Realigning Service Operations Strategy at Dhl Express

Realigning Service Operations Strategy at DHL Express
Tim Coltman
University of Wollongong – Centre for Business Service Science, Wollongong, New South Wales 2522, Australia [e-mail]

John Gattorna
Macquarie University – Macquarie Graduate School of Management 2000, New South Wales, Australia, [e-mail]

Stuart Whiting
DHL - Express Global Head Office, Bonn, Germany, [e-mail]

This paper describes the approach that DHL used to respond to aggressive revenue and profit targets set by its Asia-Pacific regional management board. DHL’s reaction to these targets was to redefine its strategic service vision by systematically aligning its internal support functions with distinct buyer behavior structures. Specifically, we developed a model based on the tangible and intangible factors that directly influence a customer’s choice of a third-party logistics provider. Next, we reverse engineered the service provider’s delivery system to align with each customer’s preferred buying behavior. DHL’s share of wallet and profitability immediately improved, enabling the company to maintain its leading position in the market. Quantitative and qualitative results show an improvement in DHL’s market share, customer satisfaction scores, and employee opinion survey results. Key words: third-party logistics; service concept; survey research; discrete choice modeling; latent class segmentation. History: This paper has been refereed. ___________________________________________________________

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Improved trading conditions within the Asia-Pacific region prompted DHL’s regional management board to embark on an aggressive strategy to achieve substantial revenue and profit targets in its 2015 strategic plan. The management board recognized that country-level managers would need to make hard-line decisions about (1) ―who‖ should be the right customers in DHL’s target market, (2) ―what‖ product bundles would be contracted or promised to

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