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DHL
Table of Contents
1 Introduction to Logistics 3
2 About DHL 4
4 Omni-Channel Logistics 10
7 Conclusion 16
Logistics as an Industry
Logistics can be said to be the management of the flow of things between the point of origin and
the point of consumption to meet requirements of customers or corporations. One definition of
business logistics speaks of "having the right quantity of the right item at the right place at the
right time for the right price in the right condition to the customer". With the ever rising
consumerism and constantly changing requirements of customers, it becomes imperative for
businesses to be able to service demands of the user.
Many firms within the industry make significant investments into trailers, trucks, etc. These
investments are typically made based off of short term forecasted customer demand. As other
retailers and other firms have sought to integrate logistics functions into their firms, traditional
logistics firms who rely on a small number of customers might be forced to write down those
investments in a downturn.
Like most other industries, transportation and logistics is confronting immense change; and like
all change, this brings both risk and opportunity. The sector could develop to meet these
challenges in many ways, some evolutionary, others more revolutionary. The biggest
beneficiaries of these digitization and customer-centric trends are the firms who are likely to gain
market share through the purchase of smaller businesses, and increase efficiency through the
development or acquisition of tech start-ups. New entrants are developing new business models
to create value for their shareholders, without the asset-heavy balance sheets and capital-
intensive nature currently burdening logistics companies.
About DHL
DHL Express, a division of the German logistics company Deutsche Post DHL Group provides
international courier, parcel, and express mail services. It is the world's largest logistics
company, particularly in sea and air mail. It transports urgent documents and goods reliably and
on time from door-to-door in more than 220 countries and territories, and operates the most
comprehensive global express network. DHL Express has a fleet of more than 250 aircrafts, and
is also one of the largest air carriers worldwide.
The company went on an expansion of its services throughout the world by the late 1970s with
the primary interest in offshore and intercontinental deliveries, but the success of FedEx in the
United States prompted their own intra-US expansion starting in 1983.
In 1998, Deutsche Post began to acquire shares in DHL, reached controlling interest in 2001, and
finally acquired all outstanding shares by December 2002. The company afterwards absorbed
DHL into its Express division, while expanding the use of the DHL brand to other Deutsche Post
divisions, business units, and subsidiaries. Today, DHL Express shares its DHL brand with
business units such as DHL Global Forwarding, DHL Supply Chain and DHL e-commerce. It
gained foothold in the United States when it acquired Airborne Express and went head on with
FedEx.
Within the strategy 2015, DHL decided to focus further on other industries starting with the
sectors like Life Sciences & Healthcare, Technology, Energy, Automotive and Engineering &
Manufacturing. DHL is now working on overall sector strategies to deliver the best possible
value and to optimize value propositions for these specific industries. It is helping technology
customers streamline their supply chains, squeeze out costs, improve CO2 efficiency and go to
market faster. The company is looking for increased efficiency, trying to establish channels for
growth in new and emerging markets, addressing global compliance requirements, and readily
managing M&A integrations while balancing risks and costs.
2. DHL Air UK
Based at East Midlands Airport, it was purchased by DHL in 1989, and has since 2000 been
operating a fleet of 22 Boeing 757-200SF freighters on intra-European services and a fleet of
four Boeing 767-300ERF Freighters, primarily on Trans-Atlantic routes.
Further, Deutsche Post also has stakes in airlines like Aerologic (50%), Polar Air Cargo (49%),
Tasman Cargo Airlines (49%), some of which operate under the DHL brand.
DHL Ocean Freight
With a broad range of Ocean Freight products covering different equipment types and
consolidation services, DHL ensures that the cargo reaches the right place, at the right time in a
cost-efficient way. DHL works with a spread of ocean carriers covering major carrier alliances
with planned space protection from every major container port in the world to deliver reliability.
As one of the largest Ocean Freight service providers for Full Container Load (FCL) and Less-
than-Container Load (LCL) shipments, DHL currently handles in excess of 2.8 million TEU’s
and greater than 2 million cubic meters of LCL freight annually, across continents.
