Objectives and strategies
Excerpts from Deutsche Post AG's 2013 Group Annual Report.
Strategy 2015 – our Group-wide framework
In 2009, we introduced our Strategy 2015, which represents the Group-wide framework for our vision, mission, values and objectives. Our guiding principle is to remain the postal service for Germany and to become the logistics company for the world. The mission associated with this principle reflects our values and customer promise, namely:
We want to make our customers, employees and investors more successful, we always show respect, without compromising on results; we make our customers’ lives easier and we want to be a part of making our world a better place in which to live. To this end, our strategy pursues three key objectives: we want to become the provider of choice for customers, the employer of choice for our staff and prospective employees and an attractive investment for shareholders. Our progress is routinely measured using indicators relevant for internal management.
In the reporting year, significant progress was again made on a Group-wide basis. This is reflected, for example, in customer satisfaction rates, the results of our annual employee opinion survey as well as the development of key financial figures such as EBIT, EAC and operating cash flow. Our ranking in "Fortune World’s most admired companies 2013" also reflects how satisfied customers and employees are with Deutsche Post DHL: we come out top in our industry.
In 2014 we shall focus primarily on increasing profitability and generating cash.
Group-wide initiatives complement business strategies
Our divisional business strategies are supplemented by Group-wide strategic initiatives which we use as levers to help us achieve our goals. One example is DHL Customer Solutions & Innovation (CSI). In the reporting year, this unit strengthened our sector management and, in conjunction with our customers, developed sector-specific products and services.
Our First Choice management approach helps us to continuously improve internal processes. Group-wide, over 30,000 employees have now been certified in this methodology.
Strategic priorities of the divisions
The priorities of the operating divisions are anchored in the divisional business strategies. Here, too, our focus is on strengthening our profitability.
The following strategic approaches are how we aim to meet the business challenges of today and tomorrow.
Making costs more flexible: To achieve this goal, we are adapting our networks to changing market conditions and shipment structures. We are also cutting costs wherever possible and sensible, whilst investing in growth areas. Furthermore, we want to further increase the quality of our products, whilst protecting the environment in the process. For example, we commissioned the development of an electric delivery vehicle that precisely meets the needs of our delivery staff whilst improving our carbon footprint and reducing operating costs. Our Parcel 2012 Production Concept has made our sorting and transport more efficient and thereby lowered costs.
Providing the highest quality to our customers: We want to offer our customers the best service at all times, at the highest level of quality and at reasonable prices. To this end, we are modernising the sorting equipment and IT architecture in our mail network on an ongoing basis. We are also investing in our parcel network and adapting it to increasing volumes on an ongoing basis. Our goal is also to deliver 95% of all items sent in Germany to customers the next day. Moreover, we are constantly offering more services to parcel recipients, for example, package notification, shipment status and preferred location. Proximity to our customers is important to us, which is why we operate by far the largest network of fixed-location retail outlets in Germany. We are also expanding our successful co-operation with retailers, particularly by way of our Paketshops.
Motivating our workforce: The key to high quality and high performance is happy and dedicated employees. That’s why we equip our workforce with state-of-the-art tools, provide mail carriers with e-bikes and e-trikes, offer counselling on health issues and, at some locations, make childcare available. The most recent collective agreement included another noticeable wage increase, raising our levels even higher above the competition.
Tapping into new online and offline markets: We are taking advantage of our expertise in physical communications to offer competent digital communications. The internet is already strongly facilitating customer access to our services, allowing them to calculate and purchase postage and also locate retail outlets and Packstations online and by mobile telephone. We are also investing in future growth areas in all our businesses: beyond our E-Postbrief product, we are active in the growing industry of online advertising. We operate Europe’s largest platform for targeting (online advertising space marketing), provide the largest online German marketplace for journalistic content and are the first parcel delivery service in Germany to operate its own shopping portal. By acquiring Allyouneed.com we have established an online supermarket, where together with retail customers we are trialing same-day food delivery. At MeinPaket.de we offer one of the largest online marketplaces in Germany. We have taken our expertise in transport and network management into the deregulated coach market with the ADAC Postbus. In 2014, we shall operate additional lines, and in the future we intend to offer this service nationwide in Germany.
As part of our strategic programme FOCUS, we have expanded our business and increased our market share in recent years. In the reporting year, our attention was focused on strengthening our profitability.
Managing revenue and costs: Our return on sales rises when growing volumes lead to economies of scale in the network; when innovations and automation improve productivity and costs are strictly managed. We minimise indirect costs through simplified and standardised processes. For example, we are streamlining our IT system architecture step-by-step.
Structuring sales and prices: Using global campaigns, we specifically target small and medium-sized businesses which could benefit the most from exporting. We concentrate upon items whose size and weight optimally match our network and thereby create economies of scale. In terms of our pricing policy, we encourage global co-ordination and discipline. We also work to continuously improve our customer approach. Our Insanely Customer Centric Culture initiative is intended to fix problems faster and meet customer expectations more effectively.
