INTRODUCTION

MEANING OF LOGISTICS:

Logistics is concerned with getting the products and services where they are needed and when they are
desired. It is difficult to accomplish any marketing or manufacturing without logistical support. It involves
the integration of information, transportation, inve ntory, warehousing, material handling, and packaging.

The operating responsibility of logistics is the geographical repositioning of raw materials, work in process,
and finished inventories where required at the lowest cost possible.Logistics is practiced for ages since
organized activity began. Without logistics support no activity can be performed to meet defined goal. The
current challenge is to perform logistics

scientifically in order to optimize benefits to the organization. Logistics is a planning function of

management. Logistics function is concerned with taking products and services where they are needed
and when they are needed.

LOGISTICS MANAGEMENTS:
Logistics management is that part of the supply chain which plans,
implements and controls the efficient, effective, forward and backward
(reverse) flow and storage of goods, services and information between
the point of origin and the point of consumption in order to meet
customers' requirements rather to the customers' delight. A professional
working in the field of logistics management is called a logistician.

Logistics, as a business concept, evolved only in the 1950s. This was

mainly due to the increasing complexity of supplying one's business
with materials, and shipping out products in an increasingly globalize
supply chain, calling for experts in the field who are called Supply
Chain Logisticians. This can be defined as having the right item in the
right quantity at the right time at the right place for the right price and to
the right target customers (consumer);and it is the science of process
having its presence in all sectors of the industry. The goal of logistics
 work is to manage the fruition of project life cycles, supply chains and
resultant efficiencies. Logistics is Concerned with getting (or
transmitting) the products and services where they are needed or when
they are desired. It is difficult to accomplish any marketing or
manufacturing without logistical support. It involves the integration of
information, transportation, inventory, warehousing, material handling,
and packaging. The operating responsibility of logistics is the
geographical repositioning of raw materials, work in process, and
finished inventories where required at the lowest cost possible.

Importance of logistics managements:

1. Logistics is the bed rock of trade and business.

• Without selling and or buying there can be no trade and business.

Buying and or selling takes place only when goods are physically
moved into and or away from the market.

• Take away logistical support trade and business will collapse

2. Integrates logistical activities

In conventional management environment, various activities of logistics

work in isolation under different management functions. Each pocket
trying to sub optimizes its objectives at the cost of overall organizational
objectives. Purchasing trying to purchase at minimum price at the cost
of what is needed by operations. Operations produce large quantities at
minimum production cost ignoring demand leading to doom inventory.
Logistics function of management brings all such functions under one
umbrella pulling down inter departmental barriers.
3. Competitive edge:
In the fiercely competitive environment logistics provides the edge. Due
to technological revolution most of the products are moving into
commodity markets. In a commodity market where price is controlled
by competition, where there is no product differentiation in terms of
quality parameters like performance & reliability, where brands are
almost irrelevant, competitive edge is tha t of availability of product and
service in terms of time, place and quantity.
4. Leads to customer satisfaction

Through superior customer service. Organizational objectives of P

(Productivity],Q (Quality],C (Cost],D (Delivery],E (Employee
Morale],F (Flexibility],S (Safety],H (Health],E (Environment] are set to
meet customer expectations.

5. Supports critical functions like operations and marketing

Strong logistics support enables a company to move towards JUST IN

TIME production system for survival in a highly competitive market

6. Logistics wins or loses wars

• British lost American war of independence due to poor logistics

• Rommel was beaten in the desert by superior logistics of Allies

Logistics Managements and Supply Chain:

SCM and logistics management, the definitions made by the Council of Supply
Chain Management Professionals, CSCMP (former Council of Logistics
Management, CLM) SCM is defined as "Supply chain management
encompasses the planning and management of all activities involved in
sourcing and procurement, conversion, and all Logistics Management activities.
Importantly, it also included coordination and collaboration with channel
partners, which can be suppliers, intermediaries, third-party service providers,
and customers. In essence, Supply Chain Management integrates supply and
demand management within and across companies "Supply chains encompass
the companies and the business activities needed to design RFDn, make, deliver,
and use a product or service. Businesses depend on their sup ply chains to
provide them with what they need to survive and thrive. Every business fits into
one or more supply chains and has a role to play in each of them. The pace of
change and the uncertainty about how markets will evolve has made it
increasingly important for companies to be aware of the supply chains they
 participate in and to understand the roles that they play. Those companies that
learn how to build and participate in strong supply chains will have a substantial
competitive advantage in their markets. Supply chain management is the
coordination of production, inventory, location, and transportation among the
participants in a supply chain to achieve the best mix of responsiveness and
efficiency for the market being served. There is a difference between the
concept of supply chain management and the traditional concept of logistics.
Logistics typically refers to activities that occur within the boundaries of a
single organization and supply chains refer to networks of companies that work
together and coordinate

