Customizing solutions for the airline industryCost savings vs. enhanCed Customer proposition. Why not have both?
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dhl supply Chainocean housethe ringbracknellberkshirerg12 1an united Kingdom
telephone: +44 1327 308 474email: [email protected]
www.dhl.com
all information is correct as at time of printing: august 2009
DHL Supply Chain 1Airline Business Solutions
there is someone We Want to satisfy even more than you: your Customer
In our business as one of the world’s largest airlines and managing 12% of the world’s cargo (spending
over $2bn p.a. with commercial airlines) we
recognize and share the pressures facing the airline
industry – escalating commodity prices, increasing
competition, stricter safety regulations and higher
value inventories.
How should airlines respond to fluctuating consumer demand, lower passenger yields, food cost inflation and the price of fuel? Who will survive and how will we
work together to weather the storm?
The successful airlines will be those which can adapt to change, and make it work in their favor. In the current business climate is the answer to trade your customer proposition for cost savings? We think there is a better way. DHL’s Airline Business Solutions aims to help
airlines take a strategic approach to business
transformation related to their ‘above the wing’ expenditure, creating value by reducing cost, while improving the customer experience.
At DHL we believe our approach represents a fundamental
shift from a catering-led approach. We consider the airlines’ onboard requirements, examining the end-to-end process and re-evaluating the total supply chain.
The airline catering model is based around logistics. “Flight catering is 80% logistics and 20% catering (some said 70:30 and others 90:10)”1. It’s with this in mind that DHL has entered the market, applying its strategic thinking, operational excellence, supply chain and business transformational expertise into the global airline services market. Our aim is to drive mutual
commercial benefit through improved efficiency, product selection and cost reduction.
DHL Supply Chain provides a range of industry-specific solutions. These incorporate consultancy services, business solutions and design, sourcing, production, storage, assembly and delivery to after-sales and returns. Our customers can rely on us to utilize the wealth of skills and capabilities within our organization to develop
innovative solutions that work for their industry and their environment, no matter how demanding.
1 Professor Peter Jones, University of Surrey, OnBoard Hospitality, February 2009
DHL Supply Chain2 3Airline Business Solutions
We have vast experience in managing extremely
complex supply chains across a broad range of business sectors, from aviation to automotive, consumer to technology, food retail to fashion and industrial to healthcare. Each of these industries has its own critical activities, whether it be delivering chilled/frozen food to supermarket stores nationwide on a 15 minute deadline, delivering time-critical sensitive healthcare products, or managing customized line feeding of car parts to a continuous production line.
We use our industry and supply chain expertise to turn complex customer requirements into flexible solutions which meet customer challenges head-on. It’s your
perspective we take and it’s your business needs
we anticipate. We make it our business to understand your goals, objectives, key customers and competitive issues to help improve their business models. We work closely with our customers, shoulder to shoulder with their management teams to establish trust and confidence to develop same-side-of-the-table behaviors to drive mutual success.
We drive sustainable competitive advantage for
our customers by getting their products to market
faster and more efficiently. Whatever their size, our customers can rely on us to draw on our local insight and global scale to deliver value across every aspect of their supply chain. Our role, in short, is to help make our customers successful.
And what is our knowledge based on? In addition to being the largest global supply chain and freight
forwarding business, we also operate 350 of our own aircraft, as well as utilizing the capacity of many other airlines. We have representation at over 220 airports globally and partner with some of the leaders in the industry to provide specialist transportation services. We have airside facilities and are highly experienced in managing airside operations, with approved drivers and vehicles as well as knowledge of aviation legislation and insurance requirements.
there is someone We Want to satisfy even more than you: your Customer
DHL Supply Chain4 5Airline Business Solutions
DHL are a large business with a turnover in excess of €41.6bn and we have real credibility in transforming businesses. As a result many customers come to us with their business problems, often broader than purely supply chain.
Through our supply chain consulting and network design studies, we help customers with the big picture; we understand what’s working and what can be optimized for improved operational efficiency and
enhanced customer service.
Our business has a long and successful track record of delivering step change transformational programs
that address large, complex and underperforming
business-critical issues. These can be driven by an internal or external trigger for change and generate significant customer value. We plot out the path, re-engineer and work with our customers to deliver the change.
