20021019

DHL GLOBALCUSTOMERLOGISTICS

Sacha Van Hoever, Senior Logistics Consultant, DHL Global Customer Logistics

Brussels, October 19, 2002

3

Contents

Introduction to GCL– DHL Global Customer Logistics– Vision & Strategy

DHL & Partners

Service Parts Logistics

Reverse Logistics

Service Parts Logistics Survey 2002

Case Study

4

Globalisation

Creation of virtualenterprises

E-commerce

One stop shopping

OrganisationalIntegration

Time to marketcompression

Customer ServiceExplosion

Focus on corecompetencies

PLC Reduction

The business environment is changing

5

Global Customer Logistics

DHL DHL InternationalInternational

DHL Airways

GlobalGlobalCustomerCustomerLogisticsLogistics

GlobalGlobalCustomerCustomerLogisticsLogistics

6

Global Customer Logistics

Created in 2001 for addressing the needs and requirements of DHL’s global customers

developing

implementing

proactively managing

integrated express distribution and logistics solutions on a regional and truly global level

Large National Regular

GAC

GCL

National Advantage

7

long term preferred partner of

choice for the leading global

companies

“To enable DHL to become the long term

preferred partner of choice for global

express distribution and express supply

chain solutions for the leading global

companies within DHL’s target industries”

DHL Global Customer LogisticsVision

Global Logistics Organization StructureGlobal Virtual Teams

Global Logistics

Global Partner Alliance

Global Business Acquisition

Support

Global Pricing & Profitability

Analysis

Global Logistics Infrastructure

Global Quality

Global After Sales Program Management

LogisticsEMEA

LogisticsAP

LogisticsNA

Partner Alliance

Business Acquisition

Support

Pricing & Profitability

Analysis

Logistics Infrastructure

Quality

After Sales Program

Management

Geog

rap

hic

al Log

isti

cs O

rgan

izati

on

Global “Virtual” Functional Team


Global LogisticsVision and Strategy

10

DHL Global Logistics will be the Global Leader in (time-sensitive) parts distribution

with real-time information technologies supporting consistent global offerings.

DHL will develop integrated solutions targeted at high value, high impact goods.

DHL Global LogisticsVision

11

‘Brain’ ConsultativeServices

Call Center Management

Consultancy

Manage Partners

IT Capability

Customer Relationship Management

Special reporting

‘Muscle’Physical Services

Core

transportation<

250 kg

Heavy W

eights

Def’d. services

Door-to-A

irport

Airp

ort-Airport

Sam

eday N

FO

Dom

estic

Warehou

sing

Repairs

IT system

s

Build expertise ourselves

DHL

How will DHL tap into the total SC market..?

DHL Global LogisticsOur approach

e.g. DPWN and Others

Use partners and joint bidding

Build expertise ourselves


DHL and Partners

13

ShareholderPartners

StrategicPartners

Third Party (3PL)Service Providers

No. of shared Services Larger Investments Longer Duration Enhanced Process

IntegrationSelectionProtocol

START

Number of Partners

Loca

l

Geographical scope

Importance Number of

Projects

Glo

bal/

Reg

ion

al

Our Partner Relationships

14

DHL Shareholders

1% 76%

Two Investment Trusts = remaining 23%

15

Deutsche Post World Net

33 bln EUR turnover, 318 k people

Europe Pan-European

parcel

network

Worldwide DHL in 228

countries &

territories

Germany 69 Mio

letter

items per

day High

speed

Worldwide Danzas, AEI 150

countries 38,000

people

Germany 130 bill. Euro on

balance sheet 10 Mio clients 13,500 branches

3 Types of Logistics Service Offering

Single DHL 3PL

Solution

CustomerDivision/Account

DP Bus. UnitService Provider

SingleManaged

4PLSolution


4PLService Platform

DPWNBus. Unit

DPWNBus. Unit

Partner

DPWN4PL service platform

Partner Joint Bid Solution


DPWNBus. Unit

DPWNBus. Unit

DPWNBus. Unit

Partner

CRM ManagementTender coordination amongst

members

LSP expertise (CRM)Logistics Consultant

Joint BiddingIT Capability

17

DPWN 4PL Platform

A Joint Venture between:


Service Parts Logistics

19

The importance of supply chain management

As we are moving from competing brands to competing supply chains, logistics has become one of the key drivers of competitive advantage.