INFORMATION

DHL is the global leader in logistics - with more highly experienced professionals at more locations in more
countries than any other provider. His goal is to build strong, long-term partnerships with customers by
providing world class services, across all our operations. In India, they have formed a new joint venture -
DHL Lemuir Logistics, which consolidates their position as the leader in International Freight Forwarding,
Supply Chain Management, Project Transport and Customs Brokerage. They are the first choice for
companies looking for end to end logistics solutions and high quality servicing capabilities. Aft er joining
forces with Excel in 2005, they are now also the sector's leading innovator - providing the extraordinary
range of cutting-edge solutions. His logistics customers include over 75% of the worlds largest quoted non-
financial enterprises. These organizations trust us with their brands and reputations not simply because
they are the worldwide market leader, but because they strive to deliver globally consistent services of the
highest quality,

History and background of DHL

► DHL are the first letters of the last names of the three company founders, Adrian Dalsey, Larry
Hillblom and Robert Lynn.

► In 1969, just months after the world had marveled at Neil Armstrong's first steps on the moon, the
three partners took another small step that would have a profound impact on the way the world does
business.

► The founders began to personally ship papers by airplane from San Francisco to Honolulu,
beginning customs clearance of the ship's cargo before the actual arrival of the ship and dramatically r
educing waiting time in the harbour. Customers stood to save a fortune. With this concept, a new industry
was born: international air express, the rapid delivery of documents and shipments by airplane.

► The DHL Network continued to grow at an incredible pace. The company expanded westward from
Hawaii into the Far East and Pacific Rim, then the Middle East, Africa and Europe. By 1988, DHL was
already present in 170 countries and had 16,000 employees.

► At the beginning of 2002, Deutsche Post World Net became the major shareholder in DHL. By the
end of 2002, DHL was 100% owned by Deutsche Post World Net. In 2003, Deutsche Post World Net
consolidated all of its express and logistics activities into one single brand, DHL

The world's largest express and logistics Network

DHL is a global expertise in express, air and ocean freight, overland transport and
logistics solutions; DHL combines worldwide coverage with an in-depth
understanding of local markets.

Below are the global facts and figures that show you the scale of the world's largest express and logistics
network
 Dhl express worldwide

Employees more than 124,000

Countries and territories more than 220
Hubs 36
Bases 4700
Vehicles 72,000
Aircraft 350
Pack stations (only Germany) 900

Products and services of DHL:

DHL Document Express (DOX):

This service is ideal for shipments that are not subjected to Customs declaration at destinations, or have
no commercial value or do not require a license.

DHL Express Worldwide Package (WPX)

This service is used for shipments with commercial value or those, which must be declared for Customs
evaluation. They may be subjected to Customs inspection at destinations and may be taxable or dutiable.

Jumbo Pack and Jumbo Junior:

This service makes exporting easy. One box dispatched for on e flat fee, anywhere in the world. DHL
Jumbo Box is for shipments under 25kg and Jumbo Junior for shipments less than 10kg.

Import Express:

This service is a single window solution for all importing needs. DHL Import Express is a one window, one
rate, and one account, one currency service that enables a shipment picked up from the supplier's
doorstep overseas and delivered directly to the customer anywhere in the world. And what's more, it
allows the customer to maintain total control of your importing costs.
Fashion First:

Fast Forward is the revolutionary new service of DHL for moving heavy goods that brings increased
efficiency and delivers greater cost savings for Indian importers and exporters. It facilitates the import and
export of shipments weighing 20kg and above by providing significant savings with a wide range of
innovative and flexible door -to-door solutions. Another feature of Fast Forward is Trade Automated
Services (TAS), an online platform that provides comprehensive trade and customs information in 50 key
countries worldwide, calculates total landed costs of a shipment (including duty, tax and other customs
related charges), generates import and export documentation, screens senders and receivers against
government lists pertaining to embrgoes and sanctions, and compares an item's export and import
clearance costs and regulations to enable qualifying sourcing decision. Fast Forward is specially developed
after extensive research and designed to meet the unique needs of industries such as Automobiles,
Electronics, Heavy Engineering, Publishing and Textiles.