DHL is able to offer airlines a ‘one-stop shop’ utilizing our expertise to design the appropriate business
solution through a comprehensive range of services and operating models. And by partnering with world
class organizations, the DHL approach creates a ‘best of breed’ solution and allows for the creation of a more targeted customer proposition. The result is a customized, leaner, more cost effective, responsive business model to meet and adapt to changing market dynamics.
Past experiences have taught us that in order to gain the best sustainable return for your business, a strategic
approach and partnership is key. Tactical initiatives can then be implemented to fulfill the strategic objectives by adopting a true end-to-end approach for the provision of ‘above the wing’ services.
Successful transformational change requires a strong
relationship between both parties: shared vision
and goals, shared risk and reward with joint incentives to motivate both parties to exceed expectations.
By adopting our airline business solution as a Fourth Party Logistics Provider (4PL) or 3PL provider we will
adopt lean thinking across the end-to-end process,
optimizing our network, whilst seeking continuous improvement and cost reduction. We take responsibility for assembling and controlling the resources, capabilities and technologies of our own organization (3PL) or sourcing from the right third party service providers (4PL), whether they be producing raw or finished materials (food or retail). We assume accountability
for the management, performance, cost and
development of the entire business solution.
Whether our customers want a full end-to-end seamless solution or just an element of the solution, DHL can be
relied on to help fulfill their business objectives.
The four key principles to our ‘above the wing’ airline solutions are:• Delivergreattastingfood
• Optimalcostprocurement
• Intelligentlogistics
• Flexiblecommercialmodel
airline business solutions
AIRLINE BUSINESS SOLUTIONS
AIRLINEBUSINESS
SOLUTIONS
FoodServices Logistics
Procurement& Sourcing
CommercialModel
DHL Supply Chain6 7Airline Business Solutions
We will find the right partners for your region with the capability to design and consistently produce
an enhanced customer experience. Whether it be recruiting specialist chefs to adapt the latest restaurant trends into a premium in-flight dining experience or utilizing the latest manufacturing techniques to produce best quality offering at the right price, DHL can find them.
Consumer knowledge - we provide airlines with real customer insight and ensure that we are responsive to
changing consumer and market trends; whether that be a greater demand for seasonality, healthier options, international recipes, or perhaps for different packaging to reduce the impact on the environment. This insight is gained from our customers and partners’ experience, incorporating the latest retail and restaurant trends supplemented with targeted market research.
Food-related procurement - our partners understand your customer proposition and using this knowledge determine whether to make or buy in prepared goods. They utilize their buying power to purchase quality materials, ingredients and services from preferred suppliers at the best price.
Premium and non-premium food production - from creation of premium food menus to buy on board retail services, our partners have the knowledge and expertise using the latest food production, innovation and food science techniques to consistently produce high
quality food and improve the customer experience.
Food safety - highly qualified teams assure the quality and the safety of the food that is produced. We ensure rigorous hygiene standards are maintained
through all stages of the supply chain from the raw materials that are bought through to the finished products which leave our facilities.
Food packaging - through our innovation, industry insights and materials knowledge we can introduce new packaging options to enhance the look of the
product, reduce space and support environmental
and sustainability objectives. We also show great consideration to ensure ease of use by the consumer and service delivery by cabin services.
Tray assembly - we look to constantly innovate our assembly processes based on our learnings across a
wide range of industries to deliver cost savings.
Menu design - through our chefs’ knowledge, consumer insight and food science expertise we can plan, design and seek to push the boundaries for
new menus.
WorKing With the right partners to deliver great tasting food
Consumerknowledge
Food-related procurement
Foodsafety
Menudesign
Trayassembly
Premiumfood
production
Foodpackaging
Non-premiumfood
production
FoodServices
AIRLINE BUSINESS SOLUTIONS
DHL Supply Chain8 9Airline Business Solutions
We determine our customers’ real procurement needs and produce long-term solutions. We do whatever it takes to deliver their objectives.
From strategic sourcing to fully outsourced
procurement, our capabilities cover every aspect of today’s purchasing and supply management functions.
In-house design - the formula for success is based on a flexible, innovative approach backed by deep procurement expertise and the insights gained from working relationships with some of the world’s biggest companies. Dedicated teams can be established in-house, leveraging a considerable skilled off-site resource using procurement technology.
