Value Chain Analysis Of DHL And Aramex - Assignment Example

Value Chain Analysis Of DHL And Aramex The report is on a comparative analysis between DHL Express and Aramex on the basis of one of the elements of business operation. In order to compare and contrast both the companies in the logistics and express transportation segment, one business operation element, that is supply chain is chosen for the study. The supply chain plays an integral role in this industry. DHL being a much bigger company in comparison to Aramex has a segregated supply chain network, while Aramex has a smaller but technologically well-equipped supply chain. Sincerely yours, Table of Contents Executive Summary 2 I: INTRODUCTION 4 1.1 Background 4 1.2 Procedure 4 II: LITERATURE REVIEW 5 2.1 Company Overview 5 2.3 SWOT Analysis 6 2.4 Value Chain Analysis of DHL and Aramex 8 2.5 Element of Business Operation in DHL Express and Aramex 10 III: Findings 12 3.1 Questionnaire Findings 12 3.2 Interview Findings 15 Conclusion 17 Recommendations 17 Appendices 21 Appendix 1: Questionnaire Survey 21 Appendix 2: Interview Questions 22 Executive Summary This report was prepared with the aim of investigating an element of business operation that is relevant for DHL Express as well as for Aramex. However, this is not possible if information regarding the companies, their operational functions and their strengths and weaknesses are not discussed. Both secondary as well as primary data would be collected in order to present a comprehensive report to the readers. Among these major business operations, supply chain is the common element that has been considered for this report. Though supply chain plays a significant role for both DHL Express and Aramex, but DHL Express is a bigger company and supply chain is segregated for different segment such as, health care, oil and gas, etc. Aramex on the other hand is present worldwide, but yet the company is not as large as DHL, so they have a sophisticated and technology integrated supply chain. I: INTRODUCTION 1.1 Background The express transportation and logistics industry can be regarded as one of the steady growing segments in the world economy. More than 1.25 million individuals are employed in this industry directly, which is even more than the size of the petroleum and oil industry. Apart from this, it supports more than 2.65 million other jobs around the world (Oxford Economic Forecasting, 2005). There are many industries around the world which functions with the help of express service industry, such as pharmaceutical, manufacturing, financial services and other technology companies (Transport Intelligence, 2012). The global leaders in this industry are the big four companies; DHL Express, UPS, TNT and FedEx (Thompson and Martin, 2010). The aim of this report is to analyse the business operations of two well-know express transportation and logistics industry, so as to identify a common element in their business operation and compare and contrast them. The companies chosen for this study is DHL Express and Aramex. A specific focus towards the business operation and function of these companies in the Gulf countries, such as Bahrain, etc would be also taken into account. 1.2 Procedure This report will include a comparative study of two companies in the express transportation and logistics industry. With the motive of comparing both the companies on one common element of their business operation, primary data as well as secondary would be collected. The primary data would be gathered through a questionnaire survey and interview. A semi-structured questionnaire would be prepared and both close-ended as well as open-ended questions would be included. Interview would be conducted with a senior management official of DHL and Aramex. II: LITERATURE REVIEW 2.1 Company Overview DHL Express DHL Express is a part of the Deutsch Post DHL, which is a German logistics company. It was established in the year 1969 in Bonn, Germany. However, the company has aggressively expanded to different countries around the world. By 2001, Deutsch Post acquired the shares of DHL and thus DHL became a part of Deutsch Post (United States Postal Services; Deutsche Post AG, 2013). The company follows the norms and regulations of the different countries because it has to deliver mails and packages around the world. The company offers export, import, domestic and industry solutions and services (Onkvisit and Shaw, 2004). According Nour Suliman, the CEO of DHL Middle-East, Saudi Arabia has one of the biggest markets in the Middle East. As per DHL’s records Gulf countries are among the 20 most profit generating regions for DHL. DHL is controlling around 36 to 47 local