DHL Supply Chain’s Control Tower Operations

DHL Supply Chain’s Control Tower Operations Provide Multinationals Global End-to-End Supply Chain Management Capabilities
Detroit, Michigan USA Control Tower Site Visit
July 23, 2019
By
Evan Armstrong

DHL 3PL Operations Overview

With combined 2018 gross logistics revenue of $28.1 billion and net revenue of $17.2 billion, DHL Supply Chain and Global Forwarding rank as the largest global third-party logistics provider (3PL). Its 248 million square feet of warehousing space and 3.2 million ocean TEUs (twenty-foot equivalent units) managed rank DHL’s 3PL operations first in warehousing globally and third in ocean freight forwarding.

DHL Supply Chain (DSC) North America is headquartered in Westerville, Ohio. It provides a wide range of inbound, manufacturing, warehouse/distribution and outbound operations to serve a range of industries including automotive, chemical and energy, consumer, engineering and manufacturing, life sciences and healthcare, retail, and technology. Key transportation customers include: Boeing, Diageo, Ford and United Technologies.

Gross revenues were in excess of $4 billion and net revenues were close to $4 billion. The North American network employs 39,500 personnel and has 431 warehouses with a combined 121 million square feet of space. DSC’s North American Transport Solutions operations employ 2,000 associates managing approximately 25,000 shipments per day.

DHL Supply Chain’s Transport Solutions

DHL Supply Chain’s Transport Solutions service offering has four main operations: 1. Lead Logistics Partner (LLP), 2. Managed Transportation, 3. Freight Brokerage, and 4. Dedicated Fleet. DSC’s “Lead Logistics Partner” LLP, Managed Transportation and Brokerage service offerings account for approximately 55% of total U.S. Transport Solutions revenue. Its Dedicated Fleet Operations make up 45%. Approximately half of DSC’s Transport Solutions customers are also warehouse management customers and its dedicated fleet operations have 1,300 power units, 2,000 trailers, and 1,800 drivers.

DSC uses three primary integrated transportation management systems to support Transport Solutions customers. Oracle Transportation Management (OTM) is utilized in its LLP and Managed Transportation control tower operations, ORTEC is utilized in its dedicated fleet and last mile operations, and MercuryGate is used to manage its freight brokerage operations.

DHL Supply Chain Transport Solutions Systems Architecture

DHL oversees $5 billion of freight under management (FUM) in North America and $14 billion globally.

Each of DSC’s control tower operations is part of a network of six LLP Centers of Excellence (CoEs) based in: Detroit, Michigan for North America, Birmingham, United Kingdom for Europe, Oman, Jordan for the Middle East, Johannesburg, South Africa for Africa, Shanghai, China for Asia, and Sao Paulo, Brazil for South America. The control towers focus on six main service areas: Transportation Management, Transportation Planning, Shipment Monitoring and Control, Carrier Sourcing/Procurement, Freight Bill Audit and Payment, and Performance Management.

Each of the centers work to drive operational excellence and process standardization across the six regions in DSC. To support these efforts, DSC has developed a standard online toolkit for knowledge sharing between the global control tower sites.

Each control tower utilizes Oracle’s transportation management system for its operations. DSC has been using OTM (Oracle Transportation Management) for 13 years.

In addition to DHL’s transportation planning and execution solutions, each control tower benefits from DHL’s Resilience360 application which identifies global operational and socio-political risks, natural disasters, and threats to productivity and profitability. Based on this information, control tower personnel can proactively avoid potential disruptions and resolve service issues.

DHL Supply Chain Automotive, Engineering & Manufacturing Control Tower/LLP Customer Case Study

DHL manages inbound materials for automotive and engineering & manufacturing customers from its control towers in Detroit, Shanghai, Chennai, Japan, Sao Paolo and Mexico. These global control towers act as the LLP location overseeing the global operation and provides the customer with dedicated account management. Approximately 70,000 ocean containers of inbound materials from over 2,500 suppliers based in Europe, the Asia Pacific, and South America are managed by DHL annually.

From its order management system, customers electronically send order releases which DHL’s TMS calculates into specific numbers of parts/materials to suppliers. The suppliers in turn utilize DHL’s supplier web portal (SWP) to confirm materials from these releases into DHL’s OTM transportation management system. Suppliers can confirm or edit quantities, ship dates, and equipment types. Once in OTM, transportation planning, carrier routing, and auto-tendering take place through integrators. This SWP coupled with DHL’s TMS solution is driving a “no touch” environment from supplier release through to carrier booking and delivery resulting in significant productivity improvements. This is driving the international supply chains from a very manual and paper driven world to be more on a par with domestic and regional supply chains supported by state-of the-art TMSs.