Global sourcing - our performance is maximized by leveraging our experience in local, regional, and
global supply markets with our significant market
purchasing power. Our transparent commercial approach to procurement gives us the edge, meaning that ultimately our customers benefit from getting products to market more quickly and cost effectively and without the internal resource needed.
Purchasing strategies - we have developed an unrivalled combination of capabilities, particularly in complex, service-based categories. We deliver results by drawing upon a proven combination of methodologies, tools,
systems and specialist expertise to help in generating the best possible purchasing strategy (developing key supplier partnerships to e-tendering).
Optimum cost procurement - due to the size of our group and the expertise of our people we unlock
hidden savings and utilize our global buying power. Through our people and processes we enable optimum cost procurement which leads to improved asset utilization, reduced sourcing cycle time, increased supplier-led innovation, improved working capital & cash flow and process improvement.
Inbound management - the integration of purchasing within our solutions creates the basis for establishing a total end-to-end process for
logistics process management. Purchasing and procurement thus becomes the enabler for the logistics ability of a company.
Consultancy - we can help with every aspect of the procurement challenge and the objective is to deliver tangible and sustainable benefits for our customers. We provide a structured approach that accurately
identifies value improvement opportunities, then we ensure the benefits are delivered and locked in for the long term.
AIRLINE BUSINESS SOLUTIONS
optimal Cost proCurement & sourCing solutions
In-housedesign team
Inboundmanagement
Purchasingstrategies
Globalsourcing
Consultancy
Optimum costprocurement
Procurement& Sourcing
DHL Supply Chain10 11Airline Business Solutions
As the world’s largest contract logistics specialist we pride ourselves on consistently delivering excellent operations. Our customers can rely on solutions that work harder for their business through our
commitment to listen and innovate, supported by our disciplined approach to performance measurement, quality assurance, project management, environmental management and process improvement.
We engage with our clients on a consultancy basis, but unlike other consultants, we deliver from
implementation to steady state. It is for this reason that we focus all of our expertise and experience on driving sustainable competitive advantage for our
customers now and for the future.
Our performance metrics provide DHL management teams with the appropriate tools and management information to understand performance and manage the business on your behalf.
Through performance measurement we:• Listentoandunderstandthevoiceofourcustomer
• Providethecustomerwithdetailed
management information
• Conductoperationalperformancereviews
• Supportproblemsolvingandcontinuous
improvement
Planning is critical to business success, that’s why DHL has made project management a core discipline and a key differentiator. Through our DePICT® project management methodology, we ensure that the solution is implemented on time, to budget and becomes an operational reality. We define roles, expectations, scope and goals, then monitor projects so closely that we can anticipate and respond to risks and opportunities before they happen, which is key to keeping a project on track.
We are passionate about quality assurance. Quality is about finding ways to constantly raise the bar. When we say quality, we mean delivering the highest levels of accuracy, on-time performance, and exceeding food hygiene and regulatory requirements, to drive ultimate value for the customer.
To keep our customers ahead of the game, DHL adopt a proven process improvement methodology. We collaborate with our customers to identify opportunities to re-engineer or continuously improve operations based on their business objectives.
Environmental management and sustainability are
core to our business. Customers are expecting greener solutions and we are market-leading within the airline industry, actively tracking and minimizing our effect on the environment and sourcing products from sustainable sources wherever possible.
DHL as a business is committed to the environment and through its environmental program, GoGreen, is targeting a reduction in its carbon footprint: 10% by 2012 rising to a 30% reduction by 2020.
intelligent logistiCs, meeting your Current and future business needs
Carbonassessment
Inventorymanagement
Security
Freightforwarding
Printmanagement
Waste andreturns
management
Fleetmanagement
StorageDHL
Aerospace
Logistics
AIRLINE BUSINESS SOLUTIONS
intelligent logistiCs, meeting your Current and future business needs
DHL Supply Chain12 13Airline Business Solutions
Building on our customer-focused culture and passion for successful operations we can bring a
unique set of skills and capabilities to the airline
sector to help develop a competitive advantage
for our customers. These include:
Business solutions - through our industry knowledge and expertise we turn complex customer requirements into flexible solutions that appear seamless and simple, while meeting our customers’ challenges head-on.
Full outsourced solutions - as a successful Fourth Party Logistics Provider (4PL) we can apply the resources and expertise of the DHL organization to take full responsibility for the complete management of our customers’ end-to-end operations.
