What DHL wants is simple….be “The logistics company for the world.” That fulfills a greater vision to improve the lives of people everywhere, enabling international commerce to boost economic growth with safer deliveries of medical goods and the ability to reach the most remote areas of the world. Revolutionizing the world of logistics takes innovation and the ability to recognize key opportunities and then transform. Key opportunities in this case meant finding actionable insights from the massive amounts of data DHL collects every day. That’s exactly what DHL Express (a division of DHL) did in 2013, embarking on a global finance transformation they appropriately named “Project INSIGHT.”
“The data that we get from INSIGHT allows us to be very specific when it comes to pricing, profitability, and costing. We can adjust our prices where we have very little capacity. We can lower our prices where we have more capacity. We can offer customers a much more balanced pricing proposition.” Graeme Aitken, Vice President of Business Controlling
Starting in one country and then replicating to others around the world, DHL Express integrated data from finance, operations, their customers and more, creating a sophisticated state-of-the-art costing system that takes advantage of the goldmine of data that DHL Express users have access to.
“What we’ve got is we understand very granular costing and profitability of every shipment, and 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
This allows DHL Express full visibility into cost management, yield management and gives them the ability to predict and act on their customer’s economic cycles.
Cost management allows DHL Express to take into account the hard costs of doing business no matter the customers (think planes, trains, automobiles, fuel, personnel etc.) Knowing those fixed costs allows DHL Express to better manage their customer pricing, ensuring it’s low enough for customer retention and yet high enough to be profitable for DHL Express.
With the capability of yield management, DHL Express can adjust for decreased or increased capacity. They can adjust prices where they have little capacity and offer lower prices when there is more, resulting in a balanced pricing proposition. They can then pass insights and cost savings to their customers to save them money, improve their service, and increase their customer’s profitability.
“If, for example, we have an issue with a customer with failed delivery– so if we keep trying to deliver a shipment, 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,’ and they get an insight into their own logistics data, and they can make their own improvements.” Graeme Aitken, VP of Business Controlling
Perhaps one of the most impressive results from the finance transformation is DHL Express’ ability to manage customer’s economic cycles with micro and macro 3rd party data. Whether the economy is up or down, DHL Express is now predicting and forecasting with better accuracy. They can look at historical data and add in economic indicators and strategic priorities to better manage their budget and revenue/profit plan.
“We have a brilliant view of the past. So 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.” Graeme Aitken, VP of Business Controlling
DHL Express’ team is proud of the progress they have made in a few short years, knowing that 85% of digital transformation projects fail. Graeme Aitken credits Teradata Consultants with consistent, innovative and critical work on Project INSIGHT.
“Teradata consultancy helped us build the system. One or two of them are still working on INSIGHT. If we ever have an issue, if we have a change request, if we want to make improvements, we always get the same people back because we had such a strong relationship, and over the years they understand almost as much of the business as we do and they can help us— ‘This is practical, this is not practical.’” Graeme Aitken, VP of Business Controlling
Congratulations to the DHL Express team on the success of Project INSIGHT!