DHL Customer Solutions & Innovation
DHL • AUTOMOTIVE
• Parts Logistics Challenges Managed!
www.dhl.com
Shay Dorgan - Director, Customer and Emerging Market Development
August 2010
Agenda
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
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Aftermarket is crucial to the survival of the industry
Revenue
Profit
New cars,
14%
New cars,
45%
Customer Loyalty
Good Service
10
Interior
Design
9.6
Aftermarket,
54%
Value for
Money
Aftermarket,
22%
Used cars,
19%
Insurance,
11%
Other, 2%
2nd largest revenue
generator
Used cars,
1%
Insurance,
27%
9.4
Reliability
Pleasure to
drive
9.2
8.9
Other, 3%
Over half the industries’
profit
Highest single influencing
factor for re-purchase
The aftermarket business is critical to the industry.
The dominant market position the OEMs’ have in this segment is under attack from different sources
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
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Agenda
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
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Supply Chain managers are under huge
pressure to …
Handle Demand
Fluctuations &
Expectations
Level
•  Sensitivity in market causes reactive fluctuations of
demands
•  Agility at the lowest costs required in supply chain
management
•  Demand and supply changes result in the need to reconfigure companies supply chain
Reduce assets
•  Outsourcing of logistic activities: warehousing,
transportation
•  Reducing inventories
•  Strategic positioning of inventories to reduce inventory rebalancing and optimize lead time/costs to serve customers
Maintain the
Health of the
Supply Chain
•  Require constant feedback and check on health of supply
chain
•  Benchmarking supply chain with competitors to
understand
where is best-in-class
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
Page 5 Supply Chain managers are under huge
pressure to …
Reduce Costs
•  Reductions required on overall transportation and
warehousing costs
•  Reductions in shipment volumes result in the loss of
economy of scale
Strong demand for oil (Emerging
Markets)
Energy prices will continue to increase
(long term) due to rising extraction
costs…
–  Increasing transportation costs
–  Transportation optimisation
–  Multimodal approach
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
Page 6 Supply Chain managers are under huge
pressure to …
echnical
T
Challenge
•  Increasing complexity in today’s vehicles
•  Highly skilled technicians
•  Increase the number of parts in the supply chain
Digital information flows are growing
Customer’s expectations sometimes rise faster
than capabilities
RFID technology
Networks and satellite communications
Elimination of physical media
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
Page 7 Supply Chain managers are under huge
pressure to …
nvironment
E
Challenge
•  CO2 footprint and how to measure
•  Overall CO2 reductions
The greatest environmental, social and
economic threats facing the planet.
The warming of the climate system is
evident from observations of increases
in global average air and ocean
temperatures (melting of snow and ice,
and rising global mean sea level).
Sustainable transportation / logistics
and “greening” supply chains are
becoming a must!
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
Page 8 Agenda
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
Page 9 Network Optimization Software & Methodology
DHL expertise and a software to design an optimal transportation network
Input Parameters
Optimization Engine
Output
Locations of suppliers,
plants, DCs,
Warehouses, customers
Infrastructure configuration
roduct demand and
P
customer service
requirements
Optimized
Scenario
Transportation modes,
rates, and lead times;
warehousing rates
Physical flows of
products
Constraints, e.g.
capacities
Assumptions, e.g. on
incomplete information
ptimization algorithm
O
(e.g. center of gravity)
Typical objective scenarios:
•  Minimization of cost
•  Achieve required service level
•  Create green-field supply chain
•  Combine multiple discrete supply
chain networks
•  Redesign network for change in
demand or increase in costs
•  CO2 reduction
•  Adhere to constraints (e.g. service
levels, capacities, safety stock)
Logistics Cost
•  Transportation
•  Warehousing
•  Inventory
ervice Levels
S
•  Lead time
•  Order cycle time
•  Percent of demand filled, etc.
Source: DPDHL Inhouse Consulting
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
DHL | Page 10
Local Spare Parts Distribution for Car Manufacturer
Innovative local spare parts distribution drives sales and
improves customer service for a premium car manufacturer
Customer Facts
Region
Global
Sector
Automotive
Company
Premium Automobile Manufacturer
Customer Challenge
DHL Solution
Customer Benefits
•  Upgrade spare parts distribution model
from overnight next day to up to four
deliveries a day
•  Warehouse collaboration to provide shareduser local distribution
•  Improved after sales customer service
levels
•  Optimal site location using route planning
and design expertise
•  Increased sales of high margin spare parts
•  Local distribution warehouse locations with
good proximity to service centers
•  Cost effective and flexible warehousing
solution to handle bursts of activity
•  Cross-training of existing staff to handle
bursts of activity
•  Reduced inventory costs at service
centers
•  Higher volume of service and repair work
•  Flexible warehouse solution providing
receipt, put away, pick and dispatch
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
DHL | Page 11
DHL Global Forwarding automotive competency centre network
ACC Germany –
Frankfurt
ACC Hungary –
Budapest
ACC AMNO –
Atlanta
ACC China North
– Beijing,
Shanghai
ACC Mexico
– Mexico City
ACC India –
Delhi,
Mumbai,
Chennai
ACC Asia –
Sao Paulo
ACC Location
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
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Key ACC Service Elements
Global Automotive Solution
1
2
Forecast
3
Order
Management
4
Planning
5
Booking
Reporting
Overall Visibility, Control &
Escalation
Supplier 1
Warehouse 1
Airport / Port
OR Cross Dock
Supplier 2
Warehouse 2
Airport / Port
OR Cross Dock
Warehouse 3
Supplier 3
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
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Automotive Competency Center creates value
Transparency / Monitoring / Escalation
Six Sigma Experts
•  increase productivity
•  drive the escalation process
midterm
planning
•  increase cost savings
•  increase customer and employee satisfaction
•  provision of full information access to the
automotive the automotive network OEM,
supplier, carrier
•  24/7 service availability
•  Dedicated IT Tool
edicated automotive
D
know-how
Benefits
•  Strategic & tactical planning
•  Solution design for
automotive
perational
O
Excellence
•  Global footprint and local
multilingual teams
•  ownership for the
payment flow
•  intern tariff audit
ransportation
T
Concepts
•  Premium Freight
•  Network
midterm
planning
•  a/r controlling
•  KPIs
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
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Conclusion
Supply Chains will require a considerable revision
Vehicle Components doubled in the last decade – and will grow again due to rising
consumer expectations in terms of
Comfort
Safety
Environment/Fuel efficiency
Technology
Growth in emerging markets poses severe infrastructure and management issue
Supply Chains – both inbound and aftermarket – will be under great stress to cope with
another major parts range expansion
Overall, the Logistics supporting the aftermarket industry will need dramatic change to
cope with rising consumer expectations, parts prolifertion, faster response times,
and all at reduced cost !
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
Page 15 Thanks for your attention
Shay Dorgan - Director, Customer and Emerging Market Development
Automotive Logistics Europe | Bonn | March-1-2012 | Shay DORGAN, DHL Customer Solutions & Innovation
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