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LOGISTICS MANAGEMENT IN

DHL
Table of Contents

Sl. No. Topic Page No.

1 Introduction to Logistics 3

2 About DHL 4

3 Artificial Intelligence and Logistics 7

4 Omni-Channel Logistics 10

5 Internet of Things and Logistics 12

6 DHL Healthcare Logistics 15

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.

The presence of a robust logistics-related infrastructure and management system facilitates


seamless movement of goods from the point of origin to that of consumption, and aids an
economy’s movement to prosperity. With the logistics industry in the mature phase of its life
cycle, it will continue to grow in the coming years as the economy continues to expand. The
industry is expected to increase at an annualized rate of 2.6% until 2022 according to IBIS
World. Further, the progress of logistics sector holds an immense value for Indian economy as
well; as such advancement would increase exports, generate employment and give the country a
significant place in the global supply chain. The Indian infrastructure sector witnessed 91 M&A
deals worth US$ 5.4 billion in 2017. Power segment contributed the largest share with 39 deals
worth US$ 4.4 billion according to the IBEF.

However the logistics industry as a whole is particularly susceptible to changes in macro-


economic market conditions. The confidence and strength of clients’ businesses is the major
driver of the logistics sector. Because of this, shipping and logistics demand begins to wane
before market contractions, and experiences downward pressure for a short time after the market
recovers before normalization. Fuel prices remain a major cost driver for the industry and the
slightest fluctuations in commodity prices adversely affect the profitability of businesses.

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.

DHL EXPRESS WORLDWIDE (as of 2017)


Head Office Bonn, Germany
Revenue 60.4 billion euros
Network More than 220 countries and territories
served/approx. 500 airports served globally
Employees Approx. 96,000
Customers Approx. 2.7 million
Aircraft More than 250 dedicated aircraft
DHL Network: Channels and Medium
DHL Aviation
DHL Aviation, a division of DHL Express, is responsible for providing air transport capacity to
the business. It is not a single airline, but refers to several airlines owned, co-owned or chartered
by DHL Express for its business operations. In 2009, Deutsche Post World Net was rebranded as
Deutsche Post DHL (DPDHL). DHL Airways was renamed as Astar Air Cargo in the Unites
States which in turn operated air freight services as a cargo airline for DHL until 2012.With over
15,000 consolidation flights every week and daily flights from more major locations, DHL
maintains a fast, secure and flexible service with the visibility and assured supply chain
management.
The five main airlines owned by the Deutsche Post are:

1. European Air Transport Leipzig


It is responsible for major part of the European network and for long haul services to
the Middle East and Africa. Operating out of its hub at the Leipzig/Halle Airport it has a fleet
of 11 Boeing 757 Freighters and 21 Airbus A300-600 Freighters.

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.

3. DHL Aero Expreso


A subsidiary in Central and South America Hub in Tocumen, Panamá, it operates a fleet of
Boeing 727-200 and 757-200 Freighters in Central and South America, as well as serves
destinations in the Caribbean and Florida.
4. SNAS/DHL
It handles Middle East destinations from its headquarters and main regional hub at Bahrain
International Airport, operating a fleet of Boeing 767-200 and 757-200 freighters. The fleet is
deployed throughout the Middle East and Africa.

5. Blue Dart Aviation


Based out of Chennai International Airport, Chennai, India, with a fleet of 6 Boeing 757
Freighters. It provides services for the Indian network and regional charters.

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

Artificial intelligence can be easily defined in as human intelligence exhibited by machines.


Machine learning is a part of Artificial intelligence and deep learning is a part of machine
learning. Machine learning involves evaluation and categorization of the received data and
drawing of insights and inferences out of it. Deep learning is a finer learning and continually
updating the learning just as in case of human brain.
AI is a bigger set which consists of a number of technology components that are interrelated.
The AI technology has the sensing components, the processing components and the learning
components.
Sensing components: Everything that is understood by humans with the help of sense of touch
is taken in by these sensing components in the form of text, images, video and sound etc. This is
done so that all the real world information can be taken in. Best AI sensing capability is text
based processing and recently AI has been able to improve its ability to process unstructured data
as well. Our interactions today are captured by microphones and AI tries to make sense out of
them. The comprehension ability of AI driven voice assistants is surpassing that of humans
today.

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.

Predictive Logistics: The Next Operational Paradigm


AI can help this industry by shifting its operation model from reactive approach and forecasting
to proactive approach with predictive intelligence. Most air freight lanes and networks are
planned using historical data and expertise from professionals with decades of industry
experience.

