DHL Express Germany

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A delivery service must be reliable and fast, while maintaining a constant overview. This is what customers expect when they use DHL Express to send goods all over the world. A rapid and reliable overview is essential for the company as well, when it comes to analysing and assessing its business processes. DHL Express Germany is standardising its business intelligence (BI) environment on IBM Cognos 8 BI and is optimising its processes. To address the continuous rise in world trade as the result of globalisation, today’s transport services need to be fast and reliable. Demand for time-critical express services is rising, with an annual growth rate of 6 to 8 percent in the global express market over the last few years. DHL Express Germany GmbH operates in this market as an independent company within the Deutsche Post World Net subsidiary, DHL.

The organisation’s core business is courier and express services for private and business customers. From letters to 2.5 ton pallets, DHL Express sends consignments to Germany, Europe and destinations all over the world, with timed deliveries available on request. To achieve this, DHL maintains a huge global infrastructure, covering 220 countries and regions. About 300,000 employees strive to exceed customers’ expectations every day with rapid and reliable service. Every year, DHL sends around 1.5 million consignments to more than 120,000 destinations all over the world. The company is the leader in the international express market, but it faces tough competition.

Challenges faced
To maintain its leadership in the express market, DHL Express Germany relies on a detailed analysis of its operational business and customer profitability. The logistics specialist uses IBM Cognos BI tools to identify potential improvements and reduce costs. “In the past, sales controlling focused primarily on sales growth,” explains Klaus Baumhauer, a Controller at DHL Express.

“To promote healthy growth, our internal processes need to be coordinated as effectively as possible. As well as improving our service to the customer, this helps us to work more efficiently—the key concept is contribution to profit. IBM Cognos 8 BI supports us with this task.”

The project also included reorganisation, expansion and standardisation of the BI landscape. The first step took place at the start of 2007, with the organisational separation of the express and parcel divisions. Just two years before, the two divisions had set up a customer value management solution as a database supported application. The application consolidated sales and costs, but “it didn’t go far enough,” explains Peter Barysch, Head of Data Management at DHL Express.

Strategy followed
In May 2007, under the technical management of the Controlling department, DHL launched the KPR Express project with the definition of requirements for its new solution. The IT department then took over, working in close cooperation with Deutsche Post’s in-house IT service provider.

The system landscape had to be capable of using existing data and making it available to other applications. Secondly, it needed to map the process chain that the products pass through as precisely as possible—including special processes, a common feature in express business. The third requirement in the specifications was automation: “Reports and analyses need to provide users with a clear view of all relevant information when required, at the touch of a button,” states Peter Barysch.

Standardisation was another important aim. In the past, the company had a whole range of BI applications, and just as many information silos. IBM Cognos 8 BI offered all the functionalities the company needed in a single platform. Integrated throughout the entire company, the solution allows analyses to be run on all data sources, providing a comprehensive view of national and international business. Loading processes and key figures were defined. Costs were specified for each process step, with some assigned directly to a consignment, and other costs divided by the total number of consignments, as well as additional higher level costs. “To continue to improve our business intelligence and take account of the fact that we had become a new division, we used existing hardware to create a completely new BI environment and a new data warehouse,” explains Peter Barysch.

Ensuring data quality in the data warehouse—an IBM Informix database—proved a huge challenge, with partially incomplete data and inconsistent processing. These errors were resolved by means of specific data enhancement. The process used a very wide range of data sources, involving Oracle, SAP, flat files, Teradata and Microsoft® Excel®. Detailed production data is particularly important for DHL Express. Peter Barysch explains, “A consignment can be processed in many different ways. For example, some of our customers have high consignment volumes which, for capacity reasons, cannot be handled in the local station. We collect the shipments by lorry and bring them straight to the gateway. For other customers, we have our own staff in the logistics centres, which is responsible for preparing the consignment. We need to consider all the details of these special cases in our costings. There is also master data,including customer data, product data, cost types and information about the sales structure.” DHL Express has developed new loading procedures to handle all this information and load it into the data warehouse with the required quality using IBM InfoSphere DataStage. IBM Cognos 8 BI was implemented at the same time. The solution was fully installed in May 2008, after some initial performance problems had been ironed out. “The complexity of this project was clear from the very start,” recalls Klaus Baumhauer. “This made the support we received from management even more important, and we always knew that we had full backing from above.”

Benefits realised
The solution is now operating with the required speed and reliability, analysing 30 million data records in a matter of seconds, with a clear overview of results made available to users. Most of these reports, with up to 15 different subreports, are very complex, and the data models used provide great added value.

“We now have a very precise view of our customers’ contribution margins from a range of perspectives: the salesperson’s point of view, the product view and the view at each individual process step,” explains Klaus Baumhauer. “We can also identify the main cost drivers and use this information to optimise our internal production processes. Previous-year and year-to-date analyses help us to identify trends, for instance: where has the company improved, where do we need to take action?” IBM Cognos also highlights costs that used to be hidden due to the previous lack of special process integration. “For example, we have a customer whose consignments cannot be processed by machine. Rather than using a conveyor belt, these consignments need to be carried by an employee—and this generates high costs. We couldn’t see this with the previous BI landscape.”

Peter Barysch points out another result: “We now have figures that are accepted by controlling from the outset, and we can use this information to create fully integrated sales reporting. There are also some practical benefits. The user-friendliness of the solution means that even employees from outside the controlling area can use the system with relatively little training.”

Around 100 users from sales, marketing, controlling and management use the IBM Cognos solution. They all work with the same application and the same data, but have access to user-specific views to support their decisions and ensure optimal marketing effectiveness. “The data models give us the required flexibility to compile individual requirements and create reports to provide optimal support,” says Peter Barysch. IBM Cognos also generates highly aggregated overviews for top management.

The decision in favour of Cognos was also based on positive experience in the past. “Some of the key factors behind our decision were the effective and open partnership, the integrated reporting platform with links to different functions in the product and the solution’s user friendliness,” says Peter Barysch. Whereas in the past data was entered manually from a wide range of sources, it can now be loaded easily into the BI platform, where it is then available for use in analyses and reports. Reducing the number of manual processes—in combination with the lower server costs—has also helped to cut operating costs. “The implementation of IBM Cognos 8 BI has allowed us to streamline our internal processes and reduce operating costs through standardisation. Not forgetting the additional functionalities,” sums up Ralf Schweighöfer, CIO at DHL Express Germany.

Future plans are already in place. On 1 July 2008, the company introduced a new logistics product, Day- Definite International, an international service with delivery guaranteed on a specific day, demonstrating another IBM Cognos benefit. The flexible IBM Cognos solution quickly mapped the new product, despite the different processes and the fact that other parameters drive costs. Standardisation has brought benefits, avoiding the need to change a whole range of different applications. “Our IBM Cognos solution provides us with the required transparency and an optimal tool to manage the product and maintain a precise view of costs. This demonstrates the solution’s business value,” stated Klaus Baumhauer. DHL Express is not forgetting that IBM Cognos Go! Mobile usage is due to start this year with CXO reports sent straight to managers’ Blackberrys, giving them access to important business information at any time, and from any location.

About IBM Cognos BI and Performance Management
IBM Cognos business intelligence (BI)and performance management solutions deliver world-leading enterprise planning, consolidation and BI software, support and services to help companies plan, understand and manage financial and operational performance. IBM Cognos solutions bring together technology, analytical applications, best practices,and a broad network of partners to give customers an open, adaptive and complete performance solution. Over 23,000 customers in more than 135 countries around the world choose IBM Cognos solutions.