markets, which are generating over SAR 30 billion in the express transportation and shipping segment (Al-Zayani, 2013). Revenue growths in certain segments were badly affected due to decline in the demand. Those segments were global forwarding, supply chain division, etc. This reveals that DHL Express is a market leader in express transportation and logistics service industry. Aramex Aramex is another company in the transportation and logistics service segment, which was established in the year 1982 that is headquartered in Amman, Jordan (Aramex International, 2013; Neal, Quester and Pettigrew, 2006). Aramex is the founding member of Global Distribution Alliance (GDA) that is an organisation of 40 leading express transportation and logistics service providers worldwide. Aramex offers services such as international express delivery of documents and parcels, import shipments, deliver non-priority economic shipments, offers cash on delivery, domestic express, business solutions, which include financial, telecom, inter branch and mass mail solution (Linder, 2006). The major revenue of Aramex is generated by the North African and Middle Eastern countries. Aramex offers many online customised services to suit their customers in the Middle Eastern countries such as Saudi Arabia, Qatar, Abu Dhabi, Bahrain, Kuwait and Oman. These facilities are tailor made for customers ready to ship their goods by land. The trucking segments of Aramex in the Middle Eastern countries are of two types; Less than Truck Load Shipping (LTL) and Full truck Load Shipping (FTL). 2.3 SWOT Analysis In this section of the report, a SWOT analysis would be conducted in order to compare and contrast the strengths, weaknesses, opportunities and threats of DHL and Aramex. SWOT DHL Express Aramex Strengths Leading market share in the air cargo segment globally Network spread to more than 220 countries and managed by about 275,000 employees. It is considered among top 50 freight and cargo airline companies in the world Focused towards e-procurement and central procurement (Lawfer, 2004.) Innovative and technology integrated corporate culture Strong management High brand equity Strong network and supply chain worldwide, especially in Middle Eastern and African countries Pricing power Founder of GDA and it follows asset light model Cash position is strong Weaknesses Many of the competitors are government owned companies The growth in terms of market share is limited because competition is extreme Management capacity Brand name in Western countries is weaker (Hoyer and Macinnis, 2008) Opportunities Merger and acquisition with the business and corporate houses Global expansion Scope to diverse in financial market Online marketing portal Emerging markets International expansion Threats Tremendous advancement of e-commerce segment Turbulent economies and natural disasters Decline in the business of various traditional services such as letters due to e-mail (Holmquist, 2012) Mature market Presence of strong competitors Intense competition Substitute products available in the market 2.4 Value Chain Analysis of DHL and Aramex Value chain analysis will assist in identifying the primary as well as supporting business operations of DHL Express and Aramex, so that one of the most significant elements of business operation of these companies can be chosen for further analysis. Value Chain (Operational functions) DHL Express Aramex PRIMARY ACTIVITIES Inbound Transportation Flow of goods from customers to warehouse or distribution hose for dispatch Warehousing, goods handling and shipping, inventory management through effective tools Outbound Transportation Sophisticated channel for distribution and delivery of goods within stipulated time, transportation channels Distribution beyond the walls of the warehouse covers all the stages of the supply chain to deliver goods to the final customers. Operations Transportation, delivery on time, good payment facilities, import and express service Freight forwarding, custom clearance, on-time delivery, customer support, Marketing and Sales Marketing through online channels such as company website. Offering e-procurement facilities. Sales of services through technologically advanced channels Surveys for customer service, personal feedback collection, setting new branches in different countries, on-time delivery, offering cost effective and value for money services to customers Services Express transportation, mail and parcel delivery of all sizes, cash on delivery facility and import services too Express shipping and transportation services, land, air and ocean freight service, logistics facilities, e-commerce and record management solutions Procurement