Automotive Flash Dhl Wheels in Motion

AUTOMOTIVE FLASH DHL WHEELS IN MOTION

DHL Business Unit – Excellence. Simply delivered.

DHL Customer Solutions & Innovation De Kleetlaan 1 1831 Diegem Belgium 2 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 3

EDITORIAL ON THE AGENDA…

SUSTAINABILITY IS ALL ABOUT WORKING SMARTER Dear Valued Customers, 05 Sustainable Packaging Multimodal In a fast moving world, getting the relevant information is By organizing customer events and conferences around Battery Logistics a constant challenge! The DHL Automotive team is the globe we demonstrate our commitment to local and committed to establish an industry-tailored communication customized offering. aimed at keeping you up to speed with on-going projects and relevant initiatives from a global logistics perspective. DHL Automotive team is willing to learn from local experts and openly create a dialogue, share trends and innovative The automotive sector is a dynamic arena. Effective ideas that may shape tomorrow’s automotive industry. logistics is crucial for volume vehicle assembly that calls for large number of components to arrive on time, in perfect Fathi Tlatli condition, and in the right quantity. But operating to a consistently high standard on a global scale is not enough. President Global Sector Automotive, 09 DHL Customer Solutions & Innovation THE RACE TOWARDS SUSTAINABLE MOBILITY Automotive players are keen to continuously innovate in and DHL Automotive Team their product, market, and manufacturing strategies. eStory White Paper Intense global competition demands that we respond to Urban Logistics market trends and come with new solutions to support Volvo Cars Rolls Out New Innovation customers’ needs. 15

THE CAR’S STAR

New Product Launches Business of Recalls Aftermarket Services 4 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 5

In order to support this unprecedented assembly growth, Implemented in 1994, the goal of NAFTA was to eliminate MEXICO, A NEW the whole automotive ecosystem, logistics providers barriers to trade and investment between the USA, included, will have to face important challenges and Canada and Mexico. This agreement has always benefited MAJOR PLAYER IN THE integrate the requirement of new stakeholders. the development of the automotive sector in Mexico to the point that nowadays, Mexico automotive trade Indeed, the premium manufacturers who didn’t take part to balance with the USA is largely positive for both finished AUTOMOTIVE GAME the early wave of investments into Mexico are quickly vehicles and parts. However, while material flows have catching up. Entry of new brands like Audi, BMW and been quickly growing, custom processing capabilities and Infiniti will shift product mix from 4% to 12% share of regulatory frameworks have failed to adapt fast enough premium vehicles. Asian OEMs, including the Japanese ones, transforming the different USA-Mexico road border At times when the global economic outlook remains uncertain especially for countries like have also planned to increase their assembly capacities and crossing in logistics bottlenecks. are actively developing their local supplier networks. Brazil and Russia, Mexico appears as a safe haven for industrial investors and especially for On top of local logistics challenges the automotive the automotive ones. With new plants established serving mostly export industry in Mexico will have to cope with some gaps in markets, an unprecedented new model launch activity supporting processes at the Tier 2 or Tier 3 level. If (already 21 announced by 2020) will put additional Mexico has a very well established Tier 1 supplier base, As the domestic market has grown, along with the pressure on the domestic supply chain that already has to out of which more than 80% are large global companies, economies of other countries in the region, many completely overcome some historical challenges: some lower tier suppliers lack technological know-how companies have been looking at a Mexico as a regional and certain product offerings like body, powertrain and and global export base. Over the last five years, Mexico’s Infrastructure chassis rely heavily on imports of auto parts to meet the light vehicle production has been on a remarkable growth The World Bank’s Logistics Performance Index for 2014 gap in supply. track (8.2% CAGR since 2010) driven by exports to the USA. ranks Mexico 50th out of 160 countries in terms of supply chain efficiency. While many efforts and investments are This impressive performance in a sluggish global and “YOU CAN ASSEMBLE A made to improve the country infrastructures some nodes regional macro-economic context has been made possible remain challenging. It is for example the case of maritime CAR WITH PARTS MADE by important amounts of FDI. Mexico has already terminals since the country’s four major ports handle 96% benefited from over USD 30 Billion FDI since 2007 from BY TIER 1s IN MEXICO. of Mexicos foreign trade, according to The Seneca Group global automotive OEMs. The country should attract over LLC for the U.S. Trade and Development Agency Safety THE PROBLEM IS NOW 17 additional USD Billion in the years to come thanks to and visibility. government incentives, favorable trade agreements and a GETTING THE COMPONENTS highly skilled yet cost competitive workforce. Service consistency FOR THOSE TIER 1s” Local regulation makes it difficult for international groups According to forecasts the national automotive production to operate their own assets in Mexico whereas local New logistics challenges also arise as Mexican plants is likely to grow by an additional 50% and hit the five companies have difficulties in bringing the scale and traditionally serving NAFTA and South American million units’ milestone by the end of the decade. experience required to support the accelerated growth of markets are looking for new destinations for their TOP 10 & BOTTOM 10 VOLUME GROWTH MARKETS the industry. Efficient 3PL services such as managed outputs. In the 2010-15 term, Mexico’s LV exports to Asia 2015 VS 2022 VARIANCE (THOUSANDS) transportation are and will remain a must in a country grew ~250% whereas exports to Latin America grew by where capacity is more and more difficult to secure. only ~20%. Global forwarding capacity in and out of

9,042 Mexico will most likely have to be quickly increased in Cross Border order feed the local industry in components and serve the world with its products.

8,0% 20.000 2,874 2,959 7,0% In a context where challenges are only shadowed by 6,0% 1,884 1,448 1,340 1,172 15.000 unprecedented prospects DHL Automotive focus for the 798 743 691 429 5,0% 4,0% years to come will be to provide innovative integrated 10.000 3,0% solutions that will support the industry growth and “Over the period 2016-2022 more capacity will be installed in Latin America alone than 2,0% in Western Europe and North America combined. Mexico will account for half of that 5.000 ambitions to become global automotive powerhouse for 1,0% growth” source Autotech Forecasts all major automotive brands. 0 0,0% 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

AUTO Imports (USD) AUTO Exports (USD) Automotive Share of X-Border Trade 6 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 7

SUSTAINABILITY IS ALL ABOUT WORKING SMARTER

WHY IS SUSTAINABILITY A MUST NOT A PLUS? HOW WE’RE WORKING ‘SMARTER’

