PowerPoint Presentation - DHL GLOBAL CUSTOMER LOGISTICS Vision and by tuj10580

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									                      DHL GLOBAL
                       CUSTOMER
                      LOGISTICS




                  Brussels, October 19, 2002
Sacha Van Hoever, Senior Logistics Consultant, DHL Global Customer Logistics
    Contents



       Introduction to GCL
         – DHL Global Customer Logistics
         – Vision & Strategy
       DHL & Partners
       Service Parts Logistics
       Reverse Logistics
       Service Parts Logistics Survey 2002
       Case Study




3
    The business environment
    is changing

                     Globalisation      E-commerce

       Focus on core                               Customer Service
       competencies                                   Explosion




    Time to market                                     Organisational
     compression                                        Integration


       Creation of virtual                       PLC Reduction
          enterprises
                             One stop shopping
4
    Global Customer Logistics




                DHL International

                                 Global
                                Customer
              DHL Airways       Logistics




5
    Global Customer Logistics


    Created in 2001 for addressing the needs and requirements of DHL‟s
                             global customers



             GCL


                                     developing
             GAC


      National Advantage           implementing

    Large National Regular
                             proactively managing



      integrated express distribution and logistics solutions on a regional
                             and truly global level
6
    DHL Global Customer Logistics
    Vision




long term preferred
         “To enable DHL to become the long term
      preferred partner of choice for global express


partner of choice for
     distribution and express supply chain solutions
      for the leading global companies within DHL‟s


 the leading global target industries”




     companies
7
Global Logistics Organization Structure
Global Virtual Teams

                                                                   Global Logistics


                                           Logistics          Logistics          Logistics
                                            EMEA                 AP                NA
Geographical Logistics Organization




                                                                                                 Global Partner
                                       Partner Alliance
                                                                                                    Alliance


                                           Business                                              Global Business
                                      Acquisition Support                                      Acquisition Support
                                                            Global “Virtual” Functional Team
                                          Pricing &                                             Global Pricing &
                                         Profitability                                            Profitability
                                           Analysis                                                 Analysis

                                           Logistics                                            Global Logistics
                                        Infrastructure                                          Infrastructure


                                            Quality                                              Global Quality


                                          After Sales                                          Global After Sales
                                           Program                                                 Program
                                         Management                                              Management
  DHL GLOBAL
   CUSTOMER
  LOGISTICS
  Global Logistics
Vision and Strategy
     DHL Global Logistics
     Vision




         DHL Global Logistics will be the Global
        Leader in (time-sensitive) parts distribution
          with real-time information technologies
          supporting consistent global offerings.
          DHL will develop integrated solutions
        targeted at high value, high impact goods.


10
     DHL Global Logistics
     Our approach


      ‘Brain’ Consultative
            Services
     Customer Relationship        Build                                                                   How will DHL tap
         Management             expertise
                                ourselves                                                            into the total SC market..?
         IT Capability

         Consultancy

       Manage Partners
                                                                                                                                     Use partners and
       Special reporting                                                         Build                                                                                                e.g. DPWN
                                 DHL                                             expertise
                                                                                 ourselves
                                                                                                                                       joint bidding
                                                                                                                                                                                      and Others
     Call Center Management
                                               Heavy Weights



                                                                                   Door-to-Airport



                                                                                                                       Sameday NFO                                                    ‘Muscle’
                                                               Def’d. services



                                                                                                     Airport-Airport
                              transportation




                                                                                                                                                 Warehousing



                                                                                                                                                                         IT systems
                                                                                                                                      Domestic
                                                                                                                                                                                      Physical
                                 <250 kg




                                                                                                                                                               Repairs
                                  Core




                                                                                                                                                                                      Services



11
 DHL GLOBAL
  CUSTOMER
 LOGISTICS
DHL and Partners
     Our Partner Relationships


                                                                      START
     Global/Regional




                          No. of shared Services
                          Larger Investments
                           Longer Duration
                                                    Shareholder
                       
                          Enhanced Process                          Selection
                           Integration               Partners        Protocol


                          Geographical
                           scope
                          Importance
                                                     Strategic
                          Number of                 Partners
                           Projects


                                               Third Party (3PL)
     Local




                                               Service Providers

                                                Number of Partners
13
     DHL Shareholders




        1%                                             76%



                        Two Investment Trusts = remaining 23%




14
     Deutsche Post World Net




                         33 bln EUR turnover, 318 k people




        Germany             Europe           Worldwide         Germany
         69 Mio             Pan-European    Danzas, AEI        130 bill. Euro on
          letter items        parcel network  150 countries       balance sheet
          per day                             38,000 people
                                                                  10 Mio clients
         High speed        Worldwide                             13,500 branches
                             DHL in 228

                              countries &
15                            territories
 3 Types of Logistics Service Offering


 Single DHL                        Partner
                                                                               4PL
    3PL                           Joint Bid
                                                                             Solution
  Solution                        Solution

   Customer                       Customer                                   Customer
   Division/                      Division/                                  Division/
    Account                        Account                                    Account



                           LSP expertise (CRM)
  DP Bus. Unit             Logistics Consultant                            4PL
Service Provider              Joint Bidding                          Service Platform
                              IT Capability


                    DPWN        DPWN        DPWN                  DPWN         DPWN
                                                       Partner                            Partner
                   Bus. Unit   Bus. Unit   Bus. Unit             Bus. Unit    Bus. Unit




     Single                    CRM Management                                DPWN
    Managed          Tender coordination amongst members              4PL service platform
     DPWN 4PL Platform




     A Joint Venture between:




17
    DHL GLOBAL
    CUSTOMER
    LOGISTICS
Service Parts Logistics
     The importance of supply chain management



       As we are moving from competing brands to competing supply
       chains, logistics has become one of the key drivers of competitive
       advantage.

