DHL is a large player in the international express industry. According to the Cambridge Advanced Learner‟s Dictionary the word „express‟ means “a service which does something faster than usual”.
(Cambrigde Online Dictionary, 2010) At the moment, the global market is dominated by four express providers, also known as (global) integrators or global logistics providers. (DHL Express
NL, 2010i) DHL Express is one of them. The company transports goods from an origin to a destination location. This process is executed by means of a network and resources, like employees, vehicles and buildings.
In the Netherlands, DHL Express lost a lot of volume the previous years: the amount of shipment decreased by 16% from 2007 to 2010. The management team of the Operations department of DHL Express NL assumes that the decreased volume negatively influences the profit margin.
The three underlying aspects of the profit margin are the costs on the one hand and the tariffs and volume on the other hand. It is important to keep the costs as low as possible in order to improve the profit margin. However, this is difficult, since DHL Express NL owns an extensive network with many resources, which means that the fixed costs form a significant part of the total costs. The costs can be cut to a certain level, but cannot be cut any further, since the service performance is brought into question.
The other aspects are tariffs and volume. As explained, the volume has decreased the previous years. Next to this decrease, the tariffs are lowered to competitive tariffs as well, since low costs
Express providers entered the market and caused a strengthening of competition. Competitive tariffs and decreased volumes have led to a decreased revenue.
The lowered amount of volume and the extensive network of resources probably cause a low utilization of these resources. In addition, the revenue has been decreased by the competitive tariffs. The high fixed costs of the extensive network and the lowered revenue put pressure on the profit margin.
At the moment, transparency in the performance of resource utilization is lacking for DHL Express NL. This lack of insight makes it difficult to take the right management decisions about resource
management. The performance of resource utilization is monitored ad hoc in case of problems, but a structural way of monitoring is missing.
Furthermore, the flexible part of the resource utilization is unknown by DHL Express NL. In general, it is always preferable to have a flexible part, which is able to absorb the volume changes.
Flexibility influences the fixed cost part of the total costs and therefore it makes it easier to keep the profit margin at a desired level.
The opaqueness of the performance on resource utilization and flexibility led to the following project objectives:
1. Create transparency about the resource utilization and flexibility at DHL Express NL by means of a dashboard
2. Embed the dashboard into the Operations department to support the managers on medium long term decisions
In order to take decisions on the medium long term, which is defined as 1 to 1.5 year, the Operations management team is not only interested in the current situation of the resource performance, but also in possible future situations. In addition, it is important that this dashboard is corresponding with the preferences and requirements of the Operations management team, since this group of managers will be the future users of the dashboard.
The second objective is about the implementation of the dashboard into the organisation. The dashboard must support the Operations management team in making decisions about the resources of the network on the medium long term. Therefore, the dashboard must become a part of the organisation and a frequently discussed item on the agenda. It must be kept in mind that the performance of the utilization and flexibility of resources is not the final goal of the company. It will probably contribute to a higher profit margin, but increasing this profit margin is the final objective of the company.