Some companies have recognised this, however they have been focussing on the supply chain driving the production and sales of finished goods (e.g. Dell).

Yet there is another supply chain within these companies, also heavily affecting customers and business results, which is often largely being ignored:

The Service Parts Supply ChainThe Service Parts Supply Chain

20

The Service Parts Supply Chain

“Traditional bases of competitive advantage no longer suffice; the search is on for new opportunities for differentiation”

Competitive advantage is sought in parts of the value chain that thus far have been overlooked or under-addressed.

After sales is one of those areas:– Traditionally too fragmented– Poorly linked with other parts of the organisation– Received little management attention

However, by reengineering the service parts supply chain companies can:– Create competitive differentiation – Improve customer retention– Increase earnings from after sales support– Reduced cost of after sales support– Customer satisfaction

21

Do you leave money on the table?

Excess service parts inventory

Unnecessary scrap and obsolescence

Poor coordination with suppliers, customers and other companies

Penalties for missing service level agreements

High service logistics costs

Poor utilization of physical and people assest

22

Strategic importance

Initial equipment sales High sales costs No relationship Poor customer info Low profitability

Operational after market service Relatively low sales cost Ongoing relationship Good margins High support costs

‘Back to square 1’ Missed opportunity for

customer loyalty Repeat sales will be just

like the initial sale Lost after market service

accountPoor AMS

performance

Repeat equipment sales Low sales costs Established relationship In-depth customer info Increased profitability High switch costs

Good AMSperformance

23

Revenue and Profit life cycle

Service

Finished Goods

Time

ProfitRevenue

$

Service

Finished Goods

Time

Re

lati

on

sh

ip

24

SC impact on shareholder value

Service logistics has a significant impact on shareholder value

Shareholder value

Fixed capital

Working capital

Costs

Revenue

Profitability

Invested capital

• High margins• Customer retention

• Inventory pooling• Speed instead of inventory• Virtual warehousing• Information instead of inventory

• Outsourcing• Centralization

• Obsolescence• First time fix

25

The significance of Service Parts cannot be neglected

,,Spare parts represent $700 billion in spending

and 8% of GDP in the United States alone’’

Piper Jaffray, U.S. Bancorp

26

Service Logistics in after market service

CustomerCustomer Call centerCall center

Field serviceField service Service controlService control

The goal:Is to get the

right person with theright skills at theright place at the right time with the

right parts for afirst time fix at the

LOWEST COST

The goal:Is to get the

right person with theright skills at theright place at the right time with the

right parts for afirst time fix at the

LOWEST COST

Service logistics is an important enabler to improve after market service

Logistics based activities can account for more than 90% of the total costs of delivering after market service - source: Accenture.

27

Building blocks for service logistics

Several building blocks are added to build service logistics related supply chain configurations:

Plants

Operations

Vendors

DC

Platform

VAL

Modes

Transport

Inbound DC

Consignment

In transit

Inventory

Handling in

Handling out

VAL

Handling

Duties

Others

Inter DC

Outbound

Plant

Call centers

Repair

Recycle

Upgrade

Re manufacture

De manufacture

Refurbish

Field engineers

Repair centers

Disposal centers

Strat. Inv. Depl.

Parts replen.

Info. substitute

28

SL typical process description

Call reception

Diagnostic

Job assignment

Match field engineer & part

Repair on site

Return part

Call closed

Call management Field service operation

Job acceptenceby fieldservice

Part requestat warehouse Part delivery Return part received

in repair center

29

Plan & execute(lean)

React & execute (agile)

Hedge &deploy

(hold inventory)

Continuous replenishment

Demand characteristics

Predictable Unpredictable

SERVICEPARTS

LOGISTICS

Supplycharacteristics:Service levelagreement

Longlead-time:+3 days

Shortlead-time:2-4 hours

24-48 hrs

Service Parts Supply Chain strategyDemand/Supply characteristics

30

Drivers / characteristics of a service parts supply chain

Large number of sku’s (DC - optimization)

High percentage of slow or non-movers (forecastability, obsolescence)

Large variation in form / size / weight (handling)

Relation with finished product serial number (information)

Long term service obligation (end of life decisions)

High standards for:– product availability– responsiveness / speed (cost of downtime)

Service Level Agreements (SLA) common

Consumables versus spare parts

31

Key customer support logistics area

Primary logistics challenge

Service parts inventory management Maximising parts availability with minimum inventory and costs