INTEGRATED LOGISTICS

Logistics is viewed as the competency that links an enterprise with its customers and suppliers.
Information from and about customer's flows through the enterprise in the form of sales activity, forecasts
and orders. As products and materials are procured, a value added inventory flow is initiated that
ultimately results in ownership transfer of finished products to customers. Thus the process is viewed in
terms of two inter- related efforts, inventory flow and information flow.
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Inventory Flow
The management of logistics is concerned with the movement and
storage of materials and finished products. From the initial purchase of a
material or component, the logistical process adds value. By moving
inventory when and where needed. Thus the material gains value at each
step. For a large manufacturer, logistical operations may consist of
thousands of movements, which ultimately culminate in the delivery of
the product to an industrial user, wholesaler, dealer or customer.

In order to understand logistics it is useful to divide it into three areas:

► Physical distribution

► Manufacturing support

► Procurement
For DHL:

DHL is completely service oriented therefore it does not have its own
material movement but that of the customers the sender, the receiver and
also the intermediateries. That means it only involves physical
distribution and procurement. Procure ment also includes the material
needed for packaging such as paper, moulded trays and boxes, wooden
crates, standard containers wraps, plastic inlays etc. The materials or the
goods collected from the senders (including papers, documents,
physical goods like clothing, household good, chemicals, exotic animals
etc) are weighed, checked for condition, and depending upon its various
characteristics it is packed. The goods are then dispatched to their
destinations. There is no value addition to the material it self but it is
done to the service which is provided (e.g. if there has to be a certain
package delivered from India to UK the normal services would take
 about 2 days whereas as a super fast delivery would be done in about 9
hours)

Information flow

Information flow identifies specific locations within a logistical system

that have requirements. Information also integrates the three operating
areas. The primary objective of developing and specifying requirements
is to plan and execute integrated logistical operations.

Logistical information involves two major types of flows:

1. Coordination flows

2. Operation flows

1. Planning and coordination flows

Coordination is the backbone of the overall information system.

Strategic objectives:

Strategic objectives detail the nature and location of customers, which

are matched to the required products and services to be performed .

For DHL

It implies estimating the time requires for collecting the goods from the
door step of the sender and then estimating the time for the goods to
reach the final customer.
Forecasting
Forecasting utilizes historical data, current activity levels, and planning
assumptions to predict future activity levels. Logistical forecasting is
generally concerned with relatively short -term predictions.

The overall purpose of information planning/coordination flow is to

integrate specific activities within a firm and to facilitate overall
integrated performance.

For DHL

DHL's whole business is dependent on the vital point of timely

delivery. Based on the distance to the final receiver, the accessibility,
the documentations and procedures that need to be handled etc they
have fine tuned the process of delivery. They can accurately gauge how
much time it will take for the goods to reach its end desti nation.
2. Operational flows

The second aspect of information requirements is concerned with

directing operations to receive, process, and ship inventory as required
supporting customer and purchasing orders. Operational requirements
deal with

► Order management
► Order processing
► Distribution operations
► Inventory management
► Transportation and shipping
► Procurement

For DHL:
DHL owns its success for the efficiency with which the operations are
carried out. Here not only the company but the sender and sometimes
the receiver can track the goods through their information center. They
are given a certain password which they can use to trace via online or
their customer service helpline.
Supply Chain Management
Definition for supply chain management

"Supply chain management is the management of upstream and

downstream relationships with suppliers and customers to deliver
superior customer value at less cost to the supply chain as a whole."
Explanation:

The supply chain is the network of organizations that are inv olved
through upstream and downstream linkages, in the different processes
and activities that produce value in the form of products and services in
the hands of ultimate consumer.( in detail mention above)
For DHL:
Supply chain Optimization
Good design is at the heart of an effective supply chain solution. DHL
has developed a reputation for consistently developing innovative
solutions that streamline operations and improve control. T heir in-house
teams have contributed to the solutions design of some of the world's
leading brands and enabled to win key contacts.

DHL solutions design team offers a wide portfolio of expertise and

services, from logistics network strategy, transport des ign, warehouse
design and simulation, through to operational improvement and
inventory analysis

International Supply Chain

Extended Supply Chain Services
Implementation Services

Outsourcing Projects
 1. International Supply Chain:

DHL's international supply chain management solutions are focused on

helping customers take increased control of international inbound
supply chain to maximize the value of international and global sourcing.