Managing the network: Most of our costs are attributable to the air and ground network. We replace aeroplanes with newer, more efficient, and thus more cost-saving aircraft. We sell available cargo space to freight and forwarding companies, thus improving our network utilisation and reducing costs. On the ground, we are automating and standardising processes. For instance, vehicles are equipped by default with shelves and can be loaded directly from the conveyor belt. We also plan our pickup and delivery routes to maximise time and cost savings.
Motivating our employees: Our established Certified International Specialist (CIS) training programme ensures that all our employees have the requisite knowledge of the international express business at their disposal. Training is carried out by our own employees, including executives, for specific functions as well as on a cross-functional basis. This adds to mutual understanding whilst reinforcing a team atmosphere and loyalty within the division. The Certified International Manager (CIM) module is for managers and is intended to strengthen the unified leadership culture within the division. We want to sustainedly motivate our employees around the world. Systematic and continuous recognition of outstanding performance is one way of contributing to this.
GLOBAL FORWARDING, FREIGHT division
We are already well positioned in our markets due to our global product offering in air and ocean freight and in overland transport. We aim to consistently achieve growth that exceeds the market average and consolidate our leading position. To achieve this goal, we pursue several approaches:
Developing new customer solutions: We are constantly developing new products and services to meet the needs of all of our customers. In the reporting year, we were the first company in our industry to introduce a tool that tracks the carbon footprint of shipments. Customers worldwide now receive a carbon footprint statement via our web-based Track & Trace service. Our Flexitank product now allows customers in all regions to efficiently transport large quantities of non-hazardous liquids. Shipments are dispatched in a standard container, which is simultaneously more economical and environmentally friendly. DHL Thermonet represents the launch of a global air freight service tailored to the Life Sciences & Healthcare sector. Customers in this sector can manage their temperature-sensitive shipments, such as pharmaceuticals and medical devices, using a transparent and regulatory-compliant platform.
Building up a comprehensive transport network: For a freight forwarding company of our proportions, it is essential we continuously expand and optimise our network and operations. We continue to focus our efforts in this area on the growth markets of Brazil, Russia, India, China and Mexico. In 2013, we expanded the largest trade lanes between Europe, the Middle East and Africa. We also established a new office in Myanmar/Burma, from which we can better tap into the trade between ASEAN countries. Furthermore, we expanded the intra-regional LCL lanes between the Americas – mainly Latin America – and Asia. To optimise our network, we introduced intermodal road-rail transport between Asia and Europe.
Simplifying and standardising processes: Our strategic project New Forwarding Environment (NFE) made good progress in the reporting year. The aim is to develop a forward-looking operating model with efficient processes and state-of-the-art IT systems, which is intended to underpin our position as industry leader. Moreover, we shall be able to manage our processes better, standardise products and offer modular services. In future we intend to have a globally harmonised and unified organisation with dedicated customer service. Customers will benefit from shorter response times, products tailored to their needs and targeted communication. We are increasing the transparency and quality of data for sales volumes, customer figures, capacities, operations and freight. A test phase of this new operating model has been underway in New Zealand since the fourth quarter of 2013. We intend to roll the NFE project out throughout the entire Global Forwarding business unit over the next two years.
SUPPLY CHAIN division
Our Growth Through Excellence strategy is aimed at steadily improving our existing business and achieving profitable growth in key sectors.
Steadily improving existing business: We have established three programmes to continuously increase our performance, efficiency and competence. The first of these, known as Operations Excellence, promotes operational and technical standards aimed at guaranteeing the sustainability of our performance. We also apply the proven First Choice methodology to sustain the achievements we have realised and improve on them even further. Our Cost Leadership initiative is intended to significantly reduce costs and manage them effectively in order to increase our overall profitability. We achieve this by leveraging purchasing efficiency, operational discipline and best practices. As a result, we succeeded in further reducing our direct costs in 2013. Our Organisational Capability programme develops leadership qualities and enhances employee commitment. We want to attract new talent and retain and develop our existing talent. To this end, we have launched a top talent management programme.
Growing profitably in focus sectors: We have established three programmes to further our growth. In the Sector Focus programme, we are deepening our expertise on an ongoing basis throughout our six focus sectors. Dedicated global sector teams offer our customers comprehensive sector-specific solutions along the entire supply chain and ensure an exchange of knowledge on best practices across regions and business units. In our Strategic Products Replication programme, we develop and reproduce logistics solutions aimed at simplifying customers’ business processes. In doing so, we apply our proven standards and practices. One example is our Technical Services, which are processes integrated into the respective supply chain solutions and which we use to shorten repair cycles and thus notably reduce our technology customers’ warehouse and transport costs. Thus far, in addition to Technical Services, we have replicated the following strategic products worldwide: Airline Business Solutions, E-Fulfilment, Environmental Solutions, Lead Logistics Provider, Life Sciences & Healthcare Platform, Maintenance, Repair & Operations and Packaging Services. With our Sales Effectiveness programme, we are increasing the performance of our sales organisation by bolstering sales and customer support, learning to better understand our customers’ business objectives and inquiring regularly as to their satisfaction.