DHL: driving global standardisation of operations with Robotics
When it comes to standardisation and optimisation Oscar de Bok, CEO of DHL Supply Chain, highlights the need for flexible solutions when battling today’s supply chains that continue to grow in complexity.
De Bok emphasises that with a large global company such as DHL, the importance of having a strategy that utilises digitalisation and collaborative robotics is crucial for enhancing value, and ensuring its workforce is unified and connected. “Standardisation of our processes is how we improve and is therefore a very important part. It starts with having the best people, then having standardised processes around the globe, to then making our customers aware and want to grow with us. Because the more we grow with our customers, the more opportunities we can provide,” notes de Bok.
DHL has recently come to the end of its 2020 strategy, but has long-term strategies that look to as far as 2050. DHL is currently driving its 2025 strategy that focuses on ‘delivering excellence in a digital world’, as part of its strategy the company plans to invest US$2.2bn into digitalisation and robotics.
“The future is exciting. The future is about innovation and making sure we continuously improve. We believe to be truly innovative, an idea has to be rolled out throughout the entire organisation,” says de Bok. To accelerate growth and drive disruption, “we are not going to wait for customers to tell us what will happen tomorrow, we will tell our customers.”
“Flow is everything in a supply chain environment,” comments Markus Voss, CIO and COO of DHL Supply Chain. “When you look at supply chain and logistics, we are at the brink of a major disruption. It is exciting to be in this industry at this moment in time, because we can shape the future.” Markus Kückelhaus, VP Innovation and Trend Research at DHL, also adds that in a McKinsey study it was highlighted that “60% of potential digitalisation revenue is coming from the supply chain industry.” With this in mind, DHL has been striving to change their whole paradigm, investing in a central team to drive productisation of technologies relevant for all sites.
“We have identified the key characteristics of innovative technologies and how they fit into our 2,000 sites globally,” says Voss, with this method DHL has developed a standardised and structured process that drives optimised innovation, “right now, we have more than 2,000 initiatives which we feel are ready to be rolled out.”
Robotic and RPA innovations DHL has currently implemented to standardise its processes and increase productivity and efficiency include, ‘goods to person robots’ and ‘follow me robots’ to assist with the picking and transporting of products to reduce the miles covered by associates. In addition, DHL has also implemented wrapping robots reducing physical work; wearable devices to replace traditional barcode readers and picking devices; autonomous forklifts for moving pallets in warehouses; Neo Avidbots (cleaning robots) reducing unsociable and repetitive tasks and Sawyer robots (robotic arms) to reduce repetitive packing tasks. Inside these innovations is intuitive software, developed by DHL and its partners, which Voss believes will help to drive efficiency when it comes to the adoption of innovative technology. Ultimately, DHL aims to substitute its manual and repetitive tasks that add limited value to the company and to its associates satisfaction, with algorithms and robotics to improve the flow within its warehouses.“We want every site, customer and employee to feel that a digital supply chain is actually a reality and that we're driving this very hard,” comments Voss.
When it comes to standardisation, Voss highlight that it is a double edged sword. Robotics and RPA is extremely important when it comes to standardising physical operations within warehousing and logistics, but equally in order to achieve this standardisation of warehouse operations, backend software needs to also be standardised in order to truly see the benefits. “All the amazing innovations that you see in terms of robotics is nothing without the intelligence and the software that is driving the decision making and that is innovating robots to where we need them to be,” says Voss. “This industry has been known to be a cottage industry, with each side of an operation being slightly different and running on slightly different systems. With the advancement of innovative technology such as robotics and automation it is very clear that the more standardised you are the easier it is to drive innovation through your operations. We have been putting a lot of effort in the last five years into the standardisation of our backend systems so that all sites are running on the same software and processes, making it much easier to connect robotic platforms and other innovative technologies,” concludes Voss.
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Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector