DB Schenker and SIS through Porter’s model
This first part is mean to analyse through Michael Porter’s model how DB Schenker managed to gain competitivity and reduce the 5 forces on its market. This part is divided in two parts: a brief introduction of DB Schenker and its IS strategy then the application of this IS strategy to reduce the 5 forces
1) Overall Presentation of DB Schenker
DB Schenker was born one century and a half ago in Austria. DB Schenker built at this time the first railway from Paris to Vienna. Since then, DB Schenker has grown up to be one of the leading logistics and transportation worldwide market. DB Schenker operates today in more than 120 countries all over the world (they celebrated the 13th of October 2010 their 4 decades of presence in Singapore for example). DB Schenker brings solutions in land, ocean and aerian freight. DB Schenker employs around 91.000 people for an annual turnover of 15 billions euros.
2) Overall presentation of DB Schenker market
Although DB Schenker holds a strong position on the transportation market: DB is the leading company in aerian and ocean freight in Europe. Nevertheless, it still needs to face tough competition. Its 3 main rivals are DHL International GmbH, Kuehne + Nagel International AG, Panalpina Welttransport AG. 3) Importance of IT in DB Schenker strategy
To face this competition, DB Schenker decided that IT system was one of its best strategical tool. “In order to compete in the long run, companies need to constantly assess and adjust their IT strategy and thus ensure meaningful investments in technology, infrastructures and process improvements” declared DB Schenker CEO Peter Schumann. Each, year, DB Schenker invests millions of dollars in Information technology, especially in E-commerce applications.
4) An example of Strategic Information System at DB Schenker: the Master Data Management System
As an example, DB Schenker adopted in 2010 a Master Data Management (MDM) system with the help of Hewlett-Packard. The MDM system is a response to disharmony between different datas platform belonging to the firms DB Schenker bought and integrated over the past 10 years. This new database system embraces the entire DB Schenker enterprise. The objective of this system is to provide to all employees and DB Schenker member a unique and authorized source of hight quality datas and informations. The MDM is a central data plateform collecting, maintaining, securising and providing critical datas about each and all DB Schenker transportation operations. Every DB Transport Management System is linked to the MDM platform in order to receive, in real time, the required information about every transportation process.
B) The 5 forces model applied to DB Schenker
Michael Porter’s model of the 5 forces is a snapshot of a particular market at a given moment. This model describes the level of rivalry within an market by emphasizing on 5 particular forces that shape the industry : the bargaining power of suppliers, the bargaining power of the customers, the threat of new entrants, the threat of subsitute products and the rivalry of the existing firms already in the market.
DB Schenker uses strategic information systems for in order to reduce all of these 5 forces to gain competitiveness.
1) DB reduces the power of bargaining of customers
Definition of the bargaining power of customers
The bargaining power of the customer is the power of the customer bring your price down or to ask for quality of service. The power of the customer is high when he can have a wide choice of firms proposing the same product and can chose the lowest price. You can reduce the bargaining power of customers each time you improve the quality of your product or each time you provide it at a lower price than your rivals.