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International Conference on Advancing Public-Private
Partnerships for e-Business Standards

Characteristics, Trends & Future Shape of the Logistics Environment
Interaction with Standards Work

Harry Strover
Geneva, September 18-19th 2008
Outline

1. DHL Company Overview


3. Logistics Environment
     •    Characteristics
     •    Trends
     •    Future Shape


4. e-Business Standards at DHL
     •    Our expectations
     •    Relationships with Standards Organizations
     •    e-Business with our Customers
     •    Internal e-Business
     •    Conclusion

DHL | September 2008                                   Page   2
DHL Overview

     DHL’s parent company Deutsche Post World Net is the world’s leading logistics
     group. With revenues of more than €63 billion and 500,000 employees in more
     than 220 countries and territories it is one of the biggest employers worldwide.

                        Largest Courier and Express provider in Europe,  8 million customers
                         Asia Pacific and Middle East /Africa             36 Hubs and 4,700 bases
                        Top 3 worldwide                                  350 aircraft, 72,000 vehicles


                        World’s No.1 in Warehousing, Distribution &         59 countries and territories
                         Contract Logistics                                  2,500 logistics centers, warehouses,
                                                                              terminals
                                                                             23million m2 storage capacity

                        World’s No.1 in Air and Ocean Freight               150 countries and territories
                                                                             813 terminals & warehouses
                                                                             4.4million t Air; 2.8miliion TEU Ocean


                        Europe’s No. 2 in Road Freight                      30 countries and territories
                                                                             160 terminals
                                                                             2million full truck load movements

                                                                             Cross-border solutions for business
                        Largest worldwide network for Mail Distribution      mail, publication distribution, direct
                                                                              marketing and merchandise


DHL | September 2008                                                                                       Page    3
Outline

1. DHL Company Overview


3. Logistics Environment
     •    Characteristics
     •    Trends
     •    Future Shape


4. e-Business Standards at DHL
     •    Our expectations
     •    Relationships with Standards Organizations
     •    e-Business with our Customers
     •    Internal e-Business
     •    Conclusion

DHL | September 2008                                   Page   4
Characteristics
So what is Logistics?

●The Art or Science of getting:-         ●and its not:-
• The right thing and the right person   • The next best thing
• In the right quantity                  • To the nearest economic delivery quantity
• In the right place                     • To the storage point, not the usage point
• At the right time                      • A week earlier, to be sure
• At the right quality                   • Requiring inbound inspection
• Every time                             • 95% of the time
• At the optimal cost                    • At a cost we can get away with
• Doing least harm to the world          • Paying lip service to the environment




DHL | September 2008                                                               Page   5
Characteristics
               Evolving Business Models in Logistics Outsourcing

                         Core Logistics
                          Competence       Traditional                    Typical                        Leading                       Visionary
                           Business
                           Strategy
             Core




                                                                                                                                       Customer
                                                                                                         Customer
                           Strategy
                                                                                                                               Supply
                                                                         Customer
Competence




                                                                                                                               Chain
                                                                                                                                             Supply Chain
                                                                                                                            Orchestrator
                                                                                                                                               Manager
                           Planning          Customer                                          LLP         4PL

                                                                                                                             Warehousing
                                                                                                                                                   Distribution
                           Coordi-
                           nation                                                                    Functional Processes
                                                                                                                                                       Courier
                                                                                                                            Value      Business
                                                                 Couri Freight Ware-   Value
                                                                                                                            Added      Processes
             Logistics




                                          Cour   Freight Ware-    er   Trans-   hou    Added
                          Execution                                                            Exp Freight Ware- Value      Services
                                           ier   Trans- hou             port   sing    Svcs.                                                           Freight
                                                                                               ress Trans- hou Added
                                                  port   sing                                                               Sourcing                 Transport
                                                                                                     port  sing Svcs.
                                                                         3PL     3PL   3PL
                                                                    Integrated                                                  Production      Engineering
                                                                     Logistics
                                                                     Provider