Goods are procured from the different branch offices and delivered at the door step of the customers. Goods are procured from the warehouses, branches and delivered to the point of delivery on time (Cherunilam, 2010) SUPPORTING ACTIVITIES Human resource management Huge base of human resource around the world to support operational functions like, transportation, warehousing, distribution and sorting. Human resources working in different companies are involved in functions like, warehousing, transportation, distribution and delivery. Technology and Design Whole business model is built on technologically equipped infrastructure, where goods delivery and tracking can be done on real-time basis. E-procurement, online portal for shipping through land, effective tracking facility for customers. Infrastructure Transportation such as, vehicles, cargos, ships or airbuses are there for prompt delivery. Ample number of trucks and other vehicles for land shipping (Blackwell, Miniardand Engel, 2006). Every mode of transportation is utilised by the company for prompt delivery, which includes airbus, trucks and other vehicles. 2.5 Element of Business Operation in DHL Express and Aramex After a comprehensive discussion on the whereabouts and business operations of both DHL Express and Aramex, this section of the study would specifically discuss one significant element of business operation that is both common and significant for the companies. Supply chain is one of the most significant elements of every company. However, in case of express transportation and logistics industry, supply chain is responsible for conducting the core functions. DHL Express and Aramex are functioning in the same industry and the structure of their supply chain would be similar because they are conducting similar functions daily to generate revenue. However, difference can be seen in the method of utilising them and also in terms of size because DHL Express is a bigger company in comparison to Aramex. The supply chain segment of DHL Express has two units; customer-focused solutions for outsourcing and end-to-end integrated offering in case of contract logistics. Inbound transportation includes the process from sorting, procuring and taking goods to the point of transportation (Adler, 2010; QFinance, 2013). On the other hand, Aramex have teams of supply chain experts, who have the expertise to ensure effective flow of products, control the inventory management cost, increase the speed of transaction and offer improved sales to the customers by offering them what they require (Rothwell and Kazanas, 2003). Aramex has an extensive network for freight forwarding and is well equipped with inclusive transportation solution. The trucks of the company are well-equipped with GPS tracking system, which ensures that the customers can track the location of their product easily. DHL Express on the other hand has organised its supply chain in three specific hubs, so that it can supply the goods worldwide. The three specific regions are Europe, Middle-East and Africa, Asia Pacific or America (Pride and Ferrell, 2004; 2012). The supply chain of DHL Express has structured its global management framework for implementation of supply chains which are sector-specific and offers solutions to its customers on a cross-level basis. Aramex has not such structure in supply chain because the company size in comparison to DHL Express is small. The supply chain of DHL is segregated and spread in a comprehensive format for smooth flow of service and goods to 220 countries, while Aramex has a precise yet technologically well-equipped supply chain to attend all its customers efficiently. III: Findings 3.1 Questionnaire Findings The questionnaire present in Appendix 1 has been prepared for the customers availing services from the concern Logistics companies. Their feedback would be collected in order to identify the quality of services that DHL and Aramex are providing and also the effectiveness of the supply chain indirectly. The sample size would be 10. The information received from the respondents has been stated below: 1. In the first question, the age of the respondents have been observed. In this 20 % respondents need to send mails or packages, while 40 % percent respondent belong to the age group 26-35, 35 percent respondent belong to age group 36-45 and 5 % belong to 46-50, as can be seen in the graph below: 2. It has been determined that 35 % of the respondents are females, while 65 % are males in the sample for the survey, while signifies males avail the logistics services more than the females, as can be seen in the graph below: 3. Among 10 respondents 4 of them rated DHL Express as 1, 3 respondents rated UPS as 1, 2 respondents rated FedEx as 1 and 1 respondent consisted Aramex to be 1st in rank. These rating of the customers are based on their overall perception about the company and its services. 