DHL as a Lead Logistics Partner – Providing Consultancy with Operationalization
As one of the world’s leading logistics service providers, DHL is known for having a global network and a wide range of services such as global freight forwarding, supply chain management, and express mail. Lesser known is that DHL can act as a Lead Logistics Partner – or an LLP – for a client. An LLP is also frequently referred to in the industry as a 4PL – or a Fourth Party Logistics provider. The term 4PL was first coined by Andersen Consulting (Now Accenture) defined as “an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions.” In other words, a 4PL is a specialist logistics provider that coordinates the activities of 3PLs.
In this issue of LM, we went to DHL (Thailand) and spoke with two industry veterans, Mr. Edwin Pinto, Head of Sales, DHL Global Forwarding (Thailand), and Mr. Suthep Thamthada Head of Oceanfreight, DHL Global Forwarding (Thailand) to learn what exactly an LLP does and how a client can benefit from engaging a 4PL or LLP.
While most 4PLs provide consultations to their customers, DHL’s service takes it one step further by helping its clients “operationalize” or implement the advice it has given. This means that DHL not only analyses the customer’s supply chain and discover ways in which it can be optimized and made more cost-effective, but also helps to put these recommendations into “real world” practice. “We don’t just tell our clients what to do,” says Mr. Pinto. “We blend our experience and provide consultancy with operationalization. We don’t just leave it at the concept stage.” The process can be done by either two ways. First is by using DHL’s staff in an outsourced role for the client, meaning that DHL will take charge of all the operationalization should that be desired. Or secondly by having DHL’s staff integrate with the client’s staff to work together on the implementation process. By working together, the experience from the DHL team can be transferred to the client’s staff seamlessly and with less friction. Change is managed and thus less disruptive.
A Lead Logistics Partner’s services mostly benefit companies with complex supply chains with inbound and outbound logistics moves coupled with operations spanning multiple countries and vendors. A perfect example would be that of an automobile manufacturer. Component parts are sourced from multiple supplies both domestically and overseas, and need to be sequenced into a just in time production environment. Even clients will lesser complexity can achieve cost savings when employing an LLP as it allows them to focus on the main business. “DHL takes on much of the risk and worry for the client allowing them to do what they do best,” says Mr. Pinto.
“We have an experienced team along with infrastructure and technology here in Bangkok. Plus we also have a global network that we can call in anytime when further or even more specialized expertise is required,” says Mr. Thamthada. “These are all the tools that DHL has, and we use them to benefit our customers’ supply chains.” With offices all over the world and strong connections with many different companies and industries, DHL is able to bring all the accumulated knowledge and best logistics practices to their customers. “As an LLP, we share our knowledge with our customers. Often times we have the situational awareness of which routes are quicker or which processes are more efficient and help save costs. Our global knowledge database allows us to share gained expertise with clients. Other 4PLs, especially pure consultants, may not have enough practical or on the job experience employing a theoretical or academic approach.
DHL’s emphasis is on what is practical and achievable with complex supply chains often existing in varied and often challenging operating environments. Our team is used to handling problems and finding solutions quickly.”
We make things happen for our client by utilizing our resources from around the world to make it more efficient.
Customers can get in touch with DHL’s dedicated Lead Logistics team for a consultation. DHL will analyse the customers’ entire supply chain and look for opportunities to create efficiencies and cost-savings. If there is nothing to improve or change, or if the supply chain is already fully optimized, then DHL will not suggest any changes if it doesn’t benefit the customer. “We wouldn’t suggest change for change just for the sake of it,” says Mr. Pinto. “As an LLP, we work purely on the interest of the customer.” If after analysing the supply chain and finding that there is an opportunity to help, DHL will make suggestions as to where improvements can be made.
As for the cost of DHL’s services, DHL’s Lead Logistics unit is not sold on a transactional basis like in the classic approach of selling air or ocean freight. Rather, their pricing can be based on a cost plus model or a percentage of the overall savings in the supply chain.
Mr. Pinto says, “We are open to meet any type of customer who feels that their supply chain could benefit from less complexity and leaner logistics operations, be it a large MNC or a smaller, regional or local business.”
As a Lead Logistics Partner, DHL provides its services purely on the client’s best interests. Their policy is to be neutral on all the logistics providers they recommend and manage. DHL can offer their own logistics services, but will first compare it with the services of other providers. “It could be that we find another 3PL or company that can provide a more suitable service in a particular trade lane,” says Mr. Thamthada. “If it benefits the customer, we are happy to recommend them over DHL.” DHL works with their customers to set up and monitor the KPI of all the players, which they monitor in a transparent way.
With increasing competition, more and more companies are forced to have the lowest costs to market. Logistics may be one of the final areas where true savings can be achieved by having the most effective supply chain.
DHL’s LLP Services
DHL understands the importance in industries such as, for example, Automotive, Chemicals, Energy, Industrial & Engineering, and Technology. A successful LLP is built upon a strong and effective partnership arrangement with customers to deliver value to their business, and encompasses a whole range of skills and experience that is deployed to meet the needs of businesses. These include:
- Network analysis and design
- Business planning
- Change management
- Project management
- Control tower and network management services, coordinating a wide supplier base across many modes and geographies
- Inventory planning and management
- Inbound, outbound and reverse logistics management
Key benefits of DHL’s LLP Services:
- Your operating costs are reduced, in distribution, transport, procurement and staffing
- Your working capital is lowered, because your inventory is reduced and your order cycles are shortened
- Your fixed capital is reduced, as your network becomes more flexible and you enjoy higher asset utilization
- This means enhanced product quality, availability and customer service performance, plus reduced capital investment, increased profitability and greater shareholder value