How DHL is using digital technology to futureproof itself

3 MinutesBy NZ Trucking magazineDecember 2, 2019

“When you have as many vehicles as we do, just a 0.1% improvement is big for us,” said DHL chief executive John Pearson in a recent interview with financial journalist and news editor at Finixio, Roger Baird.

Pearson was commenting on the supply chain giant‘s stance on the threat of digital firms and the disruption they may bring to the supply chain industry. DHL runs 260 aircraft, more than 34,000 vehicles, employs 100,000 staff, operates in 220 countries, and has 2.6 million customers. Last year it delivered 402 million parcels and letters.

According to Pearson, changing technology, such as increasing automation, has always had a profound effect on the industry. But, he said, perhaps the most significant impact has been the rise of e-commerce over the past six years. For example, writes Baird, while letter sales are dwindling due to email dominance, parcel sales are increasing because of the growth of the likes of Amazon and hundreds of other online firms.

“There are pockets of disruption across the many markets we work in. We are on guard not to let other firms get in between ourselves and the merchants we work with,” Pearson said.

Instead of letting digital technology get between it and its customers, Pearson said that DHL is rather using it to its advantage. Digital technology allows firms to use analytics to cut costs as well as grow sales. DHL‘s e-commerce unit has an analytics team that tracks sales patterns for smaller brands and retailers across more than 100 markets. It can tell which regions are spiking and suggest where these firms should target resources to boost revenues.

“If there are difficulties in any one region, industry, or channel opportunities will pick up elsewhere. Sales growth across the Americas has run at just under 10% this year, while the Middle East and Africa grew at 8%,” he said.

While continually developing its own logistics infrastructure, Pearson sees these areas as vital to make sure lean digital start-ups do not begin eating into DHL‘s sales. But digital technology can also help a global giant like DHL cut its spending. Pearson said the group is currently piloting software that studies the route a typical driver, with 80 packages to deliver in four hours, should take.

The group currently spends €1 billion (NZ$1.71 billion) a year on new investment, but with more than 3000 facilities around the world, upgrading automation in these facilities can ‘soon eat up that investment‘, Pearson notes. For example, the unit upgrade to its Cologne, Germany, hub in August totalled €123 billion (NZ$210.86 billion). The renovation at its centre in Malpensa, Italy, will cost €109 billion (NZ$186.86 billion) once completed next June.