DHL helps customers:

► Give visibility of the upstream supply chain, and enable earlier decision
making

► Create a more agile supply chain, better able to respond to changes in

consumer demand

► Reduce lead times, inventories, and associated storage costs

Customer-focused solutions are built up from the following core services:

► Origin management, including: vendor management; supplier

collections; customs brokerage; consolidation services and value -added
services

► Global forwarding, including: air/ocean/road/rail freight forwarding and

management; European managed transport

► Destination management, including: port and demurrage management;

customs brokerage; de-consolidation and pre-retail services; port to
distribution centre transportation; direct store delivery (US only)

► Supply chain visibility and management, including: purchase order

management; RFID product tracking; exception management; planning
and forecasting; inventory management.

► Global forwarding services are provided across all major routes.

Logistical services that are offered.

► Reverse Logistics

► Services Logistics

► Inbound to Manufacturing

► Medical device distribution

► Distribution to stores Management

► Engineering Response
a.)Reverse Logistics

DHL's reverse logistics solutions help customers plan, implement and

control flow of materials and manage related information, back up the
supply chain to recapture values and ensure the safe disposal of goods.
Items include the recovery of obsolete or non -operational white goods
such as refrigerators, plus the removal of old furniture on delivery of new
or replacement products.

Services include:

► Roll in Management: de-installation of finished goods at the customer's

site

► Returns Management: receiving, sorting, verifying and managing

returned products

► Express Delivery: Exchange of Dead On Arrival product

 b.) Service logistics

Service and replacement parts DHL's service and replacement parts

service involves the management of manufacturers' replacement parts
delivered to and from customers according to pre-defined service levels
or warranty agreements on a one, two, four or eight-hour and next-day
basis, 24 hours a day, seven days a week.

DHL works closely with customers to overcome common issues such

as:

► Poor parts availability

► High inventory investment

► Long lead times, accentuated by global sourcing

► High levels of customer returns

► Poor visibility, reporting and control

► Cost control of the demand chain

Key services include:

► International freight forwarding

► Domestic and regional inbound deliveries

► Inventory planning, forecasting, procurement and analysis

► Distribution centre operations

► Outbound delivery

The entire process is underpinned by a web-enabled electronic order

processing and order monitoring tool.
c.) Inbound to Manufacturing

Inbound to manufacturing is the complete end-to-end logistics

management of inventories, facilities and labour associated with the
inbound flow of materials from vendors and supplier origins to
consumption points in manufacturers production lines.

The service encompasses:

► Network, transportation and facility design

► Inventory optimization

► Supplier management

► Transportation management

► In-plant services

Key to the service is integrating manufacturers' forecasting, order

management and supply chain execution processes with their component
suppliers. DHL implements warehouse management and supply chain
event management systems to manage just-in-time deliveries and allow
supply chain participants to exchange forecast requirements in real time

Value is created for manufacturers and component suppliers throughout the world by:

► Enabling a robust and cost-effective supply chain

► Providing the necessary visibility so that the location of all
components within the supply chain is known to all supply chain
participants
► Reduce inventory and investment costs
► Improve delivery times
► Co-ordinate multiple components more efficiently
d.) Medical Device Distribution

DHL country-based warehouses for a number of manufacturers to service

a local customer base. This includes the receipt of product from local or
global manufacturing sites and downstream distribution to hospitals.

e.) Distribution to stores management

DHL distributions to store services are focused on helping retailers create

efficient and flexible supply chains to deliver product to retail outl ets at
high levels of service. These solutions are built from several core
services: reverse logistics collections; sortation; processing;
repair/refurbishment; value recovery; disposal and compliance.

f.) Engineering Response

Through our Engineering Response services, we manage the materials

supply chain from works planning and inbound goods through to on -site
works, delivering stock out to engineers, builders and construction
workers in the field.
 2. Extended supply chain services

DHL not only provides physical logistics services but also manages
other enhanced supply chain services, improving efficiencies and
reducing costs.

a.)Order Management

Receipt, management, execution, sequencing and dispatch of orders in a

timely manner.

b.)Call Center Management

A Call Centre manages orders, monitors sales activities, provides

customer services and functions as a Help-desk.

c.) Global Inventory Management

DHL gives the customer a global view of inventory, thus enabling

informed decisions regarding the disposition of stock.

d.)Consolidated Billing Services

The creation of a consolidated and categorized invoice, based on all

services performed in a specific time-period by more than one service
provider, made available in an agreed format.

