DHL has launched a new risk management solution, Resilience360, to give businesses the competitive edge in logistics.
The tool gives customers a holistic, end-to-end view of their supply chains and the ability to convert socio-political and environmental volatility into competitive advantage. Resilience360 comes as a new report, ‘The Resilient Supply Chain,’ argues companies must build resiliency into their supply chains to avoid critical damage to their businesses.
eft interviewed one of the major contributors of this new tool: Tobias Larsson, Head of resilience team DHL, read the question and answer below.
Q: DHL’s new Resilience360 – How it came about and more importantly what does it do?
A: In terms of how it started, well, in 2011, a lot of our DHL customers were experiencing supply chain disruptions. The earthquake in Japan, the flooding in Thailand; those ranked in the top five most costly kind of natural disasters that impacted businesses.
During that year, discussions began on how vulnerable supply chains are with everything being interconnected and how something happening in one part of the world affects something in a complete other part. The butterfly effect as we talk about. Different webs of actors around the world have pushed the supply chain towards becoming extremely lean, reducing the safety stock, and inventory in general, not to sit on too much capital. Further to the fact that there has been a lot of outsourcing and clustering going on. There are certain clusters in the world like Shenzen (China) or Bangkok (Thailand), where whole industries get together and develop a product, this has affected a lot of our customers sales (leaving our customers very impacted).
Although at DHL our core is providing logistics services, we seek to become a supply chain partner to our customers, focusing on innovation too. That’s the reason we spent nearly three years innovating and creating this tool now called resilience 360 which aims at creating the most resilient supply chain.
Q: You’ve chosen four metrics to assess the supply chain risks, why these four? (Operations, Hazards, Socio-Political and Market Risks)
A: We chose those four metrics to define supply chain risks. As there is a lot of risk management, we didn’t want to be confused with enterprise risk management. Our focus is on supply chain risk as it is an area where we can support and mitigate risk. So we chose operations as a metric, looking at things such as IT risks, car theft, counterfeiting within the supply chain. Secondly, socio-political metrics such as: strikes, labour disputes but also looking at countries which are less politically stable. We also look at emerging markets and finally, hazards such as explosions, and other possible threats when you produce dangerous goods.
Q: With the tool, are there different ways to implement it? Is there a one-time use versus a long term implementation?
A: We have two different ways we use the tool and we always differentiate between the two things. Supply chain risk assessment, is the one off ‘thing’ which can be repetitive. You can do a risk assessment more than once. In fact, you should repeat it because a lot changes in the supply chain: new suppliers, new locations, so it should be done twice a year. However, it has that one-off characteristic of using the hotspots of the supply chain by using different tools (databases), we map, we dual code the supply chain, we look at where all the important locations are in the world for supply chains, for one customer specific supply chain, no matter if DHL does the transport and we look at databases to see if they are exposed to some of the risks we just mentioned. We also use survey technologies to see where they have sufficient back up capabilities in place where there is single viewers’ source, etc…
The second capability in the tool, is to feed in real-time events that could impact and how it could impact the supply chain because we have dual coded and the certain connections between why or who could be impacted, what could be impacted and the different layers within the supply chain. This ranges from things like road closure to earthquake, labour dispute or even a pandemic relevant to the supply chain. We use different companies to collect the data for us and specify what we need for supply chain matters and we also use social media – twitter is the most interesting source in this case. For example, in the US fire dispatch system.
In terms of the length, to set up the customer and train them, it could be done in two weeks, if we have the data available and if we know the process of updating the data of the supply chain. Other projects might take months, to survey the entire supply chain on how resilient certain sides are, etc… this could take over nine months.
Q: What is DHL’s role once the Resilience 360 tool has been implemented?
A: It depends on what risk you have to mitigate, but if there is something in terms of how to increase security in different sites that we have (or make an audit), we make sure our assessment is correct. DHL has 300 security experts worldwide so we would have someone quite globally that can help a customer in the global supply chain to look at what security measures are suitable in different areas of the world. If it comes to changing sourcing policies, this would be more difficult to advise our customers, but we could look at rerouting options, or storing goods, alternative locations, some of the logistics behind it we can always help mitigate the risk.
Q: As the product was launched very recently, how is successful has it been so far?
A: We started engaging with customers last year and have a handful of customers signed up who are using or have been using the tool for quite some time. So far it has been very successful; there are automotive customers, chemical customers, aerospace, fast-moving consumer goods. Since our launch two weeks ago we have gotten a big boost in our activities.
This is the second in a three-part article series analysing the first S&OP survey carried out by eft and Hughenden Consulting.
Georgia Logistics compiles a monthly set of facts and figures regarding the Logistics Markets. We selected a few facts to share with you :-
Zara’s and its parent company, Inditex, are perhaps the text book for how to do retail supply chain right.