Report on DHL: international door-to-door express mail service
HISTORY OF DHL
In 1969 Dalsey, Hillblom, and Lynn developed a way to decrease turnaround time in the shipping business by flying bills of landing to port ahead of time. DHL started out moving documents between San Francisco and Honolulu; the process soon evolved into an international door-to-door express mail service throughout the Pacific. Within a few years, DHL began expanding its service to the Philippines, Japan, Hong Kong, Singapore and Australia. The company started to serve Europe in 1974, the Middle East in 1976, Latin America in 1977, and Sub-Sahara Africa in 1978.
The company did not begin developing a network within the United States until 1983, when it established a hub at the Cincinnati/Northern Kentucky International Airport. That year the company also became the first to offer international service to Europe’s Eastern Bloc. In the years to follow, DHL would also be the first to include Vietnam and the People’s Republic of China in its delivery network and the first to reestablish service to Kuwait following the Gulf War. More recently, DHL was the only company to continue air express service in Indonesia – despite the civil unrest in that country during May 1988.
In December 1998, DHL was named the “World’s Most Global Company” by Global Finance Magazine, based on criteria including global reach, sales, assets, and profits. Featured alongside companies like Reuters, Citibank, and Shell, DHL was specifically cited for its practice of establishing “its own, rather than agent, operations overseas” and for employing “as many local staff as possible.” To bolster its international influence, DHL has expanded its interests in Asia, Australia, and South America since summer 1999.
DHL Bangladesh
DHL Express is the first international air express company to set up operations in Bangladesh in 1979. Its Country Office is located in Dhaka with other offices in Comilla, Narayanganj, Chittagong, Sylhet and Khulna. DHL also has service centers in all Export Processing Zones of Bangladesh. DHL Express Bangladesh is headed by Desmond Quiah. Today, with over 250 employees and more than 40 operational vehicles, DHL Express Bangladesh is the largest Air Express Company operating in the country.
DHL Bangladesh not only delivers documents and heavy weight parcels, but also provides value-added and innovative services to its customers. With its experience in local and regional markets, you can expect the highest level of quality, service and more in total logistics solutions. For the latest news and happenings about DHL in Bangladesh, please visit.
BUSINESS STRATEGY OF DHL
DHL strives to be the number one leader in the overnight shipping business. Competing against such entities as UPS, FedEx, and the U.S. Postal Service, only allows them to compete by means of stuck-in-the-middle. This type of strategy is clearly seen because DHL only offers one means of delivery, overnight; where all three competitors offer several options. When a customer wants to send a package through one of the competitors, they have a choice in overnight, 2 day, or 5 day delivery. The cost for shipping a letter or package also leaves them stuck in the middle because they only offer one set price, no matter where the shipment is going, whether its from Kansas to New York, or California to Moscow, the same price applies to both.
FedEx and UPS offer a discounted rate compared to DHL that reflects the travel time the shipment is going, while the U.S. Post Office offers a cheaper rate, but it normally does not get there overnight. Also, UPS offer bundling to their customers. If a UPS customer only uses UPS for domestic shipping and DHL for international; UPS decided to offer a discounted rate if that customer decides to use UPS for both international and domestic shipping. This opens the door for UPS to acquire more business at a lower cost to the customer.
We feel that DHL is currently in the mature part of the product life cycle because the service that they offer of overnight shipping has been around for almost 20 years here in the states and over 30 years from an international point of view. Of course there is always the opportunity for growth in such ways as acquiring new customers and building new and state-of-art facilities.
| DHL Express
Deutsche Post AG |
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| Type | Division |
| Founded | 1969 |
| Headquarters | Bonn, Germany |
| Key people | Frank Appel (CEO, Chairman)
Adrian Dalsey (co-founder) Larry Hillblom (co-founder) Robert Lynn (co-founder) |
| Industry | Express Logistics |
| Products | DHL Express Worldwide
DHL Express 9:00 DHL Express 12:00 |
| Owner(s) | Deutsche Post |
| Employees | 500,000 (2009) |
| Website | www.dhl.com |
STRATEGIC OPERATIONS
At DHL, it is very evident that speed, quality, and customer service are looked upon with a high sense of importance. Of all the themes are in some way tied into our business strategy. We always put the customer first, we go above and beyond to provide the best service and quality of shipping material, and we do so in a timely manner. Just as our quality policy states: “To sort domestic and international material to the DHL Worldwide Network through Safe, Efficient, and On-time Hub operations.”
