While businesses understand the importance of being customer-oriented, very few understand the essential role of logistic management in supply chain. Customers want value for their money through safe delivery of their products. Therefore, the logistics department ensures that a firm reduces its operating expenses while enhancing customer service. The demands of consumers are met through proper planning, control, and implementation of effective movement and storage of goods and related information from a point of origin to their destination. The process begins with raw material accumulation, processes, and the production of the final product or service before availing them to clients. As the process gains recognition in businesses, businesses are adopting new models through advanced technologies to easily facilitate their processes ( Lentjes, 2015) . Firms such as DHL have over the years evolved their operations with respect to the changing market dynamics in meeting the needs of their consumers.
Overview of DHL
As one of the world’s largest logistics companies, the American company that was founded in 1969 has grown to be an international company to deliver more than 1.3 billion parcels every year. The firm has its headquarters in Germany but operates on a global scale in more than 220 countries in the world. Their integrated services include parcel deliveries, freight shipping via air, ocean, road, and rail, as well as solutions and special expertise with the aim of delivering value across the supply chain (Rahman, 2018). They began by being the first international door-to-door delivery service before shifting to air deliveries as the world became more revolutionized. The simple idea turned out to save companies shipping costs and improved the speed in which products and services were received by clients.
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In 1971, the company moved in operations far East as they continued to enjoy rapid growth across the world. More firms were opened in Africa, Asia, and Belgium before being fully absorbed in Germany (Rahman, 2018) . From planning, sourcing, and production to storage and delivery, DHL supply chain division serves clients in many industry sectors. They also provide consulting solutions to other businesses by ensuring that products and services reach consumers efficiently. With rival competitors such as UPS and Fed Ex, the firm’s market share remains strong with a huge market share of 8.3% (Rahman, 2018) . their contract logistics business reported increased revenue of about 1.2% to EUR 13.2 billion in 2011.
Logistics Operations at DHL
Staying relevant is paramount to the company’s success in the competitive market. This includes maintaining a comprehensive understanding of market trends and consumer wants. In a world of connectivity, ordering products have been competitive in an evolving e-commerce market. From the past, people found it easier to order products and have their parcels sent and delivered through third parties than doing it themselves. as time went by, people expected faster and free delivery services that had a lower cost than the traditional form of buying ( Lentjes, 2015). Businesses also sought ways of gaining a competitive advantage by reducing costs in supply chain operations. In this case, DHL exploited the opportunities to base its logistics operations.
Away from the traditional logistics process that involved multiple contacts from warehousing to the consumer, DHL operates as a single source that provides direct services to clients. There are no third parties involved such as brokers who would likely increase the final cost of a product or service ( Lentjes, 2015) . Consumers order and pay for goods and services. The firm, in turn, receives the order requests and fulfills them from the warehouse and through their different transportation networks. Domestic processes are faster as opposed to the involvement of foreign manufacturers. Goods may be removed from manufacturers to international transport in the U.S. and back to the consumer. The single source solution provider reduces complexity and saves close to 20% of indirect costs while enabling clients to track the progress of their deliveries ( Lentjes, 2015) . Not dealing with external parties reduced the time taken in fostering business growth.
Challenges in DHL’s Logistics Operations
From uncertainties in weather, insecurities, as well as socioeconomic and political instabilities among others, their logistics operations have been made difficult in emerging regions. Factors affecting other business would likely affect DHL, particularly when delivering products and services to their clients. Disruption of supply chains in 2015 due to conflicts in the Middle East, industrial actions in the U.S. ports, as well as other global disasters disrupted the chain of processes within DHL ( DHL, 2016). Delays followed and the company incurred more costs that amounted to millions of dollars. The nature of the global interconnections increases the risks of both natural and man-made disasters from interrupting the flow of operations. Therefore, risk management becomes difficult to achieve due to the uncertainties of other businesses being affected ( DHL, 2016) . Assessing supply chain risks and managing the uncertainties is critical in defending against the increasing global risks.
Majority of logistics firms have limited visibilities as they often do not know where risks lie . Firms should be able to act fast in controlling crises and exposures in order to minimize possible damages. Therefore, developing a 360 resilience program is crucial in ensuring business continuity ( DHL, 2016) . Logistics precisions depend on making the right moves at the appropriate time. Optimized operations should result in efficiencies.
Future Trends in Logistics Management
Warehousing is leaning towards automation in a rapid manner than other logistic divisions. While demanding consumers seek instant services, on one hand, business work to optimize their supply chain process in the most efficient manner. Automation makes work easier, particularly when determining fleet deployment, loading capacities, and fuel consumptions as well as others. Automation reduces close supervision by improving accuracy thereby enabling managers to focus on other areas ( Speranza, 2018). Automating warehouse operations improves accuracy, velocity, and efficiency in warehouse operations. In the same way, clients would be able to track the storage of their products and whether they have been released or not. Storage of products is also made safer and easier to control as opposed to conventional methods of storage.
The wide range of technologies adapted by DHL is to solve delivery problems. Online demand services are increasing and security software is being developed to solve security problems in the supply chain. Innovative technologies are becoming more important to also increase the speed and flow of work. Consumers are also seeking excellent shoppers’ experience as DHL continues to upgrade their services to their different clients ( Speranza, 2018) . Services have to be tailored to meet the individual needs of clients.
Most importantly, logistic companies should understand the importance of having successful collaborations ( Gunasekaran, Subramanian & Rahman, 2015). This is because of the increased interconnectedness of supply chains across the world. Mutual benefits should be realized in all players. In this case, DHL has a sustainable competitive advantage that enables them to operate their single line approach without including multiple players who may disrupt the value chain process.
References
DHL. (2016). Press release: Supply chain resilience best defense against growing global risks. Retrieved from http://www.dhl.com/en/press/releases/releases_2016/all/logistics/supply_chain_resilience_best_defense_against_growing_global_risks.html
Gunasekaran, A., Subramanian, N., & Rahman, S. (2015). Green supply chain collaboration and incentives: Current trends and future directions.
Lentjes, C. (2015). The beginning of a logistics evolution. DHL. Retrieved from https://blog.dhlecommerce-usa.com/beginning-logistics-evolution/
Rahman, M. (2018). A Study of Business Analysis of DHL. A Study of Business Analysis of DHL (November 8, 2018) .
Speranza, M. G. (2018). Trends in transportation and logistics. European Journal of Operational Research , 264 (3), 830-836.