By 2050, the world population will know how to tackle it. Like other DHL’S OBJECTIVES FOR reach 9.5 billion people and the businesses, DHL Automotive is also CORPORATE AND AUTOMOTIVE NO. 1 SUSTAINABILITY STRATEGIES number of cars on the road is highly concerned about carbon OPTIMIZING EXISTING RESOURCES DHL Automotive aims to address estimated to soar from 800 million emissions and is continuously working and introduce many measures to Step number one is using available resources in a more today to 2.5 billion, which may sound on innovative solutions to combat the create a sustainable environment efficient way. Before investing in new technologies, good for the world economy, but not problem, but the question is: at what for all its customers. According to existing processes should be optimized and streamlined. so much for environment conservation. cost? Companies are heavily investing Manoella Wilbaut, Head of Global According to the World Health in different technologies such as Commercial Developments and The supply chain optimization solutions aim to analyze Organization, around seven million electrification and renewable energies Responsible for DHL Automotive and improve customers’ logistics setups to effectively meet people died due to air pollution in to comply with increasingly strict Sustainability Programs. their requirements and expectations. The Slotting 2012. Environmental concerns are governmental regulations – for A strategy based on five pillars of Optimization Tool (Optislot Tool) provides a set of increasing and governments are example, in 2015 the European Union strength has been implemented methods used to determine the most efficient location for implementing more and more wants an average fleet to reduce and specifically works around the each product within the warehouse in relation to its regulations to prepare for this near carbon emissions to 130g/km and to NO. 2 automotive sector. unique requirements, plus demand, movement and future of 2050. “Everyone is concerned 95g/km by 2021 – but major storage characteristics. Additionally, other systems such as WORKING TOWARDS CLEANER SOLUTIONS and everyone matters“, says Fathi compromises are being made along 1. Fleet management: alternative the Go Green Carbon Dashboard monitors the company’s Tlatli, President Global Sector the way. At DHL Automotive, the fuels and electric vehicles are One of the trends observed in the automotive sector is for current emission flow and associated costs, allowing us to Automotive, DHL Customer Solutions & focus is on approaching the matter of used through specific companies to refocus on their core activity. To ensure the strike the most optimal balance between the two. Innovation. “Having a sustainable sustainability by managing the triple automotive solutions best final product, they need trustworthy suppliers and approach is no longer an option. It is bottom-line – preserving the 2. Suitable Logistics Facilities: service providers within their value chain. our responsibility to work together environment, decreasing costs and optimized use of resources and and develop a solution that will lead to increasing quality and productivity. renewable energy is The company is fully engaged in the process of reducing its a better future for our society.” The company strongly believe that the highly promoted carbon footprint and was the first globally operating

former should not have to be 3. Network provisions: route logistics company to set itself a concrete CO2 efficiency According to the study “A New Era of achieved at the cost of the latter. management and modal shift target. It achieved this by pro actively developing cleaner Sustainability” held by the UN in 2010, solutions to increase solutions in order to minimize waste and maximize 93% of CEO’s see sustainability as The Group has devised a quality effectiveness in transportation cost-effectiveness and quality of service. important to their company’s future methodology that allows to ‘work 4. Additional Cost-Effective success. But the reality is that where smarter’ to attain sustainability, Solutions: specific sustainable Internally, Deutsche Post DHL is continuously promoting a many seem to understand the and which also works in line with end-to-end solutions for the better use of resources within its capacities and investing importance of the issue, few really its objectives. automotive customers in cleaner warehouses that will use alternative energies. 5. Standard Definition: working The group is also extending its green fleet. The climate- “TO BE EFFICIENT AND VIABLE, SUSTAINABILITY SHOULD proactively with government friendly vehicles fleet, which is used for transportation, has BE ENVISIONED BY TAKING INTO ACCOUNT THREE organizations, research institutes increased to 11,00 in 2014, allowing frequent deliveries to ELEMENTS SIMULTANEOUSLY: DECREASE THE COST, and NGOs to find better ways of dealerships without having an adverse affect on the INCREASE THE QUALITY AND REDUCE NUISANCE. STRATEGIC DECISIONS BASED ON A BALANCED MIX OF reducing fuel emissions. environment or on service quality via the Parts Distribution THESE VARIABLES SURELY RESULT WITH SUCCESS.” Centers solution. 8 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 9

NO. 3 “WORKING WITH DHL AUTOMOTIVE COMMUNITY OFFERING SMARTER HAS BEEN KEY IN HELPING US ACHIEVE VOLVO – AN UPWARD VISION OF SUSTAINABILITY IN THE END-TO-END SOLUTIONS OPERATIONAL EXCELLENCE IN TERMS OF AUTO INDUSTRY DEVELOPING SMARTER SUSTAINABLE DHL and Volvo share the same philosophy: sustainability should be combined with quality and cost-effectiveness. In 2013, Deutsch Post DHL honored the company Smart end-to-end solution available SOLUTIONS, WHICH ARE COST-EFFECTIVE, NO. 4 with the Most Innovative Customer Solutions award. across the value chain have been DO NOT COMPROMISE ON QUALITY SERVICE WORKING IN developed. The objective is to efficiently AND ARE GREAT FOR THE ENVIRONMENT. COLLABORATION Both companies have been working together on the global Maintenance on manage processes from the beginning, ” Manoella Wilbaut, WITH PARTNERS Demand (MoDe) project that brings together 11 academic institutions and leading right down to the manufacturing. Head of Global Commercial Developments and Responsible for DHL Automotive Sustainability Programs AND INTERNAL TEAMS companies. With MoDe, the goal was to develop a commercially viable truck that can identify where and when maintenance is required. It should also be able to Most of the companies have provide alerts when the maintenance is needed for which component. With early goals to develop airtight sustainable detection of sub-optimal engine operations, estimations show that it can prevent solutions for 2020 and 2050, but DHL SUSTAINABLE PACKAGING up to more than 50 tons of fuel Automotive collaborates with its Sustainable / reusable packaging solutions for Inbound to Manufacturing and Aftermarket have emissions per year and per vehicle. partners and stakeholders to also been developed with the aim to decrease cash investment through a ‘pay per use’ system and As parts are replaced only when create solutions, which meet increase productivity by improving handling and storage processes. needed, vehicle downtime is ‘today’s’ requirements. Companies minimized without harming the need to think pragmatically and environment and drivers’ safety. realize that providing sustainable Productivity, cost-effectiveness, MULTIMODAL solutions for today and tomorrow is connectivity and environmental With its large worldwide fleet network, DHL can offer a solution that combines multiple modes as important as thinking of the near concerns are all optimally managed. of transportation (air, ocean, road freight and rail). Proper selection of transport modes and and far future. efficient prediction and planning of both worldwide and local deliveries not only allow us to reduce transportation costs, but also to reduce carbon emissions. As the supply chain becomes more and more complex, the risk of DHL FLEET – ACHIEVING OPERATIONAL EXCELLENCE disruption has become even greater. The company is not only working on the logistics side, but also exploring new BATTERY LOGISTICS Providers and customers have to join ways of improving sustainability through operations. By collaborating with the That’s not all though. With a boom in electrification, OEMs also have to consider the logistics of forces in order to develop and DHL fleet department, DHL Automotive is able to provide sustainable vehicles for Lithium batteries management. DHL can run this from start to finish – from transportation to implement the best suitable solution transportation that use alternative/duel fuel and also focus on electric vehicles storage and to managing regulation requirements. These components are subject to tight for all parties. Collaboration is that have a positive impact on reducing the company’s carbon footprint. legislative rules (for example: ADR, dangerous goods class 9, UN 3480) and require specific necessary to ensure success. handling procedures such as temperature-control.