Service parts transportation Providing rapid parts delivery while minimising costs

Service parts sourcing Finding and developing low-costs/high-quality sources of supply

Service technician capacity planning Maintaining the appropriate number of technicians to support demand

Service technician dispatch Managing deployment of service technicians on an hour-to-hour basis

End-user customer service management Managing appropriate response to customer service issues

Service parts warehousing Maximising order fulfilment effectiveness while minimising costs

Services parts order processing and fulfilment Maximising order entry and processing while minimising costs

Service parts procurement Ensuring timely delivery of high-quality parts at minimum costs

Service technician scheduling Ensuring service technician capacity is effectively utilised

End-user service requirements determination Accurately identifying customer satisfaction needs and expectations

32

Characteristics - trade off required

Customer

satisfaction

Cost to

service

Service

quality

Business

profit

Cost elements: Inventory costs Downtime costs Repair costs DC operating costs Transport costs (Second) call costs Human resources costs Distribution costs

Quality elements: First time right (diagnosis and repair Minimum downtime (response & repair) Simple communication (hassle free, 24/7) Parts availability Job planning (part, engineer, site) Right tools and skills utilized Right parts

What drives my ability to..

- compete on price

- meet profit margin targets?

How do I deliver quality

service?

33

Trends

Increasing customer demands

Dramatic expansion in range and sophistication of service offerings

Increasing complexity in service techniques requirements

Global service requirements due to globalization

Integrated service chain planning and operations (parts, repair, DC, transport, engineer, installed base)

Ability to turn logistics errors into marketing and sales opportunities

Increasing differentiation of similar products

Remote diagnosis / pre- alerts (self diagnostic capabilities)

Inventory pooling

Design consistency across product offerings

Full parts inventory visibility (network-wide)

34

Example: remote diagnosis

Service centre

Real time transmission of data analysis

Spare partsAircraft

engineers

Scheduling of service and part requirements of next maintenance stop

Big reduction of unplanned stops and

aircraft downtime

Next maintenance stop

35

Example: Inventory pooling

Safety stock

Cycle stock

Safety stock

Cycle stock

Safety stock

Cycle stock • Lower safety stock and • lower average inventory

With same service level!

Company x Company y

Company x & y

Pooling


Reverse Logistics

37

Service Parts Supply Chains

Engineers

Parts & Materials

Service Event

Repair Returns

38

Service level

Highservicelevel:

2-4 hrs

‘Lower’service

level

Replenishment

Direct shipment

Replenishment Direct delivery (24-48 hrs)

Replenish 2-4 hrs

Production

Strategic partscentre

Serviceevent

Regionaldistribution

Suppliers

Network DesignMulti-level decoupling points

Repair Centre Return Cycle

39

Different models within service parts logistics

Repair and Return– Retrieve defective unit– Repair defective unit– Send back repaired unit

Inbound and outbound item are identical

Exchange / Replacement– Retrieve defective part– Send spare part

Inbound and outbound item are different

Consumable– No Return only outbound

Repair and Return– Retrieve defective unit– Repair defective unit– Send back repaired unit

Inbound and outbound item are identical

Exchange / Replacement– Retrieve defective part– Send spare part

Inbound and outbound item are different

Consumable– No Return only outbound

Early delivery– Before 9:00– Before 12:00

Delivery the same day– Bullet van– On board courier/NFO– Private jet renting

Repair at the central hub– End of runway

Stocking Locations– Regional storage location– Strategic parts centers

Early delivery– Before 9:00– Before 12:00

Delivery the same day– Bullet van– On board courier/NFO– Private jet renting

Repair at the central hub– End of runway

Stocking Locations– Regional storage location– Strategic parts centers

Distribution ModelsDistribution ModelsDistribution ModelsDistribution Models Ways to Influence TATWays to Influence TATWays to Influence TATWays to Influence TAT

40

Different DHL products

Transportation & Real Time Info– 3 Leg Repair and Return (No packaging available)– 2 Leg Repair and Return (Packaging available)– End of Runway (12 h repair window)

Transportation, Warehousing & Real Time Info– Return Repair Inventory (4 leg RMA from central stock)– Direct Express Inventory (Consumable from central stock)– Strategic Inventory Management (Consumable from strategic

stock)