         •       Single function transactional relationship                                          •   Strategic multi-functional partnerships
         •       Local / regional reach                                                              •   Global, door-to-door coverage
         •       Physical asset heavy, process execution                                             •   Bring integrated IT solutions ready to use
         •       Cost plus management fee                                                            •   Continuous innovation (cost & service)
         •       Fixed upfront cost to change                                                        •   Risk/Gain share
                                                                                                     •   Reduced need for capital
               DHL | September 2008                                                                                                                         Page   6
Trends
 Fast & Fundamental Global Change is upon us

                         • Indian population grows as fast in 1 week as the EU population does in 1 year
●Globalization moves     • The Chinese middle class is consuming more and more of what it makes
to a Multi-Polar world   • Major new hubs are being built around the world (e.g Dubai)

                         • Much of the world is now on-line, mobile commerce is developing quickly
●Technology led          • Humble delivery equipment (containers, totes, hangers) become intelligent
complexity accelerates   • Increasing dependence on automation

                         • Rising oil prices slowing the growth in global trade
●After a decade,         • Globally food prices and inflation rates rising (China12%, Vietnam 25%)
inflation is back        • Marked shift from Air to Ocean in Technology and Healthcare companies

●Terrorism has           • Container scanning will slow ports down, compliance will tie up management
created a new cost       • Security issues can cost hundreds of dollars per container
pressure
                         • Carbon: Sustained investment hampered by short term who pays argument
●The Smarter are         • Energy costs steeply rising; Efficiency/carbon abatement actions needed
getting Greener          • Water supply is becoming the next sustainability issue for some

                         • Imbalance of “white-collar” talent is limiting growth in the developing world
●Who will win the        • Wal-mart report “Blue-collar” labour shortage in the US as a growing issue
War for Talent ?         • “Employers of choice” make training a priority

..these are opportunities if we grasp them, real threats if we do not
 DHL | September 2008                                                                              Page    7
Trends
    ..with significant impact on supply chain

International Supply                                                                         After Market
 Chain Management                                                                            Management


                                    “The Wider Supply Chain”
                                             (21st Century focus)


           Global                                                                      Customers/
                                Local                            Customers/
          Supply /                              Producers                              Consumers
                              Suppliers                           Retailers
          Sourcing                                                                     After Market
                               “The Immediate Supply Chain”
                                              (1980/90s focus)

                                                  Reverse
                                                    Flow
                                                  Logistics




  Ever increasing          Security & Risk                       Being serious about         Disruptive
  Transport Costs           Management                            the Environment        Technology Waves
    DHL | September 2008                                                                              Page   8
Future Shape of the Logistics Environment
Embracing the possibilities of information and technology

Sophisticated customer solutions
• Deeper integration with other enterprises means more and more information exchange
• Increasingly diverse and complex processes mean e-Business capabilities are becoming
  more sophisticated and expanding to meet needs across multiple industries
  and disciplines
Capitalizing upon innovation
                                                          Solar Powered
                                   Smart Sensors           Warehouses
             Parcel Robots




                                                                          E-Paper

            Remote vehicle
             intelligence                            Electric Vehicles




DHL | September 2008                                                                Page   9
Outline

1. DHL Company Overview


3. Logistics Environment
     •    Characteristics
     •    Trends
     •    Future Shape


4. e-Business Standards at DHL
     •    Our expectations
     •    Relationships with Standards Organizations
     •    e-Business with our Customers
     •    Internal e-Business
     •    Conclusion

DHL | September 2008                                   Page 10
e-Business Standards at DHL
Our expectations

                       Operate a profitable global business
                         • Use e-Business to help standardize business processes and encourage re-use
                         • Reduce operational overheads through process simplification and standardization
                         • Enable advanced business models that provide global coverage and consistency



                       ●Ability to deliver consistent, effective and innovative solutions
                         • Use e-Business to create a competitive edge
                         • Establish global standards-based services leading to robust, replicable customer
                           solutions
                         • Reduce implementation & running costs; increase margins and benefits to the
                           customer.