DEUTSCHE POST DHL GROUP CONFIRMED ON THE DOW JONES SUSTAINABILITY INDICES Deutsche Post DHL Group has once again been recognized for its corporate sustainability leadership, confirming its place on the leading Dow Jones Sustainability Indices DJSI World and DJSI Europe in 2015. Despite the continuous bar-raising in the assessment “WE ARE WORKING WITH process, including increased requirements for the implementation of sustainability-minded business practices, Deutsche Post DHL PARTNERS ACROSS THE Group saw rating improvements across several DJSI components. VALUE CHAIN TO “This confirmation by the world’s leading sustainability indices DJSI World and DJSI Europe underlines that we are on a good way DEVELOP INTEGRATED of combining commercial success with responsible business activities,” said Deutsche Post DHL Group CEO Frank Appel. “An SUSTAINABLE MOBILITY improved rating demonstrates that we have taken the right measures to increase our sustainability step by step.” The DJSI is SOLUTIONS AT A GLOBAL among the world’s best known sustainability indices and assess the world’s leading companies on their sustainability performance SCALE. IT IS NOT ONLY according to strict criteria. ABOUT BEING STRONG BUT ABOUT LEVERAGING Over the years, the DJSI has helped generate one of the world’s most comprehensive databases for financially-relevant PROPERLY COLLECTIVE sustainability data, and provides an important decision-making tool for sustainability-minded investors. In addition to DJSI, INTELLIGENCE. Deutsche Post DHL Group is currently represented in other important sustainability indices: In June 2015 for example, the Group “ has been included again in the FTSE4Good index which evaluates the sustainability of companies according to criteria such as Matthias Bohm environmental standards, climate change efforts, and labor standards.

DHL Vice President Category Management Ground Fleet 10 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 11

DHL EXPRESS “GOING EVEN GREENER IN MEXICO”

DHL Express Mexico has reaffirmed its commitment to the environment by announcing plans to add 294 new and, more energy-efficient vehicles to its ground fleet that will significantly reduce carbon dioxide emissions into the atmosphere. The first batch of 159 eco-friendly Mercedes-Benz Sprinters arrived in mid-November, and the remaining vehicles joined the updated ground fleet by the end of 2015.

The new fleet, representing an investment of more than $10 million, includes vehicles built with state-of-the-art energy efficiency standards, allowing DHL Express Mexico to provide greater speed and quality of service to customers. The new fleet will reduce carbon emissions by more than 266 tons in 2016 – a 20% decrease compared to 2015.

As part of the company’s efforts to provide its employees with the safest driving technology in fuel-efficient vehicles, DHL Express Mexico has partnered with Mercedes-Benz for five consecutive years. Mercedes-Benz also provides vehicles for DHL Express operations in Europe.

SAFER, HIGHER QUALITY SERVICE

The 2016 fleet acquired from Mercedes Benz consists highest quality service that has characterized our operations of the new Sprinter diesel Euro IV and NGT Euro VI, with for 35 years in Mexico,” says Antonio Arranz, Country BlueEFFICIENCY technology, and provides features that Manager of DHL Express Mexico. increase operating safety, optimizes driving and reduces These infrastructure investments for DHL Express Mexico carbon emissions. are part of the Group-wide GoGreen program. As part of the The energy-efficiency as well as the driving and safety initiatives in Mexico, the company announced that some of features of these Mercedes-Benz vehicles supported the these units will be powered by natural gas. This will make a company’s decision to acquire this new fleet. “These positive contribution toward the efforts of Deutsche Post investments reflect the commitment that the Express division DHL Group, which is committed to reducing its carbon of Deutsche Post DHL Group has with the environment and emissions of carbon dioxide worldwide by 30% by 2020. with its partners to provide them with the most efficient and safest vehicles for our couriers and to give our customers the Published 1/14/2016climate change efforts, and labor standards.

TO CONCLUDE

So, where the automotive sector is experiencing great change and has become more innovative than ever, recent customer demands show that the automotive industry does need to change its business model. Previous strategies were focused on the product itself; now the vehicle must be a part of the full mobility solution, which has to be suitable for people and the transportation of goods, and in which technology must play a big part. Manoella Wilbaut Head of Global DHL has proactively developed transport and logistics solutions to Commercial Developments meet these needs. By collaborating with industry leaders, the

Head of Sustainability company aims to continuously improve its offer and create ‘smarter’ DHL Customer Solutions sustainability solutions. & Innovation manoella.wilbaut@dhl.com 12 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 13

A new report outlines how sustainable mobility innovations have been sparked by the Formula E Championship, the world’s first fully-electric racing series.

Many of us are drawn to urban living, attracted by the INFRASTRUCTURE promise of greater opportunities, increased wealth and & BUSINESS MODELS improved amenities. Indeed, by 2050, the United Nations estimates that 66% of the world’s population will live in Often technologies rely on infrastructure to be efficient. THE RACE TOWARDS cities. The downside is that urban areas are negatively Without geographically comprehensive charging impacted by the mass movement of goods and people, networks, for example, the adoption of electric vehicles is which means that finding environment-friendly likely to remain low. The impact of changing regulatory sustainable mobility solutions has become increasingly and legislative frameworks must always be considered, as SUSTAINABLE urgent. Identifying and delivering short-term solutions is strong political initiatives have the power to significantly the most pressing challenge. change infrastructure and business models.

MOBILITY As this search intensifies, race-tracks in some of the world’s CHANGE MANAGEMENT biggest cities aren’t the most obvious place to look for innovation inspiration; but the Formula E Championship, & COMMUNICATION the world’s first fully-electric racing series which began its Effective communication is vital for achieving common second season in Beijing in October 2015, has acted as a understanding and overcoming resistance to change. The catalyst for technology innovation in the automotive transition to more sustainability requires a change of industry. Entertainment may be at the heart of the habits and mindset, because as good as a solution might Formula E concept, but it is an event that is also keenly be, it is worthless if not adopted. To achieve successful aware of other ‘e’ elements — namely environmental and communication, different channels must be used and energy concerns. account taken of how people retain information. Messages about sustainability must always focus first on As the Championship’s official logistics partner, DHL has the particular sector to which they apply (logistics, for published a report — called eStory: Undertaking the example), but must also focus on the wider population Mobility Challenge — which outlines the mobility who may know very little about that sector. innovations and green technology solutions that have already spun-off from the Formula E event. The report “Being able to innovate is a key success factor,” highlights features case studies from 13 Formula E partners, including the report’s author, Manoella Wilbaut, Head of Global how UK-based Aquafuel Research has patented renewable Commercial Developments & Sustainability, DHL Customer energy generators which run on glycerine; the pioneering Solutions & Innovation. “The report is part of a wider B2B role of India’s Mahindra Racing in developing electric program called eStory that aims to boost Innovation and power-trains; how BMW has integrated a total life-cycle Sustainable Mobility. We trust the real value comes from approach into its production systems; and how the the ability to connect people together and work in eco Championships have accelerated the development of systems. Let’s envision future in a pragmatic and charging systems for e-vehicles. Clearly, these are examples innovative manner!” — Ian Halstead of ‘sustainable development fueled by innovation’.

