Improving Supply Chain Efficiency at DHL Express: A Strategic Analysis

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Strategic Supply Chain
Management and Logistics

Table of Contents
Introduction......................................................................................................................................3
4.1 Explain the role of logistics in supply chain management in an organization......................4
4.2 Evaluate procurement practices in an organisation...............................................................5
4.3 Discuss the factors that must be considered when improving logistics and procurement
practices in an organisation.........................................................................................................6
LO5..................................................................................................................................................8
5.1 Plan a strategy to improve an organisation’s supply chain....................................................8
5.2 Assess how a supply chain improvement strategy will benefit overall business
performance in an organisation...................................................................................................9
5.3 Explain how barriers will be overcome in an organisation when implementing supply hain
improvement strategy................................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

LIST OF FIGURES
Figure 1: Components of Supply Chain Management....................................................................5

Introduction
Supply chain management can be referred to as a set of approaches through which finance,
materials, and the information flow from vendors to the customers’ destination. This task has
emphasised the role of supply chain management in DHL Express organisation, which is a
courier Services Company operates its business at a global level by offering international courier,
parcel and express mail service facilities. The success of a logistic business largely depends on
the effectiveness of supply chain management, as it includes the entire activities of planning,
purchasing, transportation, storage, and distribution to the specified point of destination.

4.1 Explain the role of logistics in supply chain management in an organization
Supply chain management and Logistics
Supply chain management is concerned with the management of the movement of goods and
services from one point of origin to another point of consumption. Logistics is a vital element of
supply chain management and helps the organisation to store and deliver the right product in the
right condition to the destination point at the right time.
Figure 1: Components of Supply Chain Management
Following points help the organisation to understand the role of logistics in DHL courier service
organisation:
Warehouse Designing and Management:
Logistics assist DHL Express in designing and managing the warehouses to utilised the
warehouse space optimally. The assistance to warehouse designing reduces the wastage of
materials, and ensure safe and dust free storage environment for goods and services in the
warehouses of DHL (Role of logistics in Supply Chain, 2015). Warehouse management includes
aligning the supply chain activity with the integration of the latest technology in warehouses to
ensure effective flow of goods and services.
Order Processing

When the customer’s order their items, a legal document is generated that depicts descriptions,
like, supply, quantity, price, payment terms, delivery period, etc. Hence processing of such order
is done by logistics which includes activities, like, checking orders, checking price and payment
terms, checking the availability of stock, checking inventory shortage, and acknowledging the
order deviations.
Inventory control
The role of logistics in DHL Express is to ensure whether there is a sufficient amount of stock is
available in the warehouse to meet the demands of the customers timely. Inventory storage is the
major element in supply chain management, and if it is stored for an excessive period, it may
indirectly affect the profitability of the DHL Express. Therefore, the role of logistics is to ensure
the carrying costs associated with the inventory is minimised by timely delivery of goods and
services to the customers (Functions and roles of logistics, 2017).
Transportation
The role of logistics also arises in the transportation of goods and services from suppliers to the
buyer’s place. The transportation mode chosen by the logistics depends upon the cost and
commission involved in such flow of goods and services.
4.2 Evaluate procurement practices in an organisation
Procurement is a systematic procedure which involves sourcing and obtaining of goods and
services from the suppliers and delivering to the beneficiary. The effective management of
procurement activities influences the overall performance and productivity of DHL Express in a
positive way.
DHL Express offers a wide range of services across the world through which it provides express
mail services, parcel, and international courier services. The objective of procurement functions
is to carry out the entire procurement activities based on the “Six Rights”. Such six Rights
includes the right source, right quality, right cost, right quantity, right time, and the right place
(Hsin Chang et al., 2013). These six rights principles followed by DHL Express ensure that:
 To purchase goods and services economically

 To ensure timely delivery of goods from the chosen suppliers
 To purchase the quality items of goods and services in the right quantity from the reliable
sources
 To ensure the purchasing of products as per the organisation policies
 To ensure centralised procurement facilities so that overall administration costs can be
reduced.
The procurement process performed by the logistic staff of DHL Express involves, Providing
necessary logistics information to the logistics department of DHL Express so that timely
response can be implemented. After then, the logistic function creates a detailed procurement
plan for the flow of services and goods from the origin point to another point.
The logistic function of DHL Express performs an effective procurement process at a global
level, through categorised planning strategy which leads to the enhanced operational efficiency
of the organisation along with reduced costs. The procurement staffs of DHL Express ensure the
effective relationship with their suppliers and take advantage of global procurement expertise to
offer its wide range of courier and procurement services to different organisations (Touboulic
and Walker, 2015).
4.3 Discuss the factors that must be considered when improving logistics and procurement
practices in an organisation
In a competitive environment, every organisation is required to introduce innovative tools to grab
opportunities for enhancing productivity through reduced costs. To improve procurement
practices and logistics functions of DHL Express, it is essential to reduce wastage of inventory
and ensure effective utilisation of warehouse space. Factors that are required to be considered to
enhance procurement and logistic functions:
Supplier consolidation
To maintain and improve the productivity of DHL Express, supplier consolidation is an effective
tool through which procurement costs and other relevant costs can be reduced. A lean supply
chain management policy is essential through which the logistic function of DHL Express can