                       ●Understand & Manage our Business Better
                         • More in depth visibility of the information supply chain, better control of the
                           process, improved business performance, and reduced organizational cost
                         • Making change a part of the process – agility is key to a successful business
                         • Allow operational teams more control of the supply chain, allowing in-flight
                           changes and decisions to be made easily, reducing the risk of failure




DHL | September 2008                                                                                     Page 11
e-Business Standards at DHL
Relationships with Standards Organizations

• DHL is proactively engaged in the use and definition of e-Business standards (e.g. UN
  EDIFACT, RosettaNet, OAG, GS1, IATA, ANSI)
• Standards organizations provide a supporting community
• Effective collaboration between standards organizations is critical

                            EANcom             GUSI
                                                                                      Woodx
                                                                                                                                        Petro-chem
                                                                           SIG                                                              PIDX
                                                            CONSUMER                                            CHEMICAL
                       Tradacoms
                                                             GSI                                                 CIDX

                                                                          PAPER/FOREST
                                                                                                           DR
                                                HI -TECH                  PAPIN ET                C   TN                                Petro-chem
                                              ROSETTANET                                       FA                                      JCPI /CEDI
                                                                                           / CE
                                                                                         UN
                           RETAIL/PHARMA
                                GS1
                                                                                                                                           CargoImp
                                                                             G ENERIC
                            G ENERIC                                      UN/CEFACT                               AIRCARGO
                                X12                                                                                IATA

                                                                                                                                    CargoFACT
                           ES
                         RI




                                                           ebXML
                       ST




                                 HEALTHCARE
                     DU




                                      HL7                                                                                                            Galia
                   IN




                                                                                                                                     VDA
                                                                XM
                                                                  L
                                                                   ST




                                                  GENERIC
                                                                     D




                  VICS                                                                                          AUTOMOTIVE
                                                                      S




                                                                                                                                            Odette
                                                 OASIS                     G ENERIC                               JAIF
                                                                           OAGi                 AIAG
                                                                                                                                            JAMA/
                                                             HRXML
                                                                                                                                            JAPIA
                                                                                                                             STAR
                                                                                              AAIA




DHL | September 2008                                                                                                                                         Page 12
e-Business Standards at DHL
        On-Demand Customer Requirements


                                          Our customers and other
Customers /




                                          business partners require:
 Partners




                                          • Operational agility
                                          • Continuous business
                                            process change
                                          • Scale from small to large
                               Complex      operations
                                          • Scale from low to high
                                            volumes
    DHL




                                          • DHL to use (their) standards.




        DHL | September 2008                                     Page 13
e-Business Standards at DHL
        DHL’s customers use many different standards


                                                                          • In connecting with thousands of
                                                                            e-Business customers, we use
Customers /




                                                                            many different standards.
 Partners




                                                                          • Standards provide:
               RosettaNet    EDIFACT   IDOCs   OAGi      GS1     Custom     – Familiar “target” for involved
                                                                              parties – common dictionary,
                            DHL’s Customer Integration Platform(s)
                                                                              syntax and process
                                                                            – Greater re-use and hence
                                                                              reduced risk for our
                                                                              customers
                                           Still
    DHL




                                                                            – Faster deployment of
                                       unnecessarily                          solutions
                                         complex




              Over one billion e-Business transactions annually
              Approximately 8,000 customers, suppliers, customs authorities, etc.
        DHL | September 2008                                                                         Page 14
e-Business Standards at DHL
        Standardizing e-Business transactions between internal systems


                                                                          • A common data model will make
                                                                            standards really work for DHL
Customers /




                                                                          • Standards provide:
 Partners




                                                                            – Good direction for internal e-
                                                                               Business transactions
                                                                            – Supporting knowledge for
               RosettaNet    EDIFACT     IDOCs   OAGi      GS1   Custom        business transactions and
                            DHL’s Customer Integration Platform(s)             data models inside the
                                       Common Data Model                       enterprise
                                                                            – Leverage and ease of
                                       Common Data Model
                                                                               implementation with our major
                                                                               IT providers
    DHL




                    DHL Enterprise Internal Integration Platform(s)




              This is DHL’s biggest current e-Business initiative

        DHL | September 2008                                                                        Page 15
e-Business Standards at DHL
Case Studies - Implementing Standards for internal e-Business

●Large Healthcare Customer                    ●Large Consumer Customer
• Selected RosettaNet as internal             • Selected GS1 as internal
  e-Business standard                           e-Business standard

• Not all internal requirements were met by   • Not all internal requirements were met by
  the selected standard                         the selected standard

