Analysis of DHL Express Supply Chain and Operational Costs

This report provides a comprehensive analysis of DHL Express's supply chain management, focusing on strategies to reduce operational costs and enhance business profitability. The study examines DHL's background as a leading logistics provider, its global presence, and its service offerings. It utilizes a positivism research philosophy with a descriptive research design, employing both primary and secondary data collection methods, including interviews with supply chain managers and employees. The report delves into value analysis, exploring how DHL can reduce costs in areas such as inbound and outbound logistics, operations, marketing, and services through technological advancements and strategic planning. Furthermore, the report outlines market promotional plans, including geographic, demographic, and psychographic market segmentation strategies to attract customers in key markets like Indonesia, San Francisco, Honolulu, and Germany. The analysis concludes by emphasizing the importance of value analysis and effective promotional strategies in maintaining DHL's competitive edge in the international market.

Running head: MANAGEMENT AND BUSINESS CONTEXT
Management and Business Context
Name of the Student
Name of the University
Author’s Note

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Executive Summary
This very specific study has provided a deep insight about entire supply chain procedure of DHL
Express. In order to expand the entire business process this very specific organization has made
effective operational plan within logistic sector for reducing unnecessary value cost. With the
help of effective methodological tools, the study has evaluated the research issue on how to
reduce the operation cost for rendering business profitability. DHL is one of the most
recognizable logistic brands occupying a predominant place in international market. In order to
draw the attention of global customers the study has focused to make effective promotional
strategies as well.

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Table of Contents
1. Background of the product or services:.......................................................................................3
2. Research method:.........................................................................................................................4
3. Value analysis:.............................................................................................................................7
4. Market promotional plan:..........................................................................................................10
5. Conclusion:................................................................................................................................13
Reference List:...............................................................................................................................14

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1. Background of the product or services:
Stadtler (2015) opined that business organization primarily aims to draw the attention of
target market by maintaining superior quality of products as well as services. As per the point of
view of numerous eminent scholars maintaining product and service quality is not the only
factors, based on which the business organization can maintain image and reputation. Along with
maintaining the product and service quality, business organization would have to focus on
making effective promotional plan with the help of value analysis. DHL is one of the most
prestigious logistic divisions occupying a predominant place in the realm of logistic sectors.
After staring their journey as effective courier and parcel service providers from Hawaii into
Pacific Rim to mid-east and European Continent, the organization has focused to make in-
depth overview about the importance of expanded their entire business wings in the international
market (Dhl.com, 2018). This kind of courier service is surrounded with 170 countries by
involving 285,000 employees in various sectors.
DHL while running the entire business process in different multinational countries has
aimed to deliver the services within time. As a result, customers do not have to wait for a long
time in receiving the services. More than 76,200 vehicles are purchased for maintaining the
shipping method properly to the destination. The supply chain managers with the help of
advanced method of technology can keep a constant update regarding the deliverable of services.
The employees associated with the shipping department are well trained in maintaining an
effective communication with the clients. As a result, the entire services can be delivered in
smooth and systematic way (Christopher, 2016). This very specific study has aimed to deliver
the entire services in stipulated time along with low cost. In quest of maintaining an effective

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shipping method DHL would have to make effective promotional plans and policies. More than
50% of the express of DHL shipments is delivered to Indonesia. After making an effective
value analysis it can be concluded that DHL is one of the leading groups with 480,000 in over
220 countries.
2. Research method:
Research method is the systematic procedure of collecting appropriate data and
information with the help of numerous methodological tools. In order to gather relevant data and
information regarding entire supply chain process of DHL, some of the most effective issues of
DLH within shipping procedure have been identified.
Chosen research design:
In quest of acquiring proper knowledge about the necessary threats of DHL in
maintaining supply chain method and their challenges in tracking the customers’ location
properly the study has focused to select positivism research philosophy. This very specific
research philosophy is highly effective in maintaining in-depth observation about the research
issue. By using deductive approach, the researched has made an in-depth case study on how the
supply chain managers have to face difficulties in delivering the product towards proper
destination (Golicic & Smith, 2013). In order to evaluate the research issue the study has chosen
descriptive research design as well. Descriptive research design enables the researcher to explain
the entire research problem from different point of view. By maintaining a keen observation on
the research problem, necessary information has been collected on how supply chain managers
are facing difficulties in their operation process.
Data collection technique:

