Supply Chain Management at DHL - Essay Example

Supply Chain Management at DHL Name Institution Date Table of Contents Supply Chain Management at DHL 1 Table of Contents 2 Supply Chain Management at DHL 20 2 Introduction 4 Question 1 4 Mission and SWOT analysis of DHL supply chain strategies 4 Strengths 5 Strong brand image 5 eServices and technology 5 Globalism 5 Corporate symbisosis 6 Weaknesses 6 Opportunities 6 Global expansion 6 Threats 7 Relations with overseas countries 7 Question 2 7 How supply chain management strategic decisions are applied to DHL 7 Customer value 7 Forecasting 9 Inventory management 11 Supply chain integration 13 Technology standards 14 Question 3 15 How improving supply chain management can lead to reduced costs at DHL 15 Plan 16 Source 16 Make 16 Deliver 17 Return 17 Question 4 17 Outsourcing actions in DHL 17 Conclusion 18 References 19 Introduction Supply chain management is the active management of activities of supply chain to maximize customer value and attain a sustainable competitive advantage. It is among the most significant strategic aspects of every business firm. Decisions should be made on how to coordinate production of services and goods, where and how to store inventory, and how to disperse them in a cost effective and timely manner. Supply chain management demonstrates a conscious effort by supply chain organizations to develop and operate supply chains in the utmost efficient and effective ways possible. Activities of supply chain cover product development, production, sourcing logistics and information systems that coordinate these activities. DHL is a global market leader in global express, air freight, and overland transport. It is also the global number one in contract logistics and ocean freight and provides a variety of customized solutions from supply chain management to express document shipping. Question 1 Mission and SWOT analysis of DHL supply chain strategies DHL’s supply chain strategies have six interlinked components: to deliver constant service excellence, to strengthen customer focus, to extend capabilities through driving practical innovation and creating local strength, to persistently drive efficiency, develop and maintain talent to attract and to be practical in social. Strategic decisions on logistics are a key to the success of DHL’s supply chain. Order fulfillment is a significant portion of supply chain and DHL management makes strategic decisions on logistics network. The operation and design of the logistics network has an important influence on performance of supply chain. Logistics is seen as a competency that connects a company with its suppliers and consumers. Information from customers flow via the organization in form of orders, forecasts and sales activity. As materials and products are secured, a value added flow of inventory is initiated that eventually leads to ownership transfer of end products to consumers (Roussel, & Cohen, 2004). Strengths Strong brand image DHL has become the international express transportation organization to attain concurrent system wide ISO 9001 certification in global quality standards. Thompson, B., (2010) notes that the company has also developed its personal quality scheme that matches the standards of their customers. eServices and technology DHL utilizes and continues to look for new technology. The company spends approximately 10 percent of total income for information technology. The company has superb eServices that offers access to systems that make sure that customers have visibility and control of their supply chains all the times. Through technology, products are queried, ordered and tracked online (Thompson, 2010). Globalism The Company operates on a global scale, with operations in over 220 nations. This makes DHL to have a huge market in which to operate, and therefore realize remarkable revenues. The company can also attain international economies of scale. Corporate symbisosis The Company has created its personal organizational structure to serve worldwide market, named corporate symbiosis. This model entails the empowerment of DHL employees at a local level as well as the recognition of the interdependence of all parts of the company as a whole business (Thompson, 2010). Weaknesses Numerous DHL competitors in the global market are government controlled, owned or subsidized carriers, with greater assets, less profit compassion, lower costs and greater complimentary operating conditions than DHL. Hill and Westbrook (2002) note that DHL’s prices are higher than that of their competitors and this might be a weakness if the customers don’t perceive a disparity between the services of DHL and that of its competitors. Opportunities Global expansion DHL has the capability to expand globally. Organizations depend on deliverance of just in time inventory to help them contend quickly and more resourcefully. The global economic market has become entirely incorporated, and operations barriers continue to decline which has enabled corporations to sell and source internationally. This boost in international selling and sourcing has made companies to downsize their supply chain and open novel markets (Thompson, 2010). Expansion of e-Commerce Since DHL already has a key presence of online shipping; it can look for internet organizations to contract delivery of its products. In addition, because there is rapid growth of e-commerce, DHL can enjoy both brand name recognition and profits from this form of expansion. Threats Relations with overseas countries Even though DHL has expanded globally, it is subject to regulations and laws of overseas nations. Hill and Westbrook (2002) note that the foreign countries might be a key problem in DHL’s global expansion through raising costs and stunting growth. Everywhere the company goes, it’s at the risk of laws and regulations that obstruct its efficiency and operations. Political and economic conditions: The Company is subject to the overall global political and economic condition in areas of supply and fuel prices, consumer