       Some companies have recognised this, however they have been
       focussing on the supply chain driving the production and sales of
       finished goods (e.g. Dell).

       Yet there is another supply chain within these companies, also
       heavily affecting customers and business results, which is often
       largely being ignored:



     The Service Parts Supply Chain
19
     The Service Parts Supply Chain


        “Traditional bases of competitive advantage no longer suffice;
         the search is on for new opportunities for differentiation”
        Competitive advantage is sought in parts of the value chain that
         thus far have been overlooked or under-addressed.
        After sales is one of those areas:
          – Traditionally too fragmented
          – Poorly linked with other parts of the organisation
          – Received little management attention
        However, by reengineering the service parts supply chain
         companies can:
          – Create competitive differentiation
          – Improve customer retention
          – Increase earnings from after sales support
          – Reduced cost of after sales support
          – Customer satisfaction
20
        Do you leave money on the table?



                                                Excess service
     Poor utilization                           parts inventory
     of physical and
     people assest




       High service                            Unnecessary
       logistics                               scrap and
       costs                                   obsolescence




                                           Poor coordination
                                           with suppliers,
                        Penalties for
                                           customers and
                        missing service
                                           other companies
                        level agreements

21
     Strategic importance


        Initial equipment sales
           High sales costs
           No relationship
           Poor customer info
           Low profitability


                                      Operational after market service
                                        Relatively low sales cost
                                        Ongoing relationship
                                        Good margins
                                        High support costs


       „Back to square 1‟                                             Repeat equipment sales
          Missed opportunity for                                       Low sales costs
           customer loyalty                                             Established relationship
          Repeat sales will be just like                               In-depth customer info
           the initial sale
                                               Poor AMS   Good AMS
                                                                        Increased profitability
          Lost after market service
                                            performance   performance   High switch costs
           account




22
     Revenue and Profit life cycle



                            Finished Goods
       Relationship




                                Service




                                             Time


                                               Revenue
                            Finished Goods     Profit

          $                     Service




                                             Time



23
       SC impact on shareholder value



     Service logistics has a significant impact on shareholder value

                                                                     • High margins
                                                      Revenue        • Customer retention

                                 Profitability

                                                                     • Obsolescence
                                                       Costs         • First time fix


            Shareholder value
                                                                     • Inventory pooling
                                                                     • Speed instead of inventory
                                                   Working capital   • Virtual warehousing
                                                                     • Information instead of inventory
                                Invested capital
                                                                     • Outsourcing
                                                    Fixed capital    • Centralization




24
     The significance of Service Parts cannot be
     neglected




        ,,Spare parts represent $700 billion in spending
          and 8% of GDP in the United States alone’’

                                           Piper Jaffray, U.S. Bancorp




25
     Service Logistics in after market service


     Service logistics is an important enabler to improve after market service



                    Customer                                                Call center


                                                   The goal:
                                                 Is to get the
                                           right person with the
                                              right skills at the
                                             right place at the
                                             right time with the
                                               right parts for a
                                             first time fix at the
                                               LOWEST COST



                  Field service                                            Service control


                 Logistics based activities can account for more than 90% of the total
                     costs of delivering after market service - source: Accenture.


26
       Building blocks for service logistics


       Several building blocks are added to build service logistics related supply chain configurations:

      Operations             Transport              Inventory              Handling               Others
         Vendors                Modes                  Plant              Handling in               Duties
         Plants                Inbound                  DC                Handling out         Info. substitute

           DC                  Inter DC              In transit                VAL

        Platform              Outbound            Consignment                Repair

           VAL                                   Strat. Inv. Depl.          Recycle

       Call centers                               Parts replen.             Upgrade

     Field engineers                                                    Re manufacture

     Repair centers                                                     De manufacture

     Disposal centers                                                      Refurbish


27
     SL typical process description


             Call management                                            Field service operation

     Call reception


                      Diagnostic


                                   Job assignment

                                                Job acceptence
                                                 by fieldservice

                                                                     Match field
                                                                   engineer & part

                                                                                     Repair on site


                                                                                                      Return part


                                                                                                                    Call closed


                  Part request                                                              Return part received
                 at warehouse                                      Part delivery              in repair center
28
       Service Parts Supply Chain strategy
       Demand/Supply characteristics


                        Long
                                         Plan &            Hedge &
                        lead-time:
                        +3 days          execute            deploy
     Supply                               (lean)        (hold inventory)
     characteristics:   24-48 hrs
     Service level
     agreement                                            SERVICE
                                                           React &
                                       Continuous
                                                           PARTS
                                                           execute
                        Short         replenishment
                        lead-time:
                                                         LOGISTICS
                                                            (agile)
                        2-4 hours
                                     Predictable             Unpredictable


                                           Demand characteristics
29
     Drivers / characteristics of a service parts
     supply chain

        Large number of sku‟s (DC - optimization)
        High percentage of slow or non-movers (forecastability,
         obsolescence)
        Large variation in form / size / weight (handling)
        Relation with finished product serial number (information)
        Long term service obligation (end of life decisions)
        High standards for:
          – product availability
          – responsiveness / speed (cost of downtime)
        Service Level Agreements (SLA) common
        Consumables versus spare parts


30
         Key customer support                                           Primary logistics
             logistics area                                                challenge

     Service parts inventory management               Maximising parts availability with minimum inventory and costs


     Service parts warehousing                        Maximising order fulfilment effectiveness while minimising costs


     Service parts transportation                     Providing rapid parts delivery while minimising costs