e) Freight & Customs Solutions

DHL's many years of experience with international trade requirements

and formalities, combined with the European Competence Centre and
country expertise, gives customers the leading edge in service, quality
and management in cross border transactions.
 2. Implementation Services:
a. Implementation and Project Management

Implementation starts by defining project aims, setting the targets and

describing the deliverables in detail. The major topics in implementation
include business processes, engineering, real estate, IT systems,
migration, HR, finance and legal considerations.

b. Quality Management

Total Quality Management is a management strategy that integrates

quality orientation into the whole structure and workflow of a company
by using methods and techniques of quality management

Corporate Policy for Quality, Environment, Health and Safety (QEHS) is based on five corporate
values:

► Customer satisfaction: Providing our customers and their customers

with excellent, high value logistics solutions

► Employee motivation: Building on the know-how and stimulation of

individual potential in multi-cultural teams

► Operational excellence : Continuous improvement of processes and

services to fulfill or exceed expectations

► Corporate citizenship: Acting as a responsible corporate citizen in all

countries

► Shareholder reward: Developing a sustainable business to provide

increasing shareholder value

Globally, DHL management systems are certified according to the international

standard for quality management systems ISO 9000 in almost every operating unit.
Performance Management:

Performance management is a key part of the supply chain. Measured

elements are reviewed as a system, as each component interacts with all
the other parts around it. Performance measuring not only records
historical performance but also provides early indication of any service
slippage. In this second role, the measures provide a valuab le
contribution to DHL's Continuous Improvement Programme.

Outsourcing Projects

Outsourcing involves DHL taking over and managing previous in-house

logistics operations, including:

► Distribution centers

► Transport operations

► Back-office functions

► Supply chain management functions

► After sales services

Innovative Supply Chain Development

Supply Chain Management services are delivered across industry

sectors and provide expertise, knowledge and resources in terms of
personnel and supply chain tools. All services are targeted at optimizing
logistical operations in both process and strategy, and are aligned to the
client's commercial expectations.

The services are as follows:

► Strategic Logistics Consulting

► Lead Logistics Provider

► Consulting and providing Transport optimization: Route-Pro and

Trans-Pro

► Consulting and providing Supply Chain Design

► Consulting and providing Transportation

► Engineering, optimization and re-engineering

► Implementation and Project Management

► Process Management

► Outsourcing

DHL's consulting services also offer re-organization of customer

facilities, project management for customers, impleme ntation of new IT
Systems, creation of tender documents and tender processing.
Supply Chain Re-engineering

DHL works with customers to review supply chain efficiencies. One of

the main tasks is to evaluate cost efficiency to ensure that costs are
being driven down throughout the contract duration. Data analysis
allows DHL to provide customers with 'what if modeling' or the
impact of changing the business rules.

After Sales Optimization

Optimizing return logistics and spare parts logistics as well as

maintenance and repair services.

Vehicle Management Services

Our vehicle management services focus on the management of sales

and marketing support programmes for automotive manufacturers.
Combining a range of services and systems to deliver a global
response, they help you overcome challenges at the end of the
automotive supply chain.

Distribution to Stores Management

DHL's distribution to store solutions are focused on helping

retailers create efficient and flexible supply chains to deliver
product to retail outlets at high levels of services

These solutions are built from several core services including

reverse logistics:

► logistics network strategy

► warehouse design and simulation

► Transport modeling.
TRANSPORTATION

Transportation is the most visible of all functions of logistics and high contributor to logistics cost. We
can see trucks, containers and wagonloads of material being moved from place to place as an activity
directly associated with trade and business. We should also appreciate that this is an activity that
adds highest amount of cost to the activity of making inputs and outputs available to consumers.
Transportation function moves the products to meet customer expectations at minimum cost.
Transportation is one of the most visible elements of logistics operations. Transportation provides 2
major functions: product movement & product storage.

Product Movement

Whether the product is in the form of materials, components, assemblies, work-in-process, or finished
goods, transportation is necessary to move it to the next stage of the manufacturing process or
physically closer to the ultimate consumer. A primary transportation function of product movement is
moving up and down the value chain. Since transportation utilizes temporal, financial, and
environmental resources, it is important that items be moved only when it truly enhances the product
value. Transportation involves the use of temporal resources because product is inaccessible during
the transportation process. Such product, commonly referred to as in-transit inventory, is becoming a
significant consideration as a variety of supply chain strategies such as just - in - time and quick
response practices reduce manufacturing and distribution center inventories.