• Made structural and semantic changes to     • Made structural and semantic changes to
  Standard (Bespoked)                           Standard (Bespoked)

• Forked from standard version                • Proposed Changes to GS1 governing
                                                body
                                              • Project was delayed considerably
                                              • Created complexity for External Parties
                                              • Risk of forking from standard version


●Implementing external standards for internal e-Business is challenging

DHL | September 2008                                                                      Page 16
Conclusion
DHL uses e-Business standards with our customers

• Standards provide the best way of providing an open, re-usable way of inter-
  operating with our customers
• SDOs are a valuable supporting community for our e-Business development
• Using e-Business standards when working with our customers benefits DHL’s
  internal operations




DHL | September 2008                                                         Page 17
Conclusion
Implementing standards within our organization is challenging


  • We have to be selective when implementing standards internally
  • e-Business standards do not represent all internal business interactions
  • Our strategic software vendors need to participate with us in implementing
    standards
  • Standards compliance and version alignment is difficult – especially where
    the fit is not ideal
           – If not managed well, standards limit the agility of the internal solutions

  • Many other organizations regard internal e-Business as a key differentiator /
    asset
           – Not all are willing to share and help develop standards for this purpose




DHL | September 2008                                                                      Page 18
Conclusion
e-Business is much more than data exchange

• Information quality and its associated benefits all require standards to be in
  place
• e-Business for DHL is about business process interactions across multiple
  enterprises
   – Standardizing business processes is our real challenge




DHL | September 2008                                                               Page 19
Thank You!




DHL | September 2008   Page 20

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DHL - Logistics & eBusiness Standards

