DPWN scales the heights

Dr. Klaus Zumwinkel believes in frontal assaults — both in his private and professional life. Scaling mountain tops is physically exhausting, but once ou’ve made it, the feeling is indescribable. And when you are up there you see things from a new perspective. Some things hecome insignificant."
The summit that Zumwinkel wishes to conquer in his professional life is the No. 1 spot in the world logistics industry, and that is where he wants to lead Deutsche Post World Net. "We are making good progress", he said, pointing to the excellent half-year results for 2001 (cf. ITJ 35/2001). His big competitors, UPS, Fedex and TPG are also trying to scramble up the same mountain. "In terms of turnover, we are already ahead of UPS. And we are the sole genuinely all round provider of logistics services. We organise the physical transport of goods, from small parcels to large volume project shipments. We also manage the flow of data that accompanies the goods and offer financial services of all descriptions at all points along the supply chain."
Zumwinkel was appointed to head Deutsche Post in 1990. Soon after the
giant state enterprise was converted into a public limited company five years ago, he charted its new course: "Growth and internationalisation", were to be his watchwords. And then he got stuck in.
The acquisition of 25% of the equity of leading global air express delivery specialist DHL (a holding that was later boosted to nearly 50%) was followed by the takeover of Deutsche Postbank and in 1999 the acquisition of logistics service provider Danzas. Since then this expansion strategy has been consistently extended by the takeover of the Swedish logistics concern ASG, the parcels and logistics arm of Nedlloyd and of the US logistics giant Air Express International (AEI), not to mention a raft of smaller purchases in Europe. Africa and South America. The contribution of the logistics division to the total turnover generated by the DPWN Group thus climbed niore or less overnight from () to over 24%. "That is an outstanding success", says Zumwinkel smiling. Success is what gives him job satisfaction and spurs him on to set ambitious new goals.
In the year 2000. DPWN excelled itself by posting a turnover of EUR 32.7
billion and an operating profit (EBITA) of around EUR 2.4 billion. "We want to exceed the record set last year with this year’s turnover and profit, even if our biggest competitors have to issue profit warnings", says the CEO.
Yields could however take the shine off this strategy. "Integration costs associated with a strategy of growing rapidly by acquisition are naturally very high". said Zumwinkel, explaining the weakness of the Group's bottom line. "However we are already over three quarters of the way there with the integration of both EuroExpress and Danzas. This phase should he con-
cluded by the end of 2002 and the group should have been fully reorganised. Then the full synergy effects will kick in. We are already of course benefiting from certain economies of scale", added Zumwinkel
"Thus we have for example consolidated all Deutsche Post’s and DHL’s road and rail traffic under the management of the Danzas Business tnit Eurocargo".
"With its financial leverage, Deutsche Post World Net-Group is extracting considerable discounts when it buys in capacity from external providers worldwide, at terms which the individual divisions could not hope to negotiate in their own right. However, economies of scale also come into play with purchases for inhouse use, whether it be PCs or trucks." But as far as assets are concerned Zurnwinkel does not necessarily want to go on a buying spree. "We intend to stay asset-light."
The Post CEO pins great hopes on EDP. "We can enormously reduce
transaction costs by papertess material planning. Modern IT tools also make synergy potentials far more visible. IT thus makes it possible for us to exploit the DPWN Groups enormous customer base systematically. I am convinced that our customer base represents an as vet only partially prospected Eldorado", says Zumwinkel.
To step up the tempo, Zumwinkel initiated the P.L.U.S. project (DPWN Leverages Customer Base) in tandem with the Roland Berger Consulting Group. It is designed to improve the quality of cooperation, purchasing and integral services among the individual divisions in the group, thus creating a win-win situation for all participants. PLUS started this spring with the development of a shared database containing data on all key customers. key sales contacts and common sales and marketing tools.
The new strategy is already beginning to bear fruit with several customers: in the case of the automobile manufacturer FIAT for example, or with some high-tech manufacturers. The important point is that all our employees should begin to view our customers as potential clients for all business units and divisions of the DPWN Group. It is really about increasing our customer base for the benefit of all. Of course there is an upside for our customers too in terms of access to a broader spectrum of products and services from the Group.
Another approach to improving yields in Zumwinkel’s opinion is to expand the scope of value-added services offered in the logistics area, particularly by the addition of financial packages. <>.
As logistics service providers, we are in a unique position when we manage the transport of the goods to influence
the insurance premiums. In the States, we have been successfully selling our Cash Forwarding> product for several months now and this product is now being trialled in France for an eventual Europe-wide launch.
With the purchase of the DSL Bank and recently also the PB Capital Corp. (formerly the US subsidiary of the German BHF Bank and the Dutch ING Group) in New York, which both now operate as business divisions of the Deutsche Posthank AG. Bonn, we have
acquired businesses that will provide us with a platform for the realisation of our ambitious plans. Our newly acquired capability to provide a comprehensive range of financial services will make us attractive for a whole new category of major customers. The successful cooperation between FIAT, DHL Worldwide Express and the Posthank is a good example of what can he achieved and is the only partnership of its kind in Europe>>.
In the context of this joint venture, the DPWN Group manages the logistics and financing of Fiat auto spares all over Europe. a business that is worth around EUR 2.5 billion per annum (see ITJ 34/01, page 11).
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Zumwinkel is optimistic about the future of the logistics industry in general and of his business in particular: <>