Characteristics, Trends

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Characteristics, Trends Future Shape of the
Logistics Environment Interaction with Standards
Work
International Conference on Advancing
Public-Private Partnerships for e-Business
Standards
Harry Strover Geneva, September 18-19th 2008
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Outline

• DHL Company Overview
• Logistics Environment
• Characteristics
• Trends
• Future Shape
• e-Business Standards at DHL
• Our expectations
• Relationships with Standards Organizations
• e-Business with our Customers
• Internal e-Business
• Conclusion

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DHL Overview
DHLs parent company Deutsche Post World Net is
the worlds leading logistics group. With
revenues of more than 63 billion and 500,000
employees in more than 220 countries and
territories it is one of the biggest employers
worldwide.

• Largest Courier and Express provider in Europe,
  Asia Pacific and Middle East /Africa
• Top 3 worldwide

• 8 million customers
• 36 Hubs and 4,700 bases
• 350 aircraft, 72,000 vehicles

• Worlds No.1 in Warehousing, Distribution
  Contract Logistics

• 59 countries and territories
• 2,500 logistics centers, warehouses, terminals
• 23million m2 storage capacity

• Worlds No.1 in Air and Ocean Freight

• 150 countries and territories
• 813 terminals warehouses
• 4.4million t Air 2.8miliion TEU Ocean

• Europes No. 2 in Road Freight

• 30 countries and territories
• 160 terminals
• 2million full truck load movements

• Largest worldwide network for Mail Distribution

• Cross-border solutions for business mail,
  publication distribution, direct marketing and
  merchandise

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Outline

• DHL Company Overview
• Logistics Environment
• Characteristics
• Trends
• Future Shape
• e-Business Standards at DHL
• Our expectations
• Relationships with Standards Organizations
• e-Business with our Customers
• Internal e-Business
• Conclusion

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CharacteristicsSo what is Logistics?

• The Art or Science of getting-
• The right thing and the right person
• In the right quantity
• In the right place
• At the right time
• At the right quality
• Every time
• At the optimal cost
• Doing least harm to the world

• and its not-
• The next best thing
• To the nearest economic delivery quantity
• To the storage point, not the usage point
• A week earlier, to be sure
• Requiring inbound inspection
• 95 of the time
• At a cost we can get away with
• Paying lip service to the environment

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CharacteristicsEvolving Business Models in
Logistics Outsourcing
Core Logistics Competence
Traditional
Typical
Leading
Visionary
Business Strategy
Customer
Customer
Customer
Core
Strategy
Supply Chain Orchestrator
Supply Chain Manager
Planning
Customer
LLP
4PL
Competence
Warehousing
Distribution
Coordi- nation
Functional Processes
Value Added Svcs.
Ware-hou sing
Value Added Svcs.
Freight Trans-port
Ware-hou sing
Freight Trans-port
Exp ress
Courier
Courier
Business Processes
Value Added Services
Freight Trans-port
Cour ier
Ware-hou sing
Execution
Freight Transport
Logistics
Sourcing
3PL
3PL
3PL
Production
Engineering
Integrated Logistics Provider

• Strategic multi-functional partnerships
• Global, door-to-door coverage
• Bring integrated IT solutions ready to use
• Continuous innovation (cost service)
• Risk/Gain share
• Reduced need for capital

• Single function transactional relationship
• Local / regional reach
• Physical asset heavy, process execution
• Cost plus management fee
• Fixed upfront cost to change

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TrendsFast Fundamental Global Change is upon us

• Globalization moves to a Multi-Polar world

• Indian population grows as fast in 1 week as the
  EU population does in 1 year
• The Chinese middle class is consuming more and
  more of what it makes
• Major new hubs are being built around the world
  (e.g Dubai)

• Technology led complexity accelerates

• Much of the world is now on-line, mobile commerce
  is developing quickly
• Humble delivery equipment (containers, totes,
  hangers) become intelligent
• Increasing dependence on automation

• After a decade, inflation is back

• Rising oil prices slowing the growth in global
  trade
• Globally food prices and inflation rates rising
  (China12, Vietnam 25)
• Marked shift from Air to Ocean in Technology and
  Healthcare companies

• Terrorism has created a new cost pressure

• Container scanning will slow ports down,
  compliance will tie up management
• Security issues can cost hundreds of dollars per
  container

• The Smarter are getting Greener

• Carbon Sustained investment hampered by short
  term who pays argument
• Energy costs steeply rising Efficiency/carbon
  abatement actions needed
• Water supply is becoming the next sustainability
  issue for some

• Who will win the War for Talent ?