4. DHL Express was chosen by 5 respondents, 2 respondents chose Aramex, 1 respondent chose UPS, 1 respondent chose FedEx and 1 also chose TNT. This signifies that the feedback depends on the service people has availed or liked. 5. 7 respondents selected DHL Express for urgent delivery, while 3 selected Aramex. Among the 7 candidates who chose DHL Express, 2 have not availed services of Aramex, so their choice of DHL Express was obvious. 6. Among the 7 respondents supporting DHL Express, 2 of them said they like DHL because of its on-time delivery and good handling, 4 of them preferred it because of its effective network and customer service, 1 respondent find it to DHL to be affordable as well as praised it for on-time delivery. On the other hand, 3 respondents who supported Aramex said that it offers delivery on-time and it is affordable, while 1 among these 3 respondents also added that since its goods delivery network is highly efficient, so it delivers goods with care. 3.2 Interview Findings DHL Express Place: Bahrain Time: 11:00 a.m. Date: 20th November 2013 Person: Rafat Zourgan, Country Manager The interview was initiated by exchanging compliments and through self-introduction of the Country Manager. Rafat Zourgan is the Country Manager of DHL Express and heads the Logistics and Supply Chain segment of the company in this region. He is associated with DHL Express Bahrain since 2010 as Key accounts manager, Area sales manager and now as a Country manager. Mr. Zourgan informed that since DHL Express has a huge customer base, so it segregates its supply chain channel based on the industry such as, pharmaceutical, heavy machinery, etc, so that it is easier to sort and transport the products using the appropriate vehicle. The goods are kept in their own warehouses during transit. Since the supply chain functions on technology integrated infrastructure, so goods can be tracked easily. 3. Logistics and express delivery services as DHL face various challenges in relation to transportation and delivery of goods on time. Secondly, delivering the products with care is another important task because the company has to compensate for any damage. Thirdly, minimising lag time and managing human resource throughout the large supply chain is indeed a challenge. DHL Express is trying to minimise lag time between transit. Plans are there for restructuring the technological framework for a complete IT integrated supply chain, so that there is no scope of negligence. Aramex Place: Muharraq Town, Bahrain Time: 12:00 a.m. Date: 22nd November 2013 Person: Luai Al Agha, Country Manager The interview was initiated by exchanging compliments and through self-introduction of the Country Manager. 1. Luai Al Agha has been associated with Aramex since 2008 as Customer accounts manager and then as Country manager from 2008 till now. He studied Architectural engineering from Budapest University of Technology and Economics and MBA from University of StrathClyde. 2. Aramex believes in utilising technology for convenience and efficient service, so software integrated supply chain and inventory management system is the unique selling proposition of Aramex. This is supported by the logistics and distribution segment, transportation and human resource. Supply chain is the back bone of Aramex and the growth of Aramex from a small firm to a global player goes to the successful supply chain of the company. Aramex has been registering steady growth even during the periods of financial crisis. It is evident that Aramex has the strong supply chain and logistics and effective human resource to compete with the global players. Conclusion This study was conducted in order to analyse one common element of business operation in two logistics and express delivery companies, DHL Express and Aramex. The purpose was to compare and contrast the effect of this element in the growth and progress of the company. The secondary data were utilised to critically review the operations of these companies keeping in mind the common element, while the primary data was collected through questionnaire survey as well as interview that was conducted with the Country manager of Bahrain. Since, Bahrain and the Middle-Eastern countries were the focus of discussion in this study, so primary data has been collected from the Middle-Eastern markets. Supply chain is important for both the companies, but the framework of supply chain is different in both the companies due to their customer base