     Services parts order processing and fulfilment   Maximising order entry and processing while minimising costs


     Service parts sourcing                           Finding and developing low-costs/high-quality sources of supply


     Service parts procurement                        Ensuring timely delivery of high-quality parts at minimum costs


     Service technician capacity planning             Maintaining the appropriate number of technicians to support demand


     Service technician scheduling                    Ensuring service technician capacity is effectively utilised


     Service technician dispatch                      Managing deployment of service technicians on an hour-to-hour basis


     End-user service requirements determination      Accurately identifying customer satisfaction needs and expectations


     End-user customer service management             Managing appropriate response to customer service issues



31
     Characteristics - trade off required


                                               Business
                                                profit



           Cost to                                                          Service
           service                             Customer                     quality
                                              satisfaction




            Cost elements:                                   Quality elements:
             Inventory costs                                 First time right (diagnosis and repair
             Downtime costs                                  Minimum downtime (response & repair)
             Repair costs                                    Simple communication (hassle free, 24/7)
             DC operating costs                              Parts availability
             Transport costs                                 Job planning (part, engineer, site)
             (Second) call costs                             Right tools and skills utilized
             Human resources costs                           Right parts
             Distribution costs

              What drives my ability to..
                                                               How do I deliver quality
              - compete on price
                                                               service?
              - meet profit margin targets?



32
     Trends



        Increasing customer demands
        Dramatic expansion in range and sophistication of service offerings
        Increasing complexity in service techniques requirements
        Global service requirements due to globalization
        Integrated service chain planning and operations (parts, repair, DC,
         transport, engineer, installed base)
        Ability to turn logistics errors into marketing and sales opportunities
        Increasing differentiation of similar products
        Remote diagnosis / pre- alerts (self diagnostic capabilities)
        Inventory pooling
        Design consistency across product offerings
        Full parts inventory visibility (network-wide)

33
     Example: remote diagnosis




                      Real time
                   transmission of
                    data analysis
                                     Service centre
                                                        Scheduling of service
                                                      and part requirements of
                                                       next maintenance stop


                Spare parts                           Aircraft engineers




                             Next maintenance stop

                                                            Big reduction of
                                                          unplanned stops and
                                                           aircraft downtime

34
     Example: Inventory pooling




Cycle stock                                  Cycle stock



              Safety stock                                 Safety stock

               Company x                                     Company y


                                    Pooling

                      Cycle stock                            • Lower safety stock and
                                                             • lower average inventory

                                                             With same service level!
                                     Safety stock
                                    Company x & y

35
 DHL GLOBAL
 CUSTOMER
 LOGISTICS
Reverse Logistics
     Service Parts Supply Chains




                  Engineers
                                   Service Event
               Parts & Materials




                     Repair           Returns




37
     Network Design
     Multi-level decoupling points

   High
                            Replenishment                               Replenish                 2-4 hrs
 service
           Service level



  level:
 2-4 hrs

                            Replenishment                                   Direct delivery (24-48 hrs)

 ‘Lower’
 service
   level                                      Direct shipment




                           Suppliers   Production             Regional          Strategic parts   Service
                                                             distribution           centre         event


                                                    Repair
                                                    Centre
                                                                                    Return Cycle
38
     Different models within service parts logistics


           Distribution Models                   Ways to Influence TAT

        Repair and Return                     Early delivery
              – Retrieve defective unit              – Before 9:00

              – Repair defective unit                – Before 12:00

              – Send back repaired unit
                                               Delivery the same day
           Inbound and outbound item are            – Bullet van
            identical
                                                     – On board courier/NFO
        Exchange / Replacement                      – Private jet renting
             – Retrieve defective part
                                               Repair at the central hub
             – Send spare part
                                                    – End of runway
           Inbound and outbound item are
            different                          Stocking Locations
                                                     – Regional storage location
        Consumable
                                                     – Strategic parts centers
             – No Return only outbound




39
     Different DHL products



        Transportation & Real Time Info
          – 3 Leg Repair and Return (No packaging available)
          – 2 Leg Repair and Return (Packaging available)
          – End of Runway (12 h repair window)


        Transportation, Warehousing & Real Time Info
          – Return Repair Inventory (4 leg RMA from central stock)
          – Direct Express Inventory (Consumable from central stock)
          – Strategic Inventory Management (Consumable from strategic stock)


        Variations of the above




40
        Effect on the Total Turn around time by
        combining models and infrastructure



         5               4           3             1                     Transit
                                                                 hours
        days            days        days          day                     Time




     3 Leg Repair                  End of               Advanced Exchange
      and Return                   Runway               from strategic stock

                    2 Leg Repair           Advanced Exchange
                     and Return             from central stock




41
     Parameters influencing the model choice


        Customer organisation
             – The service mindedness of the organisation
                  Do you see service as a means to gain a competitive advantage?
             –   Availability of local field engineers
             –   Willingness to hold stock (value of the items)
        Item type
             – Consumable vs. serviceable

             – High end vs. low end                 –   Installable by customer
             – High value vs. low value             –   Impact of the product
        Customer‟s customer                 –          Physical aspects
             – What does the enduser expect (management of the expectations)

             – High value vs low value




42
   DHL GLOBAL
   CUSTOMER
   LOGISTICS
Spare Parts Logistics
      Survey
44
45
46
     Most of the companies interviewed have ambitious goals for the future
     Most of the companies interviewed have ambitious goals for the future

                                           Preliminary results of: "Spare Parts Survey 2002" (3)


      Stock turn rate
      Stock turn rate                            Costs1)
                                                 Costs1)                        Service level
                                                                                Service level       Return lead time2) Repair lead time
                                                                                                    Return lead time2) Repair lead time
                    -                                   -                              -%-                    - Days -                   - Days -


