Service Offering Analysis of DHL - Essay Example

DHL is one of the most important wings of Deutsche Post DHL, which is reportedly one of the internationally leading logistics group (DHL, . The prime focus of the company is customized delivery services of goods, letters and information. The company was established in San Francisco around 40 years back. After massive expansion globally, spreading out its operations to 220 countries and territories, DHL claims to be the world’s leader in the logistics industry (DHL, 2013). The services of the company spreads across ocean, air, overland transportation and contract logistics. The company also offers international mail services. The revenue of 51 billion Euros ion the year 2010 explains the huge market share of the company (DHL, 2013). As per the mission statement, excellent service delivery remains to be a constant focus of the company (DHL, 2013). However, the logistics industry has grown to such an extent that the complexities in the delivery mechanisms and the requirements of the industry has also grown massively complex. Thus it is extremely challenging for a logistics service provider to ensure consumer satisfaction. However, with the increasing competition in the industry, it is important that consumer satisfaction is assured. Moreover, the ethical aspects of the business also demand it. The objective of this essay is to critically analyze the service delivery of DHL and to provide a critical appraisal of its service delivery. The information on the service performance of the company has been sources from secondary literature and information made available by the company on the public domain. The perceived effectiveness of the services has been evaluated against the personal experience and also information collected from the peer on their personal experiences. The key elements of evaluation The evaluation of the service delivery of DHL has to consider the theoretical framework of the industry. Considering its major service stakeholders DHL can be generally termed as a ‘Third Party Logistics Provider’. There are several studies which have identified the key functions of a Third Party Logistics Provider. These include Transportation, Warehousing, Freight consolidation and distribution, Product marking, labeling, and packaging, Inventory management, Traffic management and fleet operations, Freight payments and auditing, Cross docking, Product returns, Order management, Packaging, Carrier selection, Rate negotiation and Logistics information systems (Rabinovich, et al, 1999). It is important to understand these theoretical constituents of Party Logistics service in order to evaluate the quality of DHL’s service. These functional elements spread across the four categories of warehousing, transportation, customer service, and inventory and logistics management (Rabinovich, et al, 1999). However, this report limits it scope to the consumer service offering. Thus only the category of customer service is being considered here. The functional elements of customer service include Freight Payments, Auditing, Order Management, Fulfillment, Help Desk, Carrier Selection and Rate Negotiation (Sink, & Langley, 1997). The proper material and information flow within these categories are important in the successful service delivery. Thus the performances of DHL in these categories are being evaluated here to critically understand its service performance. Critical Evaluation DHL as a market leader DHL claims to be worldwide leader in air freight. Its market share amounts to 12% of the total market (DHL, 2013). This is claimed to be twice as large as the share of the second largest group in the industry (DHL, 2013). Thus in terms of the market share and their increasing presence in the industry, they can definitely be termed as service leaders. Moreover, their services in terms of quality and reliability have attained a large market space. An interesting achievement in this respect has been cited in the website of DHL. Its latest achievement has been that it has won a long term contract with the electronics giant, Panasonic to handle their warehousing and transport operation. The contract amounts to 120 million Euros. DHL has made remarkable presence in China, which has already turned to be a global hub in logistics. 80 % of the international express delivery service in China is handled by four companies including TNT of the Netherlands, FedEx and UPS of the United States and DHL of Germany (Xinlian, 2011). Xinlian, (2011) has referred to DHL as an international express giant. DHL has successfully remained in contract with Formula 1 as their official logistics partner since 2004 (LBR, 2013). Taking into account these market fact and service facts, DHL would fall into the category of service leaders. Customer Friendly Services They offer services which are custom made for the customer. Their freight carriers include almost major carriers in the world. The service that distinguishes DHL from small players in the industry is that they have chartered flights being offered in very competitive prize. This makes them flexible in terms of customizing the services according to the customer. This makes their services flexible in terms of timings and other