Facilities and inventory management - we manage the design, build, implementation and operation of dedicated and shared-user facilities – including bonded, temperature-controlled, industry-specific (e.g. airside) and conventional warehousing. Whether facilities are provided by us or sourced from a third party provider.
Our inventory management system allows us to efficiently manage the flow of materials, people and equipment to a high degree of visibility. Enabling our customers to reduce their inventory and have access to greater availability.
Freight forwarding - we are the No.1 provider of air and sea freight operating globally in over 150 countries. We source products from around the world and have the infrastructure and network to design a customer solution based on the desired service levels and optimize transport costs.
Our fleet management solutions use the latest technologies related to vehicle design, traceability and regulatory compliance. This advancement gives our customers the operational confidence to meet their desired service levels in the most efficient and environmentally friendly manner.
Security - we co-operate with regulatory authorities to design and implement regional and global security policies and procedures. We provide security training
to all levels of staff and have a wealth of experience and knowledge of airport operations around the globe.
Waste management - our Environmental Compliance Solutions group within DHL delivers an environmentally focused approach to waste management. We promote re-use, pre-treatment and segregation of waste to improve recycling rates and eliminate landfill.
Print management - we provide expert management of all the printed and digital materials through Williams Lea, renowned as world leaders in the provision of Corporate Information Solutions.
DHL Supply Chain14 15Airline Business Solutions
In any operation we believe that different commercial options should be available, depending on our customers’ needs.
Our open book management model gives our customers full transparency of the financial information regarding their operation. This enables us to work together to make more informed decisions and ensure our customers have greater control over their budgetary spend. Through this model we are able to work towards aligned goals, eliminate conflicts of interest and provide the flexibility over the term of the contract to support any changes in the customer’s strategic direction. Open book information includes, but is not limited to, revenue, profit, cost of goods and services, cash flow and expenses.
Our commercial model of closed book management and accounting is very much still prevalent in today’s business. Benefits of this include having fixed pricing
with a matrix of charges depending on volume and the services required.
DHL is committed to balancing both operational
and financial needs to provide best value. Sharing
risk and reward gives both parties the incentive needed to form long term strategies. Through the open book commercial model we can provide structured savings.
By adopting our airline business solution as a Fourth Party Logistics Provider (4PL) or 3PL provider, DHL can
add real value to your business by:
• Reducing operating costs through improved distribution, transport, procurement and staffing
• Reducing your working capital through reduced inventory and improved availability
• Reducing fixed capital expenditure through improved asset utilization across our network
Ultimately, the DHL solutions deliver enhanced customer value by improving product quality, availability and customer service performance, whilst reducing cost and capital investment which results in
improved profitability and shareholder value.
a fleXible CommerCial approaCh
Closedbook
Risk andreward
Lead logistics provider
3PLOpenbook
CommercialModel
AIRLINE BUSINESS SOLUTIONS
DHL Supply Chain18 19Airline Business Solutions
We are confident that we can meet your business challenges faster and more effectively. Our scale and expertise mean that, the chances are, we’ve already
solved your problem many times in the past. In fact, the likelihood is that we’ve made it a best-practice solution, ready to be implemented by an account team that intimately understands the market.
We’ve described our business excellence and here are just few examples of our depth and breadth in practice:
We perform global supply chain management for a leading toy retailer, managing the buying process and transportation for suppliers principally from Asia to the Americas and Europe. Our warehousing operations in each region manage peak seasonal demand of over 50,000 orders a day employing 1,100 personnel. To handle the seasonal variation, DHL has set up its own temporary employment service. This arrangement provides us with greater flexibility, whilst retaining the business knowledge by attracting more returning seasonal employees. Through this initiative our quality improvement process has led to a 30% increase in efficiency since its start-up.
Our best example of the savings can be seen with the NHS Supply Chain business. In 2006, we entered into a 10 year contract with the English National Health Service (NHS), where we are responsible for managing the procurement of over 620,000 healthcare products and targeted with over £1 billion savings to be channeled back to the NHS, to improve patient care.
It’s not just about delivery: our power packaging operation is the largest contract manufacturer of food and beverage products in North America. We produce everything from beverages to cake mixes for some of the biggest consumer brands in the world in a variety of packaging options.
