Supply Chain Management

This document discusses the concept of supply chain management and its importance in logistics operations. It explores DHL's supply chain structure, sourcing materials and services, distribution system, and demand management and inventory system. The document provides insights into the various departments and processes involved in DHL's supply chain management.

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Supply Chain Management
Name
Institution

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Introduction
Deutsche Post DHL Group is a global logistics and mail organization. The company
focuses on being the first choice for investors, customers, as well as employees in its core
business globally. DHL makes a global contribution by connecting people along with making it
possible to trade globally while remaining committed to corporate citizenship, responsible
business practices, as well as purposeful environmental activities. Under the Group’s Deutsche
Post and DHL brands, it provides a global service portfolio that comprises of express delivery,
supply chain management, letter and parcel dispatch, e-commerce solutions, and freight
transport. The Group’s customers include Abbot, Evonik, Schneider Electric, Cisco, Andritz,
Dupont, Schmitz Cargobull, ZF, and Deutsche Post DHL Group. DHL generally works with the
retail, automotive, life sciences and healthcare, consumer and technology sectors. The company
has an approximate of 550,000 employees globally. DHL’s management styles are democratic
and employee participation is encouraged in every aspect of the working of the company. The
workers are allowed to give their opinions as well as present their ideas to help better the
organization and the employees. Democratic management is effective for the Group because it
facilitates the understanding of social along with the cultural differences that exist in the
workplace. DHL’s organization structure is such that the DHL region is headed by an Executive
Chairman. Below the executive chairman is the managing director, operations director, and
senior operations manager. The sustained growth in global trade flows and a boom in e-
commerce led to DHL’s revenue to rise by 1.8% (€61.6bn). The organizations have more than
1,400 warehouses and deliver their services in more than 220 countries globally. DHL’s logistics
and supply chain activities will be addressed in this report.

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Supply Chain Structure
DHL’s supply chain’s structure is made up of six departments. The main role of
department A is receiving. DHL receives online orders and calls for orders from the customers.
To strengthen its internal network of transferring data and e-movement internationally, the
Group has installed the Network Management System (NMS) (Al Zaabi, Al Dhaheri & Diabat,
2013). The system aims at reducing the downtime as well as delays in transferring shipment
details to the company’s various offices globally, in instances of network failure.
Department B is the reweight department. The primary purpose of this department is to
reweight documents and parcel by use of a reweight machine. The importance of this department
is often associated with instances when the customer attempts to cheat the employee on weight
with the intention of saving cost (Azadi, et al., 2015). As such, the employee should determine
the correct weight and charge the right price.
Department C is the packing department. Using the RFID technology, the department
packages documents. At times, a customer can send a parcel without extra packaging. As such,
the employee should take care of the parcel to prevent damage or theft.
Department D is the classification department. The staff classifies parcels and documents
that need to be sent to a certain service center. The department ensures the delivery of items of
the same destination is grouped together to enhance efficiency (Brandenburg, et al., 2014). Data
Warehouse is applied to feeding all management and reporting tools.
Department E is the shipping department that contains the logistic department that is used
to ship the products. The Transport Management System is used entailing planning the transport

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modes along with schedules, manage the execution as well as tracking shipments across the
supply chain.
Department E is the inventory or store department. The department stores parcel and
documents that are failed to deliver. The Warehouse Management System is used to record
actions and events in the receipt, handle and store products as well as orders in a warehouse
environment.
To boost its supply chain efficiency, DHL adopts innovative solution such as pooling of
reusable containers thus helping cut on costs and improves performance. To achieve this, DHL
enhances collaboration between the supply chain and the packaging experts to come up with
optimal packaging formats for specific products.
Sourcing Materials and Services
A supply chain that is effective usually comprises of an efficient sourcing and
procurement process. The sourcing and procurement process serially entails collaborating and
integrating with all type of users along with partners to the company’s supply chain. Making use
of an analogy of DHL Group, the leading company in the logistics industry, it is essential to
make sure that there exists a stable relationship between the distributors and the suppliers (Cai, et
al., 2013). The need for this is to ensure quick customer satisfaction. DHL has established a
management service center with its collaborators. The goal of this management service center is
to assist in tracking the flow of the client’s products. In supply chain management, the most
essential part is ensuring there exists a good relationship between an organization and the
distributors. To make sure that it is effective in obtaining goods and services, DHL Group makes
sure that the suppliers are treated as business partners and considering their capacity, the