                +58%                                -14%                               +2%                    -61%                       -49%
                          2.30
                                                                                                                                  22,5
                                              100
                                                                                  94         96
                                                                                                       15,1
                                                               86

         1.46

                                                                                                                                                 11,5


                                                                                                                         5,8




      Ø Today           Ø Target          Ø Today           Ø Target          Ø Today    Ø Target    Ø Today       Ø Target    Ø Today        Ø Target
47
1) Inventory reduction target: 17%, cost reduction target: 14% 2) Average for the EU                                           Interlog2002 15-16.05.2002 - 4
     Outsourcing will be extended to value added activities such as planning,
     Outsourcing will be extended to value added activities such as planning,
     procurement and inventory ownership
     procurement and inventory ownership

                                                                Scope of Outsourcing by Function
                                                                                     -%-


                   100         100




                                                           67                   69
                                                                          64
                                                60
                                                                                                                                56

                                                                                                             38

                                                                                                 23
                                                                                           13          13

                                                                                                                       0

               Transportation Warehousing 1)                               Repair          Planning   Procurement    Inventory
                                                                                                                     ownership

          Percentage share of companies which outsource this function today
          Percentage share of companies which believe that this function could be outsourced in the future
48
1) Central warehousing, 57%/ 61%, local warehousing and depots 62%/ 73%                                             Interlog2002 15-16.05.2002 - 5
   DHL GLOBAL
   CUSTOMER
   LOGISTICS
Solution Components
     DHL Global Logistics Solution Elements



                          Total Quality System

                  State of the art        Warehouse
                  IT systems                Network
                                          (ELC/SPC)

                             Logistics Call
                               Centers


                   Skills/             Transportation
                   People                   Services


                          Total Quality System




50
     DHL Global Logistics Solution Elements



     DHL‟s logistics solutions consist of:

        Strategically positioned storage locations
          – Express Logistics Centers
          – Strategic Parts Centers
        Logistics Customer Service Center
        DHL Worldwide Express Transportation network
        Same day dedicated transportation
        Group of dedicated people offering support on day-to-day
         operations
        Comprehensive IT solution



51
     Logistics Capabilities



     DHL‟s logistics solutions consist of:

        Strategically positioned storage locations
          – Express Logistics Centers
          – Strategic Parts Centers
        Logistics Customer Service Center
        DHL Worldwide Express Transportation network
        Same day dedicated transportation
        Group of dedicated people offering support on day-to-day
         operations
        Comprehensive IT solution



52
     ELC vs SPC


                              Products             Speed of                   Main
             Coverage
                              Stored               Transport                  Function

                Regional      (Semi) finished       Overnight          Value added
 Express                                               (International)     services
                 Center        Repair parts
 Logistics                     Spare parts                               Distribution
 Center                        High product                              Repair (EOR)

 (ELC)                          value or high                             Bonded stock

                                opportunity cost

 Strategic      Local/Area    Spare parts           (domestic)           Distribution
 Parts           WH            Very high              same day
 Center                         product value or
                                very high
 (SPC)
                                opportunity cost


53
     Global Network SPCs & ELCs
      9 Express Logistics Centers
      273 Strategic Parts Centers




     United States        Europe, Africa
             45             Middle East    Asia Pacific
                                    109            93
        Latin America
                     35


54
                                                                                                                                  Developments subject to change
                                                                                                                                                   August 2002
       SPC Network Europe - ME - Africa

 106 SPC locations as at 01/08/2002
 3 ELC locations as at 01/08/2002
                                                                                                                                  Skelleftea
 (Brussels, Johannesburg, Bahrain)

                                                                                                  BGO
                                                                                                                OSL
                                                                                                                                                    HEL
                                                                                              SVG                           STO
                                                          BFS          GLA
                                                                              Livingston
 (NOT INDICATED ON MAP):                                                                                                   GOT                                        MOW
                                                       DUB             Middlesbrough                KLL
                                                                MAN
 Existing SPC Locations:
                                                                         Leicester                                   CPH
 Tel Aviv      Israel                           ORK             BRS
                                                                                      AMS               HAM                                 GDN
 Cairo         Egypt                                Plymouth
                                                                        LHR (3)                                  BER
                                                                                                                                                  WAW
 Dubai         Dubai                                                                                     HAJ
                                                                                      BRU          DUS             LEJ                 POZ
 Dahrain       Saudi Arabia                                                    LIL
                                                                     Rennes                              FRA    DRE                                 KTW
 Jeddah        Saudi Arabia                                                  CDG (3)MZM                                                     WRO
                                                                           Tours                              NUE PRG
 Riyadh        Saudi Arabia                               NTE                         SXB           STR              BRQ
 Kuwait        Kuwait                                                                                                                  BT
                                                                                Dijon       BSL           MUC                          S
 Larnaca       Cyprus               La Coruna                      BOD                                                     VIE
                                                                                LYS     GVA       ZRH                LJU
                                                                                                                                            BUD
 Las Palmas    Canary                   OVD
                                                      Bilbao
                                                                TLS                                       Padova
                                                                              Grenoble                                           ZAG                      BUH
 Islands                       OPO                                                                  MIL
 Lausanne      Switzerland    LIS                                                                 TRN          BLQ
                                              MAD            BCN                MRS        NCE                                                BEG
                                                                                                                     AOI
 Indicative SPC locations                                                                           QPG
                                                                                                               ROM                                              IST
 Ankara         Turkey                  XVQ                    VLC                                                               BRI
                                                                                                                                                                      ESB
 Belgrade       Yugoslavia                                                                                     NAP
                                              XML                                                         PAL