Variations of the above

41

Effect on the Total Turn around time by combining models and infrastructure

5days

5days

4days

4days

3days

3days

1day

1day hourshours Transit

Time

3 Leg Repair3 Leg Repairand Returnand Return




Advanced ExchangeAdvanced Exchangefrom central stockfrom central stock

Advanced ExchangeAdvanced Exchangefrom central stockfrom central stock

End of End of RunwayRunwayEnd of End of RunwayRunway

Advanced ExchangeAdvanced Exchangefrom strategic stockfrom strategic stockAdvanced ExchangeAdvanced Exchangefrom strategic stockfrom strategic stock

42

Parameters influencing the model choice

Customer organisation– The service mindedness of the organisation

Do you see service as a means to gain a competitive advantage?

– Availability of local field engineers– Willingness to hold stock (value of the items)

Item type – Consumable vs. serviceable– High end vs. low end– High value vs. low value

Customer’s customer– What does the enduser expect (management of the expectations)– High value vs low value

– Installable by customer– Impact of the product– Physical aspects


Spare Parts LogisticsSurvey

44

45 - 2Interlog2002 15-16.05.2002

The initial phase of the study revealed interesting findingsThe initial phase of the study revealed interesting findings

Preliminary results of "Spare Parts Survey 2002" (1)

• Spare parts logistics is not yet considered a core competency in more than 50% of the companies interviewed

• Major KPI's used in SPL division's are still isolated logistics metrics rather than customer satisfaction measures (e.g. systems uptime)

• More than 60% of the companies still lack global stock visibility

• Less than 30% of the study participants have incorporated central ownership of spares

• None of the companies interviewed are currently pooling inventory with third parties

• Spare parts logistics is not yet considered a core competency in more than 50% of the companies interviewed

• Major KPI's used in SPL division's are still isolated logistics metrics rather than customer satisfaction measures (e.g. systems uptime)

• More than 60% of the companies still lack global stock visibility

• Less than 30% of the study participants have incorporated central ownership of spares

• None of the companies interviewed are currently pooling inventory with third parties

46 - 3Interlog2002 15-16.05.2002

• More than 50% of the service organisations are still working on proprietary IT systems

• Most of the companies are currently adding material planning tools to their ERP landscape

• Less than 20% of the companies claim to have a full-loop part tracking system in place,but more than 60% of the companies are in the process of establishing it

• The opportunities of Web based enhancements are clearly not exploited

• A very low percentage of SPL costs are managed under global cont racts

• The variable (i.e. transaction based) share of SPL costs are below 50% on average

• More than 50% of the service organisations are still working on proprietary IT systems

• Most of the companies are currently adding material planning tools to their ERP landscape

• Less than 20% of the companies claim to have a full-loop part tracking system in place,but more than 60% of the companies are in the process of establishing it

• The opportunities of Web based enhancements are clearly not exploited

• A very low percentage of SPL costs are managed under global cont racts

• The variable (i.e. transaction based) share of SPL costs are below 50% on average

The initial phase of the study revealed interesting findingsThe initial phase of the study revealed interesting findings

Preliminary results of "Spare Parts Survey 2002" (2)

47 - 4Interlog2002 15-16.05.2002

Most of the companies interviewed have ambitious goals for the future Most of the companies interviewed have ambitious goals for the future

Preliminary results of: "Spare Parts Survey 2002" (3)

Stock turn rateStock turn rate

1.46

2.30

Ø Today Ø Target

+58%

Costs1)Costs1)

Ø Today Ø Target

-14%

Service levelService level

94 96

Ø Today Ø Target

+2%

Return lead time2)Return lead time2)

15,1

5,8

Ø Today Ø Target

-61%

Repair lead timeRepair lead time

22,5

11,5

Ø Today Ø Target

-49%

100

86

- - - % - - Days - - Days -

1) Inventory reduction target: 17%, cost reduction target: 14% 2) Average for the EU

48 - 5Interlog2002 15-16.05.2002

Outsourcing will be extended to value added activities such as planning, procurement and inventory ownershipOutsourcing will be extended to value added activities such as planning, procurement and inventory ownership

Scope of Outsourcing by Function- % -

100

67 69

23

38

5664

13 13

0

60

100

Transportation Warehousing 1) Repair Planning Procurement Inventory

ownership

Percentage share of companies which outsource this function today

Percentage share of companies which believe that this function could be outsourced in the future

