DHL Express

Delivering on an improved bottom line through cost and yield management.

Deutsche Post DHL Group is the world’s leading logistics company with 1.59B parcels delivered per year.

The Group enables global trade by connecting people and markets. DHL Express is one of five business units within the Group, endeavoring personal and business shipping services with speed and security. DHL Express’ 103,000 colleagues are united by a passion for logistical efficiency.

Finance operations has gained influence over company direction. DHL Express endured significant impacts across their business due to the coronavirus pandemic. Early on, DHL Express saw a sharp drop in volumes. Adapting their freight and aircraft network to respond to shifts in global supply chains, DHL Express has seen exceptional performance of their operating margin, meeting and exceeding prior year’s levels.

Fortunately, a prior global finance transformation effort prepared DHL Express for “what if” scenarios – including micro- and macro-economic factors, Brexit, digitization, and even pandemic impacts to manufacturers’ global supply chains. Their strong financial management strategy uses data to maximize operating margins and improve bottom-line revenue.

Evidence of this is in their most recent quarter completed where DHL Express saw cost and yield management measures continue to aid in growth of division earnings by 8.4% YOY.

DHL Express has the ability to reconcile to the penny, influence capital expenditures, and achieve high impact business outcomes for key logistics KPIs such as activity-based costing, yield management, forecasting, pricing, and profitability.

DHL Express implemented a transformation project to provide financial business insights through a single global application on Teradata, replacing their costing system. This included a single, unified profit model across multiple dimensions. The analytical environment managed costing, profit, and yield management with detail down to the route, service center, country, and region. For instance, DHL Express scans a shipment nearly 30 times between point A and point B. By proactive monitoring of time stamps, immediate action can be taken and customers can be notified of a missed shipment.

Deutsche Post DHL Group by the numbers

220

Countries and territories of operation

1.59B

Parcels delivered per year

131,300

Vehicles, bicycles, and aircraft in its fleet

€63.3B

Consolidated group revenues (2019)

Treating data as their greatest asset.

“The original business case was built purely on cost-saving from the systems we could sunset a whole bunch of legacy applications, which we did, and we did produce the cost savings we expected. Yes, we saved money by building one central system, but the true benefit has been in the value of the data. We then had a lot fewer people working on costing, which used to be very, very manual. All these people could go into the business and do something more useful.”

Graeme Aitken, VP of Business Controlling, DHL Express

Coupling operations with a powerful finance transformation foundation and additional analytics, they identified 200 opportunities worth over $20M in savings.

Their Teradata platform allows DHL Express to integrate with operations to include billing, which provides the ability to calculate the cost of every shipment. When cost is known, you can play “what if” scenarios to better understand profitability and pricing strategies. Data analytics allows DHL Express to understand critical business insights into other areas such as logistics, revenue, profit, and yield management.

Activity-based costing produces profitable insights.

“We've become pretty brilliant at explaining the recent past. We understand very granular costing and profitability of every shipment. Because it's at the level of the shipment, we can aggregate it up to trade lanes, countries, products, customers, and then we can start to take action on pricing, revenue management, capacity management, and so on. So, we can be very surgical about how we approach pricing, costing, and profitability. If we have a problem with profit, if we have a problem with cost, we can really be very specific about how we fix it.” 

Graeme Aitken, VP of Business Controlling, DHL Express

DHL Express identified three key initiatives using data analytics for business insights into their finance transformation.

Cost management versus price adjustments

There are always hard costs to doing business. Raising the price to ship a package is easy. However, if we raise the price, could we potentially lose the customer and their respective revenue? If a customer and revenue are lost, does DHL Express really lose the cost? This is why cost management is necessary, and DHL Express users are satisfied because sales teams watch revenue, operation teams watch costs, and shipments and revenue can be reconciled.

Yield management

With the capability of yield management, DHL Express can adjust for decreased or increased capacity. They can adjust prices when they have little capacity and offer lower prices when there is more, resulting in a balanced pricing proposition.

DHL Express will pass insight and cost savings to the customer, saving them money, improving service, and increasing profitability.

Supplying shipment insights improves customer satisfaction.

“If, for example, we have an issue with a customer with failed delivery — so if we keep trying to deliver a shipment and our customer is not home — it’s bad for us and it’s bad for the original shipper because they’re getting lower customer satisfaction if a shipment’s not delivered. In many cases we’ve actually shared information with our customer, ‘We have an issue delivering shipments. We have an issue with bad address.’ They get an insight into their own logistics data and can make their own improvements.”

Graeme Aitken, VP of Business Controlling, DHL Express

Managing for customer ups and downs

With multiple years of data in the Teradata platform, DHL Express can now begin predicting and forecasting with better accuracy using micro and macro third party data, including shifts in economies and impacts from Brexit or the coronavirus. They are able to look at historical data and add in economic indicators and strategic priorities to better manage budget and revenue/profit plan.

“If you extrapolate the past to the future, we should get a pretty accurate indication of where we're going. So, if you build in variables like inflation rates, Brexit, whatever else is happening in the global economy, we should be able to forecast more accurately using the very detailed costing data that we have currently.”

As DHL Express continues its path on finance transformation, they know supplying decision makers with detailed transactional costs will allow them to explore and confront “what if” scenarios head on, understanding, committing and agreeing to a plan forward.

Business analysts can efficiently evaluate performance and profitability rather than consolidating data and preparing reports. This enables reconciliation between profit metrics and the General Ledger, ultimately shortening the process to close the books monthly, quarterly, and yearly.

“Where we want to go in the future is towards variable costing, incremental costing, and forecasting. So, what if we make a change to our network? What if a customer leaves us? What if a customer comes to DHL? What impact does that have on our cost, our revenue, our profitability at the level of the entire company?”

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