purchase of its services and relations with overseas nations. As an international organization, DHL is subject to greater risk than domestic organizations (Hill, & Westbrook, 2002). Question 2 How supply chain management strategic decisions are applied to DHL Customer value Supply chain management refers to the management of downstream and upstream relationships with customers and suppliers to deliver quality customer value at a reduced cost to the entire supply chain. According to Hines, (2004), the supply chain refers to the network of companies involved through downstream and upstream linkages, in the diverse activities and processes that generate value in the form of services and products in the hands of the eventual customer. Supply chain management involves the application of management activities to customer value outcomes as shown in the table below. Source: 2008 De Rose and Associates DHL uses supply chain optimization strategy to ensure good design is at heart of an efficient supply chain. The company has created repute for consistently creating innovative solutions that improve control and streamline operations. DHL’s in house teams to solutions design of several of the global leading brands and enhanced winning of key contacts. DHL provides a broader portfolio of services and expertise from transport design, warehouse design and simulation, logistics network strategy, to inventory analysis and operational improvement. The immense competition in modern day market is as a result of increased globalization of supply and demand sources, advances in technology, improvements in availability of information and innovative business designs. Hines (2004) notes that in greatly competitive markets, the mere pursuit is market is not Sufficient in ensuring profitability, and therefore organizations are focusing upon redefining their profit zone or competitive space. DHL has expanded its operations from local to international markets. DHL’s international supply chain management solutions focus on assisting consumers to take greater control of global inbound supply chain to exploit the value of global and international sourcing. DHL assists customers, to offer visibility of upstream supply chain, and enhance quicker decision making, to develop more flexible supply and to how to better respond to the shifts in consumer demand. Forecasting In today’s supply chain, forecasting is essential for organizations that manufacture items or deliver services. Manufacturing companies utilize material forecasting to make sure that they produce the right amount of material that gratifies consumers without generating an overcapacity whereby a lot of inventory is produced and thus stays on shelf. Service delivery companies use forecasting to project the number of customers in need of their services. Forecasts are made for an organization’s components, service parts and finished goods. The forecast is utilized by the company’s production department to create production or to procure order quantities as well as safety stock levels. Forecasts are not static and are regularly reviewed by organizational management in order to make sure that the available information on future trends, the external or internal environment is integrated into the forecast to offer a more precise calculation (Hugos, 2006). In supply chain management, a test case for demand is always the bullwhip effect. The better the demand forecasting, the lesser pronounced the bullwhip effect. This can be help in saving money. A simulation of a new approach indicates that for a three tie, which involves the customer, the retailer and the firm, a fluctuation at the retailer can easily be reduced. Forecasting uses historical data, present activity levels and planning presumptions to forecast future levels of activity. Supply chain forecasting is usually concerned with comparatively short term predictions. Larson and Halldorsson (2004) note that the overall aim of forecasting of coordination flow or information planning is to incorporate particular activities within the company to enhance the overall performance. In DHL, the entire business depends on the crucial point of timely delivery. Based upon the distance to final receiver, accessibility, procedures and documentations that require to be handled, DHL have a well established procedure of delivery. The company is able to precisely gauge the amount of time required for goods to reach their end destinations. Inventory management Inventory management strategic decisions focus upon inventory and the amount of product that must be in-house. A subtle balance exists amid too much inventory, which has the capability of leading to loss of value or fewer inventories which is not adequate enough to meet demands in the market. Inventory management is a vital issue in successful supply chain management. Decisions on operational inventory revolve around optimal stock levels at every location t make sure that customer satisfaction is met as market demand change. At DHL control policies are looked at so as to establish appropriate levels of supplies at order as well as reorder points. These supplies levels are vital to the everyday operation of DHL and are also important in keeping levels of customers’ satisfaction high (Hines, 2004). According to Hugos, (2006), inventories throughout the entire supply chain directly influences the availability of goods, how speedily they are delivered to the market place and at what price. These are vital elements of superior customer service. Organizations measure and define service in numerous manners, but service is usually connected to the capability to satisfy consumer demand within a particular time. The amount and location of inventories the ability of a supply chain to offer short consumer response time and also consistently meet a greater fraction of what is usually very vague demand. Even when competitive pressures and customer expectations don’t demand the stocking of refined products, inventories of raw materials or components are essential to offer