To download the report, please visit: The report also identifies three key levers to help such http://www.dhl.com/estory mobility innovation evolve:

TECHNOLOGY THE PERCENTAGE OF

GLOBAL CO2 Mobility has always been influenced by advances in EMISSIONS technology. It’s crucial to devise intelligent transport PRODUCED BECAUSE systems, driven by data management, to optimize the flow OF TRANSPORTATION of people and goods through densely-populated urban THAT USES FOSSIL FUEL COMBUSTION centers, but also to ensure that current solutions become more efficient and use fewer resources. 14 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 15

URBAN LOGISTICS GO GREEN

science parks, the Swedish Energy Volvo Buses has also teamed with DHL Manoella Wilbaut, DHL Customer Volvo Buses have some residents. However, there is a clear Sweden, where two variants of its Agency, and regional government, set Express to create a new bus stop Solutions & Innovation, Head of global trend for the evolution of latest buses are operating on route 55 ingenious solutions to up to devel­ op,­ demonstrate and design, which would include DHL Global Commercial Developments, is sustainable transport solutions based within the local public transport evaluate the next generation of SwipBox, secure delivery locations for impressed by both the bus stop make city logistics more on electromobility, via the use of system. Seven of the vehicles on the sustainable public transport. “The customers of online retailers who concept and the Route 55 project. either hybrid power trains, electric route are the 7900 electric hybrid, and sustainable, including Volvo Group aims to be the world prefer the convenience of picking up “Through our City Mobility program fuel cells or batteries. One of the early three are all-electric concepts, leader in sustainable transport their orders from unattended we aim to develop sustainable green vehicles – and an movers in this fledgling sector is Volvo featuring free Wi-Fi, power sockets to solutions,” says Niklas Gustafsson, locations rather than accepting them solutions that reduce environmental Buses, which has established a recharge phones and other mobile innovative bus stop. Chief Sustainability Officer, Volvo at their home or workplace. These impact, increase productivity and network of partnerships with major devices, and with the driver’s seat in a Group. “A unique collaboration in “self-service locker stations” – which control or reduce costs, and Volvo global cities. central position to increase capacity. Academics, politicians and observers Gothenburg enables us to launch the can only be accessed using a Buses’ philosophy certainly dovetails Although just 10.7 meters long, these from both the public and private electric bus route here and remain a customer’s PIN – are available to with ours,” she says. Last year, two Volvo 7900 electric vehicles can carry 86 passengers. sector agree that urbanization will be leader in the development of future improve customer conve­ nience.­ By hybrids began oper­ a­ ting­ in Hamburg, the major catalyst for global change public transport.” adding new support services such as “It’s also good to see the local and Germany, while a fleet of eight similar in this century. The perception that INNOVATIVE self-service locker stations, bus stops regional authorities in Gothenburg vehicles took to the roads of cities should be considered as dynamic facilitate carbon-free mobility of are collaborating on ElectriCity, Stockholm, Sweden. The compa­ ny­ has APPROACH and living ecosys­ tems,­ within which people and goods. because as cities of the future also received an order for 25 of its people, their homes, workplaces and Volvo Buses, which expects full continue to evolve, the public sector electric hybrid buses to operate in vehicles will interconnect with the commercial production of its all- “DHL Express is the first to launch this will have a crucial role to play, not Edinburgh, Scotland. At the same providers of goods, services, energy electric buses to start in 2017, says entirely new delivery option in the simply on individual projects such as time, Volvo Buses is collaborating with and big data has also gained energy consump­ tion­ is around 80% Swedish market and it is the rapidly Route 55, but in terms of both urban other major cities to create widespread support. lower than conventional vehicles. But growing e-commerce that creates the infrastructure and legislation.” sustainable city traffic solutions based there’s more to the Route 55 project need for more customer-friendly­ on electromobility,­ including Curitiba, Admittedly, there is less accord – for than technological advances.­ It’s one transport solutions,” says Ted Ian Halstead Brazil, and Shanghai, China. THE REDUCTION IN CARBON the moment – about how cities of the of many schemes devised and ­Söderholm, Managing Director, DHL Published: November 2015 EMISSIONS GENERATED BY future will organize and operate their delivered by ElectriCity, a Express Sweden. It’s an innovative However, its most ambitious project VOLVO’S ELECTRIC HYBRID myriad functions to meet the fast- collaboration between Volvo Buses, approach to the “last mile” challenges was launched in June of this year, in changing requirements of their the local authority, city planners, two faced by all logistics providers. Volvo’s home city of Gothenburg, 16 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 17

That milestone was achieved back in 1976, and there have consumption and emissions of a four-cylinder engine been many more since, including the intriguing concept of and the power and performance of a six or a “pedestrian airbag,” which inflates to cover the eight-cylinder variant. windscreen after a collision, reducing the potential impact on people outside the vehicle. Adaptive cruise control, That combination of commitment to safety and radar sensors offering 360-degree visibility of other technological innovation was critical when Volvo Cars vehicles, forward collision warning and even cyclist decided to take on the Chinese market, following its detection devices are other Volvo Cars innovations, acquisition by Zhejiang Geely Holding in 2010. Its new introduced through its IntelliSafe program – the suite of owner immediately pledged to invest $11 billion over the safety features found in its cars. The ultimate aim, says next five years to revitalize its model range and to expand Eriksson, is to ensure that by 2020, no one traveling in a its global footprint with both increased sales and in- new Volvo will ever be seriously injured or killed, a country production plants, in the world’s two largest auto visionary approach that would most certainly have been markets, China and the United States. Volvo Cars had been applauded by the company’s founders. The engineers in the latter market since the mid-1950s, but had never tasked with designing Volvo Cars’ new generation of previously had the resources to set up a pro­duc­tion plant. ­Drive-E power trains have been setting equally challeng­ ­ing In China, the challenge was even greater, as other VOLVO ROLLS OUT goals: building units which deliver the low fuel premium brands were already established there. NEW INNOVATION

As Volvo Cars continues its was more important to them than Group. “We are always working to simply propelling them forward as create very safe cars. We were the first renaissance under Chinese quickly as possible. ­Gabrielsson and carmaker to install seat belts in front owners Geely, Kjell-Ake Larson were also decades ahead of and rear seats, and we designed the their contemporaries in creating a first three-point seat belt in 1959. Eriksson, Vice President brand which spoke directly and Making engines with very low emission (Indirect Purchasing) at powerfully to the consumer. Most auto levels is also very important to us. industry pioneers emblazoned their We were the first carmaker to design Volvo Cars, points out that names on their vehicles, their factories an effective system for ‘cleaning’ innovation has always and their billboards. However, the two exhaust gases, by using a three-way Swedish entrepreneurs preferred to catalytic convertor.” been its driving force. create a brand which meant something; so, from the Latin verb Doing things differently has been a “volvere” (to roll), they created way of corporate life for Volvo Cars, Volvo: I roll. since its astute founders realized that sheer speed was not a vehicle’s only Their first customers knew they were selling point. buying a car which would roll regardless of the weather or the The cars manufactured by Assar uneven road surface; and the Gabrielsson and Gustaf Larson were perception that Volvos are reliable and designed to withstand both the rigors safe remains ingrained in the buying THE AMOUNT THAT VOLVO’S of Sweden’s unforgiving climate and public’s col­lec­tive psyche. It remains so OWNER, GEELY, IS INVESTING TO CREATE NEW MODELS AND its challenging road conditions. Even today. “Safety has become the central DRIVE GLOBAL EXPANSION before the first Volvo chugged off the element of our long-term heritage,” production line in April 1927, says Kjell-Ake Eriksson, Vice President protecting its oc­cu­pants from harm (Indirect Purchasing) at Volvo Car 18 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 19

