Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
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. Page 2 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? Page 3