Excerpts from Deutsche Post AG's 2012 Group Annual Report.
Strategy 2015 reaches half time
In 2009 we presented our Strategy 2015, which pursues three key objectives: we want to become the provider of choice for customers, an attractive investment for shareholders and the employer of choice for our staff.
In the reporting year, significant progress was achieved in all three objectives, which is reflected, for example, in customer satisfaction rates, the development of our share price and our financial figures as well as the encouraging results of our annual employee survey.
Our successes in these areas result from a combination of the operational strength of our divisions, market developments and global trends, all of which had a positive impact on our business. With an eye towards the goals we have set for 2015, we see three key strategic approaches: a strong divisional focus, Group-wide initiatives that leverage our operating business and a unified corporate culture and value set.
The following strategic approaches are how we aim to meet both today’s and tomorrow’s challenges. Our central goal is to make a stable and sustainable contribution of at least €1 billion to the Group’s earnings.
- Making costs more flexible: To achieve this goal, we are adapting our networks to changing market conditions and making costs more flexible. We cut costs wherever possible and sensible. We also retain the high quality of our services and protect the environment. Ideally, we search for solutions that meet several goals at once: a new generation of machines in our mail centres, for instance, not only raises the level of automation and quality but also lowers production costs and carbon dioxide (CO2) emissions. In our parcel business, a new production system allows us to sort and transport parcels more efficiently, saving costs along the way.
- Providing the highest quality to our customers: We want to offer our customers the best service at the highest level of quality and at fair prices. Therefore, 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. In the future, we want to deliver 95% of all items sent in Germany to customers the next day. Moreover, our customers receive real-time track and trace data and we are doing this with the environment in mind: the majority of our delivery services in Germany will be completely carbon neutral in the future. Proximity to our customers is important to us. We operate by far the largest network of fixed-location retail outlets in Germany, consisting of over 20,000 outlets and sales points. This includes our network of around 2,500 Packstations and around 1,000 Paketboxes. We are also expanding our successful co-operation with retailers.
- Motivating our workforce: The key to high quality and high performance are happy and dedicated employees. The current collective agreement in Germany established an innovative Generations Pact. Furthermore, we demonstrate how much we value our people by equipping them with state-of-the-art tools, counselling them on health issues and, at some locations, making childcare available.
- Tapping into new online markets: We are taking advantage of our expertise in physical communications to offer competent digital communications. The internet is already strongly facilitating customers’ 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. In addition, we are continuously exanding our online offering to include new industries, such as the shipment of food.
In 2010, we introduced our FOCUS strategic programme, which involves four areas:
- Employee motivation: Our employees are very important to us and constitute our main competitive advantage in retaining current customers and winning new ones. The Certified International Specialist (CIS) training programme ensures that all our employees have the requisite knowledge of the international express business at their disposal. In the year under review, we added new modules such as “security” and “customer service”. Training is carried out for specific functions as well as on a cross-functional basis. This adds to mutual understanding and reinforces the team atmosphere and loyalty to the division. In addition, we regularly honour employees who have proved to be International Specialists through special achievements.
- Service quality: Our strengths lie in the proximity to our customers and our ongoing improvement. We are optimising our workflows to make us the provider of choice when it comes to speed, reliability and cost-efficiency. At our quality control centres, we track shipments globally and adapt processes dynamically to enable us to guarantee quick delivery, even in the event of unforeseen circumstances. Reliability and speed are vital to our position as experts in international shipping.
- Customer loyalty: The customer is always the focus of attention of our approximately 100,000 employees. We place great value on customer opinion and make it as easy as possible for our customers to give feedback on our performance, whether via conventional customer service or in-person surveys. Moreover, we use our First Choice methodology to constantly review customer behaviour and customer response and to draw the necessary conclusions, starting with the customer’s very first contact with the call centre, internet site or sales staff all the way to delivery of the shipment to the recipient and finally to invoicing.
