Download DHL-BP-NISA: Win-Win-Win! Case Study

DHL-BP-NISA: Win-Win-Win!
Case Study
The development of this Case Study has been supported by Project SCALE (Step Change in
Agri-Food Logistics Ecosystems - project #: 249I) which is part funded by INTERREG IVB North
West Europe, a financial instrument of the European Union’s Cohesion Policy. It funds projects
which support transnational cooperation.
The five partners of Project SCALE are Cranfield School of Management, European Food and
Farming Partnerships (EFFP), DHL Supply Chain, Wageningen University and the Université
d’Artois.
Version19-10-2014
DHL-BP-NISA: Win-Win-Win!
Green Light
This case was prepared
by Dr. Denyse Julien,
Dr. Carlos Mena and
Dr. Vahid Mirza Beiki as
part of the SCALE
Project as a basis for
class discussion and
learning. The case
does not illustrate either
effective or ineffective
handling of a business
situation.
The case data is partly
based on publically
available information
Dean’s proposal had got the green light from all three partners in
principle, but it was clear to Dean that his credibility hung on making
this a success.
The proposal required BP to pay Nisa for the use of their trucks
which would make the proposal interesting to the Nisa group. It
would also be interesting to BP as their overall distribution costs
would still be reduced by a large amount even with the payment to
Nisa. In fact, the only company that would take a hit would be DHL
as the increased efficiency gains between the two contracts and
resultant savings would be given back in full to the two customers.
Dean was convinced that whilst there would be some short term
margin erosion for DHL, ultimately, it would lead to long-term growth
and competitive advantages for DHL but in the current climate this
was a hard sell.
DHL was the market leader and the customers expect a level of
innovation and leadership from DHL – this proposal was clearly
something that would tick both those boxes. DHL’s size and
infrastructure underpinned by the large investment in state of the art
systems to support the solution were key enablers. However,
Dean’s vision for the future was the catalyst that could move this
forward.
It was going to be difficult to implement the solution and to get the
hearts and minds of the different teams on-board with it. But Dean
was optimistic that they could deliver on the promise.
With the London Olympics fast approaching and in the spirit of the
Olympic strapline – it was time for Dean to inspire a generation of
managers to think and act differently.
The Solution
In 2009 DHL signed contracts with the partners to deliver on the proposed solution. The
solution involved developing a composite distribution model operating four main DC’s and
three supporting cross docks of a tri-temperature regime.
Some
of
agreeing
the drivers for
to
be
part
Nisa
of
the
partnership were that it would:

Unite all elements of the
Nisa supply chain.

Maximise the existing DHL
network, driving further efficiencies
and
operating
cost
reduction
(Offering new solutions, process
improvement
initiatives,
joint
investment and new value added
services generating new revenue
streams).

Strategically
grow
the
network. Through the takeover of
Scunthorpe and implementation of
Livingston and supporting cross docks (2011) the move would optimise flow of product
across the network through a tri- temperature offering.

The benefit of the network reduces mileage, improving environmental credentials and
supporting smaller independents through more frequent deliveries. This enables greater
flexibility in ordering and more effective control of stock levels in line with customer
demand.

Becoming more innovative, driving the sustainability agenda within the wider industry
Whilst for BP the key drivers were:

Developing a national network for a true end to end supply chain

Developing a first class customer service team for frontline support on order and delivery
queries for BP’s company owned stores in addition to purchasing and inventory planning.

A strategic and lean transport network to drive efficiency and reduce operating costs
through optimising vehicle fill, increasing the fleet utilisation and developing standard
delivery processes. For example delivery windows at store.
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
Enhancing BP’s ‘Target Neutral’ commitment to the environment through a dedicated
recycling centre.
Partnership Aims
For the three partners the ethos that underpinned what would be the future challenges that
they would face as they progressed was to focus on ‘value satisfaction and efficiency before
contractual boundaries’. A key facilitator to the success of the partnership was to culturally
align both companies to a partnership mentality over a transactional relationship.
As the integration of assets progressed it was vital that DHL was able to maintain and
exceed operational Key Performance Indicators during the network changes and beyond,
enhancing customer satisfaction. This was no small thing as the development of a national
network involved aligning Stoke and Harlow to the new solution, closing two outbases, taking
over the management of the Nisa Scunthorpe site which had previously been managed by a
DHL competitor and implementing the cross dock in Livingston before April, 2011.
The importance of the work of partnership to building on the brand image of the partners and
to reinforce their environmental credentials was a key aspect that was important to
everyone. This resulted in several key inclusions in the project such as:

Zero to landfill approach through a recycling program.

Reducing CO2 emissions of vehicles through investment in new and old fleet.
The partnership was also keen to creating new revenue streams from value added services
for gainshare.
Case questions:

What would be the critical features that would make this partnership continue to deepen
and drive things forward?

Alternatively what would undermine the partnership and potentially lead to its breakup?

How easy would it be to replicate this collaboration? or, To expand the collaboration
network? What are they key criteria to consider in these scenarios?
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