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organization makes sure that their payment is remitted in time (Chen, Cheng & Huang, 2013).
Considering the suppliers as an organization’s business partners and remitting the payments in
time has got a long term loyal inclination in the entire process of the logistics business.
Nonetheless, DHL gives its customers strong consideration and this has got an impact of
ensuring that there is a green supply chain management structure which is cost effective.
Evaluating a company’s relationship with its partners is effective in avoiding cases of the
partners preferring to work with an organization’s competitors. Despite that a company’s
revenue remains to be the prime goal, it is also important to observe a good relationship between
the company and the raw materials suppliers, distributors of the organization’s finished goods,
including the main players in its supply chain (Diabat, Kannan & Mathiyazhagan, 2014). As
such, DHL has developed a customer management service center that aims at monitoring and
establishing all the negative concerns that are raised by the company’s collaborating partners
within its supply chain. Aimed at boosting its supplier relationship, the organization works
towards making sure that the client demand information is available, and in this instance, the
suppliers will have an added advantage in terms of cutting on costs. If an organization is to be
effective in sourcing for materials and services, it has to ensure that there is loyalty from its
partners and that they are acceptable to its services (Dubey, et al., 2017). Such loyalty often
enhances the competitive hedge in sourcing for resources, which DHL has effectively achieved.
Generally, as all resources move across the company’s supply chain, DHL makes sure that all the
partners are fairly and equally treated, signifying a strong relationship between DHL and its
suppliers.
Sourcing materials and services are complicated since it involves picking the right
supplier and reducing the risks while taking cost out a material. However, the development of

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information system provides the departments involved with material sourcing to improve on the
process of decision making and reduce the cycle time. Such information system tools empower
the leaders to digitize business processes, BOM for new the introduction of new products,
manage suppliers, deliver more value to an organization, and collaborate on product design
(Fahimnia, Sarkis & Davarzani, 2015). DHL can improve its process for sourcing materials and
services by managing suppliers as well as leveraging supplier information, improving new
product introduction and evaluation. Other measures include enhancing access to supplier
innovation and optimizing the sourcing processes, analysis, and quotation collection.
Distribution System
The most visible element of the logistics operations is transportation. There are two main
functions that transportation provides: product storage as well as product movement. Whether
products are assemblies, materials, finished goods, components, or work-in-progress,
transportation is important in moving them to the next stage of manufacturing (Formentini &
Taticchi, 2016). Due to the fact that transportation makes use of temporal, environmental, as well
as financial resources, it is only logical to move the items only when it improves the product
value. DHL owns its fleet of motor vans and airplanes which it uses to move products. Based on
the final destination that products have to reach, including the kind of packaging paid by the
customer, the company uses individual modes of transport or even a combination of roadway,
waterway, rail freight, or airway (Genovese, et al., 2017). In instances of larger consignments,
the company takes into consideration the economies of scale along with the economies of
distance by providing an appropriate logistical solution that assists reduce the overall cost for the
customers.

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The company’s warehouse service comprises of inbound logistics, distribution, along
with aftermarket services in a manner that enhances the management of inventories, reducing
operating costs, including enhancing the cycle times. The company’s warehouse facilities
provides its clients warehousing that is integrated into the entire supply chain, including meeting
demanding service levels (Govindan, et al., 2014). It incorporates the design implementation as
well as operations both to the dedicated and multi-user sites (Gold, Hahn & Seuring, 2013).
Some of the benefits associated with DHL’s warehousing include customer service levels, stock
accuracy, lead times, redundant stock costs, and productivity responsiveness to an organization’s
strategic needs. DHL provides a network of multi-user warehouses thus facilitating the
manufacturer to hold stock at the local level and at the same time avoiding expenses and
dedicated storage solutions (Harms, Hansen & Schaltegger, 2013). The facilities are able to
receive products both from the global and local manufacturing sites hence offering a downstream
distribution. The company uses the Warehouse Management System to manage all important
processes in the warehouses. DHL also has got shared-user warehousing which are structured to
meet the needs of companies of any size.
At the moment, DHL provides shared-user experiences to the topmost retailers and
manufacturers who deal with consumer products, chemicals, medical supplies, industrial
equipment, as well as technology. Through sharing of the company’s resources that comprise of
labor, transportation, space, and equipment, the organization’s client benefit from the synergies
that aim at reducing the supply chain costs (Ho, et al., 2015). The environment created by DHL
through sharing its resources results in significant value to small organizations that require
distribution operations without having to engage in long term capital commitments, lease, or a
large organization launching products, handling acquisition, or seasonal overflow. In addition,

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DHL offers campus solutions which provide the regional clients with a flexible solution that is
modeled in such a manner that it aims to capitalize on the minimization of labor costs, similar
distribution channels, as well as increase the utilization of specialized equipment. Such campuses
are located strategically at the main distribution points in Europe, North and South America,
including some selected Asian locations (Martínez & Moyano, 2014). Other distribution
strategies that are applied by DHL include vendor hubs. The company uses vendor hubs to
warehouse and deliver service parts depending on the demand pull. The hubs are found
proximately to the facilities engaged in manufacturing (Mathiyazhagan, et al., 2013). The reverse
centers are facilities that are specially designated for the receipt and to handle returned parts
requiring repair, disposal or recycling.
DHL can improve its distribution channels by increasing the distribution channel
efficiency. To achieve this, DHL should maximize the channel intermediaries’ benefits (Mena,
Humphries & Choi, 2013). Additionally, the organization can increase supply chain management
because through proper management, DHL can reduce costs associated with inventory, enhance
delivery, including enhancing product availability. Consolidating the organization’s different
distribution channels into a single and strong channel is the other way DHL can increase the
efficiency of its distribution system.
Demand Management and Inventory System
DHL recognizes the need to keep with the fast-paced technology marketplace. As such,
the company has designed its systems to ensure that the customers’ inventory is in motion. The
company postpones the assembly, configures, and packages the finished products until the last
possible moment to assist in minimizing inventory and delivering product customized to the

