure consists of the rights-of-ways, vehicles, and carrier organizations that offer transportation services on a for-hire or internal basis. The nature of the infrastructure also determines a variety of legal and economic characteristics for each mode or multimodal system. A mode identifies the basic transportation method or form. DHL uses all the modes of transportations that is o Airways o Roadways o Waterways o Rail freight DHL has its own fleet of airplanes and motor vans. Depending upon the final destination where the goods have to finally reach and the type of package the customer has paid for, DHL uses the individual modes of transport or a combination of either of these or all. Once again the geographical location and how fast the goods have to be delivered are the factors for the final selection of modes of transportation .
The concept of economies of scale and economies of distance are both taken into consideration in case of larger consignments where DHL provides an appropriate logistical solution which helps in reducing the overall cost for the customers.

Inventory Management and Warehousing

o o Warehouse Infrastructure networks Warehouse Management Solutions

o
o o

Inventory Optimisation
Special Warehouse solution Outsourcing projects

Warehouse Infrastructure Networks

DHL warehouse service supports inbound logistics, distribution and aftermarket services in a way that improves inventory management, reduces total operating costs and improves cycle times. Benefits include improvements in: o Customer service levels o Stock accuracy o Lead times o Redundant stock costs o Productivity responsiveness to a company's strategic needs. Besides it has three divisions: o Multi Users Centre o Strategic Parts Centre o Express Logistics Centre

Warehouse Management Solutions

The Warehouse Management System (WMS) records all events and actions in the receipt, handling and storage of products and orders in a warehouse environment. The WMS also accurately records the location of inventory whilst stored in the warehouse. Strategic Inventory Management Strategic Inventory Management (SIM) has been created to deliver urgent shipments to main business areas within a 2 to 4 hour time frame, usually time critical spare parts with a high value and high impact on business. Direct Express Inventory Management Direct Express Inventory (DEI) allows customers to centralise stock in one warehouse and use express distribution to deliver components the next day. Entire management is done by DHL.

Warehouse Management Solutions

Repair Return Inventory Management Return & Repair Inventory (RRI) manages the physical flows for Return material authorization. In this case, DHL will be responsible for picking up the broken part, sending a new one, bringing the broken part to a repair centre and moving repaired parts back into stock. Cross Docking Cross-dock operations are facilities where shipments are received from one mode of transport and transferred to another mode, or where shipments complete one leg of a journey prior to commencement of another journey. Shipments are consolidated or deconsolidated. Product received into the facility is not taken into inventory.

Inventory Optimisation
Through effective inventory management, inefficiencies can be driven out of the supply chain, overall costs reduced and high service levels achieved. We optimize inventory at a line-item level at every stage of the supply chain. DHL focuses on driving results in: o Supplier management o Expediting o Order replenishment o Demand forecasting o Safety stock setting o Order pipeline monitoring o Excess stock management Inventory optimisation is supported by inventory management software that calculates 'line item risk profiles' that measure the variability of demand and supply for each line item within a customers inventory.

Inventory Optimisation
Shared-user Warehousing Through sharing of DHL's resources, such as space, labour, equipment and transportation, customers benefit from synergies that considerably reduce supply chain costs. This environment returns significant value to a small business requiring distribution operations without long term lease or capital commitments, or a large enterprise handling a new acquisition, product launches or seasonal overflow. Campus Solutions We pioneered the campus model to provide regional customers with a flexible solution designed to capitalise on similar distribution channels, minimise labour costs, and increase specialized equipment utilization. Campuses are strategically located at key distribution points in North and South America, Europe and select locations in Asia, allowing for expedited transit times to large concentrations of consumers.

Special Warehouse Solutions

Vendor Hubs Warehousing and delivery of service parts, based on demand pull. Vendor hubs are usually located in close proximity to the manufacturing facility. Reverse Centres

Specially designated facilities for the receipt and handling of returned parts for repair, recycling or disposal.
Bonded Warehousing Bonded warehouses provide secure environments in which customers' products can be held without immediate payment of local duties and taxes.

Special Warehouse Solutions

Shared-user Warehousing Our shared-user facilities are designed to meet the needs of organisations of any size. Currently, we provide shared-user services to leading manufacturers and retailers of medical supplies, consumer products, industrial equipment, chemicals and technology. Through sharing of DHL's resources, such as space, labour, equipment and transportation, customers benefit from synergies that considerably reduce supply chain costs. Consequently, the customer can increase efficiencies throughout their distribution network and maintain a higher level of service to their customers.