DHL manages origin shipment consolidation and destination deconsolidation, shipment booking, track and trace, alert management, exception and premium freight management, risk incident monitoring, the repackaging of some materials in North America, and corrective action processes. In addition, it provides part level visibility with ahead/behind and imminent shortage reporting.

DHL’s supplier management services include material release follow-up, part discrepancy reporting, compliance programs, and supplier on boarding and training.

DSC Managed Transportation Carrier Development and Sourcing

To support the U.S. control tower operations, DHL has a sixteen-person Carrier Development and Sourcing department. It is supplemented by sourcing and contract management functions in Plantation, FL and Westerville, OH. DSC’s North American carrier base is comprised of 4,000 primary carriers from a total of over 14,000 contracted carriers. The basic five-step carrier sourcing process is as follows: 1. Shipper capacity demand analysis, 2. Carrier capacity availability analysis, 3. Sourcing/bid event, 4. Carrier selection, 5. Carrier program implementation. DHL utilizes JAGGAER software to run sourcing events. At the time of our visit, the team was finishing up a $200+ million transportation bid for a customer.

For rate benchmarking, DSC utilizes benchmarks from multiple providers including: Chainalytics, FMIC, Transcore DAT, and Truckstop for truckload and LTL.

To help with carrier onboarding, DSC uses Carrier411 to find and qualify carriers, DocuSign for contracting, RMIS for carrier compliance tracking, and OTM to house carrier rates, agreed to fuel surcharges and pricing for accessorial/handling charges.

DSC uses a four-part carrier management lifecycle, which is detailed in the figure below.

DHL Supply Chain MySupplyChain Customer Portal

As part of our visit, we received a demonstration of DSC’s proprietary end-to-end supply chain visibility customer portal “MySupplyChain.dhl.com”. It incorporates warehousing and transportation data into one dashboard that has six main functional areas: shipment track and trace, inventory visibility, operational performance dashboards, operational reports, business analytics, and document management.

MySupplyChain’s track and trace/visibility functionality allows users to perform natural “human language” searches with predictive text such as “shipment status is”, “cancelled”, “allocated”, or “delivered”. It can also search by carrier using “carrier is” searches. Other search criteria include: bill of lading number, order number, shipment ID number, purchase order number, requested delivery date, business unit, and any other data element that is provided (up to 30 different reference numbers). The four main shipment statuses include planned, dispatched, in transit, and delivered. Carrier information is sourced via direct carrier application programming interfaces (APIs), electronic data interchange (EDI), and visibility applications including project44, MacroPoint, and FourKites. For shipments with exceptions, users can set up email notifications for statuses such as order rejected, redelivered, or completed. Scanned images of proofs of delivery (PODs) can be downloaded. In addition to shipment statuses, the application also allows users to identify warehouse inventory statuses such as on-hand and shipped confirmed.

Operational performance dashboards pull data from a real-time production database allowing users to track multiple service performance metrics such as overall on-time pickup and delivery performance or by carrier or lane. Tender rejects, damages, and EDI compliance can also be monitored by carrier allowing customers to manage by exception.

Document sharing includes multiple folders of documents detailing processes, procedures, and contracts.

Operational reporting can pull standard or customized reports which are often delivered to customers via an embedded email link. A report library allows customers to pick and choose which reports they would like to receive. In addition, MySupplyChain has an ad hoc report development dashboard to create reports, or perform data analysis ad hoc using predefined reports and parameters. Raw data can also be downloaded to MS-Excel or to a shipper’s data lake for further analysis.

• Pickup Performance Dashboard which details pickup counts, performance, and delay statistics.
• Shipment Performance Dashboard which details overall on-time shipment performance and by carrier.
• Shipment Accessorial Usage which details planned versus actual shipment accessorial charges by type.
• Tender Performance Dashboard which details overall tender reject and acceptance levels and by carrier.
• Routing Guide Performance which details overall carrier routing and cost compliance metrics and by shipping point.
• Optimization Savings which details transportation savings as a percentage of spend.
• Network Maps which show shipments by origin and destination locations and any exceptions.

DHL Supply Chain Operations Summary

With a focus on process management, continuous improvement, and innovation, DSC is helping its customers think beyond today’s shipment with tier-one end-to-end supply chain management capabilities. With tools such as Resilience360 and OTM to help manage control tower operations and MySupplyChain delivering business intelligence to customers, DHL has built a leading technology platform. Coupled with its proven global supply chain management operations, DHL Supply Chain is more than a traditional third-party logistics provider; it is a global supply chain manager capable of supporting very complex multinational supply chain networks.

Sources: A&A Primary Research, www.logistics.dhl