DHL Supply Chain takes a long look at key 2019 supply chain trends

DHL Supply Chain, a subsidiary of Deutsche Post DHL Group, this week unveiled a publication highlighting what it views as the key trends impacting supply chain management.

The company labeled these trends as the four “Ts” in the form of technology, trade, talent, and transportation, as they key drivers that can help supply chain organizations be able to meet customer expectations in 2019.

“Supply chain complexity has been growing for years and several of these trends threaten to create even more complexity,” said Scott Sureddin, CEO of DHL Supply Chain, North America, in a statement. “However, we are also now seeing key technologies reach a level of maturity that enables them to be used to better manage complexity while also increasing productivity and reducing costs. That makes 2019 a very exciting year in the continuing evolution of the industry.”

A specific look at the four trends cited by DHL included:

• Warehouse robotics coming of age and proving their value in select warehouse applications, with the technology expected to reach what it called a tipping point in 2019. DHL has been active on this front, as it recently announced it plans to expand usage of select emerging technologies by 2020, with a major emphasis on robotics based on strong results from initial trials. And it added that order picking is a key function of robotic development, while it also is focused on efforts aside from e-commerce fulfillment in the form of low-value tasks that spur overall warehouse productivity;
• New tariffs, renegotiated trade agreements, and regional climate events can have a ripple effect that paralyzes an entire supply chain, which, DHL said, is making proactive supply chain planning vital. And it added that designing supply chains that are able to flex to circumvent natural disasters and quickly reconfigure to meet shifts in costs or material availability, due to tariffs, is key in order to maintain high service levels. The company said this is being addressed through technology, with supply chain modeling for what-if scenarios to be quickly performed to best identify changes in costs, transportation routes, or material availability;
• The talent gap receiving the attention it deserves. DHL Supply Chain has taken steps to address recruiting and retention to consistently meet customer requirements. These steps include things ranging from using robotics to increase productivity to automating each step of its recruiting process, as well as working with colleges and universities to promote career opportunities; and
• Digitalization closing the transportation services gap and getting shippers to look to the future, most notably on the transportation side, as various digital solutions are emerging to help the sector better leverage available transportation resources and close the service gap

On a conference call with members of the media yesterday, DHL Supply Chain’s Sureddin explained digitalization is key in getting and providing real-time updates from its drivers and on the asset and equipment side, and for external carriers for visibility, in allowing the company to better focus on exception management. Another point he raised was using business intelligence tools for gauging where capacity is needed, which is key, given how there has been a noted shortage over the last several months.

“We are also focused on integrating our systems with digital freight platforms (DFP) and optimizing our capacity within the marketplace on a real-time basis,” he said. “DFP is one of the biggest disrupters for today and for the future of transportation. It does kind of reduce the need for the middleman for shippers and carriers and provides a direct line. There is still a lot of work to be done on it, and it is hard to get scale. And you are also trying to get the drivers to use technology. It is easier on the shipper side, as we have the data and know what we need to ship. There are many carriers with only two-to-ten trucks that still have value with service and costs…and getting them to use the technology. It is the future, and the big players are either developing it or partnering with people that are, and we will be doing the same thing. It is something you have to have, and it’s connecting a lot of lanes that are empty today.”

Another way to think about DFPs, he said, is to consider it within the parameters of a dedicated fleet and how much of that fleet can be put out to the marketplace. With a large dedicated fleet working for a specific customer, with a focus on backhaul, it can look for opportunities in its other businesses and match them up with other capacity opportunities in the marketplace and provide additional opportunities to meet customer demands.

When asked about ways in which 3PLs can help shippers deal with, or overcome, the myriad uncertainties related to tariffs and renegotiated trade agreements, and climate events, among others, Sureddin explained how DHL Supply Chain has a diverse and broad base of business, both globally and in North America, supporting many industry channels across various sectors, including: consumer, retail, life science, healthcare, technology, automotive, engineering, manufacturing, and chemical energy.

“The biggest issues are not based on the last 90 days (as they relate to tariffs), but more so what is going on with gas and oil prices, which have taken the biggest hit,” he said. “For those businesses, how we have helped them is if they don’t have the volume, with less exports due to the natural gas piece of it, less energy business, due to the costs related to it, and less distribution going on in what is a flexible supply chain. We had to reduce headcount and reassemble operations and reduce space. Having 120 million square-feet in North America, even though they are mostly dedicated facilities, gives us the flexibility in our space for multi-client needs and gives us the flexibility we need because of that.”

Sureddin also added that DHL is constantly working with shippers to help them figure out the best place for their supply chains to be located and providing them with options.

“A lot of people set up a supply chain and then realize they are in the wrong place, moving volume from the U.S. to Mexico or somewhere else and they need less or they are moving volume back and they need more,” he said. “So, where we come in, is wee provide them with the ability to do a lot through our scale. And through our internal real estate group, we buy land and build buildings in markets, where we see trends happening. It could be on the West Coast near key ports or in Memphis to be near e-commerce operations to be closer to same-day shipping. We invest in land and areas where we believe, based on what the market is doing, and we build more buildings to create more capacity to provide our customers with more agility.”