HIGH DEMAND

However, the huge Geely investment has paid off 100,000 vehicles annually, and 2014 US sales of just 56,000, spectacularly. Volvo Cars now has three production sites in the scale of the company’s determination to regain market China. The first is in the ­Chengdu Economic and share and transform its presence in the country under Technological Development Zone in Southwest China; the a new leadership team is evident. second is located in Daqing, northeast China, where its best-selling XC60 is as­sem­bled for the local market; and Even as those ambitious proposals were being an­nounced, the third is an engine plant in Zhangjiakou, northwest of Volvo Cars already had much to celebrate, as its all-new Beijing, which supplies engines to Chengdu and Daqing. SUV, the XC90, was launched to acclaim from dealers and All sites have the same specification for technology, safety drivers alike. “The demand was fantastic, high­er than our and the environment as Volvo Cars’ earlier plants in forecasts,” admits Eriksson. “We had 20,000 orders before Sweden and Belgium. “Chinese customers do not have the first one had reached the deal­er­ships. Today, more lower expectations than Europeans,” said Lars Danielson, than 65,000 XC90s have been sold. Such success brings its Senior Vice President of Volvo Cars, China Operations, and own challenges, of course, and as we establish our global CEO of Volvo Car China at the start of production of the footprint, the challenge is to be consistent with regard to XC60 in November of last year. “They expect premium quality. We are always moni­­tor­ing our supply chains to quality products. Customers also have plenty of choice in ensure that optimum quality is being achieved.” the highly competitive market in China. That is why we make sure to deliver high-quality Volvo cars out of “Equally though, we always need to have strong Chengdu that are at least as good as the cars we build pre­dic­tions about the potential impact of external in our European plants.” influences, which is very challenging at the moment. The future strength of China’s economy isn’t clear, Europe is The five year investment program has also enabled Volvo also more or less flat, as is the USA, and the absence of Cars to unveil plans for its first US plant. Around US$500 eco­nom­ic growth must influence demand. However, we million will now be invested in the factory, based just still believe that our target of selling 800,000 vehicles in outside Charleston, South Carolina, and production is the medium term is achievable, because of the quality of expected to begin in 2018. With a potential capacity of our products and our relentless focus on innovation.”

BEING DIFFERENT

The Swedish automaker certainly took a radical approach­ in-car app. Such innovations would require a next-gen to marketing this year, attending the Auto Shanghai road infrastructure to operate, but the trials underline exhibition in April, but not exhibiting in Frank­furt in the company’s desire to become a pioneer of September. “We are one of the world’s smallest carmakers, “connected” vehicles. so we cannot simply follow the mainstream,” says Eriksson. Eriksson is naturally enjoying Volvo Cars’ re­nais­sance under Volvo Cars is also focusing on innovations via the Geely, even if the demands of working life in Gothenburg, “connected car” concept, and used the world’s largest Sweden, mean his alarm is set for 5:15 a.m. every day. mobile technology exhibition, in Barcelona this spring, to “I have always been motivated by enthusiasm,” he says. outline its plans. A pilot fleet of 1,000 cars is being trialled “I have a very good team around me, and there is a in Sweden and Norway, to see how “road status” data powerful momentum in the company because we are about traffic flows, journey times, accidents and other going somewhere we have never been before. The new crucial information can be collected and then shared with plant in Charleston is very much part of that journey, and I other road users via the cloud. Volvo Cars’ software think I’m a very lucky person to be involved.” engineers have even devised a “slippery road alert,” so its vehicles can automatically warn both their driver and Ian Halstead other drivers, of challenging driving conditions via an Published: November 2015, Photos: Ola Torkelsson; PR 20 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 21

ASSESS LOGISTICS IMPLICATIONS EARLY IN THE LAUNCH PROCESS

Because strategic and long-term logistics decisions are to be taken at the initial stages, the early involvement of the logistics service provider is definitely beneficial. The future supply chain design decisions are especially critical since the supply chain will remain mostly unchanged during the whole product lifecycle. DHL’s expertise in risk assessment and supply chain optimization and performance allows its customers to assess the relevance of every option.

The transportation of the prototype vehicle and parts is also a major challenge of the product development phase. DHL has developed safe and confidential packaging solutions dedicated to creating diverse products ranging from high tech components to high value concept cars.

SOME LOGISTICS SOLUTIONS MATCHING THE PRODUCT LAUNCH PROCESS REQUIREMENTS

DESIGN / ENGINEERING PRODUCTION SALES READINESS READINESS -36 / -6 MONTHS -6 / -3 MONTHS D-DAY

Feasibility Mules Freeze Design Freeze Production Ordering New study building Production After & validation & ramp-up Release / concept & & validation sales Prototype & Production & Mass vision Development Component testing campaigns partner tooling Testing tooling Communication production design selection

Control Tower / Visibility

THE CAR’S Risk Management

Secure / confidential packaging Prototype shipping STAR Supply Chain consultancy / End to End Supply Chain cost evaluation The engine of the automotive industry is new vehicle launches, which can take three Industrial projects years and cost more than $500 million. In an increasingly global business, the resulting Trade Fair Management supply chains and promotional efforts often stretch around the world. Inbound to Manufacturing flows management

DHL AS A RELIABLE PARTNER FOR PRODUCT LAUNCHES Just in Time / Just In Sequence

Inplant Logistics / Line feeding Increased global competition in the automotive industry makes new product launches more frequent and time constrained than ever. In the meantime, technical constraints resulting from both local adaptation and product Complete Knocked Down Kits Packing & Transportation standardization trends have a strong impact on the process complexity and lead to tremendous development costs. Aftermarket distribution

Product launches are then a critical subject of interest for both OEMs and component manufacturers and Recall management DHL is accompanying its customers in the whole process – right from idea generation to aftersales events. 22 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 23

