DHL Exel Supply Chain reached the end of 2006 with its integration agenda pretty well complete. In all there were some 140 integration projects in Europe, says Graham Inglis, chief executive officer, UK, Middle East & Africa.
“We have a great platform to grow the business,” says Inglis who points out that one of the great strengths of DHL is the ability to offer integrated services to customers. “Retailers are sourcing product in China. We can help by providing consolidation in China, getting the materials into Europe, deconsolidating and then getting the products to the retailer.”
One of the fears expressed by some customers about the takeover of Exel by Deutsche Post was that it would create an organisation that would be too big to be responsive to smaller customers. Inglis points out that while the company has become an international giant, in the UK it is made up of 15 business units – each of them fairly small – focused on a specific industry or market segment.
“That enables us to be quite nimble,” he says. “We have a mixed portfolio – that is good for transferring best practice solutions between industry sectors.”
While the retail market is relatively mature, Inglis sees strong growth potential in a number of other sectors such as technology and healthcare. For example, in September last year DHL Logistics won a £1.6bn 10-year contract to run NHS Supply Chain on behalf of NHS Business Services Authority, and is responsible for delivering all procurement and logistics services across an initial 500,000 products to support 600 hospitals and other providers in England.
It is managing a total spend of some £22bn with the aim of making savings of about £1bn over the course of the contract. In London, for example, Northwick Park Hospital required a system capable of dealing with site traffic congestion of up to 50 vehicles a day, extensive duplication, no visibility of demand or cost and reduced patient focus.
To reduce traffic congestion DHL brought in an off-site receipt point, with an on-site customer service point and dedicated a hospital based team to deal with the newly integrated services.
Over a period of six months DHL rolled out the materials management scheme across 127 departments, 77 of which required a materials management service, 55 required linen service and 55 required intravenous fluids service.
Site delivery traffic was reduced by 80 per cent and the time nursing staff spent on supply chain tasks was reduced by six full time equivalents.
DHL does not handle pharmaceuticals for the NHS, although Inglis points out that it has its own pharmaceuticals operation with a 30,000 sq m warehouse which offers pre-wholesaling services to major clients. It is feeding products into the wholesaler distribution channels and currently about 20 per cent of its throughput ends up in hospitals.
The Middle East is another strong growth market for DHL Logistics. At the end of last year it signed a 10-year multi-million-pound contract with the world’s largest crude oil producer, Saudi Aramco. The deal involves provision, management and operation of four material distribution centres or cross-docks in Dammam, Riyadh, Jiddah and Yanbu, of a fleet of vehicles and personnel as well as 14 material service centres.
Construction is an area that the major players in the third party logistics market have tended to avoid. However, DHL, along with one or two others has been developing services targeted at major construction projects.
Inglis can point to the work it has on the £200m PFI hospital extension in Portsmouth. The 54 month construction programme started in January 2006 and DHL is scheduling inbound deliveries & vehicle movements to & on-site, managing shared plant, receiving, unloading and distributing materials and managing waste.
The annual material throughput of the scheme is some £30 million. DHL’s delivery compliance is running at 98.4 per cent and the saving is reckoned to be some £2m – two per cent of build costs to date.
Green issues are playing an increasingly important part in supply chain decision making. It is an area in which DHL has significant experience through the work it has done in the “city logistics” area.
Inglis says the developments at Heathrow are particularly exciting. There it consolidates products off-site for delivery to the retailers in the airport. DHL has now started trialling one of the new generation electric vehicles to make these deliveries. It is looking at other fuels – for example it is using bio-diesel on a Wetherspoons operation.
Inglis argues that companies need to do things more sustainably. “Big retailers are looking to be more carbon neutral and are driving these sorts of programmes. It requires stakeholders to buy into the concept. We have all got to find better ways of meeting requirements.”
CV
- 1974: Management trainee at National Health Service in the UK becoming deputy. national director of logistics
- 1994: MSc in Logistics & Distribution, Cranfield University.
- 1995: Joined Exel Logistics as a key account director and became managing director, Europe for the newly formed Health & Utilities business unit in Exel.
- 1998: Commercial director, responsible for a range of central functions for Exel (Europe).
- 2000: President, Healthcare Worldwide following the Ocean/Exel merger.
- 2005: CEO, Sector Development responsible for all EMEA Development activity.
- 2006: CEO, Northern Europe, Middle East and Africa for DHL Exel Supply Chain.
- 2007: CEO, UK Middle East and Africa for DHL Exel Supply Chain.