1) Central warehousing, 57%/ 61%, local warehousing and depots 6 2%/ 73%


Solution Components

50

Total Quality System

Total Quality System

WarehouseNetwork

(ELC/SPC)

TransportationServices

Logistics CallCenters

State of the artIT systems

Skills/People

DHL Global Logistics Solution Elements

51

DHL Global Logistics Solution Elements

DHL’s logistics solutions consist of:DHL’s logistics solutions consist of:

Strategically positioned storage locations– Express Logistics Centers– Strategic Parts Centers

Logistics Customer Service Center

DHL Worldwide Express Transportation network

Same day dedicated transportation

Group of dedicated people offering support on day-to-day operations

Comprehensive IT solution

52

Logistics Capabilities








53

CoverageProductsStored

Speed ofTransport

MainFunction

Local/AreaWH

Spare parts Very high

product value or very high opportunity cost

(domestic) same day

DistributionStrategic PartsCenter(SPC)

RegionalCenter

(Semi) finished Repair parts Spare parts High product

value or high opportunity cost

Overnight (International)

Value added services

Distribution Repair (EOR) Bonded stock

Express LogisticsCenter(ELC)

ELC vs SPC

54

Global Network SPCs & ELCs9 Express Logistics Centers273 Strategic Parts Centers

Asia PacificAsia Pacific9393

Europe, AfricaEurope, AfricaMiddle EastMiddle East

109109

United StatesUnited States4545

Latin AmericaLatin America3535

55

SPC Network Europe - ME - Africa

106 SPC locations as at 01/08/20023 ELC locations as at 01/08/2002(Brussels, Johannesburg, Bahrain)

HAM

MUC

BER

HAJ

NUESTR

FRA

DUS

BRS

MIL

Padova

PRG

BUD

WAW

MOW

BCN

CPH

STO

GOT

Skelleftea

TLS

BOD

NTE

LYS

CDG (3)

LIL

MZM

SXB

MRS

LHR (3)

ATH

IST

NCE

KLL

MAD

GVA ZRH

Rennes

LJU

GLA

Leicester

Middlesbrough MAN

BUH

BSL

BFS

BGO

SVG

BRI

NAP

Dijon

OPO

Bilbao

XML

BLQ

Tours

ORK

CTA

VLCXVQ

La Coruna

OVD

LEJ

BTS

BRU

AMS

ESB

HEL

LIS

DUB

GDN

KTW

OSL

DRE

Livingston

VIE

ZAG

TRN

POZ

WRO

(NOT INDICATED ON MAP):

Existing SPC Locations: Tel Aviv IsraelCairo EgyptDubai DubaiDahrain Saudi ArabiaJeddah Saudi ArabiaRiyadh Saudi ArabiaKuwait KuwaitLarnaca CyprusLas Palmas Canary IslandsLausanne Switzerland

Indicative SPC locationsAnkara TurkeyBelgrade Yugoslavia

Developments subject to changeAugust 2002

QPGAOI

Plymouth

Grenoble

ROM

BEG

PAL

BRQ

56

SPC Network APAC

-1

Brisbane

Sydney

Melbourne

PerthAdelaide Auckland

Taoyuan

Seoul

Tokyo

Beijing

Manila

Kuala Lumpur

Available SPC

Active/live SPC

ELC

Bangkok

Wellington

Bombay Calcutta

Delhi

Madras

Nagoya

Okayama

Kanazawa

Fukuoka

Atsugi

Shanghai

Tainan

Jakarta

Ho Chi Minh

Singapore

Penang

Hong Kong

Guangzhou

Bangalore

Chengdu

PusanUrumqi

Xian

Wuhan

Shenyang

Futian

Christchurch

Planned SPC

HushiroSapporo

AomoriSendai

Hanoi

Colombo

Canberra

Islamabad

Dhaka

Darwin

Hobart

Kuching

Hyderabad

AhemabadPune

Johor Bahru

Hsinchu

Kiheung

Matsumoto

Hiroshima

Osaka

Oita

Taipei

57

SPC Network US

Miami

Los Angeles

ChicagoTeterboro

San FranciscoCincinnati ELC

3 Existing/Operational Express Logistics Centers (Cincinnati, Miami and San Francisco) -DHL owned and operated regional distribution facilities offering a complete menu of value added logistics services

6 Existing/Operational Strategic Parts Centers -Local parts centers offering a selected menu of value added logistics services