• Imbalance of white-collar talent is limiting
  growth in the developing world
• Wal-mart report Blue-collar labour shortage in
  the US as a growing issue
• Employers of choice make training a priority

..these are opportunities if we grasp them, real
threats if we do not
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Trends..with significant impact on supply chain
International Supply Chain Management
After Market Management
The Wider Supply Chain (21st Century focus)
Local Suppliers
Customers/ Retailers
Producers
Global Supply / Sourcing
Customers/ Consumers After Market
The Immediate Supply Chain
(1980/90s focus)
Reverse Flow Logistics
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Future Shape of the Logistics Environment
Embracing the possibilities of information and
technology

• Sophisticated customer solutions
• Deeper integration with other enterprises means
  more and more information exchange
• Increasingly diverse and complex processes mean
  e-Business capabilities are becoming more
  sophisticated and expanding to meet needs across
  multiple industriesand disciplines
• Capitalizing upon innovation

Solar Powered Warehouses
Smart Sensors
Parcel Robots
E-Paper
Remote vehicle intelligence
Electric Vehicles
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Outline

• DHL Company Overview
• Logistics Environment
• Characteristics
• Trends
• Future Shape
• e-Business Standards at DHL
• Our expectations
• Relationships with Standards Organizations
• e-Business with our Customers
• Internal e-Business
• Conclusion

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e-Business Standards at DHL Our expectations

• Operate a profitable global business
• Use e-Business to help standardize business
  processes and encourage re-use
• Reduce operational overheads through process
  simplification and standardization
• Enable advanced business models that provide
  global coverage and consistency
• Ability to deliver consistent, effective and
  innovative solutions
• Use e-Business to create a competitive edge
• Establish global standards-based services leading
  to robust, replicable customer solutions
• Reduce implementation running costs increase
  margins and benefits to the customer.
• Understand Manage our Business Better
• More in depth visibility of the information
  supply chain, better control of the process,
  improved business performance, and reduced
  organizational cost
• Making change a part of the process agility is
  key to a successful business
• Allow operational teams more control of the
  supply chain, allowing in-flight changes and
  decisions to be made easily, reducing the risk of
  failure

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e-Business Standards at DHL Relationships with
Standards Organizations

• DHL is proactively engaged in the use and
  definition of e-Business standards (e.g. UN
  EDIFACT, RosettaNet, OAG, GS1, IATA, ANSI)
• Standards organizations provide a supporting
  community
• Effective collaboration between standards
  organizations is critical

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e-Business Standards at DHL On-Demand Customer
Requirements

• Our customers and other business partners
  require
• Operational agility
• Continuous business process change
• Scale from small to large operations
• Scale from low to high volumes
• DHL to use (their) standards.

Customers / Partners
Complex
DHL
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e-Business Standards at DHL DHLs customers use
many different standards

• In connecting with thousands of e-Business
  customers, we use many different standards.
• Standards provide
• Familiar target for involved parties common
  dictionary, syntax and process
• Greater re-use and hence reduced risk for our
  customers
• Faster deployment of solutions

Customers / Partners
RosettaNet
EDIFACT
IDOCs
OAGi
GS1
Custom
DHLs Customer Integration Platform(s)
DHL
Still unnecessarily complex

• Over one billion e-Business transactions annually
  
• Approximately 8,000 customers, suppliers, customs
  authorities, etc.

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e-Business Standards at DHL Standardizing
e-Business transactions between internal systems

• A common data model will make standards really
  work for DHL
• Standards provide
• Good direction for internal e-Business
  transactions
• Supporting knowledge for business transactions
  and data models inside the enterprise
• Leverage and ease of implementation with our
  major IT providers

Customers / Partners
RosettaNet
EDIFACT
IDOCs
OAGi
GS1
Custom
DHLs Customer Integration Platform(s)
Common Data Model
Common Data Model
DHL
DHL Enterprise Internal Integration Platform(s)
This is DHLs biggest current e-Business
initiative
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e-Business Standards at DHL Case Studies -
Implementing Standards for internal e-Business

• Large Healthcare Customer
• Selected RosettaNet as internal e-Business
  standard
• Not all internal requirements were met by the
  selected standard
• Made structural and semantic changes to Standard
  (Bespoked)
• Forked from standard version

• Large Consumer Customer
• Selected GS1 as internal e-Business standard
• Not all internal requirements were met by the
  selected standard
• Made structural and semantic changes to Standard
  (Bespoked)
• Proposed Changes to GS1 governing body
• Project was delayed considerably
• Created complexity for External Parties
• Risk of forking from standard version

• Implementing external standards for internal
  e-Business is challenging

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Conclusion DHL uses e-Business standards with
our customers

• Standards provide the best way of providing an
  open, re-usable way of inter-operating with our
  customers
• SDOs are a valuable supporting community for our
  e-Business development
• Using e-Business standards when working with our
  customers benefits DHLs internal operations

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ConclusionImplementing standards within our
organization is challenging

• We have to be selective when implementing
  standards internally
• e-Business standards do not represent all
  internal business interactions
• Our strategic software vendors need to
  participate with us in implementing standards
• Standards compliance and version alignment is
  difficult especially where the fit is not ideal
• If not managed well, standards limit the agility
  of the internal solutions
• Many other organizations regard internal
  e-Business as a key differentiator / asset
• Not all are willing to share and help develop
  standards for this purpose

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Conclusione-Business is much more than data
exchange

• Information quality and its associated benefits
  all require standards to be in place
• e-Business for DHL is about business process
  interactions across multiple enterprises
• Standardizing business processes is our real
  challenge

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Thank You!