Transportation uses financial resources because internal expenditures are necessary for private fleets
or external expenditures are required for commercial or public transportation.

The major objective is to move product from an origin location to a prescribed destination while
minimizing temporal, financial and environmental resource costs. Loss and damage expenses must
also be minimized. At the same time the movement must take place in such a manner that meets
customer demands regarding delivery performance and shipment information availability.

Product Storage:
Temporary storage in stationary vehicles or Vehicles kept moving on a circuitous route - Product
storage is expensive in a transport vehicle. But sometimes keeping overall cost in mind this is
adopted.

A. When unloading and loading is more expensive than storage

B. When storage space is limited. (Situation when inventory levels are very high]

Principles

There are two fundamental principles guiding transportation management and operations. They are
economy of scale and economy of distance.

Economy of scale refers to the characteristic that transportation cost per unit of weight decreases
when the size of the shipment increases.

E.g. truckload shipments cost less per pound than less -than-truckload shipments. It is also generally
true that larger capacity transportation vehicles such as rail or water are less expensive per unit of
weight than smaller capacity vehicles like motor or air. Transportation economies of scale exist
because fixed expenses associated with moving a load can be spread over the load's weight. The fixed
expenses include administrative costs of taking the order; time to position the vehicle for loading or
unloading, invoicing and equipment cost. These costs are fixed because they do not vary with
shipment volume.

E.g. suppose the cost to administer a shipment is $ I0.00. Then the I- pound shipment has a per unit of
weight cost of $I0.00, while the I,000 pound shipment has a per unit of weight cost of $0.0I. Thus, it
can be said that an economy of scale exists for the I000 -pound shipment.

Economy of distance refers to the characteristic that transportation cost per unit of distance
decreases as distance increases.

E.g. a shipment of 800 miles will cost less than two shipments (of the same combined weight) of 400
miles. Transportation economy of distance is also referred to a se tapering principle since rates or
charges taper with distance. The rationale of distance economies is similar to that for economies of
scale.

Longer distances allow the fixed expenses to be spread over more miles, resulting in lower overall per
mile charge. These principles are important considerations when evaluating alternative transportation
strategies or operating practices. The objective is to maximize the size of the load and the distance
that is shipped while still meeting customer service expectations.

Transport Infrastructure

Transportation infrastructure consists of the rights-of-ways, vehicles, and carrier organizations that
offer transportation services on a for-hire or internal basis. The nature of the infrastructure also
determines a variety of legal and economic characteristics for each mode or multimodal system. A
mode identifies the basic transportation method or form.

RAIL NETWORK

Since olden times, railroads have handled the largest number of ton - miles. As a result of the early
establishment of a comprehensive rail network connecting almost all the cities and towns, railways
dominated the intercity freight tonnage till World War II and in some cases of Europe, Asia and Africa
they even connected the countries. This early superiority enabled railways to transport large
shipments very economically.

MOTOR CARRIERS

Highway transportation has increased rapidly since the end of Wor ld War II. This is because Motor
carrier industry results from door-to-door operating flexibility and speed of intercity movement. They
are even flexible because they can operate on each and every kind of roadways. In comparison to
railroads, motor carrie rs have relatively small fixed investments in terminal facilities and operate on
publicly maintained highways. Although the cost of license fees, user fees, and tolls are considerable,
these expenses are directly related to the number of over - the-road units and miles operated. The
variable cost per mile for motor carriers is high because a separate power unit and driver are required
for each trailer or combination of tandem trailers. Labor requirements are

also high because of driver safety restrictions and the need for substantial dock labor. Motor carriers
are best suited to handle small shipments moving short distances.
WATER TRANSPORT

It is the oldest mode of transportation. First it was the sailing vessels, which was replaced by
steamboats in early 1800's and by diesel power in the 1920's. Domestic water transportation -
involves the Great Lakes, canals, and navigable rivers. In every country, fewer system miles exist for
inland water than any other transportation mode.

The main advantage of water tr ansportation is the capacity to move extremely large shipments.
Water transport employs 2 types of vessels. Deep-water vessels, which are generally designed for
Ocean and Great Lakes use, & are restricted to deep-water ports for access. In contrast, diesel-towed
barges, which generally operate on rivers and canals, have considerably more flexibility. Water
transport ranks between rail and motor carrier in the fixed cost aspect. Although water carriers must
develop and operate their own terminals, the right-of-way is developed and maintained by the
government and results in moderate fixed costs as compared to railways and highways.

