Managing International Operations And Supply Chain Management Essay

The company’s name DHL is formed by the first letters of the last names of the three founders of the company, Adrian Dalsey, Larry Hillblom and Robert Lynn in 1969. It has its headquarters Bonn, Germany.

DHL is one of the global market leaders in international express, air freight and overland transport. It also tops the table ranking as the world’s number 1 in ocean freight and contract logistics. DHL Express shares with its well-known DHL brand and with other Deutsche Post business units such as DHL Global Forwarding and DHL Express Supply Chain. DHL offers a full range of customised solutions from express document shipping to supply chain management.

Its global network is spread in more than 220 countries and territories and about 500,000 employees working worldwide to offer customers superior service quality to satisfy customers supply chain requirements.

DHL accepts its social responsibility by supporting climate protection, disaster management and education.DHL is part of Deutsche Post DHL. The Group generated revenue of more than 46 billion Euros in 2009 and it has reached about 24 billion Euros till June 2010.

Global Facts and Figures:

Number of Employees: around 500,000

Number of Offices: around 6,500

Number of Gateways: 240

Number of Hubs, Warehouses & Terminals: more than 450

Number of Vehicles: 76,200

Number of Aircraft*: 420

Number of Countries & Territories: more than 220

Shipments per Year: more than 1.5 billion

Destinations Covered: 120,000

Logistics:

The definition of ‘logistics’ is: -“Logistics management is that part of supply chain management that plans, implements and controls the efficient, effective, forward and reserve flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer’s requirements.”(www.cscmp.org)

Logistics is concerned with getting the products and services at the right place and at the desired time. It is very difficult to carry out any marketing or manufacturing without the support of logistics. It involves the combination of information, inventory, transportation, material handling, warehousing and packaging.

The operational duty of logistics is the geographical movement of raw materials and finished inventories wherever required at the lowest cost possible and at the right time.

DHL itself being a Logistics and supply chain company has grown tremendously because of international trade. As the international trade has become easy between most of the countries the trade flow has increased and the use of Logistics Company like DHL help it making the trade more easy, safe and fast.

Due to globalisation it’s now easy to get things from one country to another through these logistics companies.

Logistics Service Providers:

LSPs are companies who handle other companies’ transport and distribution networks. Recognising the cost-effective prospects in international transport and logistics entails dedication and resources (Rushton et al 2008). Thus, many businesses outsource the transportation of raw materials and finished products to LSPs and focus on their own core competences to save resources and increase profits (Mangan et al 2008).

Some companies, on the other hand, provide its own transportation and distribution services. While some others come together as agencies to organise their logistics needs, thereby getting the services at cheaper rates (Mangan et al 2008).

DHL itself being a logistics company they have many clients who do the import and export of their products through DHL. Its some main clients are Automobile Industries, Gernal Electrics, Telecome Industries, etc.

Supply Chain Management:

“The management of upstream and downstream relationships with suppliers and customers to deliver superior customer value at less cost to supply chain as whole”. Martin Christopher, Logistics and supply chain management, 2005.

Supply Chain Strategy:

Supply chain management, on the other hand, 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” (Christopher 2004).

To have an effective supply chain solution a good design and strategy is very important. DHL has developed a status for developing new and innovative solutions that makes the operations easy and improves control from time to time. Their internal teams also contribute to the solutions design of some of the world’s leading brands and helps them to win key contacts.

The strategies used by DHL are as follows:

Top-down perspective on strategy

Corporate Strategy:

Continuous Improvement

DHL aims to ensure steady service quality worldwide as they build on their achievements in purchasing and on-going quality measurement. Cost Leadership is intended to considerably reduce both direct and indirect costs and manage in such a way that it increases the overall profitability of the organisation. Organisational Capability helps to develop leadership qualities and develop employee commitment.

Profitable Growth

DHL has acknowledged three initiatives with an eye towards further growth:

In Sales Effectiveness, they continuously improve the performance of their sales by increasing sales processes and customer support which helps them to earn more profits.

In Strategic Product Replication, DHL develops and reproduces solutions which are useful to simplify their customer’s business processes as per their requirements.

In Sector Focus, DHL constantly strengthen their capability in key sectors of Consumer, Retail, Technology, Life Sciences & Healthcare, Automotive and Energy.

Business Unit Strategy:

Give visibility of the upstream supply chain, and allow to take the decisions earlier.

Create a more agile supply chain strategy which can better be able to respond to the change in consumer demands accordingly.

Reduce supply times, cost on inventories, and associated storage (warehouse) costs.

Functional Strategy:

Customer-focused solutions are built up from the following core services:

Global forwarding, including: air/ocean/road/rail freight forwarding and management to supply the material according to the customer needs and requirements.

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 around the world.