36 Planned Strategic Parts Centers (2002) -Local parts centers offering a selected menu of value added logistics services

Guam

San Juan

Myaguez

New York

Washington

Atlanta

Sacramento

Portland Boise

Salt Lake City

Dallas/Ft. Worth

Houston

Minn/St. Paul

Detroit

Cleveland

Pittsburgh

Philadelphia

Rochester

Burlington

Boston

Baltimore

Hartford

San Diego

FresnoLas Vegas

Phoenix

Denver

Albuquerque

El Paso

San Antonio

Austin

St. Louis

Indianapolis

Orlando

Tampa

Columbus

Nashville Raleigh Durham

Seattle

58

SPC Network Canada

Planned Strategic Parts Center (2002) -Local parts centers offering a selected menu of value added logistics services

Toronto

59

SPC Network Latin America Miami US

BermudaHamilton

San Juan PR

Mayguez PR

Monterrey

Guadalajara

Mexico City

Santo Domingo DR

Barbados

Trinidad & TobagoJamaica

PanamaCosta Rica

Guatemala

Venezuela

ColumbiaEcuadorQuito

PeruLima

ChileSantiago

Bolivia

ArgentinaBuenos Aires

Brazil, Rio De Janeiro

Sao Paulo

Existing/Operational Express Logistics Centers (Miami) -DHL owned and operated regional distribution facilities offering a complete menu of value added logistics services

15 Existing/Operational Strategic Parts Centers -Local parts centers offering a selected menu of value added logistics services

19 Planned Strategic Parts Centers (2002) -Local parts centers offering a selected menu of value added logistics services

Cordoba

RosarioPorto Alegre

Curitiba

Brasilia

Recife

Salvador

Belo

ValenciaEl Salvador

Nicaragua

Ciudad Juarez

60

Global ELC Network Coverage

CincinnatiCincinnatiUSAUSA

BrusselsBrusselsEuropeEurope

MiamiMiamiLatin AmericaLatin America

BahrainBahrainMiddle EastMiddle East

JohannesburgJohannesburgSouthern AfricaSouthern Africa

Hong KongHong KongAsia PacificAsia Pacific

SingaporeSingaporeAsia PacificAsia Pacific

SydneySydneyAsia PacificAsia Pacific

San FranciscoSan FranciscoUSAUSA

61









62

Logistics Customer Service Centers

BrusselsBrusselsEuropeEurope

SingaporeSingaporeAsia PacificAsia Pacific

PhoenixPhoenixUSUS

63


Fact file:

Regional Logistics Call Center

Located in Brussels, Singapore & Phoenix (AZ)

Provides Multi Lingual Call Center Services

24 x7 Coverage

Emergency order handling

Remote Call Collection

RMA Handling

Single Point of Contact into multi SPC network

The “heart” of many DHL Logistics Solutions

64


Languages CoveredLanguages Covered

65









66

DHL Global Network Fact File

67









68

Network of Sprinter CouriersSame Day Service

Bullet Vans Dedicated transport 24 x 7 service 365 days per year Escalation Procedures Direct contact with LCSC

69









70

Day to Day SupportAccount Management

Responsible for all communications with Global and regional customers

Ultimately responsible for resolving functional issues within its respective regions

Resolve, deploy, and mobilize the individual functional areas to deliver against action

Network Global Account Manager

Regional Global Account Manager Americas

Regional Global Account Manager APAC

Regional Global Account Manager EMEA

Key AccountManagers

Key AccountManagers

Key AccountManagers

Global Coordination

Countries

Regional Offices

71

Day to Day SupportBusiness Acquisition Support Group

Design high-level supply-chain solutions

RFQ response management

Coordinate development of proposal

Supply chain studies

Roll-out of IT systems

Design customer IT solutions

Develop functional IT specifications

Coordinate implementation of IT solution

Design process models

Design of detailed solution

Implementation of the solution

Business Acquisition Support Group

André BenningAndré Benning

Supply Chain Systems Consultancy Group

Reninca VerbruggheReninca Verbrugghe

Project Implementation Group

Thierry VeysThierry Veys

Logistics ConsultantsRFQ Coordinators

Logistics SystemsConsultants

Implementation Managers

72

Day to Day SupportProgram Management

Global After Sales Program Manager

Regional After Sales Program Manager

Americas


APAC


EMEA

Program Analysts Program Analysts Program Analysts

To as per a set of pre-agreed service level agreements. Performance measurement will be done against Key Performances Indicators (KPI).