                                                                                                                         CTA                              ATH




55
                                                                                  Sapporo       Hushiro


           SPC Network APAC
                                                                                                 Aomori
                                                                                                    Sendai
                                                                                     Matsumoto         Tokyo
                                                                                      Kanazawa          Atsugi
                                                                       Shenyang       Seoul          Nagoya
                                                                                                          Osaka
                                                                      Beijing    Kiheung          Okayama
                                                                                                 Hiroshima
                                                                                      Pusan       Oita
                                             Urumqi                                       Fukuoka
                                                                    Xian      Shanghai
                                                                      Wuhan
                                                                                             Taoyuan
                                                            Chengdu
                            Islamabad                                            Futian     Hsinchu Taipei
                                                                       Guangzhou             Tainan
                                                                                        Hong Kong
                                                Delhi
                                                                 Dhaka          Hanoi
                            Ahemabad
                                Bombay         Pune      Calcutta                                   Manila
                                                       HyderabadBangkok
                                                      Madras                     Ho Chi Minh
                                 Bangalore

                                                                     Penang
                                                                                 Johor Bahru
                                                                 Kuala Lumpur             Kuching
                                                       Colombo
                                                                                Singapore




                                                                                 Jakarta
                                                                                                          Darwin

          Active/live SPC
          Available SPC                                                                                                      Brisbane
          Planned SPC
                                                                                                                                   Sydney
          ELC                                                                               Perth
                                                                                                                        Canberra
                                                                                                             Adelaide               Auckland
                                                                                                               Melbourne           Wellington
                                                                                                                    Hobart     Christchurch
     56
-1
        SPC Network US


                          Seattle
                                                                                                                             Burlington
                          Portland         Boise
                                                                               Minn/St. Paul                            Rochester
                                                                                                                                            Boston

                                                                                                              Detroit                      Hartford
                                                                                             Chicago                      Philadelphia    New York
                                                                                                          Cleveland                       Teterboro
                       Sacramento           Salt Lake City
                                                                                                      Columbus
                                                                                                                 Pittsburgh         Baltimore
                                                             Denver                          Indianapolis
              San Francisco                                                                                                          Washington
                                       Las Vegas                                                            Cincinnati ELC
                              Fresno                                                   St. Louis

                                                                                                Nashville               Raleigh Durham
                   Los Angeles                         Albuquerque
                                                                                                            Atlanta
                          San Diego        Phoenix

                                                                          Dallas/Ft. Worth
                                                                                                                             Orlando
                                                               El Paso
                                                                            Austin                                                Miami
                                                                                                                  Tampa
                                                                                         Houston                                           San Juan
                                                                                     San Antonio
 Guam
                                                                                                                                Myaguez
            3 Existing/Operational Express Logistics Centers (Cincinnati, Miami and San Francisco) -
            DHL owned and operated regional distribution facilities offering a complete menu of value added
            logistics services
            6 Existing/Operational Strategic Parts Centers -Local parts centers offering a selected
            menu of value added logistics services
            36 Planned Strategic Parts Centers (2002) -Local parts centers offering a selected menu of
            value added logistics services
57
     SPC Network Canada




                                                                  Toronto

      Planned Strategic Parts Center (2002) -Local parts
      centers offering a selected menu of value added logistics
      services


58
     SPC Network
                                                                                                  Bermuda
                                                                                                  Hamilton


     Latin America                                                             Miami US


                                       Ciudad Juarez                                            Mayguez PR

                                                Monterrey
                                                                                                          San Juan PR
                                                                      Santo Domingo DR
                         Guadalajara

                                                            Nicaragua                             Barbados
                                Mexico City
                                                                     Jamaica
                                                                                                      Trinidad & Tobago
                                        Guatemala
                                                                                      Valencia
                                             El Salvador
                                                 Costa Rica
                                                                                    Venezuela
                                                         Panama

                                                                        Columbia
                                                            Ecuador
                                                            Quito                                                                        Recife

     Existing/Operational Express Logistics                                                                                             Salvador
     Centers (Miami) -DHL owned and operated                   Peru
                                                                                                                Brasilia
     regional distribution facilities offering a complete      Lima                                                                 Belo
     menu of value added logistics services                                           Bolivia
                                                                                                                                   Brazil, Rio De Janeiro
     15 Existing/Operational Strategic Parts
     Centers -Local parts centers offering a selected                    Chile
     menu of value added logistics services                              Santiago                                           Sao Paulo
     19 Planned Strategic Parts Centers (2002) -                                                                     Curitiba
     Local parts centers offering a selected menu of                                      Cordoba
                                                                                         Cordoba
     value added logistics services                                                                              Porto Alegre
                                                                                                Rosario

                                                                                                     Argentina
                                                                                                     Buenos Aires




59
     Global ELC Network Coverage




                         Brussels
                             Europe

       Cincinnati                              Hong Kong
                                                  Asia Pacific
              USA
                            Bahrain
                             Middle East
San Francisco
        USA
            Miami
         Latin America
                                                Singapore
                                                   Asia Pacific

                         Johannesburg
                             Southern Africa

                                                         Sydney
                                                           Asia Pacific




60
     Logistics Capabilities



     DHL‟s logistics solutions consist of:

        Strategically positioned storage locations
          – Express Logistics Centers
          – Strategic Parts Centers
        Logistics Customer Service Center
        DHL Worldwide Express Transportation network
        Same day dedicated transportation
        Group of dedicated people offering support on day-to-day
         operations
        Comprehensive IT solution



61
     Logistics Customer Service Centers




                          Brussels
                              Europe
          Phoenix
             US




                                          Singapore
                                             Asia Pacific




62
         Logistics Customer Service Centers


     Fact file:
        Regional Logistics Call Center

        Located in Brussels, Singapore & Phoenix (AZ)