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Data collection is the systematic technique of gathering appropriate data and information
from different reliable and valid resources. Data collection procedure is constituted with two
major types including primary source of data collection method and secondary source of data
collection method (Huo, 2012). In this very specific study, primary source of data collection
technique has been used by involving 50 employees associated with supply chain management.
On the other hand, 5 supply chain managers have also been involved in order to collect quality
data resources. An effective interview session has been conducted for collecting direct feedback
from the managers. The researcher has gathered information how to the entire supply chain
process of DHL is going to be expanded in various geographical boundaries.
Data analysis procedure:
Data analysis is the systematic method of evaluating appropriate information from
different point of views. While collecting various data the researcher can use various statistical
tools like hypothesis testing, regression analysis, finding central tendency (Walker & Jones,
2012). In this very specific study, the researcher has found central tendency by evaluating mean,
median and mode of data. With the help of a graphical representation the entire findings of data
is presented at a glance. On the other hand, the feedback of the five supply chain managers has
also been presented in data analysis part. The managers have stated their own point of view on
how employees have to face difficulties in delivering the product to proper destination.
Sampling method:
Sampling method is the systematic procedure of collecting appropriate data and
information from a specific number of people amidst large population (Yang et al., 2013).
Sampling method is constituted with two major types including probability sampling technique

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and non-probability sampling technique. This very specific study has focused to select non-
probability sampling technique by involving 50 members from logistic sectors. Non-probability
sampling method enables the researcher in involving specific group of people instead of
selecting randomly. In this kind of situation, appropriate data has been collected on how DHL
had to face challenges in tracking customers’ destination. Based on the challenges, the business
experts of this organization have focused to make promotional plans in making awareness among
the target customers.
In quest of reducing the unnecessary cost among entire operation process of DHL the
business experts have designed to focused on some most effective areas where value proposition
can be reduced.
 Reducing cost on intermediaries:
 Design systematic assemble order of inbound logistic
 Using technology for reducing unnecessary labor cost
Reducing cost
on
intermediaries
Assemble
order of
inbound
logistic
Using
advanced
technology

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Figure 2: Design the areas value cost reduction
(Source: Liao, Egbelu & Chang, 2012)
3. Value analysis:
Value analysis is one of the most effective ways of reducing operation cost. With the
emergence of technology, DHL has reduced their operation cost in order to render more profit in
the logistic sector. Supply chain managers of DHL before making value analysis have decided to
identify the areas where business experts have to bear unnecessary costs. The purpose of
identifying those areas is to highlight where the organization is bearing additional costs (Rod &
Ashill, 2013). As per revenue structure of 2014, DHL has total €56.63billion revenue with the
profit level of 2.016 billion among $41.42 billion assets. On the other hand, as per the annual
data of 2016 the revenue growth of DHL has been increased up to 2.7 percent. In quest of
increasing the entire profit level on 2020 DHL has focused to reduce unnecessary cost in several
areas within the supply chain process. Following are the specific areas where the organization
like DHL is bearing unnecessary cost (Malhotra & Mackelprang, 2012). In search of reducing
the cost of values within entire supply chain process of courier services of DHL Porter’s five
force of value chain analysis is conducted:
 Inbound logistic:
It has already been identified that DHL should design a systematic assemble order for
designing and storing the products. The products should be stored by following a proper line.
Otherwise, large number of workforce strength is required to maintain inbound logistic storage
(Lozano, 2012). On the other hand, if the supply chain managers of DKL can make a simple
storage line the supply chain executives do not have to face difficulties in distributing the

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products from warehouse. Therefore, on one hand, the organization can reduce labor cost. On the
other hand, employees can save their time of deliverable as well to proper destination.
 Operation:
The emergence of technology is one of the most effective ways of reducing operation
cost. If the organization can invest money for technology for once, the business experts do not
have to bear the employee cost (Choy et al., 2012). For an example, DHL by using SAP based
ERM (Enterprise Business Management) process can control the entire data technologically.
Employees do not have to put effort in maintaining the coherence of data.
 Outbound logistic:
In order to reduce the cost of outbound logistic DHL can render a change on
intermediaries. DHL should not invest money on any transportation agency for delivering the
services within time. After the business expansion in various international boundaries, DHL
should purchase more vehicles than 76,200. As a result, both the service providers and service
users can equally keep a track on the overall delivery process of products. On the other hand,
radio frequency identification is the system of keeping a constant track of transport. Both the
service providers and service users can equally keep the transportation track (Chuang, Liao &
Lin, 2013). As a result, customers do not have to take additional burden about the certainty of
product delivery.
 Marketing and sales:
In order to reduce the entire operation cost marketing and sales is one of the most
effective factors based on which value can be reduced. DHL after expanding their business in