  • 1. International Conference on Advancing Public-Private Partnerships for e-Business Standards Characteristics, Trends & Future Shape of the Logistics Environment Interaction with Standards Work Harry Strover Geneva, September 18-19th 2008
  • 2. Outline 1. DHL Company Overview 3. Logistics Environment • Characteristics • Trends • Future Shape 4. e-Business Standards at DHL • Our expectations • Relationships with Standards Organizations • e-Business with our Customers • Internal e-Business • Conclusion DHL | September 2008 Page 2
  • 3. DHL Overview DHL’s parent company Deutsche Post World Net is the world’s leading logistics group. With revenues of more than €63 billion and 500,000 employees in more than 220 countries and territories it is one of the biggest employers worldwide.  Largest Courier and Express provider in Europe,  8 million customers Asia Pacific and Middle East /Africa  36 Hubs and 4,700 bases  Top 3 worldwide  350 aircraft, 72,000 vehicles  World’s No.1 in Warehousing, Distribution &  59 countries and territories Contract Logistics  2,500 logistics centers, warehouses, terminals  23million m2 storage capacity  World’s No.1 in Air and Ocean Freight  150 countries and territories  813 terminals & warehouses  4.4million t Air; 2.8miliion TEU Ocean  Europe’s No. 2 in Road Freight  30 countries and territories  160 terminals  2million full truck load movements  Cross-border solutions for business  Largest worldwide network for Mail Distribution mail, publication distribution, direct marketing and merchandise DHL | September 2008 Page 3
  • 4. Outline 1. DHL Company Overview 3. Logistics Environment • Characteristics • Trends • Future Shape 4. e-Business Standards at DHL • Our expectations • Relationships with Standards Organizations • e-Business with our Customers • Internal e-Business • Conclusion DHL | September 2008 Page 4
  • 5. Characteristics So what is Logistics? ●The Art or Science of getting:- ●and its not:- • The right thing and the right person • The next best thing • In the right quantity • To the nearest economic delivery quantity • In the right place • To the storage point, not the usage point • At the right time • A week earlier, to be sure • At the right quality • Requiring inbound inspection • Every time • 95% of the time • At the optimal cost • At a cost we can get away with • Doing least harm to the world • Paying lip service to the environment DHL | September 2008 Page 5
  • 6. Characteristics Evolving Business Models in Logistics Outsourcing Core Logistics Competence Traditional Typical Leading Visionary Business Strategy Core Customer Customer Strategy Supply Customer Competence Chain Supply Chain Orchestrator Manager Planning Customer LLP 4PL Warehousing Distribution Coordi- nation Functional Processes Courier Value Business Couri Freight Ware- Value Added Processes Logistics Cour Freight Ware- er Trans- hou Added Execution Exp Freight Ware- Value Services ier Trans- hou port sing Svcs. Freight ress Trans- hou Added port sing Sourcing Transport port sing Svcs. 3PL 3PL 3PL Integrated Production Engineering Logistics Provider • Single function transactional relationship • Strategic multi-functional partnerships • Local / regional reach • Global, door-to-door coverage • Physical asset heavy, process execution • Bring integrated IT solutions ready to use • Cost plus management fee • Continuous innovation (cost & service) • Fixed upfront cost to change • Risk/Gain share • Reduced need for capital DHL | September 2008 Page 6
  • 7. Trends Fast & Fundamental Global Change is upon us • Indian population grows as fast in 1 week as the EU population does in 1 year ●Globalization moves • The Chinese middle class is consuming more and more of what it makes to a Multi-Polar world • Major new hubs are being built around the world (e.g Dubai) • Much of the world is now on-line, mobile commerce is developing quickly ●Technology led • Humble delivery equipment (containers, totes, hangers) become intelligent complexity accelerates • Increasing dependence on automation • Rising oil prices slowing the growth in global trade ●After a decade, • Globally food prices and inflation rates rising (China12%, Vietnam 25%) inflation is back • Marked shift from Air to Ocean in Technology and Healthcare companies ●Terrorism has • Container scanning will slow ports down, compliance will tie up management created a new cost • Security issues can cost hundreds of dollars per container pressure • Carbon: Sustained investment hampered by short term who pays argument ●The Smarter are • Energy costs steeply rising; Efficiency/carbon abatement actions needed getting Greener • Water supply is becoming the next sustainability issue for some • Imbalance of “white-collar” talent is limiting growth in the developing world ●Who will win the • Wal-mart report “Blue-collar” labour shortage in the US as a growing issue War for Talent ? • “Employers of choice” make training a priority ..these are opportunities if we grasp them, real threats if we do not DHL | September 2008 Page 7
  • 8. Trends ..with significant impact on supply chain International Supply After Market Chain Management Management “The Wider Supply Chain” (21st Century focus) Global Customers/ Local Customers/ Supply / Producers Consumers Suppliers Retailers Sourcing After Market “The Immediate Supply Chain” (1980/90s focus) Reverse Flow Logistics Ever increasing Security & Risk Being serious about Disruptive Transport Costs Management the Environment Technology Waves DHL | September 2008 Page 8
  • 9. Future Shape of the Logistics Environment Embracing the possibilities of information and technology Sophisticated customer solutions • Deeper integration with other enterprises means more and more information exchange • Increasingly diverse and complex processes mean e-Business capabilities are becoming more sophisticated and expanding to meet needs across multiple industries and disciplines Capitalizing upon innovation Solar Powered Smart Sensors Warehouses Parcel Robots E-Paper Remote vehicle intelligence Electric Vehicles DHL | September 2008 Page 9