Technological Electronics/Telecom solutions

Electronics/Telecom Core and Value-added Technology Solutions Inbound to Manufacturing Service Parts Logistics Technical Distribution Technical Services

o o o o o o

Electronics/Telecom
DHL provides the know-how to optimize flows and drive down supply chain costs. You reduce stock but not quality, and maintain flexibility to meet market needs. Services include: o Modular networks consisting of warehouses and hubs, downstream links enabling merge-in-transit, and delivery capabilities for any size, speed and dimension o Inbound logistics (VMI or JIT) o Electronics Distribution Network (EDN) o Reverse logistics o After sales logistics - spare parts o Lead Logistics Provider (SCM) - integrated supply chain services from DHL, whether end-to-end solutions or management of partial supply chain solutions o Complete outsourcing, including transfer of staff, infrastructure financing, business optimisation and supply chain integration

Core and Value-added Technology Solutions

o Responding to customer needs, we provide a range of core and valueadded services that reduce cycle times and improve performance. These include: o inbound logistics to production facilities, including vendor managed inventory hubs kitting, assembly and light manufacturing operations o order fulfillment and finished goods distribution o integrated freight management and contract logistics services o product delivery and installation, including reverse logistics o aftermarket and critical service parts logistics

Core and Value-added Technology Solutions

Inbound to Manufacturing Our Inbound to Manufacturing service enables our customers to more effectively manage the inbound flow of materials from collection points at their component suppliers' facilities to consumption points in their production lines. We help address the constant challenge for both finished goods manufacturers and component and sub-assembly suppliers who must adapt to shorter product lifecycles and the migration of production facilities to developing countries. Service Parts Logistics Our Service Parts Logistics service involves the management of technology manufacturers' replacement parts delivered to and from customers according to pre-defined service levels or warranty agreements on a one-, two-, four- or eighthour and next-day basis, 24 hours a day, seven days a week.

Core and Value-added Technology Solutions

Technical Distribution Supporting companies in a wide range of industries including computer equipment and peripherals, medical equipment, vending equipment, office equipment and telecommunications, our technical distribution service meets the challenges associated with the effective and safe movement of high-value goods. Technical Services Technology manufacturers expect every link in the supply chain to have capabilities to add value to their product or process. Our tailor-made solutions can be integrated into existing customer operations at our warehouses. The strength is the integrated approach with other segments of the business which improves time-to-market and reduces the cost for the customer.

Core and Value-added Technology Solutions

Value Added Services o Co packing o Product assembly o Other value added services Co-packing Comprehensive selection of manufacturing and packaging services through Power Packaging a DHL Company. By integrating manufacturing and packaging operations within their supply chains, our customers can: o Add flexibility o Improve service levels o Reduce costs o Accelerate time to mark o Increase asset utilisation

Core and Value-added Technology Solutions

In addition to these core packaging services, Power Packaging brings a unique set of services and capabilities for customers that include:

Dry foods manufacturing

Blending and production of complex, multi-component products Carton, pouch and canister filling in the following types of containers: o Rigid containers (composite and plastic canisters, metal cans, glass or plastic jars) o Flexible containers (form fill and seal pouches, cartons, slim-sticks and standup/recloseable pouches)

Core and Value-added Technology Solutions

Beverage manufacturing: o Blending, mixing and filling of hot and cold fill beverages and concentrates in the following types of containers: o Plastic bottles (PET) and glass containers (10 oz up to 128 oz) o Shelf-stable containers (paperboard, plastic cup and bag-in-a-box) Dedicated facility services: o o o o Turnkey manufacturing solutions including: Site selection/development Facility and systems design New facility start-up and operation.

Core and Value-added Technology Solutions

Product Assembly
Postponement, quick response and mass customization are breakthrough business strategies enabled via packaging services. Integrating packaging operations into distribution centres streamlines fulfillment reducing cost, enhancing product visibility and control, and improving speed-to-market and flexibility in the supply chain. Packaging services include: o Postponement packaging - primary, secondary and specialty components o Co-packing, kitting, assembly and repackaging o Retail-ready, point-of-purchase displays o Lot control via variable digital and laser printing o Machinery system engineering - labeling, bagging, carton filling

Core and Value-added Technology Solutions

Kitting/Pre-Assembling Kitting is the addition of items such as accessories and batteries to the product pack. Pre-assembling is completion of a finished product from component parts or pre-programming of products. Sequencing/ Linefeeding Sequencing is the consolidation, pre-assembly and sequencing of material flows. Line feeding covers the delivery of assembled components to a production line. Re-Working/Re-Packing Repacking for a specific customer can include repalletisation. Reworking is the modification of products to suit a local market.

Core and Value-added Technology Solutions

Packaging/Bundling Packaging includes packing of products into suitable media for transportation and retail display. Bundling is the assembly of a number of pre-packaged products to make up an integrated product offering. QA Control Quality control ensures that product is received into and dispatched from the warehouse in a suitable condition, free from faults and defects. Labelling/Merchandising The application of labels either to the product or to the packaging. Merchandising can include the addition of price stickers or promotional items ready for retail display.

Conclusion
Logistics is one the most important and integral part of any organizations strategy and function. When the logistical process is carried out accurately then not only the company reduces the production cost but also improves the efficiency and customer satisfaction. DHL has the worlds largest express and logistics Network. Over the past decades it had turned delivering goods into a finely oiled process. Be it a book, pen, WIP material, drugs, hazardous chemicals, clothes, documents, wild animals and any other thing under the sun DHL delivers it . We have tried to incorporate all the facets of logistics which propel DHL to be the best delivery and carriage-service around the world. No wonder that DHL is head and shoulders above all of its competitors!

Thank You