THE TRICKY BUSINESS OF RECALLS

Few things make automotive executives more nervous In order to minimize the negative impact of recalls following than recalls. After designing a vehicle, planning a launch a vehicle launch, DHL has developed a comprehensive and selling millions of cars, companies sometimes discover solution, which includes the following features: a technical problem in the model. In 2014 the automotive industry set a record with around 64 Million cars recalled, Recall planning and preparation thanks to simulation a figure that almost tripled compared to 2013. tools, customer mailing systems and online portals set-ups Recalls put customer-manufacturer relationships at risk. Recall smooth execution and monitoring (end-to-end The customer’s expectations are not met and there are also order management), track & trace and IT connectivity practical concerns to be considered. If a customer accepts to bring his/her car back to the dealer for a recall, he/she Key Performance Indicators monitoring for continuous will not want appreciate being held up there for too long. improvement purposes

ReActive REQUEST SETUP EXECUTION IMPROVE

Elapse up to 3 months typically 3 - 6 months 2 weeks Time

up to 4 weeks typically 3 - 6 months 2 weeks

ProActive REQUEST SETUP EXECUTION IMPROVE RECALL ALLIANCE BENEFITS Vastly improved timeline in terms of readiness The availability of parts in the aftermarket channels must ReActive = DHL Recall ACTION Much better preparedness HEDGE THE RISKS AND COSTS OF LAUNCH DELAYS Customized supply chain Recall plan be ensured from day one and should then be prepared ProActive = DHL Recall ALLIANCE Improved end to end visibility and control prior to the launch. DHL’s Aftermarket solution is based on Improved quality process The integration of a new model into an existing production flexibility and cost-effectiveness, allowing for the smooth Reduced organizational pressure facility often impacts the plants productivity and leads to Greater control of costs introduction of new components in the aftermarket delays that negatively impact the future product’s release Better understanding of key cost drivers distribution network. Minimized disruption to normal business date. Coordination of inbound flows is critical to ensure RESILIENCE360 the release date of emerging mega-platforms. NEW PRODUCT LAUNCH: TIER ONE AND OEMS Officially launched in 2014, the DHL Resilience360 solution set is especially relevant in the context of new product launches. DHL’s advanced Inbound to Manufacturing Solutions It is a unique supply chain risk management solution, which can turn disruption into competitive advantage. Highly The New Product Launch solution set-up is adaptable to ensure a reliable but flexible supply chain that will support customizable, it comprises two sophisticated products: the Resilience360 Risk Assessment, a continuous assessment study, and the Tier One and OEMs requirement. In case of a new the new model production ramp-up and frequent the software-based Resilience360 Incident Monitoring solution – both designed to improve the resilience of your supply chain. vehicle launch, Tier One suppliers are usually involved in planning adjustments. DHL’s visibility and risk monitoring the early stages. For a new component launch, Tiers Two solutions ensure the reactivity of the inbound set-up and

and Three are also involved early. DHL RESILIENCE360 RISK ASSESSMENT Illicit Trade its ability to implement efficient contingency plans.

IT Risk Supply Chain Earth Infrastructure For both cases, component and car manufacturers must Mapping and visualization of risks for the entire SC: Wind PRODUCT VISIBILITY AND AFTERSALES Cargo Theft efficiently coordinate the relationship between multiple Transparency on exposure and vulnerability in over 20 risk categories l Fire na N o D at SERVICE EFFICIENCY: ti i u a sa ra stakeholders. DHL offers various solutions to tackle this. Rates resiliency and ensures coverage of back-up plans r s l e t

Supplier p e THE MAIN FACTORS IMPACTING BRAND LOYALTY r O s Water Failure Identifies risk hotspots and recommends suitable mitigations

S

Provides evaluation of sourcing scenarios o c s i d Moving high value showcase cars from auto shows to press Geopolitical o r Utility P a Risk o z Failure li a events with large amounts of marketing material is also tical H DHL RESILIENCE360 RISK MONITORING part of the new product launch process. DHL’s Trade Fair & Industrial Customs Fire Events solutions provide the logistics support required for Efficiency Detects and mitigates risks to avoid supply chain disruptions: Strikes such occasions. Tracks relevant risk incidents with potential impact on the end-to-end supply chain Allows you to plan and book emergency/alternative shipments The release date marks the end of the product launch Monitors the entire supply base journey. It is also the beginning of the product lifecycle. 24 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 25

TAG SERVICES DECOUPLING MARKETING SUPPLY CHAIN

SPEED TO MARKET MARKETING SUPPLY CHAIN Traditionally, advertising agencies do three things for TAG is the leading global brand services company and 2. Cost Effectiveness: Increasing cost efficiency through SPEED TO MARKET customers: come up with ideas, produce them and place largest procurer of print, sourcing the best marketing process & product improvement and MARKETINGstrategic SUPPLY CHAIN them. Media buying has separated a while ago, but now materials at the best price. It is a standalone business procurement conditions. Conception we are looking at a separation between creation and division of Williams Lea, a DPDHL subsidiary since 2006. It Leverage TAG’s buying power and centralized production, also known as decoupling. TAG is a major helps brands make marketing more consistent and bring production approachConception to drive costs down (20%-30% global company born form this schism. Clients are better value by delivering efficient & creative marketing savings on printing materials can be expected) engaging “decoupling companies” directly to produce, that inspires the audience. TAG’s solutions are tailored to distribute, translate and transcreate global campaigns the customers around three pillars, which happen to be 3. Speed to Market:Execution Improving the speed at which for brands. Beyond the evident cost saving associated to very relevant for the automotive industry: campaigns can be delivered worldwide. BRAND COST CONTROL EFFECTIVENESS that concept, decoupling increases customers’ ability to Execution Auto players are accelerating their new model effectively customize their brand message around the 1. Brand Control: Ensuring brand consistency across all BRAND COST launches and product lifecycles are lower which world and gives them more freedom to the creative part, media through standardized global quality. CONTROL EFFECTIVENESS means there will be an increase in marketing as they are less dependent on creative agencies. Most of the time marketing has a decentralized campaigns on a global scale structure (often a regional marketing setup or even a local setup in some parts of the world), meaning Full web development Execution versus some of the work is duplicated and the different Mobile & tablet integration SPEED AD-HOC establishing creative Email & campaign management DIGITAL messages sent can be inconsistentTO MARKET DESIGN MARKETING SUPPLY CHAIN Automotive players are increasingly pushing to grow Full web development Execution versus Mobile & tablet integration AD-HOC establishing creative in emerging markets. There is a need for: DIGITAL Email & campaign management BROAD- DESIGNCREATIVE Simple pack shoots Post-production CAST STUDIO Full shoot production services Conception n  Timely and cost effective deliveries of International versioning Computer Generated Imagery (CGI) marketing material Global distribution Services BROAD- CREATIVE Simple pack shoots n  Post-production CAST STUDIO Printing and transportation capabilities in these PRINT TRANS- Full shoot production services markets (TAG is the world’s largest print International versioning CREATION Computer Generated Imagery (CGI) World’s largestGlobal independent distribution print procurer PREServices MEDIA International campaign adaption Execution procurer thanks to a unique supplier network) Marketing print, POS, packaging, etc. & FORMAT ADAPTION BRAND COST Unique supplier network TRANS- nCONTROL  Adapting to local culture/language in orderEFFECTIVENESS to PRINT CREATION deliver the right message World’s largest independent print procurer PRE MEDIA International campaign adaption Marketing print, POS, packaging, etc. Pre-press & FORMAT Unique supplier network Final artwork, lithography,ADAPTION colour proof