Outsourcing Projects:

DHL involves taking over and managing previous in-house logistics operations and outsourcing it to other service providers. Outsourcing includes,

Distribution centres

After sales services

Back-office functions

Supply chain management functions

Transport operations

The above outsourcing work takes place by different DHL vendors so as it will help in decreasing the extra inventory cost.

Inventory, warehousing and materials management:

Inventory Flow

Manufacturing support

Physical distribution

Procurement

Suppliers

Customers

Information Flow

Inventory Flow

The logistics department of DHL is concerned with the movement and storage of materials and finished products from time to time and at the right place at a given time. Every logistical process adds value to the material or component from its initial stage of purchase by moving inventory when and where required. Thus there is a rise in value of the material at each step and it leads to the rise in cost of final product.

Large manufacturers have thousands of logistical operations, which ultimately end in the delivery of the product to an industrial user, merchant, dealer or customer.

In order to understand logistics it is useful to divide it into three areas:

Physical distribution

Manufacturing support

Procurement

For DHL:

DHL is completely service oriented company therefore it does not have its own material movement. This means it is only engaged in physical distribution and procurement. Procurement also includes the material which is required for packaging such as paper, trays and boxes, wooden crates, standard containers wraps, plastic etc. The materials or the goods collected from the senders are weighed, checked for condition to ensure that it is in good condition and depending upon its various characteristics it is sent for further packing. The cargos are then dispatched for their destinations and moved to send it to the final destination.

Through the use of inventory management, inefficiencies can be removed out of the supply chain, overall costs are reduced and high service levels are achieved. DHL optimize inventory at a line-item level at every stage of the supply chain.

DHL focuses on driving results in:

Supplier management

Order replacement

Demand forecasting

Safety stock setting

Order pipeline monitoring

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 customer’s inventory.

DHL offers:

8% improvement in product availability and average of 20% inventory reduction

Reduced inventory and everyday expenditure.

Improved sales, profitability and return on investment

To keep a good flow of supply as per the increase in demand

Maintain high service standards

More smooth and responsive supply chain

Warehouse Management Systems

The Warehouse Management System (WMS) records all procedures and actions in the receipt, handling and storage of products and orders in a warehouse environment. The WMS accurately records the location of inventory while it is stored in the warehouse.

DHL’s WMS manages all crucial processes in the warehouse, and is also an important support for different distribution and transport concepts (planning, time controlling, booking of transport capacity, communication with customs and other shipping authorities).

DHL warehouse service supports inbound logistics, distribution and after sales services in a way that it improves inventory management and reduces its operating costs as well as improves its cycle time.

Benefits include improvements in:

Customer and quality service

Lead times

Stock accurateness

Reduction in stock costs

Productivity responsiveness to the company’s strategic needs

Transport planning:

DHL uses following modes for transportations:

Airways-

DHL are the global leader in air freight, carrying 12% of the total worldwide market. Its operations are managed over 150 countries which provide a personalised service to and from all key markets.

DHL can organise scheduled flights and chartered planes from a wide range of major carriers for transportation, as well as they provide competitive services on their own carrier, making it flexible enough to help their customers from first-time shippers to regular importers and exporters of freight.

Roadways and Railways-

DHL Freight is flexible partner for overland transport across Europe, North Africa, parts of the Commonwealth of Independent States (CIS) and the Middle East. They guarantee reliable and competent domestic and international transportation for customers of all sizes.

DHL overland transportation service comprises of more than 170 road terminals in more than 40 countries, over 3,500 weekly international departures, door-to-door tariffs and full tracking capability, all supported by customs experts in more than 275 offices all over.

Waterways-

One of the largest Ocean Freight service providers for Full Container Load (FCL) and Less-than-Container Load (LCL) shipments, DHL currently handle in excess of 2.7 million TEU’s and more than 2 million cubic meters of LCL freight annually, across all over the continents.

DHL designs a solution that leverages multiple modes of transport. DHL carrier sourcing expertise helps to work in securing and managing the best possible combination of service providers. Cold chain transport always helps to maintain the perishable goods are save and see that shipment arrives at the lowest landed cost.

Continuous tracking is a key to product security. With core transportation solution a leading-edge Transport Management System (TMS) is configured and deployed to customer’s specifications.

Conclusion

Logistics is one the most important and integral part of any organisations strategy and function. When the logistical process is carried out correctly then not only the company reduces the production cost but also improves its efficiency and customer satisfaction. Logistics management is very important for today’s highly competitive world.

DHL has the world’s largest express and logistics Network. With a network spanning about 220 countries and with its private fleet of airplanes, mobile vans, cargo ship carriers & even railway automotives in some countries. Competitors have come and gone but DHL has been able to keep its No 1 position undamaged. This is because of its dynamic nature and attitude of maintaining good customer relations and serving good quality work. Logistics management is important for every organisation.

We have tried to incorporate all the facets of logistics which boost DHL to be the best delivery and carriage-service around the world.