        Provides Multi Lingual Call Center Services

        24 x7 Coverage

        Emergency order handling

        Remote Call Collection

        RMA Handling

        Single Point of Contact into multi SPC network

        The “heart” of many DHL Logistics Solutions



63
     Logistics Customer Service Centers


                    Languages Covered
         Brussels         Phoenix         Singapore
          English          English         English
          French          Spanish         Cantonese
           Dutch                           Korean
          German                          Japanese
          Spanish
          Italian
          Finnish
           Polish
          Russian


64
     Logistics Capabilities



     DHL‟s logistics solutions consist of:

        Strategically positioned storage locations
          – Express Logistics Centers
          – Strategic Parts Centers
        Logistics Customer Service Center
        DHL Worldwide Express Transportation network
        Same day dedicated transportation
        Group of dedicated people offering support on day-to-day
         operations
        Comprehensive IT solution



65
      DHL Global Network Fact File



 Region         Number of     Number    Number of   Number     Number of      Numbe
                countries/      of      Employees   of         Owned/Leased   r of
                Territories   offices               Courier    Aircraft       Hubs
                                                    Vehicles

 E&A/ME         130            1,350     32,037       7,266       122             16
 -Europe         70              880     28,238       6,360        94             11
 -Africa         49              366      2,166         519        21              3
 -Middle East    11              104      1,633         387         7              2

 The AMERICAS    58            1,165     18,963       5,034       125             17
 (incl. US,
 Canada, MEX)

 ASIA PACIFIC    40            3,424     17,732       4,026         7             3

 TOTALS         228            5,939    68,732      16,326        254            36




66
     Logistics Capabilities



     DHL‟s logistics solutions consist of:

        Strategically positioned storage locations
          – Express Logistics Centers
          – Strategic Parts Centers
        Logistics Customer Service Center
        DHL Worldwide Express Transportation network
        Same day dedicated transportation
        Group of dedicated people offering support on day-to-day
         operations
        Comprehensive IT solution



67
     Network of Sprinter Couriers
     Same Day Service


      Bullet Vans
      Dedicated transport
      24 x 7 service
      365 days per year
      Escalation Procedures
      Direct contact with LCSC




68
     Logistics Capabilities



     DHL‟s logistics solutions consist of:

        Strategically positioned storage locations
          – Express Logistics Centers
          – Strategic Parts Centers
        Logistics Customer Service Center
        DHL Worldwide Express Transportation network
        Same day dedicated transportation
        Group of dedicated people offering support on day-to-day
         operations
        Comprehensive IT solution



69
       Day to Day Support
       Account Management

      Global                             Network Global Account Manager
Coordination


                    Regional Global Account   Regional Global Account   Regional Global Account
     Regional           Manager EMEA            Manager Americas            Manager APAC
      Offices


     Countries           Key Account              Key Account               Key Account
                          Managers                 Managers                  Managers



         Responsible for all communications with Global and regional customers
         Ultimately responsible for resolving functional issues within its respective
          regions
         Resolve, deploy, and mobilize the individual functional areas to deliver
          against action

70
         Day to Day Support
         Business Acquisition Support Group

                                      Business Acquisition Support Group
                                                André Benning


                                              Supply Chain Systems                  Project Implementation
                                               Consultancy Group                             Group
                                              Reninca Verbrugghe                         Thierry Veys



         Logistics Consultants                  Logistics Systems                     Implementation
          RFQ Coordinators                        Consultants                            Managers


        Design high-level supply-chain      Roll-out of IT systems               Design process models
         solutions
                                             Design customer IT solutions         Design of detailed solution
        RFQ response management
                                             Develop functional IT                Implementation of the solution
        Coordinate development of            specifications
         proposal
                                             Coordinate implementation of IT
        Supply chain studies                 solution



71
         Day to Day Support
         Program Management

                                Global After Sales Program Manager



         Regional After Sales           Regional After Sales         Regional After Sales
          Program Manager                Program Manager              Program Manager
               EMEA                         Americas                       APAC



          Program Analysts              Program Analysts             Program Analysts



         To as per a set of pre-agreed service level agreements. Performance
          measurement will be done against Key Performances Indicators (KPI).
         To be the for all follow-up activities requested by global or regional
          customers.



72
     Logistics Capabilities



     DHL‟s logistics solutions consist of:

        Strategically positioned storage locations
          – Express Logistics Centers
          – Strategic Parts Centers
        Logistics Customer Service Center
        DHL Worldwide Express Transportation network
        Same day dedicated transportation
        Group of dedicated people offering support on day-to-day
         operations
        Comprehensive IT solution



73
RMA IT System: Main features



   Full RMA-RTV tracking and visibility
   Customer Business rules embedded in software
   License plate technology (bar codes)
   Event driven
   Exception management through various alert
    mechanisms
   Target Stock Level management
   Web based
     Advantages


        Better allocation of capital expenditure
        Vendor consolidation
        Expand capability and coverage
        Single point of contact for total solution (LCSC)
        Total visibility on RMA cycles across partners
        Increase scalability and flexibility
        Increase field engineer productivity
        Decrease in costs
             – stock reduction
             – shorter turn around times
             – simplified processes

        Improve customer satisfaction
        ...
75
     The Solutions

76
       DHL Logistics Solutions



 STRATEGIC INVENTORY     The complete control of physical and information
 MANAGEMEN (SIM)         process flows involved in managing a time-critical
                         service contract on behalf of our Customers


     DIRECT EXPRESS      The management of centralised inventory, related
     INVENTORY (DEI)     information and express distribution of products and/or
                         component parts within a promised time window