To be the for all follow-up activities requested by global or regional customers.

73









RMA IT System: Main features

Full RMA-RTV tracking and visibility

Customer Business rules embedded in software

License plate technology (bar codes)

Event driven

Exception management through various alert mechanisms

Target Stock Level management

Web based

75

Advantages

Better allocation of capital expenditure

Vendor consolidation

Expand capability and coverage

Single point of contact for total solution (LCSC)

Total visibility on RMA cycles across partners

Increase scalability and flexibility

Increase field engineer productivity

Decrease in costs– stock reduction– shorter turn around times– simplified processes

Improve customer satisfaction

...

76

The SolutionsThe Solutions

77

DHL Logistics Solutions

STRATEGIC INVENTORY MANAGEMEN (SIM)

The complete control of physical and information process flows involved in managing a time-critical service contract on behalf of our Customers

DIRECT EXPRESS INVENTORY (DEI)

The management of centralised inventory, related information and express distribution of products and/or component parts within a promised time window

RETURN REPAIR INVENTORY (RRI)

Management of the pick-up and delivery cycles: the packaging and the documentation required to move defective, repaired and replacement parts between the Customer, an Express Logistics Centre, a repair centre and a supply centre; and, the management of inventory and shipment information throughout the process

78

Direct Express Inventory (DEI)

79

11

D.E.I- Direct Express Inventory

CUST Customers/EngineersCUST

LCSCELC

CUST Suppliers

Event

Info flow

Physical flow

13 14

4 6

7

9

23 1

8 12

Breakdown occurs1

CUST validates order (Optional : request can be direct to LCSC)

3

DHL LCSC validates order5

Customer request spare part2

Transmission to DHL LCSC4

Order confirmation6

Order to pick and pack7

Delivery of part to destination11

Pick & Pack8

Dispatch Confirmation9

Stock level ELC drops below reorder level12

Parts ordered13

New parts delivered to ELC14

5

Optional

10

Optional (EDI only) : Dispatch Confirmation to CUST10

80

DEIKey Benefits

Improved consistent service levels

Late cut-off times

Reduced Inventory Cost

Maximized Profit Window

Less Capital Investment

Improved Cash Flow

Shorter Distribution

Increased efficiency, control and transparency

Rapid Customer Response

Reduced Communications Cost

Allow concentration on core activities

81

Strategic Inventory Management (SIM)

CustomerCustomer

82

CUST Customers / EngineersCUST 1

1Breakdown occurs

2

2Customer request spare part

4

3

3CUST validates order (Optional : request can be direct to LCSC)

5

4Transmission to DHL LCSC

5LCSC determines SPC & ETA

6

6Order confirmation & ETA

SPC7

7Order to pick and pack

8

8Pick & Pack + Order Bullet Van

9

9 Dispatch Confirmation

11

ELC

13

12Stock level SPC drops below reorder level

12 SPC

CUST Supplier

10Optional (EDI only) : Dispatch Confirmation to CUST

13New part delivered from ELC (either automated in SELIS, either via replenishment order by customer to LCSC

14

14Stock level ELC drops below reorder level

15Parts ordered at CUST manufacturing

16New parts delivered to ELC

1516

Event

Info flow

Physical fl.

Delivery of part to destined person11

S.I.M - Strategic Inventory Management : Detailed

LCSC

10

Optional

83

SIMKey Benefits

Free up capital to focus on core competencies

Unleash management time and in-house resources

Add flexibility for changing market conditions

Speed cycle times for faster market response

Lower costs of inventory storage and handling

Enhance customer service regionally and globally

Simplified and centralised information and communication

Reliable high speed delivery

24/7/52

Global coverage

84

Return and Repair Inventory (RRI)

85

ELC

CUST Customers/EngineersCUST 1

1Breakdown occurs

2

2Customer informs CUST

4

3

3CUST validates request (Optional : request can be direct to LCSC)

5


5 Order Validation

6

6Order confirmation

7


8

8Pick - Pack & include Return kit


12Defective parts consolidated

12

CUST Supplier

13Defective parts sent to Repair Centre

15


16Parts ordered at CUST supplier


16

Event

Info flow

Physical fl.


