Delivering Technology Gains
Anita Devasahayam , 1-Nov-2000

Today, the definition of shipping goods via courier service means tracking its movement on the Web in the comfort of the office cubicle. And there’ll be no more painful encounters with engaged dial tones during vain attempts to check the location of the goods with the courier boys.

Furthermore, each movement and stopover is detected and recorded until it arrives at the doorstep. Even after you have unwrapped the package, you can still get online where you’ll be informed that the goods have been safely delivered.

“Customers are looking for accurate and real-time information about their shipments. They want speedy delivery and security in the process,” said Asia-Pacific Services (APIS) regional operating officer Bill Stout. APIS is DHL Worldwide Express’ IT hub and data centre in Asia.

Gone are the days of tampered parcels or goods disappearing in transit. IT and the advent of e-commerce have turned the parcel delivery folks into one of the most sophisticated carriers with their variety of track-and-trace technology that provides shippers and even customers, with information on goods movement.

DHL, with a network that spreads across more than 230 countries and territories, was among the pioneers to offer Internet-based shipment tracking system to its customers by the mid-1990s.

Two months ago, German postal company Deutsche Post announced that it will take a 51% controlling stake in DHL International. The deal that will be effective Jan 1, 2001, is seen as a move that would turn DHL into a major competitor for FedEx and United Parcel Services (UPS).

In Asia, DHL made several bold moves including consolidating its regional IT operations in Singapore, Hong Kong and Bahrain by establishing an IT and data hub in Malaysia in 1997.

APIS, headed by Stout, serves 51 countries across the Asia-Pacific and Middle East regions. APIS, spread across 45,000 sq ft of real estate at IOI Mall in Puchong, has a staff strength of 160 that includes a software development team.

Shipment data is captured and processed in the country of origin and the destination before being stored at the central server located at APIS. Currently about 40% of DHL’s worldwide shipments are transacted electronically and the figure is rising steadily. The global growth rate stands at 20% annually and a third of DHL worldwide business is generated from Asia-Pacific.

Among the products shipped within Asia and beyond include computers, pharmaceuticals, watches, garments, medical equipment, documents, car parts, shoes and cell phones.

Although DHL has managed to reduce the size of its waybills, they are shipping more paper than ever--for customers that is. Document delivery, which was DHL’s original business, is still very much alive and even growing although parcel delivery has now outstripped documents as a core service, said Stout.

EDI Still Vital
While the carrier has come a long way since its early days, it has yet to fully leverage on its relationship with the customs department. DHL was founded by Adrian Dalsey, Larry Hillblom and Robert Lynn in 1969 for cross-border shipments. The trio delivered maritime cargo paperwork from San Francisco to Hawaii by air to speed up customs clearance.

Stout admitted that customs departments are not the first off the block to adopt technology, yet it does not stop DHL from participating in the education process. Each quarter, the company circulates an 800-page internal volume on the latest customs rules and practices to offices worldwide.

The old economy technology of electronic data interchange (EDI) remains an important means for transferring information and conducting transactions. “We are involved in introducing new technology to customs departments worldwide to help them get 100% reliability of information to hasten the movements of physical goods. It is part of the strategy for improving clearance times,” he said.

He added that a system for scanning all the commercial paperwork for the outbound shipments is also being introduced. “We are working on providing full documentation paperwork at the customs checkpoint in each country in an even more timely fashion, enabling them to streamline processes and provide earlier pre-clearance in advance of the arrival of the shipment.”

The service for paperwork imaging is currently available in six to seven countries and will be available in all major markets by year-end. “A DHL core competency is the understanding of customs clearance procedures,” he reiterated.

On top of these core services, DHL is developing the logistics business and other special added value services such as final assembly of goods. Express logistics centres, manned by DHL professionals, have been set up in Brisbane, Hong Kong and Singapore.

These are complemented by strategic parts centres in most of the major Asian markets including Japan, Korea, Taiwan, Hong Kong, India, Singapore, Australia and China. These centres are managed directly by DHL or its partners.

“We are able to improve cost efficiency by allowing customers to concentrate on their core business while we take care of their logistics since, as specialists, we can handle that function more effectively,” said Stout.

The increasing role of technology is certainly not downplayed and a generous budget of RM100 million (US$26.3 million) for IT is set aside for operating APIS. Late last year, APIS inked a deal with a local e-consulting firm CyberTouch to jointly develop Web-based software and ‘Net-based customer access products to enhance DHL’s online shipment tracking application and DHL’s automated flow of information between customer service operations and customer pick-up booking systems.

EDI, EasyShip, Interactive Voice Response (IVR), DHL Connect, Web sites, eTRACK and ExpressDial are among the customer access products developed by DHL and its partners.

Other new customer products include the recently launched DHL SMS Tracking that is intended to complement DHL WAP Track launched in October 1999. The SMS (short message system) service helps customers access up-to-the-minute shipment information when and where they need it most via their cell phones.

Next Step Forward
The enhanced applications offered are expected to improve service levels, increase flexibility and allow greater control to customers over DHL’s supply and distribution channels. With more customers aggressively embracing smarter supply chain strategies to keep inventory lean, speed-to-market has become critical and logistics imperative.

Outsourcing logistics is a growing sector in tandem with the renewed focus on just-in-time (JIT) business practices and realisation of competitive advantage through focusing on core competencies, said Stout.

And managing the volume is simplified with the help of technology. “The realisation that just-in-time (JIT) methods and efficient inventory control with the use of information technology does reduce overheads is beginning to make a lot of sense to companies.”

By monitoring consumption of parts, companies are able to predict demand and supply more accurately. “The market we are in is heavily reliant on JIT to cut costs. Information is vital to JIT methods,” he added.

Stout pointed out that the visibility of the delivery pipeline provided by DHL gives customers far more control over their supply chain, allowing them to
better plan procurement.

“Competitive advantage is possible today through the application of information technology to minimise inventory. Inventory sitting in a warehouse only gathers dust and represents capital value which is earning nothing. It would almost be better to put the money in a bank to earn some interest,” he argued.

Future Solutions
Productivity improvements were noted in the customer services area since the implementation of the enhanced applications, he said, adding that headcount will hit 200 by next year to handle shipment volume that is going up steadily.

“As the business situation changes, we have to change our software in response to changing requirements. The tailoring of services for individual customers and integration with their processes and systems is also a major source of new work,” Stout said, adding that legacy tools are continually being Web-enabled.

A team of 70 software engineers and specialists are on board full-time to develop new applications or enhance existing tools that are in use.

For instance, DHL Connect, a Web-based service offered to smaller customers, rolled out Japanese, Korean and traditional Chinese versions to extend the reach of the system to more countries to widen accessibility. The team is currently working on a simplified Chinese version of the application, he said.

“The language enhancements are particularly significant as in terms of shipment volumes--Japan, Korea and China are among the top six markets in the region,” he added.

In the US, DHL Connect is expected to save the company between 75 cents and a dollar per shipment, resulting in significant increase in employee productivity and a reduction in telecommunication and paper costs.

Staff at the data centre field support calls from all IT offices in the region through its help desk. The problems handled are related to application functionality, system problems or the network.

Apart from functioning as a help desk to all its counterparts across the region, the centre also evaluates information to avoid order errors and failed orders by measuring success rates closely with clients and ferreting out what went wrong in bungled orders. Good customer service, whether by phone calls, e-mails or interactive screen chats, gives them an edge in the business.

With the general Asian economy back on track and booming in the logistics arena, DHL is optimistic that continual business improvements is on the cards. “When our customers prosper, we too prosper,” said Stout.