                       Management of the pick-up and delivery cycles: the
 RETURN REPAIR
                       packaging and the documentation required to move
 INVENTORY (RRI)
                       defective, repaired and replacement parts between the
                       Customer, an Express Logistics Centre, a repair centre
                       and a supply centre; and, the management of inventory
                       and shipment information throughout the process

77
     Direct Express Inventory (DEI)




78
     D.E.I- Direct Express Inventory

                                                  CUST Suppliers

                                   13                                14




                                              7
                                  5
                           LCSC                    9
                                                                           8   12
                                                                                                                Event
                                                           ELC
                                                                                                                Info flow
                      4    6       10                               11                                          Physical flow



                  3       CUST            2            1   CUST Customers/Engineers
     1   Breakdown occurs                                  8    Pick & Pack
     2   Customer request spare part                       9    Dispatch Confirmation
     3   CUST validates order (Optional :                  10   Optional (EDI only)   : Dispatch Confirmation to CUST
         request can be direct to LCSC)

     4   Transmission to DHL LCSC                          11   Delivery of part to destination
     5   DHL LCSC validates order                          12   Stock level ELC drops below reorder level
                                                                                                               Optional
     6   Order confirmation                                13   Parts ordered
79
     7   Order to pick and pack                            14   New parts delivered to ELC
     DEI
     Key Benefits

        Improved consistent service levels
        Late cut-off times
        Reduced Inventory Cost
        Maximized Profit Window
        Less Capital Investment
        Improved Cash Flow
        Shorter Distribution
        Increased efficiency, control and transparency
        Rapid Customer Response
        Reduced Communications Cost
        Allow concentration on core activities

80
     Strategic Inventory Management (SIM)



                         Customer




81
          S.I.M - Strategic Inventory Management : Detailed

                                                                CUST Supplier
                                                                                 16
                                               15

                                                                                         14
                               LCSC        5
                                                                       ELC
                                                                                                                                   Event
                                                                            13
                                                                                                                                   Info flow
                                                            9
                                                                                                                                   Physical fl.
                           4      6   10            7             8   SPC   12          SPC
                                                                      11




                           CUST            3            2        1    CUST Customers / Engineers
     1   Breakdown occurs                                                        9    Dispatch Confirmation
                                                                                 10   Optional (EDI only)   : Dispatch Confirmation to CUST
     2   Customer request spare part
                                                                                 11   Delivery of part to destined person
     3   CUST validates order      (Optional :
         request can be direct to LCSC)
     4   Transmission to DHL LCSC
                                                                                 12   Stock level SPC drops below reorder level
                                                                                 13   New part delivered from ELC (either automated in SELIS,
     5   LCSC determines SPC & ETA                                                    either via replenishment order by customer to LCSC
     6   Order confirmation & ETA                                                14   Stock level ELC drops below reorder level
                                                                                                                                   Optional
     7   Order to pick and pack                                                  15   Parts ordered at CUST manufacturing
82   8   Pick & Pack + Order Bullet Van                                          16   New parts delivered to ELC
     SIM
     Key Benefits

        Free up capital to focus on core competencies
        Unleash management time and in-house resources
        Add flexibility for changing market conditions
        Speed cycle times for faster market response
        Lower costs of inventory storage and handling
        Enhance customer service regionally and globally
        Simplified and centralised information and communication
        Reliable high speed delivery
        24/7/52
        Global coverage



83
     Return and Repair Inventory (RRI)




84
          R.R.I - Return Repair Inventory: Detailed

                                             CUST Supplier                            CUST Repair Centre

                                        16                                17                    14
                                                                                          13



                                                       7                                   15                                     Event
                               LCSC      5
                                                           9
                                                                   ELC         8     12
                                                                                                                                  Info flow

                          4                                          10                    11                                     Physical fl.
                                 6




                           CUST         3          2           1   CUST Customers/Engineers
     1   Breakdown occurs                                                      9    Dispatch Confirmation
     2   Customer informs CUST                                                 10   Delivery of part to destined person
                                                                               11   Defective part sent to ELC
     3   CUST validates request      (Optional :                                                                            Optional: defective parts
         request can be direct to LCSC)                                        12   Defective parts consolidated             can be sent directly
     4   Transmission to DHL LCSC                                                                                            to repair vendor
                                                                               13   Defective parts sent to Repair Centre
     5   Order Validation
                                                                               14   Repaired parts sent to ELC
     6   Order confirmation
                                                                               15   Stock level ELC drops below reorder level Optional
     7   Order to pick and pack
                                                                               16   Parts ordered at CUST supplier
85   8   Pick - Pack & include Return kit                                      17   New parts delivered to ELC
     RRI
     Key Benefits

        Improved customer service levels
        Increased efficiency and transparency in the logistic pipeline
        Reduced total pipeline costs and length
        Allows concentration on core activities
        Simplified and centralized information and communication
        Effective and efficient returns of parts
        Synergy effects through central repair instead of local repair
         action
        Detailed reporting of services and failures




86
          E.O.R - End OF Runway

                                             CUST Supplier
                                                                                                Repair Centre
                                        15                                16
                                                                                          12    13



                                                       7                                   14                                       Event
                               LCSC      5
                                                           9
                                                                   ELC         8
                                                                                                                                    Info flow

                          4                                          10                    11                                       Physical fl.
                                 6




                           CUST         3          2           1   CUST Customers/Engineers
     1   Breakdown occurs                                                          9    Dispatch Confirmation
     2   Customer informs CUST                                                     10   Delivery of part to destined person
                                                                                   11   Defective part sent to ELC
     3   CUST validates request      (Optional :
         request can be direct to LCSC)                                            12   Defective parts immediately sent to Repair Centre
     4   Transmission to DHL LCSC                                                       (in or next to ELC)
     5   Order Validation                                                          13   Repaired parts sent to ELC
     6   Order confirmation                                                        14   Stock level ELC drops below reorder level
                                                                                                                                    Optional
     7   Order to pick and pack
                                                                                   15   Parts ordered at CUST supplier
87
                                                                                   16   New parts delivered to ELC
     8   Pick - Pack & include Return kit
DHL GLOBAL
CUSTOMER
LOGISTICS
 Case Study
     Who is Lucent ?