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Courier in Mexico Processed in Mexico and Arrives in Washington
picks up a letter sent to Cincinnati and by noon the next day =
Sorted to the correct satisfied customer
Destination
This is an example of how a normal movement of freight is properly processed. The package or letter is inputted into the system at the origin, it is then transferred by air or truck to our central hub here at Cincinnati, and it is then processed or sorted to the appropriate outbound flight, and delivered to the final customer
PLANNING AND SCHEDULING
At DHL, operations are planned using a chase demand approach. A key resource that must be planned properly is staffing. During peak times of the year, staffing is a real concern for management. Being understaffed opens the chance for the system to run late, which then delays the delivery of shipments to the customer. Another key factor that must be scheduled every night and day is the operation of inbound and outbound aircraft. With such a large fleet of aircraft, a lot of times aircraft are scheduled for routine maintenance.
These aircraft must then be replaced with a backup aircraft so that the operation can continue to run as normal. One other element that must be planned is the acquirement of glycol, which is the substance used on aircraft during winter operations to prevent ice forming on the wings and body. Without proper planning and attaining the glycol, de-icing as it is known, would not happen causing a major problem during the winter months.
At DHL, the use of MRP is really not seen from a day-to-day perspective. Now, in the event of a major maintenance project that will greatly impact the sort, MRP jut might be used to allow for proper arrival of material needed to complete the job.
PRODUCT CHOICE
DHL offers only one type of service, overnight shipping. The main objective is to pick up a customers letter or package, take it back to the station, and place it on an aircraft or a truck destined for Cincinnati, where it will be sorted later that night. It will then be sorted to the correct destinations container, placed on that aircraft or truck and arrive at that station.
The courier at the outstation will then take the shipment and delivery it by 2:00 pm. DHL has just recently started offering a two-day delivery, but it is in the trial run stage here in the states. They are also in the process of developing a major trucking system here in the states that will allow them to offer a three-five day delivery option. This new system is known as Terra, meaning ground and is supposed to be offered to the public in the next two months.
CAPACITY
During the construction of the hub, the design capacity of the facility was determined to be 1.8 million pounds of freight per operation. The maximum amount of output possible is around 1.6 million pounds of box and letter material per night. That number is the operating capacity for the facility itself during a normal operation, but that number is also based upon the type and number of aircraft being utilized, as well as the number of trucks inbound and outbound. Meaning, the total number of aircraft and trucks can handle way more than the facility can. Another major factor is how long the operation is running.
On a normal operation, there is a sort window between the hours of 12:15 am till 4:00 am allowing for all flights to depart on an on-time bases. An on-time operation is the key to a successful operation because that allows all the out-stations to receive their material and get it delivered to the customer by the expected time. The on-time departure time is determined by the flight time of each aircraft to its respective destination. In an unexpected operation, examples would be when UPS was on strike and after September 11th, the operation went on several hours longer than normal, allowing more freight to be sorted over a longer period of time.
Depending on the type of aircraft and where they are bound for makes a significant difference. Currently DHL uses 22 – Boeing 727s, 4 – A300 Airbuses, 7 – Boeing DC-8s, and several prop aircraft in its nightly operations. DHL also utilizes 36 trucks in the nightly operation. Currently, the effective capacity is 1.3 million pounds of freight per night. To determine the utilization rate we would take the actual output for a given night and divide it by the effective capacity number.
1,175,000 nightly output = 90% utilization rating
1,300,000 effective capacity
The units of capacity for DHL are based upon the total pounds per night. Over the last few years, DHL has made several major changes to accommodate for projected weights. These changes were made to help relieve areas that were hit hard all night long, with less freight and vise-versa, areas with low amounts of freight would be receiving more. Although, no real changes have taken place to increase the capacity during peak times of the year, the design capacity still stands at 1.6 million pounds a night.
One approach of flexible capacity that is often addressed during the peak times of the year, which is mainly between November and December, is hiring/firing. DHL uses temporaries during this timeframe to help alleviate the heavy expected volume. The temps are normally added to the unloads and reloading positions because that is where the least amount of knowledge of the operation is needed to properly perform the job.