  • 10. Outline 1. DHL Company Overview 3. Logistics Environment • Characteristics • Trends • Future Shape 4. e-Business Standards at DHL • Our expectations • Relationships with Standards Organizations • e-Business with our Customers • Internal e-Business • Conclusion DHL | September 2008 Page 10
  • 11. e-Business Standards at DHL Our expectations Operate a profitable global business • Use e-Business to help standardize business processes and encourage re-use • Reduce operational overheads through process simplification and standardization • Enable advanced business models that provide global coverage and consistency ●Ability to deliver consistent, effective and innovative solutions • Use e-Business to create a competitive edge • Establish global standards-based services leading to robust, replicable customer solutions • Reduce implementation & running costs; increase margins and benefits to the customer. ●Understand & Manage our Business Better • More in depth visibility of the information supply chain, better control of the process, improved business performance, and reduced organizational cost • Making change a part of the process – agility is key to a successful business • Allow operational teams more control of the supply chain, allowing in-flight changes and decisions to be made easily, reducing the risk of failure DHL | September 2008 Page 11
  • 12. e-Business Standards at DHL Relationships with Standards Organizations • DHL is proactively engaged in the use and definition of e-Business standards (e.g. UN EDIFACT, RosettaNet, OAG, GS1, IATA, ANSI) • Standards organizations provide a supporting community • Effective collaboration between standards organizations is critical EANcom GUSI Woodx Petro-chem SIG PIDX CONSUMER CHEMICAL Tradacoms GSI CIDX PAPER/FOREST DR HI -TECH PAPIN ET C TN Petro-chem ROSETTANET FA JCPI /CEDI / CE UN RETAIL/PHARMA GS1 CargoImp G ENERIC G ENERIC UN/CEFACT AIRCARGO X12 IATA CargoFACT ES RI ebXML ST HEALTHCARE DU HL7 Galia IN VDA XM L ST GENERIC D VICS AUTOMOTIVE S Odette OASIS G ENERIC JAIF OAGi AIAG JAMA/ HRXML JAPIA STAR AAIA DHL | September 2008 Page 12
  • 13. e-Business Standards at DHL On-Demand Customer Requirements Our customers and other Customers / business partners require: Partners • Operational agility • Continuous business process change • Scale from small to large Complex operations • Scale from low to high volumes DHL • DHL to use (their) standards. DHL | September 2008 Page 13
  • 14. e-Business Standards at DHL DHL’s customers use many different standards • In connecting with thousands of e-Business customers, we use Customers / many different standards. Partners • Standards provide: RosettaNet EDIFACT IDOCs OAGi GS1 Custom – Familiar “target” for involved parties – common dictionary, DHL’s Customer Integration Platform(s) syntax and process – Greater re-use and hence reduced risk for our customers Still DHL – Faster deployment of unnecessarily solutions complex Over one billion e-Business transactions annually Approximately 8,000 customers, suppliers, customs authorities, etc. DHL | September 2008 Page 14
  • 15. e-Business Standards at DHL Standardizing e-Business transactions between internal systems • A common data model will make standards really work for DHL Customers / • Standards provide: Partners – Good direction for internal e- Business transactions – Supporting knowledge for RosettaNet EDIFACT IDOCs OAGi GS1 Custom business transactions and DHL’s Customer Integration Platform(s) data models inside the Common Data Model enterprise – Leverage and ease of Common Data Model implementation with our major IT providers DHL DHL Enterprise Internal Integration Platform(s) This is DHL’s biggest current e-Business initiative DHL | September 2008 Page 15
  • 16. e-Business Standards at DHL Case Studies - Implementing Standards for internal e-Business ●Large Healthcare Customer ●Large Consumer Customer • Selected RosettaNet as internal • Selected GS1 as internal e-Business standard e-Business standard • Not all internal requirements were met by • Not all internal requirements were met by the selected standard the selected standard • Made structural and semantic changes to • Made structural and semantic changes to Standard (Bespoked) Standard (Bespoked) • Forked from standard version • Proposed Changes to GS1 governing body • Project was delayed considerably • Created complexity for External Parties • Risk of forking from standard version ●Implementing external standards for internal e-Business is challenging DHL | September 2008 Page 16
  • 17. Conclusion DHL uses e-Business standards with our customers • Standards provide the best way of providing an open, re-usable way of inter- operating with our customers • SDOs are a valuable supporting community for our e-Business development • Using e-Business standards when working with our customers benefits DHL’s internal operations DHL | September 2008 Page 17
  • 18. Conclusion Implementing standards within our organization is challenging • We have to be selective when implementing standards internally • e-Business standards do not represent all internal business interactions • Our strategic software vendors need to participate with us in implementing standards • Standards compliance and version alignment is difficult – especially where the fit is not ideal – If not managed well, standards limit the agility of the internal solutions • Many other organizations regard internal e-Business as a key differentiator / asset – Not all are willing to share and help develop standards for this purpose DHL | September 2008 Page 18
  • 19. Conclusion e-Business is much more than data exchange • Information quality and its associated benefits all require standards to be in place • e-Business for DHL is about business process interactions across multiple enterprises – Standardizing business processes is our real challenge DHL | September 2008 Page 19
  • 20. Thank You! DHL | September 2008 Page 20