improved service via assemble to order business approaches. Through the use of Quicknet, the company is able to manage and track inventory levels, look at back ordered requests, and also confirm that requests have been dispatched (Stadtler, 2004) notes that with a mere click, a person is able to establish the quantity of goods one has warehoused at DHL mail terminals and also the amount of goods being processed. Supply chain and logistics management is concerned with movement and storage of finished products and materials. From the initial purchase of a component or material, logistical process adds value, through moving inventory where and when needed whereby the component gains value at every step. DHL is entirely service oriented and thus does not have its personal material movement but that of customers, the receiver, the sender as well as intermediaries. This implies that it solely involved procurement and physical distribution. Procurement entails materials required for packaging like moulded trays, paper and boxes. The goods or materials collected from senders including documents, papers and physical goods like clothing and household goods are weighed, tested for condition and depending upon their various characteristics are packed. These goods are then sent off to their various destinations. There isn’t value addition to the material itself but value addition is done to the service which is offered (Sander, & Schechter, 2008). Supply chain integration DHL supply chain comprises of a potent combination of global reach, experience, knowledgeable staff and superior end to end schemes. The company believe in creating partnerships with its consumers so as to offer the most excellent in class service. DHL pride itself on being capable to offer a combination of global reach and local touch solution and its customer management model is supported with employees who have widespread experience, strong work ethic and an industry knowledge. DHL supply chain is the market leader in contract logistics, and offers transportation, warehousing and a variety of other valued added services along the whole supply chain. In a global where markets are evolving with surprising rate, globalization is presenting several new risks for organizations (Sander, & Schechter, 2008). DHL’s supply chain division is assisting organizations to address globalization challenges through establishing distribution networks on behalf of its customers. The supply chain of DHL relies upon supply chain management solutions to make sure that it is able to provide world class services for the analysis , optimization and planning. DHLsupply chain makes organizations more effective. According to Sander and Schechter (2008), on both tactical and strategic levels, logistics specialists of DHL develop and plan end- to -end solutions of supply chain together with consumers. Environmental matters play an increasing role in modern day business planning, which raises the demand for excellent optimization of carbon dioxide emissions. Economic factors and major indicators, like inventory and warehouse costs, alongside external and internal transportation costs all play vital roles. Route planning and location also figure in the services and work of DHL, along with transport sourcing, tender management, operational storage management, warehouse planning and establishment of warehouse and logistics control. Technology standards Information sharing is vital in supply chain. Whilst there isn’t a doubt on the reality that information technology can highly reduce costs, utilization of information and business model formation are vital. DHL is a leader in creation and application of advanced, practical technology and design techniques which add value to the customers’ supply chains. DHL’s information technology unit offers a core focus for the organization’s technology development. DHL has the responsibility of product strategy and expertise for enterprise and contract logistics applications, entailing data management, visibility, transportation and order management and warehouse management (Ross, 2010). DHL uses information technology in the coordination of its supply chain processes, entailing internal production, upstream procurement, customer services, downstream sales and overall sharing of information along its supply chain. Ross (2010) notes that a range of information intensive together with customer centric IT available in modern day offers enormous benefits to both service and manufacturing supply chains such as increased flexibility, reduced costs and improved quality, form integration to coordination. The utilization of IT has gained considerable attention in the context of supply chain as it is increasing the speed and efficiency at which materials, finances and information flows in network of suppliers, distributors, manufacturers and customers. As a portion of its strategy, DHL has come up with a new initiative, the Infor supply chain management that is aimed at helping customers to overcome the logistics challenges of the geographically shifting market and lead to increased coordination costs linked to controlling and planning the supply chain. According to Stadtler, (2004), through the use of a software suitable that meets the accelerating needs demanded by the international market, DHL is able to show customers how they can master the intricacy of modern day global economy and advise customers on the options of developing numerous distribution approaches and appraise them for economy. Infor SCM network design support the overall optimization procedure, from analysis of real data to optimization of several solution proposals, all through the draft for flow of goods. This software also helps in the planning of production capacities and mapping of global manufacturing. Base on the visual display of the Infor SCM, critical paths, bottle necks and every point in the whole supply chain are easily recognized at a glance. Hypothetically, there isn’t limit to the level of optimization customers can accomplish; all objects, entailing