LOCATION
There are several strategic issues that should have been looked at when planning to develop this facility. To start off with, the cost of building, the closeness to major highways, labor force potential, room for expansion, closeness to other airlines, time zones, and weather, are all areas that should have been looked upon before committing to the Greater Cincinnati/Northern Kentucky Airport.
Factor rating for where to build the new hub for DHL
| Weight | Factor | Cincinnati | Wilmington |
| .4 | Labor | 100 | 70 |
| .3 | Other airlines | 80 | 40 |
| .3 | Weather | 75 | 60 |
In the above rating of the two potential sites for constructing the next hub for DHL, the Cincinnati comes out ahead, 86.5 to 58. With just a few examples to look at when weighing the option of where to build the next DHL hub, this is what I came up with. When looking at Cincinnati, the labor force clearly out weighs the potential one in Wilmington. Since the current hub is based out of Cincinnati, the labor is already trained for the nightly operation, where the workforce in Wilmington would not be. Another factor to look at is the access to other airlines for use of transporting material missed during our system. At Cincinnati, there are several other airlines that can be used to transport our material in and out of Cincinnati. In Wilmington, there are hardly any available airlines to use. Weather is a major factor to also consider. When looking that the two potential sites, Cincinnati comes out ahead of Wilmington because it usually has a light winter with a lot less snow, which would greatly impact inbound and outbound operations.
Environmental record
In a mail delivery company, the methods of transportation may have an effect on the environment. The amount of pollution emitted from vehicle transportation alone is a major responsibility for DHL. The revelation of adverse affects has prompted DHL to discuss and implement alternative options that are more conducive for the environment. Their efforts have been outreaching in road to achieving environmentally friendly goals.
DHL plans to overcome its negative environmental impacts through its operations on the ground. This is to enhance overall efficient transportation and processes that have qualified them to reach environmental requirements set up by governments. More intensive measures have been taken to physically control the amount of polluting by use of the alternative fuel examples. They have changed vehicles in certain delivery fleets in accordance to their use of newer fuel ideas. The fuel was switched to compressed natural gas which they hope to accomplish with 50% of their vans.
Through their Environmental Management System (EMS), DHL “travels naturally”. The EMS is established to develop DHL’s environment objectives and future. On 16 September 2005 DHL won a High Court injunction establishing an exclusion zone around each of its 288 buildings in the UK as well as the homes of its 18,000 UK employees. The firm has been the subject of a campaign of intimidation because of their business with Huntingdon Life Sciences.
The judge banned protesters from coming within 50 yards (46 m) of any DHL premises or the homes of their employees as well as any organized demonstration within 100 yards (91 m) unless the police had been given four hours’ notice. The injunction also protects anyone doing business with DHL from intimidation.
DHL Aviation
Main article: DHL Aviation
Deutsche Post owns four airline subsidiaries operating for DHL Express<href=”#cite_note-21>[22], which are collectively referred to as DHL Aviation:
- DHL Aero Expreso, Panama City, Panama, services destinations in Central and South America.
- DHL Air UK, Hounslow, United Kingdom, provides services for the European network from East Midlands Airport.
- European Air Transport, Brussels Airport, Belgium, runs the European network. Its base has been moved to Leipzig/Halle Airport.
SNAS/DHL, Muharraq, Bahrain, provides services from Bahrain International Airport for a wide variety of Middle East destinations, including Afghanistan, Pakistan and Iraq.
Conclusion
In the rough times of the late 1990’s and early 2000, DHL is still striving to become the number leader in overnight shipping. Many steps have been taken to improve performance in time, quality, and service offered by DHL. Better means of tracking shipments, more efficient aircraft, seen from a fueling and volume standpoint, as well as hiring and training well-informed employees who know the ends and outs of the operation, are all keys in providing quality work.
In the last few weeks, ITT Industries awarded the “Air Carrier of the Year” to DHL. DHL was selected from 10 Airfreight transportation companies, including FedEx and UPS that are part of the ITT-TDS program. The award is based on ITT Industrie’s quarterly Carrier Performance Assessment, a system ITT-TDS’ freight program uses to rate each carrier in 16 categories for Quality, Service, Cost-Price and Technology Capabilities. This award clearly shows the effort given by DHL and its management team to push DHL ahead of the competition and into the future of the overnight shipping industry.