understand the needs of customers and accordingly provide right product to the right place
(Golicic and Smith, 2013). The supplier consolidation includes a planned purchase from few
reliable suppliers instead of investing money in high volume of unreliable suppliers.
Many Broad lines National distributor
The goal of DHL Express is to offer reliable and timely deliveries to the end consumers. DHL
Express operates its courier business at the global level and therefore a network of distribution is
an important factor to improve logistic activities. The large scale of distribution centres is
necessary to cover a wide range of customers, manufacturers and other intermediaries involved
in the supply chain management. An integrated approach to distribution network leads to saving
of time and money of both the customers as well as DHL Express courier services.
Technology
In the competitive edge in the courier service industry, the technological factor is a vital element
that helped to improve the procurement process and logistic activities performed by DHL
Express (Monczka et al., 2015). In addition to this, availability of technical expertise is essential
to ensure a solution for procurement integration. To manage online orders, marketing, and
electronic data transfer, e-procurement systems or other advanced software is a helpful factor to
be considered for improving the logistic activities.

LO5
5.1 Plan a strategy to improve an organisation’s supply chain
Deutsche Post DHL is one of the world’s largest and leading logistic organisation which have a
unit of DHL Express that operates its business of courier services across the world. The
following plan of supply chain strategy of DHL Express will ensure enhanced performance of
the organisation.
Goals & Objectives
To improve the current supply chain procedure, it is essential for the DHL Express to ensure
technological advancement in their warehouses along with the logistic expertise so that the
organisational goals can be effectively achieved. The objective of the revised strategic plan is to
ensure transparency and effective flow of goods and services between the two points.
Current scenario
In the current situation, the supply chain process of DHL Express includes collection centres at
which all the details of products and pick up schedules are specified in which details of customer
address, the number of products, etc. are provided. The products from collection centres will be
parcelled to the distribution centre (Jacobs et al., 2014). At such distribution centres, all the
details on the products are scanned, and a unique bar code is assigned to each product so that it
can be easily traceable by the courier agent. A personal digital assistant is provided to the courier
agent so that they can record the delivery and pick up data in a digital form.
Proposed Plan
DHL Express can introduce a newer ERP system within its various warehouses, as monitoring
the inventory level on a continuous basis requires more time in comparison to digitalised
inventory management. The new ERP software will ensure automatic purchasing system in
which a planned program monitors inventory level on a regular basis. When the inventory level
reduces from a specified certain limit, then such program will automatically place the order with
the manufacturer.

Evaluation
The ERP software will help DHL Express to more focus on productive activities rather than
monitoring the level of inventory (Rushton et al., 2014). However, appropriate evaluation and
controlling initiatives are required to be taken to ensure actual performance is matched with the
set benchmark.
5.2 Assess how a supply chain improvement strategy will benefit overall business performance
in an organisation
The new proposed plan for improving the entire supply chain process of DHL Express will
benefit the organisation in the following ways:
The decrease in costly errors
Currently, the monitoring of inventory level is managed by the employees of the DHL Express.
Hence, there are more possibilities of occurring of error in managing and recording the inventory
data. Such errors can increase the cost of handling the inventory. The proposed Employee
Resource Planning (ERP) software will reduce such errors and ensure cost-efficient technique to
handle the inventory level (Christopher, 2016).
Increased customer service
Timely monitoring of inventory data through programmed software will ensure timely
availability of products from the vendors, and therefore results in faster processing of further
delivery to the customers. Introduction of such software will make the entire process of supply
chain seamless and efficient.
Scalability and Speed
Speed is an important element in a courier business. Effective management of inventory through
a programme in various warehouses of DHL Express will help the organisation to offer extensive
services to their customers with more quick and faster courier services (Touboulic and Walker,
2015).

5.3 Explain how barriers will be overcome in an organisation when implementing supply hain
improvement strategy
Following are some of the barriers to implementing improved supply chain management strategy
and its solutions to overcome them:
High Initial Investment
The automatic purchasing system in different warehouses of DHL Express will be expensive to
install. However, there are various economic and cost friendly solutions are available in the
market through which the investment costs can be reduced (Patil and Kant, 2014).
Resistance to change
Most of the employees resist accepting new changes incorporated into the organisation.
Therefore, the leaders and managers of DHL Express are required to impart necessary training
and conduct seminars to well acquaint their employees with the latest technology of automatic
purchasing the organisation.
Reduction of employment level
The introduction of new ERP software of automatic purchasing system in DHL Express will
eliminate the labour costs through termination of various labours at a different level. The
termination of employees can be managed by transferring, or promoting them other units of DHL
Express organisation. This will help the DHL Express to utilise the efforts of skilled employees
of inventory unit in other units of their organisation (Christopher, 2016).
Technological Barriers
To install ERP software of automatic purchasing, DHL Express can face technological barriers.
To overcome such barrier, technological experts are required to be appointed so that they can
specify the required infrastructure for installing the ERP software within the inventory unit of the
organisation. In addition to this, they will help to monitor ERP programmes on a periodical basis
to maintain the efficiency of such an inventory management program.

Conclusion
The above discussion has concluded that the role of supply chain management and logistics is
vital for every organisation. This task has evaluated various procurement practices followed by
DHL Express to operate its business at a global level. A strategic plan is concluded in this task
that entails the detail planning process to improve the current strategic approach of supply chain
activities followed by DHL Express. In the end, various barriers along with their solutions are
concluded that acts as a hindrance in implementing improvement in the supply chain process of
DHL Express.