1

Introduction
Logistics is concerned with getting the products and services
where they are needed when they are desired. It is difficult to
accomplish any marketing or manufacturing without logistical
support. It involves the integration of information, transportation,
inventory, warehousing, material handling, and packaging.

The operating responsibility of logistics is the geographical

repositioning of raw materials, work in process, and finished
inventories where required at the lowest cost possible

The formal definition of the word ‘logistics’ is: - it is the process

of planning, implementing and controlling the efficient,
effective flow and storage of goods, services and related
information from the point of origin to the point of
consumption for the purpose of conforming to customer
requirements.

In order to understand the concepts of logistics in terms of

practical usage and to glimpse into the how a real company or
organization uses logistics as a formidable tool to gain customer
satisfaction, reduce overall cost and increase efficiency we
selected “DHL” the worlds leading courier service company. But
DHL is multi faceted and offers myriad types of services.

History and background of DHL

DHL are the first letters of the last names of the three company
founders, Adrian Dalsey, Larry Hillblom and Robert Lynn.

In 1969, just months after the world had marveled at Neil

Armstrong's first steps on the moon, the three partners took
another small step that would have a profound impact on the
way the world does business.

The founders began to personally ship papers by airplane from

San Francisco to Honolulu, beginning customs clearance of the
ship's cargo before the actual arrival of the ship and dramatically
reducing waiting time in the harbour. Customers stood to save a
fortune.
 2

With this concept, a new industry was born: international air

express, the rapid delivery of documents and shipments by
airplane.

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

The reason for the success of DHL is due to its very effective and
efficient way of carrying out the process of project management.
The basic steps in it are as follows:
 3

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

 Initiation: The formal start of the project

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

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 Flow

Suppliers Physical Manufacturing Procurement

distribution support

Customers
Information Flow

Inventory Flow
 4

The management of logistics is concerned with the movement

and storage of materials and finished products. From the initial
purchase of a material or component, the logistical process adds
value. By moving inventory when and where needed. Thus the
material gains value at each step.

For a large manufacturer, logistical operations may consist of

thousands of movements, which ultimately culminate in the
delivery of the product to an industrial user, wholesaler, 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 therefore it does not have its

own material movement but that of the customers both the
sender, the receiver and also the intermediateries. That means
it only involves physical distribution and procurement.
Procurement also includes the material needed for packaging
such as paper, moulded trays and boxes, wooden crates,
standard containers wraps, plastic inlays etc. The materials or
the goods collected from the senders (including papers,
documents, physical goods like clothing, household good,
chemicals, exotic animals etc) 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 itself but it is done to
the service which is provided ( eg if there has to be a certain
package delivered from India to UK the normal services would
 5

take about 2 days whereas as a super fast delivery would be

done in about 9 hours)

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:

1. Coordination flows
2. Operation flows

1. Planning and 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.

For DHL
It 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
 6

Forecasting 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.

For DHL
DHL’s 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

For DHL:

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.
 7

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:

 Select the right shipping and value-added services for each

shipment
 Prepare air waybills and customs documentation on-line
 Get the latest service bulletins and customs information
 Book collections and track shipments on-line
 Save up to 300 customer addresses
 Access shipment records for 99 days
 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.
 8

Supply Chain Management

Definition for 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.”

Explanation:

The supply chain is the network of organizations that are

involved through upstream and downstream linkages, in the
different processes and activities that produce value in the form
of products and services in the hands of ultimate consumer.

For DHL:

Supply Chain Optimisation

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.
 9

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.

International Supply Chain

Extended Supply Chain Services
Implementation Services
Outsourcing Projects

International Supply Chain

DHL’s international supply chain management solutions are

focused on helping customers take increased control of
international inbound supply chain to maximise 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:
 10

 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.

Reverse Logistics
Service Logistics
Inbound to Manufacturing
Medical Device Distribution
Distribution to Stores Management
Engineering Response

Reverse Logistics

DHL’s 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.
 11

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

DHL’s 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

Key services include:

 International freight forwarding

 Domestic and regional inbound deliveries
 Inventory planning, forecasting, procurement and analysis
 Distribution centre operations
 Outbound delivery

The entire process is underpinned by a web-enabled electronic

order processing and order monitoring tool.
 12

Inbound to Manufacturing

Inbound to manufacturing is the complete end-to-end logistics

management of inventories, facilities and labour 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 optimisation
 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
 13

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.

• Order Management

Receipt, management, execution, sequencing and dispatch of

orders in a timely manner.