Pre-press Final artwork, lithography, colour proof Full web development Execution versus Mobile & tablet integration AD-HOC establishing creative DIGITAL Email & campaign management DESIGN

BROAD- CREATIVE Simple pack shoots Post-production CAST STUDIO Full shoot production services International versioning Computer Generated Imagery (CGI) Global distribution Services

PRINT TRANS- CREATION World’s largest independent print procurer PRE MEDIA International campaign adaption Marketing print, POS, packaging, etc. & FORMAT Unique supplier network ADAPTION

Pre-press Final artwork, lithography, colour proof 26 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 27

A complete- or semi-knockdown operation (SKD/CKD) times bigger than on parts. Other countries have a more consists in consolidating parts/modules in one country and protectionist approach aiming at developing the local shipping them in kits ready for assembly in another. It is a automotive industry and leveraging regional trade quick and relevant solution to bootstrap production in a agreements. In that case KD operations are relevant only if new market while lowering financial risks. Indeed, this combined to high local sourcing in order to benefit from set-up requires lower investment and enhances flexibility local incentives. The size of the local automotive industry from a production standpoint. and the infrastructure conditions are also part of the equation. Indeed countries without recognized supplier The interest of such a solution varies from one market to industry and poor infrastructure are good candidates for KNOCK-DOWN SOLUTIONS the other. The gap between the import tax level on CKD shipments. In any case, the KD strategy can also be finished vehicles and automotive parts is the main factor used to test a new market before investing in a more influencing towards a KD strategy. In certain countries, the durable manner if successful. CAPTURING GROWTH IN import duty rate on finished vehicles can be as high as ten EMERGING MARKETS MAIN OEM CHALLENGES MAIN CKD BENEFITS

Door to door time definite express Gain market share in Emerging countries movement for engineering approval

Relevant solution to bootstrap production in a new market/region while lowering risks OEMs now operate on a global level and are increasingly AUTOMOTIVE 1) SALES Minimize Capital expenditure involved in penetrating emerging markets, which will be (new plants/WH) 112bn the growth’s fuel for the next ten years. Capturing this 79bn Lower investment for assembly plants growth in the current increasingly competitive environment 57bn Optimixe Supply Chain Costs is a significant challenge for OEMs. On the one hand, they Reduce import taxes and often receive need to establish themselves and grow fast locally but on tax benefits for creating local jobs 2002 2012e 2022e the other, they have to manage efficiently global Rest of the World BRIC USA/Japan EU27 Gain flexibility to avoid overcapacity issues operations. On top of that, accelerated model renewals Load cube and product characterization flexibility and global launches add complexity to the picture.

DHL provides a wide array of services in the whole CKD process and uses a modular implementation approach that covers As globalized as the world might be borders are undoubtedly still there, illustrated by uneven geopolitical and economic the whole project life cycle from planning to operational management. To offer this fully integrated end-to-end solution, situations, different regulatory frameworks and obviously different business cultures. Understanding this diversity is key DHL combines its divisions’ respective core business areas in a smart manner: milk-run collection and consolidation in in the elaboration of a relevant localization strategy. In this context, knock-down solutions are a good option to consider origin country, multi-modal solutions and customs clearance for global transportation and assembly operations in and their relevance depends on factors inherent to the considered market as well as the company’s existing operations. destination country. On top of that, DHL has the expertise to develop CKD-customized packaging solutions matching specific customer requirements and maximizing utilization of the containers.

TIER ONE CBU COMPLETELY BUILT UNITS FINISHED VEHICLE SHIPPED PARTS GATHERING PACKAGING DEVELOPMENT PARTSF OEM FULL INISHED VEHICLES FINISHED VEHICLES I2M PACKAGING ASSEMBLY PLANE OVERSEAS FOR DIRECT SALE TIER ONE & OPTIMISATION

TIER ONE PARTS CKD LINE FEEDING KITS PACKING COMPLETE CAR KITS

PARTS/MODULES TIER ONE TIER ONE TIER ONE CKD/SKD OEM RECEIVING PLANT WAREHOUSE MANAGEMENT SYSTEMS COMPLETE/SEMI KNOCK DOWN LOCAL KITS ASSEMBLY MODULES KIT KD KITS OEM RECEIVING FINISHED VEHICLES KIT FOR OVERSEAS ASSEMBLY (POSSIBLY CONSOLIDATION PLANT COMPLETED WITH LOCAL SOURCING) FACILITY CUSTOM CLEARANCE RECEIVING PROCESS TIER ONE FINISHED VEHICLES 28 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 29

DHL AUTOMOTIVE AFTERMARKET SERVICES

Cost effective solutions for service level optimization in the Aftermarket.

Aftermarket parts and services sales are nowadays accountable for around 35% AFTERMARKET EMERGENCY SOLUTIONS AND PACKAGING of the total automotive OEMs revenue earned globally. Beyond its network of Parts Distribution Centers, DHL provides additional aftermarket solutions to manage unexpected events and optimize the packaging strategy. This part of the business delivers local customers’ preferences. For OEMs, loyalty. In demanding markets, DHL higher margins than the sale of new the main goal of performing well on makes multiple just in time deliveries to DHL AFTERMARKET PACKAGING SOLUTIONS vehicles and is therefore becoming the aftermarket is to increase customer end customer on a daily basis. A large DEALERS / END CUSTOMERS more and more strategic. The number loyalty and enhance repurchasing by AFTERMARKET network of local distribution centers IN NIGHT DIRECT TO DEALER  SPECIFIC of vehicles in operations is growing: offering the highest level of services. operates up to four milk runs a day to DELIVERIES (PUSHED PARTS) PACKAGING SOLUTIONS product quality is better and vehicles Moreover, this part of the business fulfill dealer orders on a pull mode. CENTERS DISTRIBUTION 

are aging. By 2020, 1.32 billion cars represents 35% of their overall revenue. MICRO LOCAL  MEGA LOCAL  are forecast to be on the roads. In some other markets, service and For components manufacturers, the DISTRIBUTION  parts affordability is key to retain Aftermarket service satisfaction is a key aftermarket is even more critical as CENTERS and capture market share. DHL then contributor towards brand and dealer it represents 50% of the revenue.

