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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
Global
Customer
Customer
DHL Airways Logistics
Logistics

5
Global Customer Logistics

Created in 2001 for addressing the needs and requirements of


DHL’s global customers

GCL
developing
GAC
implementing
National Advantage

proactively managing
Large National Regular

integrated express distribution and logistics solutions on a


regional and truly global level

6
DHL Global Customer Logistics
Vision

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

preferred
express distribution and express supply
chain solutions for the leading global

partner of
companies within DHL’s target industries”

7
choice for the
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 Acquisition
Support Global “Virtual” Functional Team Support

Pricing & Global Pricing &


Profitability Profitability
Analysis Analysis

Logistics Global Logistics


Infrastructure Infrastructure

Quality Global Quality

After Sales Global After


Program Sales 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
Def’d. services

‘Muscle’
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

■ No. of shared Services


Global/Region

■ Larger Investments
■ Longer Duration
■ Enhanced Process Shareholder Selection
Integration Partners Protocol
al

■ Geographical
scope
■ Importance Strategic
■ Number of Partners
Projects
Loca

Third Party (3PL)


l

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 ■ 150
balance sheet
items per parcel countries ■ 10 Mio clients
day network ■ 38,000
■ 13,500 branches
■ High people
speed Worldwide
15 ■ DHL in 228
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

CRM Management
Single Tender coordination amongst DPWN
Managed 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
■ Lost after market service Poor AMS Good AMS
■ Increased profitability
account performance performance ■ High switch costs

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

Aircraft
Spare parts
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 Productio Regional Strategic parts Service


n distribution centre event

Repair
Centre
Return Cycle
38
Different models within service parts
logistics

Distribution Models Ways to Influence TAT



■ Repair
RepairandandReturn
Return

■ Early
Earlydelivery
delivery
– Retrieve defective unit – Before 9:00
– Retrieve defective unit – Before 9:00
– Repair defective unit – Before 12:00
– Repair defective unit – Before 12:00
– Send back repaired unit
– Send back repaired unit ■
■ Delivery
Deliverythe
thesame
samedayday

⇒ Inbound
Inboundandandoutbound
outbounditem
item – Bullet van
– Bullet van
are identical
are identical – On board courier/NFO
– On board courier/NFO

■ Exchange
Exchange//Replacement
Replacement – Private jet renting
– Private jet renting
– Retrieve defective part
– Retrieve defective part ■
■ Repair
Repairatatthe
thecentral
centralhub
hub
– Send spare part
– Send spare part – End of runway
– End of runway
⇒⇒ Inbound
Inboundandandoutbound
outbounditem
item
are different ■
■ Stocking
StockingLocations
Locations
are different
– Regional storage location
– Regional storage location

■ Consumable
Consumable – Strategic parts centers
– No Return only outbound – 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
3 Leg
Leg Repair
Repair End
End of
of Advanced
Advanced Exchange
Exchange
and
and Return
Return Runway
Runway from
from strategic
strategic stock
stock

2
2 Leg
Leg Repair
Repair Advanced
Advanced Exchange
Exchange
and
and Return
Return from
from central
central stock
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

– High value vs. low value Installable by customer


– 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
The
The initial
initial phase of
of the
the study
study revealed
revealed interesting
interesting findings
findings

Preliminary results of"Spare Parts Survey 2002" (1)

¥¥ Spare
Spare parts
parts logistics
logistics is
is not
not yet
yet considered
considered aa core
core competency
more
competency in
in than
more than 50%
50% of
of the
the companies
companies
interviewed
interviewed

¥¥ Major
MajorKPI's
KPI'sused
used in
in SPL
SPL division's
division's are
are still
still isolated
isolated logistics
logistics metrics
her
metrics rat
ratthan
her than customer
customer
satisfaction
satisfaction measures
measures (e.g.
(e.g. systems
systems uptime)
uptime)

¥¥ More
More than
than 60%
60% of
of the
the companies
companies still
still lack
lack global
global stock
stock visibilit
yy
visibilit

¥¥ Less
Less than
than 30%
30% of
of the
the study
study participants
participants have
have incorporated
incorporated centra
ll ownership
ownership of
centra of spares
spares

¥¥ None
None of
of the
the companies
companies interviewed
interviewed are
are currently
currently pooling
pooling inventor
yy with
with third
inventor third parties
parties

45
Interlog2002 15-16.05.2002 - 2
The
The initial
initial phase of
of the
the study
study revealed
revealed interesting
interesting findings
findings

Preliminary results of" Spare Parts Survey 2002" (2)

¥¥ More
More than
than 50%
50% of
of the
the service
service organisations
organisations are
are still
still working
proprietary
working on
proprietary
on IT
IT systems
systems

¥¥ Most
Most of
of the
the companies
companies are
are currently
currently adding
adding material
material planning
ls
planninglstoo
to
to their
too their ERP
ERP landscape
landscape

¥¥ Less
Less than
than 20%
20% of
of the
the companies
companies claim
claim to
to have
have aa-loop
full
full part
-loop part tracking
tracking system
system in
in place,
place,
but
but more
more than
than 60%
60% of of the
the companies
companies are
are inin the
the process
process ofof establi
shing
shing itit
establi

¥¥ The
The opportunities
opportunities of
of Web
Web based
based enhancements
enhancements are
are clearly
clearly not
notoited
expl
oited
expl

¥¥ AA very
very low
low percentage
percentage of
of SPL
SPL costs
costs are
are managed
managed under
under global
globalracts
cont
racts
cont