FCL
Full container loads provided by DHL ensures a safe, reliable and cost-efficient transportation
globally. By using various equipment types DHL offers tailored solutions for all kinds of
commodities.
LCL
Operating their own LCL network globally, they serve more than 45,000-point pairs with around
2,500 scheduled direct sailings per week, to and from all major ports and inland points. Managed
from end-to-end with their own network experts ensures predictability in DHL’s Customers
supply chains, keeping deadlines, and promises towards the end customer.
Artificial Intelligence and Logistics
The IoT (Internet of Things) makes machine data available for AI systems as it involves
collection of large heterogeneous datasets. AI helps in what can be learnt from the data and what
can be done differently about it.
Processing and Learning components: As younger humans learn from parents and teachers
with the help of reinforcement in a structured environment and adult humans seek their own
inputs and learning from the world, similarly, these components use supervised as well as
unsupervised and reinforcement learning to take in and process information.
AI is continually growing because of technological advances as it is dependent on technology.
There is a huge demand as well as investment to foresee growth in the future as well. The
existence of big data, algorithmic improvements and other important technology trends that
are developing on a complementary path to AI like cloud computing and connectivity are all
pushing for the further development and growth of AI. Data storage, accessibility and
transmission speed advancement are catalyzing it further. The viability of AI technology is more
significantly influenced by social and commercial factors.
In developed markets in the world today, AI has become so ubiquitous and ambient that people
don’t even realize that they are using AI enabled services and apps on daily basis. Companies
like apple, Amazon, Facebook, Google, IBM, Microsoft, and technology companies like Baidu
and Alibaba are adopting the “AI First” strategy in the products and applications that they build.
Why AI in Logistics now
AI as a maturing technology is now accessible and affordable. Since the logistics industry is
network based, it by default provides a framework for implementing and scaling AI. The
companies which don’t intend to implement it, run the risk of obsolescence in the long run as
competitors will not avoid using it. Since AI has been deeply embedded in the consumer
markets, it quite indicates that the use of AI in industrial sectors such as logistics is approaching.
Supply chains generate a lot of structured and unstructured data on daily basis. This data is a
highly underutilized asset. This can be exploited by the logistics companies with the help of AI.
Logistics companies work on both physical and digital networks which need to function
harmoniously with high volumes, low margins, time sensitive deadlines and lean asset allocation.
AI will help these companies in network orchestration to the finest efficiency possible which
isn’t possible with human thinking. IT will help in proactive rather than reactive planning. It will
lead to prediction from forecasting, from manual processes to autonomous and most importantly
from standardized services to personalized ones.
Back Office AI
Internal functions like accounting, finance, human resources, legal and IT in organisations
encompass large amounts of detailed repetitive tasks. Here, with the use of AI, time can be
saved, costs can be reduced and productivity and accuracy can be increased with the help of
cognitive automation. Cognitive automation is a combination of Robotic process automation and
AI. Where AI can extract insights and learn from even unstructured data, RPA can only execute
rule-based work streams on behalf of human workers when given a well-structured input and
cannot learn beyond the initial programming.
When humans and AI work together, 65% of cost savings can be there, 65% of HR Rule based
processes can be automated and 93% of HR employees time can be saved as it is devoted to
repetitive tasks.
2. The DHL RESILIENCE 360 is a cloud based supply chain risk management solution
that has been tailored for logistics operators. It mitigates supplier side risks relating
material shortages, poor labour practices and legal investigations. Corrective actions can
be taken ahead of disruption thereby preventing to suffer from consequence.
3. Deutsche Post DHL Group pioneered the Smart Truck routing and prepared proprietary
real time routing algorithms. DHL PARCEL offers a voice-based service to track parcels
and provide shipment information using ALEXA by AMAZON.
Omni-Channel Logistics
Omni-channel retailing is a unification of multiple methods of shopping. It combines both the
traditional brick and mortar model and the modern online media. This approach integrates
multiple distribution, promotion and communication channels to optimize sales and provide
utmost customer service. It deeply enhances the brand experience and helps buyers identify more
with it.