R.R.I - Return Repair Inventory: Detailed

LCSC

CUST Repair Centre

11

Defective part sent to ELC11

9

10

1317 14

14Repaired parts sent to ELC

Optional

Optional: defective parts can be sent directly to repair vendor

86

RRIKey Benefits

Improved customer service levels

Increased efficiency and transparency in the logistic pipeline

Reduced total pipeline costs and length

Allows concentration on core activities

Simplified and centralized information and communication

Effective and efficient returns of parts

Synergy effects through central repair instead of local repair action

Detailed reporting of services and failures

87

ELC

CUST Customers/EngineersCUST 1

1Breakdown occurs

2

2Customer informs CUST

4

3

3CUST validates request (Optional : request can be direct to LCSC)

5


5 Order Validation

6

6Order confirmation

7


8

8Pick - Pack & include Return kit


CUST Supplier

12Defective parts immediately sent to Repair Centre (in or next to ELC)

14


15Parts ordered at CUST supplier


15

Event

Info flow

Physical fl.


E.O.R - End OF Runway

LCSC

11

Defective part sent to ELC11

9

10

1216

13

13Repaired parts sent to ELC

Optional

Repair Centre


Case Study

89

Who is Lucent ?

Revenue $34 billion in fiscal year 2000

Employees 87,000 people worldwide as of June 30, 2001

Leading global supplier of – communications networking equipment, – Internet infrastructure for service providers, – Optical networking, – Wireless networks and – Communications networking support and services.

June 16th, 2000 DHL - Lucent contract signed

DHL Logistics program include: Strategic Inventory Management, Direct Express Inventory & Repair Return Inventory

90

Advanced Exchange Business Model

Lucent Customer suffers maintenance failure

1Lucent EMEA CRC triggers maintenance order via DHL web

2

Order attributed to SPC or ELC

3

Defective Repair process

6

Defective Returned to ELC

5

Overnight Order delivery from ELC

4

Auto replenishments from ELC to SPC

4

2 or 4 hour Order delivery from SPC

4

New Stock process

7

Lucent Customers (FLM)

Manufacturing Repair

DHL ELCDHL CRC

DHL SPC

How does the designed solution work ?

91

What has been the biggest impact since Lucent changed strategy ?

BeforeBefore Service Logistics seen

as a costly necessary evil

Inventory scattered throughout the countries

Duplication & lack of structure in work efforts

Lack of inventory & performance visibility

AfterAfter A source of competitive

advantage (& future revenue streams)

Centralized & controlled inventories

Professional & dedicated support structure

Immediate real time visibility on performance

92

What are the highlights of the solution ?

Spares delivery anytime day or night within 2-4 hours

Repair times monitored and managed

Certification of deliveries immediately fed back to Lucent

All daily movements visible on-line

New spares placed anywhere in Europe within 2 days

93

Delivery Performance Q1 2002

94

What are the 3 driving forces behind the success ?

The power of…

Looking at these 3 forces in detail...

Centralized logistics

Information Technology

Lean & flexible logistics

95

The Power of Centralized Logistics ?

Cost visibility & efficiencies

End-to-end business process set to Lucent’s Business rules

Customs clearance invoices automatically

All Logistics information accessible on line– Inventory levels– Delivery performance– Customer entitlements– Inventory turnover

Significantly reduced Repair cycle times

Standardized metric and management reporting




96

The Power of Lean and Flexible Logistics?

Immediate access to any stocking location, anywhere in the world with a limited amount of time

Ability to turn on/off logistics operations anywhere in the world with a limited amount of investments by customer

Ease of stock repositioning within 1 day

Customer service contracts are no longer dictated by logistics limitations, now lean & flexible logistics accommodates and drives the service contracts




97

The Power of Information Technology?

Orders, reports & inventory can be queried via the web any time, any place

Shipment delivery information automatically sent to your Mobile or PDA via SMS

Inventory moves automatically reflected on Customer Data repository for financials

An all bar code driven logistics operation ensures 100% error free process

Automated material planning ensures stock level efficiencies




98




What is the key component ?

?PARTNERSHIPPARTNERSHIP

99

After Sales Program Management enablement

Navigation & evolution of shared open actions via Weekly conference calls

Continuous improvements on flows through performance KPI’s & availability of information

Value added services illustrated through implanting DHL key decision maker into the Lucent organization

Honest and open communication

Shared objectives & goals are driving the team forwards through new challenges


Thank you for your attention

Questions?

Documents

20021019