requirements of the customer. These customized services include urgent delivery services, economical delivery services, flexible, day definite services, door to door delivery of bulky goods, temperature controlled freight and fast and flexible services. They also offer multimodal freight service (DHL, 2013). Innovative Services The role of innovation in logistics to sustain as a market leader has been reiterated by a number of literature. Vitasek et. al (2010) has stated that enterprises must innovate to remain a leader in the market and to sustain the competitive core of the company. DHL has always given prime importance in ensuring innovation in their services. The innovation in the range of products helps them to be distinctive in the market. Appel (2007) has reported a case where DHL had joined hands with IBM, Intel and SAP to develop a state of the art technology in logistics which has been termed by the author as next generation technology. The technology which was being reported here was the use of Radio Frequency Identification (RFID) to monitor the temperature of warehoused shipments. Thus it is clear that DHL incorporates innovation in its services offered and also in the order management and fulfillment. Another example for innovation in the services offered by DHL is its Global Mail Hybrid Solutions. It is basically an integration of traditional and conventional technologies of communication. It engages both physical and digital forms of communication. Customer Interface DHL has developed a very interesting interface to communicate with its customers. They have provided an exclusive customer interface area in their website. Freight tracking is an innovative option which ensures transparency in the consignment transportation. They have provided toll free numbers and chat rooms for the customers to have access to quick and precise information (DHL, 2013). A very interesting link leading all the legalities involved in logistics as prescribed by the International chamber of commerce has been included in the website of DHL (DHL, 2013). This ensures that the consumers are aware of the legal obligations of the company towards them and their consignments. This improves the perceived reliability of the company. Personal Experience The personal experience in using DHL logistics has however had mixed observations in terms of its service. There has been precision in terms of delivery timing. The charges involved were quite transparent. However, the price negotiation facility that they offer for large customers is not offered in the case of individual customers. DHL seems to have devised very different strategies for individual customers and institutional customers. The delivery commitment as agreed to while ordering the shipment was adhered to, to a large extent. The consignment could be effectively tracked till it reached the local delivery agent. There were issues in tracing information about the consignment after it was delivered to the local office. The delivery schedule was to be fixed by the local delivery agent as per the agreement. However, this did not happen in the personal experience being quoted. The delivery van just appeared without notice and had to return reporting a closed door. This led to a lot of confusions later on. However, the consignment was delivered the next day after several deliberations. On interviewing peers on their experience with DHL, several of them reported the same issue. Though the complexity and the delay in delivery varied the nature of the issue was found to be the same. It must be noted here that the delivery boy is the end phase of the services offered by the company. All the precision and quality in the services offered by DHL remains invisible to the customer. Thus this phase of the service has to be given prime importance. It is often observed that the end delivery is outsourced by the company to delivery agents. A quality check on the service has to be ensured by DHL. The perceived effectiveness in the service offering of DHL would largely depend on the end phase of the delivery operation. Thus special emphasis has to be given so that the delivery is done with the same amount of professionalism as ensured in all other stages of service delivery. References Appel F (2007) DHL Launches Program To Develop Next-Gen Technology, Supply Chain & Logistics, Industry Week, 2007 (IW) DHL (2013) Logistics, Deutsche Post DHL, Retrieved on 12 March 2013, from http://www.dhl.com/en/logistics.html LBR (2013) DHL extends logistics partnership with Formula 1, LBR, Retrieved on 12 March 2013, from< http://contractlogistics.logistics-business-review.com/news/dhl-extends-logistics-partnership-with-formula-1-120313> Rabinovich, E., et al.(1999) Outsourcing of integrated logistics functions. International Journal of Physical Distribution and Logistics Management 29(6) 353–373. Sink, H.L. and Langley, C.J (1997). A managerial framework for the acquisition of third-party logistics services. Journal of Business Logistics 19, (1) 121–136. Vitasek, K., Ledyard, M., Manrodt, K. (2010) Vested outsourcing. Five Rules that will transform outsourcing. Palgrave Macmillan, New York, Xinlian, L. (2011) Express Reform for Speedy Deliveries, Beijing Review, July 28, 2011 Read More