DHL to go beyond traditional approach and focus on customer needs

Going beyond the traditional approach of providing only back office support, DHL Exel Supply Chain’s IT department specifically focuses on customer needs, according to Mark Wettasinghe, CIO of DHL Exel Supply Chain, Asia Pacific.

As a subsidiary of Deutsche Post World Net (DPWN), DHL provides international express delivery, overland transport, air freight services and supply chain management solutions to more than 220 countries and territories.

DHL comprises three divisions, namely Express, Logistics and Global Mail. The logistics division is further broken down into three business units (BUs): Global Forwarding, Exel Supply Chain and DHL Freight-Only.

“As a business unit of logistics giant DHL, we specialise in providing logistical services to multi-national corporations (MNCs),” said Wettasinghe. “Because we are the largest provider of logistical services in the world, customers’ expectations are way up there and meeting them is a challenge.”

In response, DHL has adopted some practices in line with its customer-focused strategy.

An economical solution
This logistics CIO noted that besides excellent service, customers also expect DHL’s IT solutions to be highly differentiated. “Sometimes, customers indicate that they expect more from our solution,” Wettasinghe said. “I tell them it depends whether they wanted it cheaper, better or faster. If they want it cheaper, we’ll try to offer them an economical solution.”

Wettasinghe highlighted that IT personnel should understand business situations and translate them into opportunities for technology to play a supporting or enabling role. “Our IT staff are not hardcore technology people. Most are business grads,” he said. “My background is not 100 per cent IT as my experience includes e-account management, business development and customer engagement.”

Besides developing existing staffs’ expertise, Wettasinghe also keeps an eye out for people with global exposure and experience working in multiple industries as “the more varied the staff, the better”.

To align the IT function with business strategy worldwide, DHL’s parent company DPWN sets policies for local IT departments including organisation, role definitions, performance assessment and recruitment. “Our data centres are also governed by DPWM security standards on a global level,” Wettasinghe said.

He sees IT from a supply and demand perspective. “Supply IT is typically commoditised, such as lease lines, which we do not build,” he said. Instead, the IT department seeks out the “best” subcontractor or service provider with the “best price and best quality”. “Demand IT”, as he calls it, refers to the role that IT plays in meeting internal and external customer demand.

Wettasinghe stressed that aligning IT with business process is essential. “The ‘I’ is more important than the ‘T’ in ‘IT’. We always have to start by asking what the business is trying to resolve.” He added that the next step for CIOs is to move down the supply chain and to consider what technologies to deploy and how to deploy them.

To ensure key staff are able to apply technical knowledge to business operations, Wettasinghe sends some on a one-month orientation programme in the company’s warehouses, before bringing them back to the IT department.

He expects the department to further evolve into a business unit by itself, providing IT services to anybody within or outside DHL.

Increased direct deliveries
Trends in the logistics industry have affected Wettasinghe’s role. “With Asia becoming an economic powerhouse, there are more cross-border trade requirements.” He added that the growth of e-commerce in Asia has fuelled an increase in direct deliveries and driven up customers’ expectations on service.

Meanwhile, more retail shops are springing up. “Retail businesses like HP are going into direct delivery, while direct delivery businesses like Dell are now opening retail shops,” Wettasinghe said. “These are changing the rules of how things are being done in logistics.”

Globalisation comes with increased specialisation and more differentiated services. “Logistics has to be sectorised and broken down. So you’ve got things like domestic road transportation, overnight delivery and parcel delivery,” he said.

Wettasinghe expects laptops and mobile devices to complement each other. “This has a big implication on logistics because rather than delivering to an address, you could be delivering to an individual who could be anywhere.”

Temperature sensors
DHL also has to deliver pharmaceutical products with temperature tolerance levels within a set time limit. To meet this challenge, the company uses Radio Frequency Identification (RFID) tags with temperature sensors. “You can pull delivery information from the tags like maximum and minimum temperatures and detect temperature fluctuations in real time.”

The company leverages on pick-to-light technology to minimise turnaround time from customer order to actual delivery. A pick-to-light system uses lights to guide the employee to exact warehouse locations where ordered items are to be picked up. “It’s like GPS, which can help you find the shortest or fastest route to town,” said Wettasinghe.

He added that pick-to-light technology has to be fitted into the whole warehouse management system to ensure efficiency. “We also need to consider warehouse layout, as well as manage and account for inventory.”

Customisable services
DHL offers standard and customisable services to customers. “While the IT cost of providing a standard service is equivalent to three to five per cent of our revenue by comparison, it can be as high as 15 to 20 per cent for customisable services.”

Wettasinghe makes customers’ requests for customisable services as business cases before top management. “I always tell the boss that if the customer is willing to pay, wouldn’t it be worthwhile that for every dollar DHL puts in, the company gets back two dollars in return?”

However, he pointed out that when it comes to providing services internally such as for ERP, finance or HR systems, associated IT costs “have to come down”.