MONALISA DAS 231206

DHL GLOBAL FORWARDING: CONSOLIDATION PROGRAM

The case study revolves around Amit Datta, the regional director of DHL Global
Forwarding (DGF), who is contemplating the continuation and optimization of a
consolidation program implemented in three Indian cities: Hyderabad,
Bengaluru, and Chennai. The program aims to aggregate shipments from
individual clients within each city to obtain cost-effective rates from airlines.
Datta is faced with questions regarding the program's effectiveness, potential
variations in costs on different days of the week, and the possibility of
consolidating shipments across these cities.
Company Overview:

- DGF Background: DHL Global Forwarding (DGF) is a division of Deutsche

Post DHL Group, the leading worldwide forwarding agent. It has experienced
significant global growth, boasted a diverse range of services and operating in
135 countries, particularly in Asia, Europe, and Africa.
- Market Context: The logistics and freight forwarding industry, valued at
trillions of dollars annually, faces challenges such as competition and oil price
volatility. Third-party logistics (3PL) providers, including DGF, play a crucial
role in transporting goods globally, focusing on reducing costs through
consolidation programs.

Consolidation Program:
- Program Initiation: DGF successfully tested the consolidation program in
three South Indian cities, aiming to achieve economies of scale by consolidating
shipments from individual clients.
- Operational Details: Shipments are consolidated at DGF warehouses in
Hyderabad, Bengaluru, and Chennai, and then dispatched to Frankfurt,
Germany, using cargo space in passenger airlines. Datta oversees the collection
of client requirements and aims to optimize the program.
- Challenges: Datta identifies potential inefficiencies, particularly on certain
days when shipments accumulate in one location. He explores the idea of using
road transportation to shift goods between cities, considering additional costs
and the industry norm of a maximum transit time of five working days.
MONALISA DAS 231206

Financial Overview:
- Revenue and Profit: In 2015, DGF had cumulative revenue of €14.89 billion
and operating profit of €181 million. The company's financial success is
noteworthy.

Decision-Making:
- Dilemmas: Datta grapples with questions about cost variations on specific
days, the program's continuation, and the potential benefits of consolidating
shipments across cities.
- Options: Datta contemplates rerouting shipments through other airports using
overnight road transportation to achieve greater cost efficiencies.

External Factors:
- Competitive Landscape: DGF faces competition from various global and
Indian forwarders.
- Logistics Industry: The logistics industry, especially 3PL providers, benefits
from globalization, state-of-the-art technology, and economies of scale.

Conclusion:
The case study sets the stage for Datta's decision-making process regarding the
consolidation program. It highlights the complexities of managing logistics
operations, the need for cost-effectiveness in the face of global competition, and
the importance of adapting strategies to optimize supply chain processes. Datta's
challenge is to formulate a plan that not only addresses immediate concerns but
also ensures long-term efficiency and competitiveness for DGF in the freight
forwarding industry.