A lot of businesses incorporate the traditional multi-channel approach where the focus is
separately on each channel and thus the channel compete against each other and thus a customer
might have different experiences while approaching via different channels. An Omni-channel
model, leverages the benefits of these mediums and incorporates them into a single highly
efficient model. It has helped overhaul the several marketing, ordering and management
strategies. The benefit reaches to all the components involved.
Every single day, the reach of mobile phones increases by miles and is connecting every nook
and corner via internet. There is an urgent need to invest in Omni-channel logistics. As per
Ericsson mobility report 2013, the number of smartphone subscriptions would reach 5.6 billion
by 2019. There will be the trend of ‘one-click shopping’ and with regular advancement in
technology, the sales will go uphill. With constant work towards predictive analytics and virtual
assistance, the existing business models are on the verge of disruption. Business are also using
social media for better brand positioning and increasing sales with better margins. Though this
model is still in its nascent stage there will be substantial evolution in this area.
With technologies such as RFID (Radio Identification Technology), VR techniques etc., there is
a merger of offline and online experience in the store. Through RFID, customers in a Burberry
store in London gain information about a product by holding it near a mirror. Several stores such
as Lowe in US have installed robots greet and escort customers to the in-store location of the
required product. Predictive analytics and customer GPS location helps stores to provide
customized offers enticing them to drop by. This is called ‘On-The-Go’ Promotions.
To effectively implement this model, there is a need to integrate the logistics accordingly to
support the communication between the mediums. DHL has its own vision for a omni-channel
supply chain with focus on consumer demand and high responsiveness. The supply chain
encompasses right from a smooth inventory visibility to highly personalized and proactive
customer management with focus on providing maximum value to the customer. Several
companies such as Amazon and DHL have started the use of drones that could help last-mile
movement. These improvements have also enabled an efficient return logistics, thus adding more
value to the customer. Despite having infrastructural challenges, especially in the growing
economies of Asia, mismatched metrics, high initial coast and several technological barriers, the
omni-channel model is here to stay. This method uses predictive analytics to map down a clear
picture of a buyer’s journey and thus drive them to incur sales. This model has the potential to
completely transform the way businesses are managed.
Internet of Things and Logistics
The simplest definition of IoT is a networked connection of physical objects. For example, a
warehouse manager can be alerted about a forthcoming mechanical problem by a connected
forklift. The connected forklift can also be used to create a greater location intelligence of
inventory.
Figure 1 below indicates that out of the $8 trillion that will be generated by IoT in Value at Stake
over the next decade, supply chain will generate $1.9 trillion in value.
This value clearly indicates that there is an untapped potential and great opportunity to gain
profits from utilizing IoT in the logistics industry.
Use Cases
1. Freight Transportation
It is already possible to monitor and track a container in a freighter even in the middle of the
Pacific and also the shipment in a cargo plane mid-flight. IoT is now expected to provide the
upcoming generation with a faster, more secure and a more accurate track and trace.
a) Theft - Theft costs the shipment and logistics companies billions of amount of dollars
each year. IoT will be able to solve this loss of goods and inventory delays by providing
clear visibility of the goods, meter by meter and second by second. Location and
condition monitoring, will provide a new level of security and visibility. To detect
possible theft, the telematics sensors in trucks and multi sensor tags on items, will
transmit the data on if the package has been opened.
b) Fleet and asset management – How often a truck, container or ULD is in use or idle can
be monitored using a sensor. The data will get transmitted for the analysis and an optimal
utilisation solution can be identified. The capacity of each load can be measured using the
sensors that can provide with additional information about the spare capacities in vehicles
on certain routes. A central dashboard can be created that would focus on the spare
capacity along routes. It could then provide recommendations for optimizing the routes
that will create fleet efficiencies, reduce the deadhead miles (account for 10% of truck
miles) and improve the fuel economy.
c) Predictive asset lifecycle management – MoDe (Maintenance on Demand) was a
research project between Volvos, DHL. They created a commercially viable truck that
decides when and how it requires maintenance autonomously. This system increased the
vehicle uptime by 305 and decreased potential danger to truck drivers. That is what
predictive asset lifecycle management is about. It leverages the analytics to predict the
failures and schedules the maintenance checks automatically.
d) Health and Safety – IoT can also play a role in preventing the collisions and alerting the
truck drivers about when they should take a break. The long distance drivers are on the
road often in hazardous conditions. Driver fatigue can be monitored using cameras that
track the pupil size and blink frequency.