PARTS loyalty. Consequently, optimization of focuses on the optimization of in- PRODUCTION Pascal Kemps, DHL Head of Passenger night replenishment for warehouses PLANT aftermarket set-ups is becoming a (OE/TIER 1) major challenge for automotive players. Vehicles says: “We are only at the start and dealers in order to limit the cost EMERGENCY SOLUTIONS of the change cycle. The Automotive of just-in-time deliveries. • DIRECT TO DEALER aftermarket will remain vibrant for • VEHICLE OFF ROAD WORLDWIDE the next years as e-retailing has Thanks to the monitoring of the CUSTOMERS WITH grown-up. The fast will beat the big.” aftermarket flows and stocks, DHL set- DHL Aftermarket Packaging Solutions aim to reduce the cost of disposable packaging. This modular and DIFFERENT ups are flexible and can adapt to reusable packaging has been developed to minimize our customers’ environmental footprint while achieving EXPECTATIONS changing requirements. This has been cost savings thanks to load cube optimization. THE RIGHT SET-UP FOR implemented for major industry leaders Customers’ needs vary from one THE RIGHT CUSTOMERS and fits with OEMs or Component DIRECT TO DEALER country to another. Drivers in mature manufacturers’ requirements. The common spare parts delivery Direct to dealer models markets tend to keep their vehicle system often uses a Parts Shay Dorgan, DHL CSI Vice President drastically reduce longer; in emerging countries, many Distribution Center in which large in charge of the implementation of distribution delays by of them are only buying their first inventory levels of components are this solution says: “By implementing DISTRIBUTION AIR & MAIN DOMESTIC DESTINATION directly shipping emergency car. With such differences regarding CENTER: SEA FREIGHT WAREHOUSE TRANSPORTATION COUNTRY available. The DHL Industry solution this set-up, Dealer inventories can be freight from the production the lifecycle of the auto market, ORIGIN COUNTRY is based on an organized network of reduced up to 70% in terms of the plant/main warehouse to customers’ expectations in terms of SHIPPER FREIGHT FORWARDER SHIPPER COURIER CONSUMER small rapid response warehouses number of parts and up to 95% in the final customers. This aftermarket services are very different. strategically located closer to cities terms of inventory value (dependent solution provides full Automotive players willing to counter to enable spare parts delivery to on OEM and service specification). visibility on emergency shipments and allows to the rise of independent aftermarket dealerships in a timely manner. Our automotive customers can offer DISTRIBUTION CENTER: DIRECT DISTRIBUTION BY DHL EXPRESS DESTINATION COUNTRY actors need to implement flexible Aftermarket service satisfaction is the highest level of services without ORIGIN COUNTRY quickly complete Vehicles aftermarket set-ups that better match essential to brand and dealership compromising their cost-effectiveness.” SHIPPER DHL CONSUMER Off Road (VOR) orders. 30 AUTOMOTIVE FLASH – DHL WHEELS IN MOTION AUTOMOTIVE FLASH – DHL WHEELS IN MOTION 31 A SOLUTION BASED ON THE HIGHLIGHTS FIRST CHOICE BUILDING INNOVATION

METHODOLOGY New DHL Asia Pacific Innovation Center in Singapore develops game-changing logistics solutions and promotes collaborative innovation in the region.

Local Distribution Centers have been established In December 2015, DHL launched its Asia Pacific Innovation Center (APIC) in DEFINE IMPORTANCE OF based on the First Choice Methodology principles. NAFTA SOLUTIONS Singapore, to offer a visionary view of the logistics world, and develop It makes use of various tools borrowed from the Six INCLUDING MX innovative solutions to meet evolving supply chain needs. The multi-million

CONTROL MEASURE Sigma and Lean methodologies with customers’ dollar facility is DHL’s first innovation center outside of Germany, and the first MX Cross Border solutions expectations and continuous improvement dedicated center for innovative logistics services in Asia Pacific. processes at the heart of this approach. As Mexico overcomes its structural “I believe innovative ideas are key for our future success. Our focus on IMPROVE ANALYZE challenges to manufacturing customer-centric innovations and the development of products and services that For the development of this solution, workshop growth the industry is likely to our customers need most, will help us to remain the logistics leader”, said Frank and follow-up meetings are organized on a regular change in size as well as Appel, CEO Deutsche Post DHL Group. basis and ensure transparency on performance, orientation. Earlier waves of targets and achievements. DHL and OEMs involved Visitors can enjoy customized visits with a selection of services, ranging from First Choice DMAIC method provides inward investment were often structure and specific tools in every build a trustworthy partnership in order to meet guided innovation center tours, to innovation workshops, events and forums. made primarily with a view to phase of process improvement the needs of all the parties involved. Launched with the support of the Economic Development Board (EDB), the APIC supplying U.S. markets. The latest exhibits include the state-of-the-art centerpiece showcasing the trend of wave of manufacturing automation and robotics in the future of working; Solution Sphere, where investment is likely to look rather DEUTSCHE POST SERVICES PROVIDED AND TYPOLOGY visitors can experience the full range of Deutsche Post DHL Group capabilities different. As the domestic market DHL ANNOUNCES and solutions such as parcel lockers, sensor technology and warehouse pick and OF PART DISTRIBUTION CENTERS has grown, along with the pack using voice and lighting technologies; Trend Curve, which highlights future STRATEGY 2020: economies of other countries in The services provided at Part Distribution Centers are: trends and their applications for the logistics industry; and Vision Wall, which FOCUS. CONNECT. the region, many companies are enables visitors to discover inspirational scenarios on what the world of logistics GROW. Reception of parts Return parts quality control now looking at a NAFTA strategy might look like in the year 2050. Deutsche Post DHL’s strategy Parts storage Scrapping of defective for their manufacturing for the coming years is based Order pick and pack damaged parts investments, with Mexican plants Bill Meahl, Chief Commercial Officer DHL, said: “The launch of the APIC in on three main pillars: Warehouse management Waste management supplying customers across NAFTA Singapore is a natural step to maintain our lead as a frontrunner in innovation, Dispatching to dealers (in night Central flows and inventory and the world. That approach following the success of our first center in Concentrating on core strengths milk runs and same day milks runs) information management makes locating close to the border Germany. Singapore’s position as an less of a priority, allowing innovation hub, its excellent infrastructure Extending the company’s Types of Part Distribution Centers include: companies to go where they can and sophisticated workforce make it an quality leadership find the right skills, supply base excellent base from which we can Mega Local Distribution Centers Micro Local Distribution Centers Seizing opportunities and logistical links. achieve strong and consistent growth restocked by Central Distribution hold 5.000 to 8.000 SKUs and are in new growth areas In this context new Automotive in the region.” Centers, usually holding stocks of restocked either by macro DCs or clusters are growing further away 15.000 to 20.000 stock keeping by Central Distribution Centers. The Singapore center is modeled after For 2020, an emphasis on organic from the border making seamless units (SKUs). DHL’s first innovation center in Germany, expansion, emerging markets and and integrated solutions for Cross which has been highly successful and re- ecommerce-related logistics has border flows essential. DHL launched with a brand new look. Besides been established. The CEO Frank WITH THIS SOLUTION: Automotive focus is to provide providing a second customer-centric Appel says: “We are building on Final customers are able to get their car fixed within the same day integrated Pan-American solutions innovation platform that caters to the our achievements and seizing new Dealers reduce their level of stocks and satisfy their customers that will support its customer’s Asian market, APIC will also invest in opportunities for additional Vehicle manufacturers increase customers’ loyalty with a high quality in regional and global strategies. services and reduce stock duplication as well as the number of rush deliveries capabilities in analytics, e-commerce and profitable growth.” last mile solutions for Asia Pacific markets.