• Call Centre Management

A Call Centre manages orders, monitors sales activities,

provides customer services and functions as a Help-desk.
 14

• Global Inventory Management

DHL gives the customer a global view of inventory, thus

enabling informed decisions regarding the disposition of stock.

• 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.

• 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

• 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.

• Quality Management

Total Quality Management is a management strategy that

integrates quality orientation into the whole structure and
 15

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:

 Customer satisfaction: Providing our customers and their

customers with excellent, high value logistics solutions
 Employee motivation: Building on the know-how and
stimulation of individual potential in multi-cultural teams
 Operational excellence: Continuous improvement of
processes and services to fulfil or exceed expectations

 Corporate citizenship: Acting as a responsible corporate

citizen in all countries
 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.

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.
 16

Outsourcing Projects

Outsourcing involves DHL taking over and managing previous in-

house logistics operations, including:

 Distribution centres
 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
optimising logistical operations in both process and strategy, and
are aligned to the client's commercial expectations.

The services are as follows:

 Strategic Logistics Consulting

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

DHL’s consulting services also offer re-organisation of customer

 17

facilities, project management for customers, implementation of

new IT Systems, creation of tender documents and tender
processing.

• 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.

• After Sales Optimisation

Optimising return logistics and spare parts logistics as well as

maintenance and repair services.

• 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.

• Distribution to Stores Management

DHL’s 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:
 18

 logistics network strategy

 warehouse design and simulation
 transport modelling.

• After Sales Optimisation

Optimising return logistics and spare parts logistics as well as

maintenance and repair services.

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.

• Distribution to Stores Management

DHL’s 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 modelling.

TRANSPORTATION
 19

Transport Functionality
Transportation is one of the most visible elements of logistics
operations. Transportation provides 2 major functions: product
movement & product storage.

Product Movement

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
 20

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.
E.g. truckload shipments cost less per pound than less-than-
truckload shipments. It is also generally true that larger capacity
transportation vehicles such as rail or water are less expensive
per unit of weight than smaller capacity vehicles like motor or air.
Transportation economies of scale exist because fixed expenses
associated with moving a load can be spread over the load’s
weight. The fixed expenses include administrative costs of taking
the order; time to position the vehicle for loading or unloading,
invoicing and equipment cost. These costs are fixed because they
do not vary with shipment volume.
E.g. suppose the cost to administer a shipment is $ 10.00. Then
the 1-pound shipment has a per unit of weight cost of $10.00,
while the 1,000 pound shipment has a per unit of weight cost of
$0.01. Thus, it can be said that an economy of scale exists for
the 1000-pound shipment.

Economy of distance refers to the characteristic that

transportation cost per unit of distance decreases as distance
increases.
e.g. a shipment of 800 miles will cost less than two shipments (of
the same combined weight) of 400 miles. Transportation
economy of distance is also referred to a se tapering principle
since rates or charges taper with distance. The rationale of
distance economies is similar to that for economies of scale.
Longer distances allow the fixed expenses to be spread over
more miles, resulting in lower overall per mile charge.
 21

These principles are important considerations when evaluating

alternative transportation strategies or operating practices. The
objective is to maximize the size of the load and the distance
that is shipped while still meeting customer service expectations.

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.

• RAIL NETWORK

Since olden times, railroads have handled the largest number

of ton-miles. As a result of the early establishment of a
comprehensive rail network connecting almost all the cities
and towns, railways dominated the intercity freight tonnage till
World War II and in some cases of Europe, Asia and Africa they
even connected the countries. This early superiority enabled
railways to transport large shipments very economically.

• MOTOR CARRIERS

Highway transportation has increased rapidly since the end of

World War II. This is because Motor carrier industry results
from door-to-door operating flexibility and speed of intercity
movement. They are even flexible because they can operate
on each and every kind of roadways.
 22

In comparison to railroads, motor carriers have relatively small

fixed investments in terminal facilities and operate on publicly
maintained highways. Although the cost of license fees, user
fees, and tolls are considerable, these expenses are directly
related to the number of over-the-road units and miles
operated.

The variable cost per mile for motor carriers is high because a
separate power unit and driver are required for each trailer or
combination of tandem trailers. Labor requirements are also
high because of driver safety restrictions and the need for
substantial dock labor. Motor carriers are best suited to handle
small shipments moving short distances.

• WATER TRANSPORT

It is the oldest mode of transportation. First it was the sailing

vessels, which was replaced by steamboats in early 1800’s
and by diesel power in the 1920’s.