2. Last-mile Delivery
During the final part of the delivery journey, logistics providers face new challenges. Last-mile
delivery is highly dependent on labour, the consumer demands become more sophisticated and
the delivery points multiply. IoT can help find creative and cost effective solutions for this
crucial part of the supply chain by connecting the logistics provider with the end consumer, thus
providing operational efficiency to the provider and value to the recipient.
a) Collection from mail boxes – To detect whether the box is empty, sensors can be placed
inside the boxes. The notification about the same is sent to the delivery person in real
time and then he can skip that box for collection, thus optimizing collection routes. A
delivery triggers an alert via GSM to the recipient’s phone and they can be reminded to
check their mail boxes and keep track of the same if they are on a holiday.
b) Flexible delivery address – Consumers have an option of giving one preferred delivery
address or selecting an alternate means of delivery. The key issue in providing a more
flexible delivery is matching the time slots and the real time delivery to the given
addresses in a cost effective manner. Tagged parcels, that are IoT based solutions,
provide more visibility to the recipient. They are made aware about when their parcel is
expected to arrive and according to their schedule they can change the address if
required, add a neighbour’s address who is at home to collect the parcel on their behalf.
The smart phone products with proximity sensors, for example smart lights can sense
whether the recipient is at home and notify the same to the delivery person, ahead of
time, to ensure if the delivery is possible.
c) Monetise and optimise the return trip – IoT connects the delivery people with
surrounding vehicles and individuals. Individuals or businesses who do not have the time
or means personally go to a post office or pack items for pick up, but want to send things
can be connected with the logistics providers on their delivery routes. The items could
then be collected with dynamic pricing models and thus would add more value to the
return trip and to the consumer.
d) Next generation visibility – RFID in the future will become ubiquitous and a printed
NFC smart label that includes sensors to monitor temperate and humidity will be used to
monitor a single product. Consumers will be able to use their smartphones to check
whether the correct temperature was maintained and whether the seal was broken during
the transportation of any perishables they ordered online. Items such as packaged poultry
could be scanned to check if ideal temperature has been maintained from the packaging
to the time it reaches the consumers home refrigerator.
End to end supply chain risk management – The supply chain management models are
breaking down due to the rising volatility and uncertainty in global supply chains. Often without
warnings, natural disasters, political unrest, market and economic volatility, all threaten
catastrophic disruption. DHL Resilience360 is one tool for such risk management. It provides a
multi-tiered visualization of the end to end supply chain. It automatically triggers appropriate
mitigation strategies when it identifies any disruptions on a global scale that would affect the key
trade lanes. It can be used in future to integrate all transmitted data from assets and alert when a
truck carrying a cargo is about to break down or a flood in the warehouse. Movement from air
freight to road freight could be done to compensate for an airline strike.
Using Centre of gravity method the location of warehouse came to X= 1.23km and Y= -7.55km
from cooper Hospital. Using google maps we traced the location and it came near Mahim
railway station which is a suitable location as most of the busy hospitals will be closer.
Conclusion
The logistic network of DHL is very robust worldwide and it uses the most advanced technical
integrations along with a big fleet in land air and sea. The company has diversified from
traditional logistic provider to an end to end solution provider for many sectors. Its healthcare
expertise in the western markets can be leveraged in Indian mega cities where the infrastructure
network is relatively better. The cities offer good air and land connectivity which is an essential
requirement for healthcare services. The model we studied gave an insight for optimal location
for a warehouse in Mumbai for effective transmission of medicines. DHL can further enhance its
warehouses into smaller ones, to create even quicker delivery schedules.