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clients’ specifications (Pagell & Shevchenko, 2014). Using interchangeable components, DHL is
able to reduce obsolescence, making it possible to assemble the finished goods as demand
fluctuates rather than watching the inventory become stale, or waiting for the imported
components to arrive (Muduli, et al., 2013). The company also cross-docks its finished goods to
cut on delivery speed and reduce its storage costs. To improve this system, DHL needs to
implement a technology system that provides connectivity and visibility to every party that is
involved in the supply chain. It is also important to have the right parts, at the right place, and at
the right time.
Aimed at making up ground against its competitors such as FedEx and UPS during the
peak season, DHL is expanding its operations, including hiring additional temporary employees
across its four business units in North America, thus adding the number of flights as well as
piloting robotic and augmented reality technologies (Seuring, 2013). DHL made this move due
to its forecasts in volume growth of approximately 15% to 40%. To meet these anticipated
demands, the DHL’s Express unit has expended weekend deliveries including adding to its
courier network (Taticchi, et al., 2015). According to Lee Spratt, DHL e-commerce CEO, to help
the company’s retailers in the United States meet the online shoppers’ demands for improved
convenience, transparency, and speed, the organizations necessitated to balance between increase
capacity with enhanced efficiency as well as offering flexible omnichannel solutions. In addition,
the Group is continuing its focus on the cross-border e-commerce which includes investments in
the United States facilities as well as the expansion of its global air capacity (Wang, et al., 2016).
According to Forbes, the company is also opening a Central Asia Hub located at Hong Kong
International Airport, an air express cargo facility that will be used to ship premium goods in and
out of the Asia-Pacific region. Cross-border e-commerce continuously grows in the U.S. as the

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consumer demand for overseas products increases, thus driving the company’s imports and
exports (Touboulic & Walker, 2015). To make sure that the delivery process is more convenient,
DHL is continuing to develop web-based tools that include On Demand Delivery which is
already fully deployed in Americas to help simplify the shipping as well as the delivery process
for smaller businesses, major retailers, along with their customers.
Managing logistics involves the constant movement as well as the materials storage
including finished goods. From the purchase of the product, the process of logistics adds value
by moving the product when and where it is needed (Winter & Knemeyer, 2013). As such, the
products gain value at every stage. For a larger manufacturer, logistical operations may comprise
of thousands of movements, which ultimately culminate in product delivery to a wholesaler,
customer, industrial user, or dealer. To understand logistics, it is essential to divide it into three
parts which are physical distribution, manufacturing support, and procurement. In the case of
DHL, it is entirely service oriented and thus it does not have its own material movement but
materials of its customers, - the sender, the receiver, and the intermediaries (Zhu, Sarkis & Lai,
2013). Hence, this means that DHL only is involved in physical distribution and procurement.
DHL can improve on its inventory system by implementing Inventory Tracking Technology in
its supply chain.
Conclusion
The supply chain is among the most essential and integral aspect of an organization’s’
strategy and function. When carried out accurately, the supply chain does not only lower the
costs associated with production but it also enhances efficiency and customer satisfaction.
Overall supply chain management is essential due to the current highly competitive and the cut-

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throat corporate world. DHL Group is among the organizations that have got the largest express
as well as logistics network. Having a network in approximately 220 countries including its
private fleet of mobile vans, railway automotive in some states, airplanes, and cargo ships
carriers, the company is capable of handling any type of products.
An organization’s competitive advantage is dependent not on its size but rather on the
design and development effectiveness and the efficiency of its supply chain. Most of the
organizations that are in the logistics business have incorporated modern technologies in their
supply chain to enhance their efficiency. Such technologies comprise of Radio Frequency
Identification and Network Management System that have got the capability of revolutionizing
the entire procurement process hence eliminating inefficiencies that affect the supply chain
management. An organization such as DHL, for instance, adopts business outsourcing services
from its external partners to assist in minimizing the chain flow costs. The company’s supply
chain structure is composed of six departments; the receiving department, reweight department,
packaging department, classification department, shipping department, and the inventory or store
department. As such, a supply chain is an important aspect of any organization and if it is not
carefully managed, it can often result in revenue loss including leading to inefficiencies.

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