Domestic water transportation – involves the Great Lakes,

canals, and navigable rivers. In every country, fewer system
miles exist for inland water than any other transportation
mode.
The main advantage of water transportation is the capacity to
move extremely large shipments. Water transport employs 2
types of vessels. Deep-water vessels, which are generally
designed for Ocean and Great Lakes use, & are restricted to
deep-water ports for access. In contrast, diesel-towed barges,
which generally operate on rivers and canals, have
considerably more flexibility.
 23

Water transport ranks between rail and motor carrier in the

fixed cost aspect. Although water carriers must develop and
operate their own terminals, the right-of-way is developed and
maintained by the government and results in moderate fixed
costs as compared to railways and highways.

The main disadvantage of water transport is the limited range

of operation and speed. Unless the origin and destination are
adjacent, supplement haul by rail or truck is required. The
capability to carry very high cargo at an extremely low
variable cost places this mode of transport in demand when
low freight rates are desired and speed of transit is a
secondary consideration.

• AIR TRANSPORT

Air transport is the newest and the least utilized mode of

transport. Its major advantage being its speed, which is
accompanied by high costs. A coast-to-coast shipment via air
requires only a few hours contrast to days taken by other
mean of transportation. The high cost of transport can be
traded off for high speed, which allows other elements of
logistical design, such as warehousing, inventory to be
reduced or eliminated. But still air transport remains more of a
potential opportunity than a reality because it is very much
under utilized.

The high cost of jet aircraft, coupled with erratic nature of

freight demand, has limited the assignment of dedicated
planes to all-freight operations. However premium carriers
provide planes dedicated for freight operations. This premium
service started off with documents and has moved onto large
parcels, which is an ideal service for firms with a large number
of high-value products and time-sensitive service
requirements.

FOR DHL:

DHL uses all the modes of transportations that is

 24

• airways
• roadways
• waterways
• 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.
 25

Inventory Management and Warehousing.

Warehouse Infrastructure Networks

Warehouse Management Solutions
Inventory Optimisation
Special Warehouse Solutions
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.

DHL facilities offer our customers warehousing that is fully

integrated into the wider supply chain and meets demanding
service levels. This encompasses the design implementation and
operation for both dedicated and multi user sites.

Benefits include improvements in:

 Customer service levels

 Stock accuracy
 Lead times
 Redundant stock costs
 Productivity responsiveness to a company's strategic needs

• Multi User Centres

We provide a network of multi-user warehouses, enabling

manufacturers to hold inventory at local level, whilst avoiding
expensive, dedicated storage solutions. These facilities can
receive products from both local and global manufacturing sites,
providing downstream distribution.

• Strategic Part Centres (SPC)

Our Strategic Part Centers (SPCs) are in-country facilities offering:

 1, 2 and 4 hour order fulfillment

 26

 stock optimisation across the complete network of SPCs

 guaranteed performance against agreed business rules

• Express Logistics Centres (ELC)

Our Express Logistics Centres (ELCs) are regional centralised

facilities offering:

 order processing
 outsourced repair facilities
 custom final assembly
 kitting services

Warehouse Management Solutions

• Warehouse Management Systems

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.

Our Prologs WMS manages all critical processes in the

warehouse, and is also an important support for varied
transport and distribution concepts (planning, time controlling,
booking of transport capacity, communication with customs
and other authorities).

• 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.
 27

• 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.

• Repair Return Inventory Management

Return & Repair Inventory (RRI) manages the physical flows for
Return material authorisation. 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:

 Supplier management
 Expediting
 Order replenishment
 Demand forecasting
 Safety stock setting
 Order pipeline monitoring
 28

 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.

DHL offers:

 Average of 20% inventory reduction and 8% improvement in

product availability
 Reduced inventory and overhead costs
 Improved sales, profitability and return on investment
 High service standards
 Better matching of supply with demand
 More streamlined and responsive supply chain

• 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.

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.
 29

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.

• 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
 30

throughout their distribution network and maintain a higher

level of service to their customers.

Outsourcing Projects

Outsourcing involves DHL taking over and managing previous in-

house logistics operations, including:

 Distribution centres
 Transport operations
 Back-office functions
 Supply chain management functions
 After sales services

Technological Electronics/Telecom solutions

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

Electronics/Telecom Technology
 31

Manufacturers have some of the most complicated supply chain

requirements of any industry because of the nature of the
products: complex, high value and rapid obsolescence.

Our logistics solutions help technology companies reduce

inventory and cycle time, while providing control and visibility
through to final delivery. This is achieved by focusing on product
availability and optimisation of product flows and supply chain
costs. For optimum flexibility and speed, you can outsource your
entire logistics operation, including distribution centers,
transport, back-office, supply chain management and after sales,
to DHL.