- Profitability: To ensure a stable earnings contribution and growth over the long term, we make sustainable investments in our business. We are expanding our hubs and gateways so that we can respond to volume growth. We are adding to our aircraft fleet to offer customers additional and faster flight connections. Moreover, we continually monitor costs, improve processes and structure our prices as required by economic factors. Detailed reporting systems supply us with the relevant data and thus support profitability management at all levels and in all countries.
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 continuously achieve growth that exceeds the market average and to consolidate our leading position. To achieve this goal, we pursue three approaches:
Developing new solutions for our customers
We are constantly developing new products and services. Since June 2012 we have been offering DHL DOOR-TO-MORE, a door-to-door delivery service from the Asia Pacific region, to a number of destination markets in Europe. The product links our intercontinental freight traffic with our comprehensive overland transport network in Europe. It shortens transit times for our customers by offering streamlined and seamless operations. With Cool LCL we now transport smaller volumes of temperature-sensitive goods with a seamless cold supply chain, meeting the demand for the delivery of temperature-sensitive food items.
In addition, we are expanding our expertise in specific sectors. In the Automotive sector, our GLOBAL FORWARDING, FREIGHT division serves most of the world’s leading original manufacturers and their most important suppliers. By sharing our expertise and industry know-how internationally, we are developing and improving sector-specific solutions. In addition, we are setting up a cross-divisional DHL global community to serve customers in the Chemicals sector. Emerging markets, increasing regulations and the responsibility for controlling future CO2 emissions have made matters more complex for freight forwarders.
Building up a comprehensive transport network
For a freight forwarding company as large as ours, it is essential to continuously expand and optimise our network and operations. We continue to focus on the growing markets of Brazil, Russia, India, China and Mexico. In the Americas region, we have strengthened intra-regional trade; in the Asia Pacific region we have expanded our presence in China, India, Indonesia and Vietnam. In Africa, sub-Saharan countries are experiencing rapid growth. We are extending our network and, at the same time, focusing on improving our profitability in the region.
Since we consolidated the network that links Singapore, Thailand and Malaysia last year, we now offer customers flexible, secure and rapid overland transport options. We opened new LCL lanes to connect China and South Korea with North, Central and South America.
In the Freight business unit, we are making a concerted effort to improve our network and our sales organisation. Since 2012, we have now also been offering our services in Kazakhstan.
Simplifying and standardising processes
In the Global Forwarding business unit, the strategic project New Forwarding Environment (NFE) picked up significant speed during the reporting year. The goal is to develop a forward-looking operating model with efficient processes and state-of-the-art IT systems. NFE is intended to further underpin our position as industry leader.
We are increasing the transparency and quality of data for sales volumes, customer figures, capacities, operations and freight. This way we can manage our processes better, standardise products and offer modular services. In the future we intend to have one, globally harmonised and unified organisation with dedicated customer service. Customers will benefit from shorter response times, products tailored to their needs and targeted communication.
The plan is to realise the NFE project within the entire Global Forwarding business unit in the next two to three years.
SUPPLY CHAIN division
Our Growth Through Excellence strategy is aimed at improving our existing business on an ongoing basis and achieving profitable growth in our key sectors.
- Continuous improvement: 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 reduce costs significantly and to manage them effectively in order to increase our overall profitability. We achieve this by leveraging purchasing efficiency, operating discipline and best practices. We thus succeeded in further reducing our direct costs in 2012. With our third programme, Organisational Capability, we seek to develop leadership qualities and enhance 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.
- Profitable growth: Our Profitable Growth pillar also consists of three initiatives. In the Sector Focus programme, we continuously deepen our expertise in our sectors of Automotive, Consumer, Energy, Life Sciences & Healthcare, Retail and Technology. 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 initiative, 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 offering. Technical Services refers to processes that are 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 continuously improve the performance of our sales organisation by bolstering sales processes and customer support, learning to better understand our customers’ business objectives and inquiring regularly as to their satisfaction.