DHL And AI in Logistics


DHL has developed a machine learning based tool to predict time delays in air freight transit.
This has been in order to enable proactive mitigation. This model is based on 58 different
parameters and can predict the average daily transit time for a given lane. It also identifies the
top factors that influence shipment delays, including temporal factors like departure days or
operational factors as airline on time performance. This can help air freight forwarders in
planning as to with which airline their shipments should fly. AI can identify quantitative rise in
interest in a topic as well as the context of that interest just as in case of fidget spinners in 2017.
There was a spike in their demand and merchants shifted from ocean shipment to air freight for
shorter lead time. AI can help in inventory management, in doing works like letter sorting parcel
sorting, and many AI based robotic systems can even do the work of unskilled labour and help
aped up the working of skilled labour as well.

1. DHL’s GLOBAL TRADE BAROMETER gives an indication of current and future


state of global trade by using operational logistics data, advanced statistical modelling
and AI. Import and export data of early cycle and intermediate commodities are taken to
serve as the basis input for the system. Overall, 240 million variables are evaluated from
7 countries and this represents 75% of global trade. When tested with historical data,
there was a high correlation between DHL’s global trade barometer and real
containerized trade providing an effective 3-month outlook.

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.

Impact of IoT on Logistics


The benefits of IoT in logistics extend to the whole of the logistics value chain i.e. warehousing
operations, freight transportation and last-mile delivery. The application of IoT on logistics
promises a substantial impact. Through IoT it is possible to monitor, in real time, the status of the
assets, parcels and people, throughout the value chain. The business processes can be automated,
which will reduce the manual interventions to a great extent, lower costs and improve quality and
predictability. Coordination of activities and optimization can be done to how people and
systems work together. To identity wider improvement opportunities, analytics can be applied to
the entire value chain.
Is it the right time to leverage the IoT in logistics? The answer is yes. It is seen that optimal
conditions do exist for the IoT to take off in the industry. Technological advancement is seen
through the emergence of mobile computing, 5G networks, big data analytics and also the rising
demand from customers for IoT based solutions. The end customers are now asking for detailed
shipment tracking, so as to have transparency in real time. The logistics providers are being
driven by the above factors to adopt IoT at an accelerating rate.
The logistics industry is one of the first adopters of the IoT technologies in operations. Starting
from the introduction of the handheld scanners. The delivery process was digitalized to multiple
sensors which then monitor the cargo integrity and the performance of the delivery truck. There
is yet a lot to explore in terms of the IoT potential and even the early adopters are just at the tip
of the iceberg.

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.

DHL Healthcare Logistics


DHL has a robust logistics network across the globe and it incorporates all the recent technical
innovations existing in the country. The use of predictive logistics is a big leap and can be used
in healthcare industry to forecast demands for medicines in hospitals so they can reduce the
inventory and in turn reduce costs. DHL can tie up with the government and create warehouse
and ship them to the government hospitals as and when required. Using its technical
advancement it can increase its reliability over the time quickly and thereby reducing the burden
on the hospitals itself for managing the stocks and preservation of medicines as many require
special care in storage and transport. The additional space created in hospitals can also be used
for other uses.

Warehouse Locating Exercise


The exercise uses DHL’s worldwide expertise for Mumbai city by using its intra city network to
become the supplier of medicines to 10 major government hospitals and use optimal location for
its warehouse which it can develop at a later stage. We have used the “Centre of Gravity”
method to determine the optimal location and further it can create its own sub warehouses by
analyzing the demands of medicines in hospitals. The hospitals under considerations are the top
10 government hospitals in Mumbai which cater to most of population.
Assumptions: The hospitals listed are government hospitals and the patient data are assumed
reasonably for calculation purpose due to lack of accurate data. Since total medicine count can’t
be quantified we have taken patients visiting per day as an indicator of the medicines consumed.
For ease of calculation R.N. Cooper hospital’s coordinates have been taken as (1,1) and the new
coordinates are determined accordingly.

Hospital Patients (daily) Coordinates (X) Coordinates (y)


R N cooper 3290 1 1
Hospital
Sir J.J Hospital 2500 -16 0.5
Sion Hospital 2100 -8 2.25
Tata memorial 4000
Hospital -10.75 0.78
Govt. Dental 2105
College -18.55 0.45
King Edward 4900
Memorial 11.75 0.6
Kasturba Hospital 2568 -13.65 -0.51
Gokaldas Tejpal 3526
Hospital -17.88 0
Saifee Hospital 3523 -17 -1.81
Rajawadi hospital 2015 -3.2 6.82

Seth VC Gandhi 2700 -3.2 6.94


and MA Vora

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.

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