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global market should focus on digital marketing communication. Digital marketing
communication is the systematic method of promoting the products and services in different
geographical locations. The marketing managers in order to sale their concept does not have to
invest large amount of money for social media purpose (Kumar & Chandrakar, 2012). On the
other hand, digital media is the only communication tool based on which DHL would be able to
grab the attention of large number of customers of multinational countries.
 Services:
Delivering couriers and parcels are the primary products with which DHL deal in
satisfying customers’ needs and demands (Kwateng, Manso & Osei-Mensah, 2014). If the
organization can reduce transportation cost, operation cost, distribution cost within supply chain
procedure the value of the product would be increased automatically. The profitability level of
the company would be enhanced.
4. Market promotional plan:
Along with making an effective value analysis method, DHL should make an effective
promotional plan based on which the organization can draw the attention of customers from
global market. As per the target customer of DHL, the business experts have selected the market
of Indonesia, San Francisco, Honolulu and Germany for delivering products. By making
effective geographic, demographic and psychographic market segmentation, the organization has
selected the target customers effectively.
 Market segmentation plan for making promotional activities:

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As already stated, Indonesia, San Francisco, Honolulu and Germany are the specific
geographic areas based on which the service process of DHL is surrounded. As per the
demographic market segmentation, people having average level of income status can easily
afford the services of DHL within proper time. In addition, this particular organization always
intends to maintain antidiscrimination within the services (Hazen et al., 2014). As a result, both
male and female customers can get equal priority and response from the service providers. In
addition, psychographic market segmentation believes that organization of various geographical
boundaries and attitudes can show equal interest in purchasing products and services. DHL never
tends to show their biased attitude to the customers. People from different cultural attitude and
backgrounds get equal priority and response from the service providers of DHL.
The primary objective of creating an effective promotional plan is to draw the attention of
customers from different geographical boundaries and attitudes (Bartolacci et al., 2012). In order
to expand the entire business process in global market the marketing executives of DHL have
given priority on digital promotional activities rather than using traditional media tools.
 Social media marketing:
Facebook, Twiter, Youtube are the social media promotional tools based on which DHL
can grab the attention of customers. As per the current market scenario, this specific organization
is in the quest of business expansion in different geographical boundaries. Social media pages
are one of the most effective tools where the marketing executives can reach the doorsteps of
global consumers (Fry, 2014). In addition, the business experts in order to communicate with the
international customers have to render multilingual flexibility so that both the customers and the
service providers can make an effective communication with each other. In order to make an

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effective visual effect, the marketing managers of DHL can easily upload visual effects of their
products and services. Based on the views’ response and feedback business strategies are made
and prepared.
 Online marketing:
Online advertisements, online promotional campaign on official websites and e-mail
marketing are the several ways, based on which the attention of international customers can be
drawn. In order to draw the attention of young generation the significance of online marketing is
undeniable. Indonesia, San Francisco, Honolulu and Germany is completely technologically
advanced countries (Bayne & Cianfrone, 2013). Inhabitants belonging to this very specific
country are very much advanced in technology. In this kind of situation, online marketing would
be very much beneficial for both the service providers as well as services users.
 Traditional promotional activities:
As per the point of view of Ward & Yates (2013), young generations are not the primary
target customer of DHL. In order to draw the attention of middle-aged customers the
organization should focus on dealing with traditional media tools as well. Newspapers, electronic
media, hoardings, billboards are the necessary traditional media vehicles based on which the
organization can introduce their products and services (Rizwan et al., 2013). As a result,
marketing executives would be able to grab the attention of various customers from different age
group. One of the most effective drawbacks of using traditional media tool is that this particular
promotional tool is not effective for drawing the attention of international customers.