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:

 Modular networks consisting of warehouses and hubs,

downstream links enabling merge-in-transit, and delivery
capabilities for any size, speed and dimension
 Inbound logistics (VMI or JIT)
 Electronics Distribution Network (EDN)
 Reverse logistics
 After sales logistics - spare parts
 Lead Logistics Provider (SCM) - integrated supply chain
services from DHL, whether end-to-end solutions or
management of partial supply chain solutions
 Complete outsourcing, including transfer of staff, infrastructure
financing, business optimisation and supply chain integration

Core and Value-added Technology Solutions

Responding to customer needs, we provide a range of core and
value-added services that reduce cycle times and improve
performance. These include:
 32

 inbound logistics to production facilities, including vendor

managed inventory hubs kitting, assembly and light
manufacturing operations
 order fulfillment and finished goods distribution
 integrated freight management and contract logistics services
 product delivery and installation, including reverse logistics
 aftermarket and critical service parts logistics

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 eight-hour and
next-day basis, 24 hours a day, seven days a week.

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
 33

time-to-market and reduces the cost for the customer.

Value Added Services

• Co packing
• Product assembly
• Other value added services

• Co-packing
We offer a 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:

 Add flexibility
 Improve service levels
 Reduce costs
 Accelerate time to mark
 Increase asset utilisation

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

 Rigid containers (composite and plastic canisters, metal cans,

glass or plastic jars)
 Flexible containers (form fill and seal pouches, cartons, slim-
sticks and standup/recloseable pouches)

Beverage manufacturing:
 34

Blending, mixing and filling of hot and cold fill beverages and
concentrates in the following types of containers:

 Plastic bottles (PET) and glass containers (10 oz up to 128 oz)

 Shelf-stable containers (paperboard, plastic cup and bag-in-a-
box)

Dedicated facility services:

Turnkey manufacturing solutions including:

 Site selection/development
 Facility and systems design
 New facility start-up and operation.

Other services:

 Packaging and raw material sourcing, procurement and

assembly
 Batch/quality control tracking via digital easy-to-trace coding
system
 Full range of secondary packaging services

• Product Assembly
Postponement, quick response and mass customisation 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:

 Postponement packaging - primary, secondary and specialty

components
 Co-packing, kitting, assembly and repackaging
 Retail-ready, point-of-purchase displays
 Lot control via variable digital and laser printing
 35

 Machinery system engineering - labelling, bagging, carton

filling, club store packs, clamshells and printed and
unprinted film over-wraps
 Make-to-order pallets
 Product rework/redress

Other Value Added Services

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.

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
 36

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.

External Performance Measurement

While internal measures are important for detailed organizational

monitoring, external performance measures are also necessary to
monitor, understand and maintain a focused customer perspective
and to gain innovative insights from other industries. The topics of
customer perception measurement and best practice
benchmarking, which address these requirements, are discussed
and illustrated below.

Customer Perception Measurement

 37

To succeed in any activities of business one has to always cater to

and satisfy the needs of the customer. To do so, it is essential for
one to know how the customer thinks in order to meet his needs in
a more satisfying manner. Therefore, an important component of
leading edge logistical performance is the regular measurement of
customer perceptions. Such measures can be obtained through
surveys or by systematic order follow up. These surveys can be
company - or industry – sponsored.

Such surveys ask questions regarding the firm’s and the

competitor’s performance in general or for a specific order in
particular. Most of the surveys incorporates measurement of
customer perceptions regarding availability, performance-cycle
time, information availability, problem resolution and product
support. The survey may be developed and administered by the
firm itself or by consultants, delivery agents or industry
organizations.
 38

Conclusion

Logistics is one the most important and integral part of any

organisations 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. Overall logistics management is very important for
today’s highly competitive and cut- throat corporate world.

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 . With a network spanning 200
countries and with its private fleet of airplanes, mobile vans,
cargo ship carriers & even rail way automotives in some
countries DHL can handle any type of goods. Not only that with
international network there comes the hassle of documentation
and paperwork, standard packaging and other formalities to
adhere to. But DHL has its own department which looks into the
international laws and other formalities. In the end what maters
is delivering good in good condition at the door step of the
customer. A happy and satisfied customer makes the business
grow. Competitors have come and gone but DHL has been able to
keep its No 1 position intact. This is because of its dynamic
nature and attitude of maintaining good customer relations.
Logistics management is important for every organisation but
more so DHL.

We have tried to incorporate all the facets of logistics which

propel DHL to be the best delievery and carriage-service around
the world. No wonder that DHL is head and shoulders above all of
its competitors!
39