The main disadvantage of water transport is the limited range of operation and speed. Unless the
origin and destination are adjac ent, supplement haul by rail or truck is required. The capability to
carry very high cargo at an extremely low variable cost places this mode of transport in demand when
low freight rates are desired and speed of transit is a secondary consideration.

AIR TRANSPORT

Air transport is the newest and the least utilized mode of transport. Its major advantage being its
speed, which is accompanied by high costs. A coast-to-coast shipment via air requires only a few
hours contrast to days taken by other mean of transportation. The high cost of transport can be
traded off for high speed, which allows other elements of logistical design, such as warehousing,
inventory to be reduced or eliminated. But still air transport remains more of a potential opportunity
than a reality because it is very much underutilized.

The high cost of jet aircraft, coupled with erratic nature of freight demand, has limited the assignment
of dedicated planes to all -freight operations. However premium carriers provide planes dedicated for
freight operations. This premium service started off with documents and has moved onto large
parcels, which is an ideal service for firms with a large number of high-value products and time-
sensitive service requirements.

FOR DHL:
DHL uses all the modes of transportations that is

► Airways

► roadways

► waterways

► rail freight

DHL has its own fleet of airplanes and motor vans. Depending upon the final destination where the
goods have to finally reach and the type of package the customer has paid for, DHL uses the individual
modes of transport or a combination of either of these or all. Once again the geographical location
and how fast the goods have to be delivered are the factors for the final selection of modes of
transportation. The concept of economies of scale and economies of distance are both taken into
consideration in case of larger consignments where DHL provides an appropriate logistical solution
which helps in reducing the overall cost for the customers.

OPTIMIZATION OF LOGISTICS WITH DHLROAD AND RAIL SOLUTIONS.

DHL Freight is a leader in European overland transport. Our continent- wide network and
comprehensive range of products and services guarantee reliable transport. DHL Freight offers you
regular services for group age and a full range of transport services for part- and full-load shipments
by road, rail and intermodal transportation. They provide special handling and transportation for
perishables, furniture, trade fair or event equipment, as well as tailored customs clearance services in
more than 350 offices across Europe. State-of-the-art IT systems give you totals shipment visibility and
higher delivery efficiency. Our industry-specific expertise and long-term experience can improve your
productivity and streamline your operations. A successful, high-caliber partnership with DHL Freight
gives you all the advantages you need to optimize your logistics.
Air Freight

DHL Danzas Air & Ocean offers a range of fast and cost -effective airfreight services for your most
time-sensitive freight with door-to-door or airport-to-airport services, fixed schedules on all main
routes and reliable connections to all other destinations.

DHL Air Freight products include:

Air FirstWhether door-to-door or airport-to-airport, Air First guarantees priority on the first
flight out and forwarding within two days - 24- hours a day, 7-days a week, and 365-days a

Air Premier Combines price and time considerations for both door-to-door and airport-to-
airport service. Your shipment will arrive at the

airport of any major marketplace around the world within only three days.

Air Value Creative routing solutions via major gateways can save you even more money
while adding only 1-2 days over our Air Premier Service.

Sea/Air Chartering additional airfreight capacity is part of everyday business - especially if there is
limited commercial lift, for new product launches, during peak seasons or for oversized cargo. Our
specialists create solutions to get your goods through on time.

Part and Full Charter Combine the speed of airfreight and the lower cost of ocean freight - and
you'll benefit from our strength and experience in both. Plus, real-time tracking at every step of the
way.

Inventory Management and Warehousing.

Inventory is an unused asset, which lies in stock without participating in value adding process. Unused
equipment, raw material, WIP and Finished goods, consumables, spare parts, bought out parts, tools
and tackles, gauge and fixtures etc. In India 9 to 12 months of sales quantity lies in the form of
Inventory (R/M, WIP, Bought out parts and Finished goods] as against a few days in Japan and a
month in the US and Europe. In our country inventory is always viewed as asset (working capital], in
fact, though it is called an asset, it is a big liability Warehousing was a customer's function
conventionally anywhere in the world. Customer to protect himself from shortages at the time of
inclement weather always used to store provisions and other utilities in his house. Consumer's own
stores were underground cellars, smoke houses to store variety of items. Poor communication
infrastructure was mainly the cause for this storage by customer. Producers and tradesmen
conveniently shrugged off their responsibility for storage and passed it on to the customer who was
left with no option. Traditional concept of warehouse as store or godown has undergone major
change now. Warehouse is considered a value adding facility now, playing a remarkable role as a
function of logistical management.