        Revenue $34 billion in fiscal year 2000
        Employees 87,000 people worldwide as of June 30, 2001
        Leading global supplier of
          – communications networking equipment,
          – Internet infrastructure for service providers,
          – Optical networking,
          – Wireless networks and
          – Communications networking support and services.
        June 16th, 2000 DHL - Lucent contract signed
        DHL Logistics program include: Strategic Inventory Management,
         Direct Express Inventory & Repair Return Inventory



89
         How does the designed solution work ?

                              Advanced Exchange Business Model

                                            Manufacturing                        Repair

                         7    New Stock                                               6   Defective Repair
                              process                                                     process


              DHL CRC                                                      DHL ELC
                                      3   Order attributed
                                          to SPC or ELC                                                  5   Defective
                                                                       4      Auto replenishments from
                                                                                                             Returned
                                                                              ELC to SPC
                                                                                                             to ELC
                                                        DHL SPC
                                               2 or 4 hour            4
                                           4                                 Overnight
                                               Order delivery                Order delivery from ELC
                                               from SPC


                                                                Lucent Customers (FLM)
     2   Lucent EMEA CRC                          1    Lucent Customer
         triggers maintenance order                    suffers maintenance
         via DHL web                                   failure
90
     What has been the biggest impact since
     Lucent changed strategy ?


     Before                            After
        Service Logistics seen as a      A source of competitive
         costly necessary evil             advantage (& future revenue
                                           streams)
        Inventory scattered
         throughout the countries         Centralized & controlled
                                           inventories
        Duplication & lack of
         structure in work efforts        Professional & dedicated
                                           support structure
        Lack of inventory &
         performance visibility           Immediate real time visibility
                                           on performance




91
     What are the highlights of the solution ?



        Spares delivery anytime day or night within 2-4 hours
        Repair times monitored and managed
        Certification of deliveries immediately fed back to Lucent
        All daily movements visible on-line
        New spares placed anywhere in Europe within 2 days




92
         Delivery Performance Q1 2002

                 Number of orders                               Delivery performance

 500
                                                    100%

 400                                                     95%
                                     SameDay
 300                                                     90%
                                     order
 200                                 NextDay                                                       delayed
                                                         85%
                                     orders                                                        on time
 100
                                                         80%
     0
         Jan         Feb    Mar                          75%
                                                                Jan Jan Feb Feb Mar Mar
                                                                SD ND SD ND SD ND

                number of parts                          total stock value in millions of
                                                                       US$
     20000                                         $70
     15000                                         $60
                                    in repair      $50
     10000                                         $40                              in repair
                                    in field
                                                   $30                              in field
                                    good on hand
     5000                                                                           good on hand
                                                   $20
         0                                         $10
               Jan    Feb   Mar                    $0
93                                                        Jan     Feb    Mar
     What are the 3 driving forces behind
     the success ?


                        Centralized logistics




The power of…



                   Information       Lean & flexible
                   Technology           logistics


                 Looking at these 3 forces in detail...

94
     The Power of Centralized Logistics ?


        Cost visibility & efficiencies
        End-to-end business process set to
         Lucent‟s Business rules
                                                        Centralized logistics
        Customs clearance invoices
         automatically
        All Logistics information accessible on
         line
           – Inventory levels
           – Delivery performance
           – Customer entitlements                 Information       Lean & flexible
                                                   Technology           logistics
           – Inventory turnover
        Significantly reduced Repair cycle
         times
        Standardized metric and management
         reporting
95
     The Power of Lean and Flexible Logistics?



        Immediate access to any stocking
         location, anywhere in the world
         with a limited amount of time             Centralized logistics

        Ability to turn on/off logistics
         operations anywhere in the world
         with a limited amount of
         investments by customer
        Ease of stock repositioning within
         1 day
                                              Information       Lean & flexible
        Customer service contracts are no    Technology           logistics
         longer dictated by logistics
         limitations, now lean & flexible
         logistics accommodates and drives
         the service contracts

96
     The Power of Information Technology?



        Orders, reports & inventory can be
         queried via the web any time, any
         place                                     Centralized logistics

        Shipment delivery information
         automatically sent to your Mobile
         or PDA via SMS
        Inventory moves automatically
         reflected on Customer Data
         repository for financials
                                              Information       Lean & flexible
        An all bar code driven logistics     Technology           logistics
         operation ensures 100% error free
         process
        Automated material planning
         ensures stock level efficiencies

97
     What is the key component ?



                       Centralized logistics




                 ?
            PARTNERSHIP
                  Information       Lean & flexible
                  Technology           logistics




98
     After Sales Program
     Management enablement

        Navigation & evolution of shared open actions via Weekly
         conference calls
        Continuous improvements on flows through performance KPI‟s
         & availability of information
        Value added services illustrated through implanting DHL key
         decision maker into the Lucent organization
        Honest and open communication
        Shared objectives & goals are driving the team forwards through
         new challenges




99
       DHL GLOBAL
       CUSTOMER
       LOGISTICS
Thank you for your attention
        Questions?

								
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