¥¥ The
The variable
variable (i.e.
(i.e. transaction
transaction based)
based) share
share of
of SPL
SPL costs
costs are
ow
are
owbel
50%
50% on
bel on average
average

46
Interlog2002 15-16.05.2002 - 3
Most
Most of the
the companies
companies interviewed
interviewed have
have ambitious
ambitious goals
goals for
foruture
the
the ff
uture

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

Costs1)1)
Stock 2)
Stock turn
turn rate
rate Costs Service
Service level
level Return
Return lead
lead time2) Repair
time Repair lead
lead time
time
- - -%- - Days - - Days -

+58% -14% +2% -61% -49%


2.30
22,5
100
94 96
15,1
86

1.46

11,5

5,8

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

Scope of Outsourcing by Function


-%-

100 100

67 69
64
60
56

38

23
13 13

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
ould cbe outsourced in the
future
48
1) Central warehousing, 57%/ 61%, local warehousing and depots
2%/673% 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 Islands OVD
Bilbao
TLS Padova
Grenoble ZAG BUH
Lausanne Switzerland OPO MIL
LIS TRN BLQ
MAD BCN MRS NCE BEG
Indicative SPC locations AOI
Ankara Turkey QPG
ROM IST
Belgrade Yugoslavia XVQ VLC BRI
ESB
NAP
XML PAL

CTA ATH

55
Sapporo Hushiro

SPC Network APAC


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

Penang
Johor Bahru
Kuala Lumpur
Colombo Kuching
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
Bermuda
SPC Network 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
Lima Belo
regional distribution facilities offering a
complete menu of value added logistics Bolivia
services Brazil, Rio De Janeiro

15 Existing/Operational Strategic Parts Chile


Centers -Local parts centers offering a Santiago Sao Paulo
selected menu of value added logistics Curitiba
services Cordoba
Porto Alegre
19 Planned Strategic Parts Centers
Rosario
(2002) -Local parts centers offering a
selected menu of value added logistics Argentina
services 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

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

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
Network Global Account
Global Manager
Coordination

Regional Global Account Regional Global Account Regional Global Account


Regiona Manager EMEA Manager Americas Manager APAC
l Offices

Countri Key Account Key Account Key Account


es 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
Customer
2 request spare part 9Dispatch Confirmation
CUST
3 validates order (Optional :
request can be direct to LCSC)
10
Optional (EDI only) : Dispatch Confirmation to CUST
4Transmission to DHL LCSC Delivery
11 of part to destination
5DHL LCSC validates order Stock
12 level ELC drops below reorder level
6 Order
Optional
confirmation 13 Parts ordered
79
7Order to pick and pack New
14 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 CUST Customers / Engineers


1

1 Breakdown 9 Dispatch Confirmation


occurs
2Customer
10
Optional (EDI only) : Dispatch Confirmation to CUST
request spare part
Delivery
11 of part to destined person
3CUST validates order (Optional :
request can be direct to LCSC)
4Transmission to DHL LCSC Stock
12 level SPC drops below reorder level

5LCSC
New
13 part delivered from ELC (either automated in SELIS,
determines SPC & ETA either via replenishment order by customer to LCSC
6Order confirmation & ETA Stock
14 level ELC drops below reorder level
7Order
Optional
to pick and pack Parts ordered at CUST manufacturing
15

82 16New
8Pick & Pack + Order Bullet Van 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 13 14

7 15 Event
LCSC 5
9
ELC 8 12
Info flow

4 10 11 Physical fl.
6

CUST 3 2 CUST Customers/Engineers


1

1 Breakdown 9 Dispatch Confirmation


occurs
2Customer informs CUST Delivery
10 of part to destined person

3CUST
Defective
11 part sent to ELC
validates request (Optional : Optional: defective parts
request can be direct to LCSC) Defective
12 parts consolidated can be sent directly
4Transmission to DHL LCSC to repair vendor
Defective
13 parts sent to Repair Centre
5 Order Validation
14Repaired parts sent to ELC
6 Order confirmation
Stock
15 level ELC drops below reorder level
Optional
7Order to pick and pack
16Parts ordered at CUST supplier
85 8Pick - Pack & include Return kit 17New 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 CUST Customers/Engineers


1

1 Breakdown 9 Dispatch Confirmation


occurs
2Customer informs CUST Delivery
10 of part to destined person

3CUST
Defective
11 part sent to ELC
validates request (Optional :
request can be direct to LCSC) Defective
12 parts immediately sent to Repair Centre
4Transmission to DHL LCSC (in or next to ELC)
5 Order 13Repaired parts sent to ELC
Validation
6 Order confirmation Stock
14 level ELC drops below reorder level
Optional
15Parts ordered at CUST supplier
7Order to pick and pack
16New parts delivered to ELC
87 8Pick - 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 Overnight
4 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
■ Inventory scattered streams)
throughout the countries
■ Centralized & controlled
■ Duplication & lack of
structure in work efforts
inventories
■ Lack of inventory & ■ Professional & dedicated
performance visibility support structure
■ 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

93
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
■ Customs clearance invoices automatically
Centralized logistics
■ All Logistics information accessible on line
– Inventory levels
– Delivery performance
– Customer entitlements
– Inventory turnover
■ Significantly reduced Repair cycle times
■ Standardized metric and management Information Lean & flexible
reporting Technology logistics

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
■ Customer service contracts are no
longer dictated by logistics Information Lean & flexible
Technology 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
■ An all bar code driven logistics
operation ensures 100% error free Information Lean & flexible
process Technology logistics

■ 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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