Customer satisfaction has become integral to contemporary business. Organizational success is determined by fulfilling customers’ needs and expectations by providing them with value. For decades, businesses have focused on identifying organizational elements that increase customer value while maintaining a competitive advantage in the market. Logistics management is often sought to enable businesses to attain customer value and competitive advantage. Logistics integrates organizations’ internal operations with supply chain processes to improve customer value. Effective coordination of supply chain activities ensures customers receive the right products or services at the right time, in the right place, and in the desired amount to avoid the effects of the organization’s costs and high-quality customer services on organizational profitability. This essay will discuss the role of customer value in international logistics operations at DHL.

DHL Background

DHL was founded in 1969 in San Francisco, the United States, by Adrian Dalsey, Larry Hillblom, and Robert Lynn. The business is the leading international air express globally. DHL began as an air-courier service and has become the global leader in express shipments.   DHL’s main business entails delivering both small and heavyweight parcels globally. DHL’s initially targeted the Bank of America and has expanded its customer base to international customers. The company’s leading global services include international express, overland transport, and air freight deliveries to countries across the globe, including Afghanistan and Iraq (Dhir, 2019). DHL delivers its services to over 70,000 destinations in 227 countries. The company’s international presence and domination in the global express market have attracted stateside competitors such as Federal Express (FedEx) and United Parcel Service (UPS).

Customer Value in DHL Logistics

Customer value is integral to an organization’s competitive advantage. According to Payne, Frow, and Eggert (2017), customer value entails the difference between customers’ perceived benefits and sacrifices. Benefits relate to the services and products a customer receives, while sacrifices entail what the customer renounces to use certain products and services. Customer value is the ability of businesses to create and add value to the services offered to customers. Customer value includes quality, service, cost, and lead time.  

Quality in Value Creation

Quality entails the functionality, performance, and technical specification of the products and services offered to customers. Customers perceive quality in terms of how a business’s products and services align with their expectations. Research by Zhang et al. (2017) shows that quality has become integral to value creation in the 21^st century. The need for change has forced businesses to strategize on creating value and satisfying consumers’ needs and wants using limited resources. DHL has significantly created value through quality by committing to deliver above and beyond customer expectations. DHL offers its customers excellent operational and innovative services throughout the supply chain. A survey about consumers’ perception of quality shows that quality is about the fitness for use and the ease of doing business with a provider. The company is focused on providing services that exceed customers’ expectations through standardized, efficient, and practical processes throughout its operational and functional business elements.

DHL also engages in continuous improvement by adopting technology and the First Choice Program. The First choice Program enables DHL to prioritize customers to strengthen customer loyalty (Prange, Bruyaka, and Marmenout, 2018). The company also offers shared user and dedicated warehousing specifically designed to meet consumer requirements and process integrity. DHL provides cleanroom facilities, order-to-cash services, warehouse management system integration, and certified high-security storage. Services at the company are provided through a managed transport and distribution system. DHL offers its services on every possible transport, including trucks, cargo, airplanes, and cargo ships. Customers can send or receive goods ranging from lightweight mails to heavyweight elements such as loose Airbus parts. The company ensures product integrity throughout the transport and distribution system.

Service in Value Creation

Service in customer value logistics entails the services and support offered to a customer after purchasing a company’s products and services. Customers perceive services in terms of customer support, product service, flexibility to meet consumer demands, and market changes. These are the services that make a customer feel valued. DHL has a customer-centric culture focused on providing the customer with service quality. The company uses a Net Promote approach (NPA) to obtain customer feedback and identify areas of improvement, enabling DHL to improve its offering and deliver quality service. DHL has made it simple for customers to assist themselves through consumer-friendly shipping apps such as MyDHL+ and MyBill. According to Pandey et al. (2021), these apps conveniently allow customers to place order requirements. The company also has 24/7 live chat support that enables customers to send shipping and customs-related queries. DHL has a team of international specialists who oversees customers’ needs by assorting shippers with end-to-end deliveries. The company offers extra value-added services such as insurance and proactive tracking with verbal updates, enabling customers to track their shipments.

DHL is flexible to meet customer demands. The company staff is trained and well versed in all DHL operations to meet different customer requirements and product specifications. DHL has a dedicated team that ensures customers are provided with accurate information in the overall logistics process. For example, suppose a customer wants to know about international customs for a given service or product. In that case, the DHL customs clearance teams formulate a solution that aligns with the clients’ clearance needs. The personal element in service delivery helps customers overcome logistics-related problems. DHL acknowledges that consumer expectations are changing rapidly due to business trends such as e-commerce. The company has launched a DHL Parcel Metro. This mobile interface allows customers to track their shipments in real-time, share their product requirements with the courier, and rate their delivery experience (Mashchak and Dovhun, 2020). DHL also has a comprehensive program that incorporates customer service into every business facet. The company is flexible to meet customers’ demands for importation business. DHL has a strategic initiative aimed at meeting customer’s need for importation. For example, the import Express product offers customers with a single all inclusive door-to door service for paying for imports. Customers can import with one company using one currency and one invoice. The Import Express product is available in over 210 countries. Also, the demand for individual customization has motivated DHL to rethink its supply chain operations to implement standardized packaging. Quality services directly affect DHL’s profits, cost savings, and competitive advantage.