Our European, inbound logistics solution for a leading luxury car manufacturer, has resulted in considerable cost reduction and more responsive logistics planning. As the Fourth Party Logistics Provider (4PL), DHL’s control tower operation has a key success factor in the European element of inbound logistics, involving 500 automotive component suppliers in 17 countries and leading to just-in-time delivery of customized parts to the production line. Acting as the 4PL, DHL played a
central role in planning and managing other supply chain service providers on behalf of its customer, including freight and express services.
Our flexibility and adaptability mean that we can manage fluctuating daily and weekly demands. We operate a network of distribution centers and transportation for a leading supermarket retailer, which entails picking and packing of store products with an accuracy rate of over 99.8%. Within individual locations the volume can rise to up to 2 million cases per week with a demand fluctuation of 40,000 cases per day. Due to the design setup, the distribution centers also act as a hub within a hub and spoke network to move bulk supplies efficiently around our facilities for distribution to the stores.
no matter hoW CompleX your business is, there is a solution for you
AUTOMOTIVE
FASHION
RETAIL
CONSUMER
TECHNOLOGY
HEALTHCARE
INDUSTRIAL
Customizing feeding line-side parts to a continuous production plant
supplier component collections, consolidation and forward distribution to production lines across emea
a scalable warehousing and distribution solution for tyres to allow for seasonal demand
Warehousing of motorcycles, packaging and delivery to national and international dealers
Integrated services - trucking, warehouses, air/ocean
import/export, customs team
Transporting from import to warehousing, including management of fleet
Warehousing - can include ambient, chilled, frozen,
bonded, automated
Movement of finished goods from distribution centers
to local areas
By specialist trucks, vans or by post to businesses
or consumers
Management and transporting of used/
damaged/unwanted goods
International/national transportation, order processing,
inventory management
EXPORT / IMPORTACTIVITIES
PRIMARYMOVEMENT
DISTRIBUTIONCENTERS
SECONDARYMOVEMENT
B2B & B2C DISTRIBUTION
AFTER-SALES & REVERSE LOGISTICS
MANUFACTURING& RAW MATERIALS
dhl provide all export/import activities for construction materials plus timed distribution to enable a project in a highly populated city to run on time
global clinical trial study management including blinding packs, labeling, and temperature monitoring
inbound and outbound transport management through a control tower service for a global pC manufacturer
receiving inbound garments from the far east to three warehouses in europe
management of point-of-sale for 52 beverage distributors across three regions, globally from 300 vendors in asia, europe and the americas
inbound transportation and storage at -150ºC and onward shipping within re-usable liquid nitrogen containers
management of inbound freight from port to a central european distribution center for a printer manufacturer
the management of over 1,000 containers of inbound products from printers across the globe into China, us and uK warehouses
using our dedicated planning center, dhl manage all primary movements for one of the world’s leading consumer manufacturers
Consolidation point for inbound deliveries prior to kitting, assembly and transportation of components to a train manufacturer in barcelona
inbound to manufacturing-including freight, customs clearance, and inventory management for an orthopaedic manufacturer
shuttle and line-side services to production lines for a global computer manufacturer in ireland
the management of up to 4,000 container movements from asia and 1,300 road / rail movements from across europe into production facilities for a kitchen manufacturer
providing shuttle transport of packaging deliveries to a leading global brewer
dhl receives, stores and manages products at a facility located inside a plasterboard manufacturing plant. products are then loaded onto trucks for further distribution
off-site hospital warehouse and on-site customer service point to reduce hospital traffic and avoid duplication of stocks
Warehousing, assembly of products and distribution of products for an information management and storage specialist
the warehousing, picking and packaging of branded items ready for distribution around france
start-up distribution center in slovakia for a supermarket chain’s expansion into this new country
Warehousing operations that provide multi-user services and processes to store, handle and distribute goods for food manufacturers
Just-in-time delivery of materials, components and maintenance parts to 2,500 trackside and depot railway engineers throughout the uK
providing storage and express distribution of replacement iv infusion pumps to cover refurbishment units within uK hospitals
return and repair services for mobile phones including swap stock distributed direct to the end user
pickup and return distribution to factory outlet for a fashion label
Collection of returned products, waste and packaging plus product recalls for a retailer of baby products in the uK
delivery of bulk petroleum to a national supermarket garage forecourt of over 270 sites
movement and kitting of expensive drugs to 26 countries with labeling, literature and quality checks
management of materials through europe, middle east and africa of backup power supplies
the distribution to a network of 175 national fashion stores
distribution of chilled and frozen goods to over 400 supermarkets nationally
storage, kitting and preparation (including local language printing of vacuum cleaners to be distributed to emerging countries)
Collection of finished windows from two factories, cross docked where orders are consolidated for daily and onward delivery to stores
over 200,000 deliveries of medical devices to diabetic patients in italy
delivery and installation of photocopiers and home cinema etc to the home or office so that it is ready for use straightaway
two-man home delivery service for larger goods such as sofas and brown goods
distribution of consumer goods from a multi-user ambient and temperature-controlled facility across spain
DHL Supply Chain20
1. Customer focus - We aim to think from our
customers’ perspective and to anticipate their
corporate needs. We make it our business to understand their growth objectives, key customers, profitability goals, competitive issues, and more, helping to improve their business models through focused relationship management.
We work closely with our customers, often shoulder to shoulder with their management teams – building confidence and trust in the delivery of their service whilst encouraging same-side-of-the-table behavior to gain mutual success.
2. Leverage scale - DHL are active in more than
220 countries and territories, around the world, employing around 310,000 people. With each of these countries, territories and markets comes different challenges, and our ability to meet these challenges has led us to hold a No.1 position in many of our markets. But to us, being No.1 is about much more than size. It is about being a leader in service,
innovation and meeting our customers’ needs.
3. Business transformation - Globally we have teams dedicated to business transformation using the most comprehensive change management tools and processes available. These include our industry-leading methodology DePICT®. No project goes live within DHL without adopting this methodology. Success can only be achieved with shared vision and shared goals. Together with effective leadership,
customer focus and employee engagement
we create the drive for successful operational
change to happen.
4. Delivering value - We can deliver value through streamlined processes, greater efficiency, innovation, thought leadership and adopting best practice from our global business in a broad range of industries. This allows our customers to have the
opportunity to realize both cost savings and an
enhanced customer proposition.
Then the process starts all over again…
What maKes us different?
21Airline Business Solutions
1
Customerfocus
3
Businesstransformation
2
Leveragescale
4
Deliveringvalue
DHL Supply Chain22 23Airline Business Solutions
DHL is a Deutsche Post DHL brand with a vision to become “The logistics company for the world”. Our promise to customers is to provide simplifying services and sustainable solutions, and to always demonstrate respect without compromising on results.
We bring together the combined strength of DHL Global Mail, DHL Express, DHL Freight, DHL Global Forwarding and DHL Supply Chain services.
We aim to be the First Choice – our way of working, our corporate culture, our ambition to be the first choice for our employees, investors and customers. The goal of First Choice is to establish a customer-oriented culture throughout the company. For us, this means offering new and existing customers even better services, to ensure that they continue to work with us and recommend us to others. That is the path that will take us forward, in all divisions all over the world. First Choice is a central tool for us to reach our objective of becoming the “provider of choice”, the “investment of choice” and the “employer of choice”.
DHL is only as good as its employees, and that’s why we work hard to design policies and concepts focused on
successful staff recruiting and human resources development. Ultimately we have committed people that don’t accept the status quo – every day, across the world, our people work hard to stay informed about local markets and growth trends, and we proactively inform our customers about new solutions and opportunities, gained from experience in other markets and operations around the globe. This creates real growth opportunities for our customers. We’re a name you can trust in places you may not.
Deutsche Post DHL is not just the largest logistics company. It is also rated as one of the most innovative
companies in the industry worldwide. The Group contains its innovation activities in the DHL Innovation Center, which opened in 2007. To bring new logistics products to the market, the DHL Innovation Center maintains strategic partnerships with leading global companies as well as research alliances with the logistics institutes of universities and societies around the world.
We continue to improve the overall customer understanding and drive our organization to become even more customer-centric and to be first choice for our global customers.
for more information
DHL will always strive to understand your airline
business needs and work with you to develop the
most intelligent solutions.
Simply email Chris Jackson or Richard Cawthra at:
Alternatively you can telephone DHL Supply Chain
on: +44 1327 308 474.
proaCtive solutions; personal Commitment; loCal strength, WorldWide