logistics centers, routes, and locations ( Ross, 2010). Question 3 How improving supply chain management can lead to reduced costs at DHL DHL can use supply chain operations reference (SCOR) model to improve supply chain strategic decisions and supply chain management costs. The SCOR model is a management device that DHL can use to improve, communicate and address supply chain management decisions within the company and with customers and suppliers of the company. According to Huan and Sheoran (2004), the SCOR addresses business processes needed to satisfy customer demands. SCOR also assists in explaining the processes along the overall supply chain and offers a foundation for the way to improve these processes and reduce costs. SCOR has five steps. Plan Supply and demand planning and management are incorporated in the initial step. Elements entail balancing requirements with resources and establishing communication along the whole chain. The plan also determines business rules to measure and improve efficiency of supply chain, which business rules entailing transportation, inventory, regulatory compliance and assets. The plan will also enable DHL to align the supply chain with its financial plan (Huan, & Sheoran, 2004). Source This is the second step of SCOR and it describes material acquisition and sourcing infrastructure. It also describes inventory management, supplier network, supplier performance, and supplier agreements. In addition, it discusses the way to deal with supplier payments and when to receive, confirm and transfer services. Make Production and manufacturing are the key emphasis of this phase. For DHL, the make process entails packaging and releasing of products and managing facilities and equipments well as transportation. Deliver Delivery entails warehousing, order management and transportation, and also getting orders from the customers and invoicing them when a product or service has been collected. This phase entails management of assets, finished inventories, transportation and exporting and importing requirements. Return DHL is required to deal with return of containers or transportation. Return entails management of return inventory, business rules, transportation, assets as well as regulatory requirements (Huan & Sheoran, 2004). SCOR will give DHL a notion of the level of advancement of its supply chain and help it to have an understanding on how the above five steps repeat over between the company, customers and suppliers. Every step is a link within the supply chain that is vital in attaining a product or service effectively along every level. Through the use of SCOR model, DHL can be able to recognize supply chain problems and reduce supply chain management costs. The model will enable DHL to fully leverage its capital investment, create supply chain road map, and align its business functions (Bolstorff & Rosenbaum, 2006). Question 4 Outsourcing actions in DHL Outsourcing of supply chain management has recently become a popular issue, due to its capability to enhance timely delivery of services and products to customers. In order to improve the financial systems processes of the company and create cost savings, DHL has entered into a transformational outsourcing agreement with Accenture. DHL has signed an outsourcing contract with the Accenture, covering the accounting and finance functions linked with DHL’s contract logistics business. Under this agreement, Accenture has consolidated numerous DHL’s administration and accounting centers into a lone Accenture managed, shared services center (Thompson, 2010). Conclusion DHL supply chain management has enabled the company to actively manage supply chain activities to maximize customer and achieve a competitive advantage to become the global market leader in global express, overland transport and air freight. DHL has utilized strategic supply chain decisions such as inventory management, technological standards, supply chain integration, forecasting and customer value to make ensure deliveries are made in the most cost effective and timely way. At the strategic level, DHL makes strategic supply chain decisions that are pertinent to the entire company and these decisions reflect the entire corporate strategy that DHL follows. DHL supply chain management costs can be reduced through supply chain operations reference (SCOR) model. Through the use of SCOR model, DHL will have a better notion of the advancement level of its supply chain and recognize supply chain problems. This model will also enable DHL to completely leverage it capital investments, align its business functions and develop a supply chain road map. References Roussel, J., & Cohen, S., (2004). Strategic supply chain management. New York: McGraw-Hill. Sander, G., & Schechter, D., (2008). Delivering the goods: The art of managing your supply chain. New Jersey: Prentice Hall. Ross, D., (2010). Introduction to supply chain management technologies. England: CRC Press. Hines, T., (2004).Supply chain strategies: Customer driven and customer focused. Oxford: Elsevier. Larson, D., & Halldorsson, A., (2004). Logistics versus supply chain management: an international survey. International Journal of Logistics: Research & Application, 7, 17- 31. Hugos, M., (2006). Essentials of supply chain management. New York: Wiley & Sons. Bolstorff, P., & Rosenbaum, R., (2006). Supply chain excellence: A handbook for dramatic improvement using the SCOR model. New York: Wiley & Sons. Huan, S., & Sheoran, S., (2004). A review and analysis of supply chain operations reference (SCOR) model. Supply chain management international journal, 9 (1), 23-29. Stadtler, H., (2004). Supply chain management and advanced planning: concepts, models, software and case studies. London: Springer. Hill, T. & Westbrook, and R., (2002). SWOT Analysis: It’s Time for a Product Recall. Long Range Planning 30 (1): 46–52. Thompson, B., (2010). Deutsche Post DHL - Strategy and SWOT Report Retrieved on November 27, 2011 from www.fastmr.com/prod/219838_deutsche_post_dhl_str . Read More