Lead Time in Value Creation

Customer value is also created through a company’s lead time, which refers to the time taken to deliver a product. DHL’s global infrastructure and local specialists guarantee fast delivery. The company has reliable delivery times and competitive prices for international shipments. Depending on customers ‘ shipping mode, DHL deliveries can be made the same day or after a few days or weeks. Delivery time is determined by shipping distance, shipment size, product category, and chosen service option. DHL delivers shipments between 8 Am and 6 pm from Monday to Friday in the U.S.  Shipping costs increase with speed. Fast and urgent DHL services are offered at higher costs than slow shipments. For example, DHL eCommerce Parcel Direct can charge $46.34, while a 5lb parcel sent from the U.S. to the U.K. within 1-3 days through DHL Express international can cost $64.07 (DHL, 2022). The company guarantees same-day delivery for special shipments. Customers wait for short periods for their goods to be delivered. DHL uses accurate delivery time forecasting to ensure goods are delivered at the exact time communicated to the customer through email. The company has a Green plan, a financed start-up focused on a route optimization algorithm that ensures efficient deliveries within the shortest time possible. The tool predicts the estimated delivery time, allowing DHL to allocate possible delivery time for each shipment and prioritize services for special shipments. International shipments take three to 14 business days, while domestic shipments within the U.S take two to eight business days (DHL, 2022). DHL reduces time-to-market through supply chain improvements.

Cost in Value Creation

Cost in customer value creation refers to all the expenses or transactions the customer pays for a product or service primarily determined by the logistics cost. It is what a customer sacrifices to obtain a given service. Research by Sanchez-Gutierrez et al. (2018) shows that businesses create customer value by giving prices or costs that assure customers that they are getting more value for the services they are paying for. Cost is determined by product weight, nature, mode of delivery, distance to be covered, and consignment size. DHL designs its services to meet customers’ needs ta favorable prices. The company has invested heavily in inventory financing to improve product attractiveness and gain the financial security needed to finance business risks (Lind and Barner, 2017). The financial products provide customers with significant value. DHL uses invoice management tools and supplier portals to provide customers with access to infrastructure and logistics services from one supplier globally.

Improvements in Customer Value Creation

Improvements in DHL in each element of customer value are critical to improvement in DHL’s performance. Warehouses are vital to the efficiency of the DHL supply chain. The company can leverage them to enhance its competitive advantage while providing customers with timely delivery of shipments. DHL can implement a warehouse management system to coordinate and align all value chain aspects(Barreto, Amaral, and Pereira, 2017). For example, the transport channels will be able to predict the arrival time to the intelligent warehouse management system, which can, in turn, select and prepare a docking slot, reducing the time for order entry to delivery. Accordingly, the system can also reveal the delivered shipments, improve inventory management practices, and ensure prompt restocking of products to avoid delays and improve customer value. A warehouse management system will improve the lead time, enabling DHL to enhance the efficiency of deliveries and provide customers with great value for their time.

Changes in DHL’s cost of services are essential to increase profitability and competitiveness. DHL costs for customized services are higher than standardized services. Because of the increased demand for customization, DHL needs to determine the logistic and commercial costs for each service provided to determine the cost per customer. These cost calculations will help DHL determine its profit margin per customer and establish the most profitable consumers. DHL can use these findings to find new ways of increasing profits while providing customers with high-quality services.

DHL should introduce quality improvements processes to improve warehouse operations to improve the quality of services and customer service. DHL should strengthen its warehouse operations by integrating online shipping platforms to enable customers to browse for its services internationally. Along with online shipping, DHL will have faster deliveries and enable customers to choose products according to their preferences, improving customer service.

DHL should improve customer service by being responsive to customer inquiries. Some of the customers’ inquiries go unanswered, especially when there is a workload at DHL. Responding promptly to customers’ questions provides them with a positive experience and creates lasting positive impressions, enhancing customers’ loyalty to DHL. Availability of technical support in online shipping will enable customers to discuss the delivery time with DHL representatives, thereby improving operations efficiency. For example, in case of delayed deliveries, contact persons’ availability provides consumers with the perceived benefit they expect when they sacrifice to wait for delayed shipments.

Conclusion

In conclusion, international logistics leads to value creation and provides a company with a competitive advantage. DHL creates customer value through quality customer services, cost-effective prices, timely delivery, and quality of services. It is crucial to improve DHL’s internal and external business operations to enhance its market share, profitability, and cost savings.

References

Barreto, L., Amaral, A., & Pereira, T. (2017). Industry 4.0 implications in logistics: an overview. Procedia Manufacturing, 13, 1245–1252. doi:10.1016/j.promfg.2017.09.045

dhl.com. (2022). Retrieved 9 April 2022, from https://www.dhl.com/us-en/home/our-divisions/ecommerce-solutions/shipping/international-shipping.html.