DHL linking supply chain closer to express network

DHL is showcasing a new EUR 14m “End of Runway” facility in Leipzig, Germany, which links outsourced supply chain operations more directly with the DHL Express transport network. The 15,000 square foot facility would allow companies to keep their stock close to the DHL Express air hub at nearby Leipzig Airport, for direct injection into the company’s express network once an item is ordered.

The facility has space for fulfillment, product finishing and repairs, and the potential to handle temperature-sensitive and hazardous items, offering a “one stop shop” for companies that want to manage their supply chains, and have items finished, packed, repaired and shipped overnight to major business centres around the world.

Graham Inglis, the DHL Supply Chain CEO for the EMEA region, said deploying stock in an End of Runway facility meant much later cut-off times for items being delivered next-day through the Express network.

Items can be ordered potentially up to 11pm and still arrive in major European cities by 9am the next morning.

“We’re deploying that product that would then feed directly into the express hub for delivery to 220 countries around the world,” he said.

Value

Potential value-added services that could be undertaken at the End of Runway facility include product assembly, configuration and customization, as well as product testing, repair and returns.

DHL Supply Chain believes the new End of Runway facility is most applicable to customers in the healthcare, technology and automotive sectors.

“A special medical device could be wanted in a hospital in Lisbon, Portugal, for an operation, and we could get it there in 14 hours,” said Inglis.

In these challenging economic times, DHL believes companies that currently run their own local distribution centres, in order to get products out quickly to their customers, could save money having DHL manage the supply chain, feeding products directly into the express network for next-day delivery in major European cities.

John Farrell, the president of DHL Global Service Logistics, said modeling had suggested customers could save 8% on warehousing costs, 17% on transportation and 14% overall by opting for the centralised supply chain management at the Leipzig facility.

“That is including costs of moving their stock to our facility – for an entirely new customer, we believe we could save 25% of their costs,” he said.

Uncertain economy

DHL is currently courting several potential customers who could be interested in the facility and the End of Runway concept.

But some months after the new centre was supposed to begin operations, DHL executives said the uncertain global economy was slowing down the decision making process among its customers.

“We are in deep discussion with a number of our customers, so that we can deploy their products here,” Inglis said. “It has taken more time, but there are a lot of discussions at the moment.”

Although it is mainly showcasing the new facility in Leipzig, DHL has another End of Runway facility in Shanghai, and expects to expand the system around the world if it proves successful.

DHL Supply Chain currently has 23m square metres of warehouse space around the world, generating EUR 11.9bn in annual revenue last year, its fourth consecutive year signing more than EUR 1bn in new business.