and size. Recommendations Both the companies have been functioning in the same industry, but they differ in terms of revenue generation, size and business operation. The recommendations stated below have been stated in accordance to the requirement of the company. DHL Express: DHL Express is already a global leader and has efficient and expert human resource to manage and control its supply chain. However, in order to eliminate the lag time in transit and ensure better delivery the supply chain of the company can be supported with software integrated framework, which will assist the agents of supply chain to track time and delivery of product at every step. Aramex: The Company utilise its effective IT integrated supply chain to expand its reach and market, so as to compete with the global leaders like DHL Express. In order to be a global leader Aramex has to increase its customer base. Reference List Adler, M., 2010. A study of marketing and online marketing tools which improve online success. Munich: GRIN Verlag. Al-Zayani, M., 2013. In Conversation with DHL Middle East CEO. [online] Available at: < http://www.aawsat.net/2013/11/article55321652> [12 November 2013]. Aramex International, 2013. About Aramex. [online] Available at: [12 November 2013]. Blackwell, R., Miniard, P. and Engel, J., 2006. Consumer behavior. Mason: Thompson Learning. Cherunilam, F., 2010. International business: Text and cases. New Delhi: PHI Learning Deutsche Post AG, 2013. Deutsch Post DHL. [online] Available at: < http://www.dpdhl.com/en/investors.html> [12 November 2013]. Holmquist, L. E., 2012. Grounded innovation: Strategies for creating digital products. Massachusetts: Elsevier. Hoyer, W.D. and Macinnis, D.J., 2008. Consumer behavior, 5th ed. Connecticut: Cengage Learning. Lawfer, M. R., 2004. Why customers come back: How to create lasting customer loyalty. California: Career Press. Linder, J. C., 2006. Does innovation drive profitable growth? New metrics for a complete picture. Journal of Business Strategy, 27 (5), 38 – 44. McFann, C., 2010. Market Report: Express Logistics Middle East 2010. [online] Available at: < http://www.arabiansupplychain.com/article-4474-market-report-express-logistics-middle-east-2010/#.UoG7-HCVOI9> [12 November 2013]. Neal, C., Quester, P. and Pettigrew, S., 2006. Consumer behaviour: Implications for marketing strategy, 5th ed. Berkshire: McGraw-Hill. Onkvisit, S. and Shaw, J. J., 2004. International marketing: Analysis and strategy. 4th ed. London: Routledge. Oxford Economic Forecasting, 2005. The Impact of the Express Delivery Industry on the Global Economy. [online] Available at: < http://www.global-express.org/doc/Global_Express_Impact_Study.pdf> [12 November 2013]. Pride, W. M. and Ferrell, O. C., 2004. Marketing: Concepts & strategies. 12th ed. Daryaganj: Dreamtech Press. Pride, W. M. and Ferrell, O. C., 2012. Foundations of marketing. 5th ed. Connecticut: Cengage Learning. QFinance, 2013. Transport and Logistics Industry. [online] Available at: < http://www.qfinance.com/sector-profiles/transport-and-logistics> [12 November 2013]. Rothwell, W. J. and Kazanas, H. C., 2003. The strategic development of talent. Massachusetts: Human Resource Development Press. Thompson, J. L. and Martin, F., 2010. Strategic management: Awareness & change. Connecticut: Cengage Learning EMEA. Transport Intelligence, 2012. Agility Emerging Markets Logistics Index 2012. [online] Transport Intelligence. Available at: [12 November 2013]. Appendices Appendix 1: Questionnaire Survey 1. Age: 18-25 26-35 36-45 46-60 2. Gender: Male Female 3. Rate the following companies for their services: (1-5) UPS Aramex FedEx TNT DHL Express 4. Which company delivers package within time? UPS Aramex FedEx TNT DHL Express 5. Which would you prefer for an urgent package delivery? DHL Aramex 6. Which service/feature of DHL Express / Aramex you like? On-time delivery Customer service Delivery of goods with care (Handling) Affordability Efficient network for Goods Delivery Appendix 2: Interview Questions DHL Express 1. Kindly tell me about your role in the department (supply chain)? 2. Please tell us how the supply chain in DHL functions? 3. What are the challenges that you often face in the maintenance and smooth functioning of the supply chain? 4. What the future plans of DHL Express regarding expansion or development of the supply chain for better service? Aramex 1. Kindly tell me about your role in the department (supply chain)? 2. Please tell us how the supply chain in Aramex functions? 3. What role does supply chain of your company will play in making Aramex a top global brand? 4. How do you think Aramex can compete with the strong players in the market? Read More