► Warehouse Infrastructure Network

► Warehouse Management Solution

► Inventory Optimization

► Special warehouse solution

► Outsourcing Projects

1. Warehouse Infrastructure Networks

DHL warehouse service supports inbound logistics, distribution and aftermarket services in a way that
improves inventory management, reduces total operating costs and improves cycle times.

DHL facilities offer our customers warehousing that is fully integrated into the wider supply chain and
meets demanding service levels. This encompasses the design implementation and operation for both
dedicated and multi user sites.

Benefits include improvements in:

► Customer service levels

► Stock accuracy

► Lead times

► Redundant stock costs

► Productivity responsiveness to a company's strategic needs

a. Multi User Centers

We provide a network of multi-user warehouses, enabling manufacturers to hold inventory at local

level, whilst avoiding expensive, dedicated storage solutions. These facilities can receive products
from both local and global manufacturing sites, providing downstream distribution.

b. Strategic Part Centers (SPC)

Our Strategic Part Centers (SPCs) are in-country facilities offering:

► 1, 2 and 4 hour order fulfillment

► Stock optimization across the complete network of SPCs

► Guaranteed performance against agreed business rules

c. Express Logistics Centers (ELC)

Our Express Logistics Centers (ELCs) are regional centralized facilities offering:

► order processing

► outsourced repair facilities

► custom final assembly

► kitting services

2. Warehouse Management Solutions:

a) Warehouse Management Systems

The Warehouse Management System (WMS) records all events and actions in the receipt, handling
and storage of products and orders in a warehouse environment. The WMS also accurately records
the location of inventory whilst stored in the warehouse. Our Prologs WMS
manages all critical processes in the warehouse, and is also an important support for varied transport
and distribution concepts (planning, time controlling, booking of transport capacity, communication
with customs and other authorities).
b) Strategic Inventory Management

Strategic Inventory Management (SIM) has been created to deliver urgent shipments to main business
areas within a 2 to 4 hour time frame, usually time critical spare parts with a high value and high
impact on business.

c) Direct Express Inventory Management

Direct Express Inventory (DEI) allows customers to centralize stock in one warehouse and use express
distribution to deliver components the next day. Entire management is done by DHL.

d) Repair Return Inventory Management

Return & Repair Inventory (RRI) manages the physical flows for Return material authorization. In this
case, DHL will be responsible for picking up the broken part, sending a new one, bringing the broken
part to a repair centre and moving repaired parts back int o stock.

e) Cross Docking

Cross-dock operations are facilities where shipments are received from one mode of transport and
transferred to another mode, or where shipments complete one leg of a journey prior to
commencement of another journey. Shipments are consolidated or deconsolidated. Product received
into the facility is not taken into inventory.

3. Inventory Optimization:

Through effective inventory management, inefficiencies can be driven out of the supply chain, overall
costs reduced and high service levels achieved. They optimize inventory at a line-item level at every
stage of the supply chain.

DHL focuses on driving results in:

► Supplier management

► Expediting

► Order replenishment

► Demand forecasting

► Safety stock setting

► Order pipeline monitoring

► Excess stock management

Inventory optimization is supported by inventory management software that calculates 'line item risk
profiles' that measure the variability of demand and supply for each line item within a customer's
inventory.

DHL offers:

Average of 20% inventory reduction and 8% improvement in product availability

► Reduced inventory and overhead costs

► Improved sales, profitability and return on investment

► High service standards

► Better matching of supply with demand

► More streamlined and responsive supply chain

D Shared-user Warehousing

Our shared-user facilities are designed to meet the needs of organizations of any size. Currently, we
provide shared-user services to leading manufacturers and retailers of medical supplies, con sumer
products, industrial equipment, chemicals and technology. Through sharing of DHL's resources,
such as space, labour, equipment and transportation, customers benefit from synergies that
considerably reduce supply chain costs. This environment returns significant value to a small business
requiring distribution operations without long term lease or capital commitments, or a large
enterprise handling a new acquisition, product launches or seasonal overflow.

D Campus Solutions

We pioneered the campus model to provide regional customers with a flexible solution designed to
capitalize on similar distribution channels, minimize labour costs, and increase specialized equipment
utilization. Campuses are strategically located at key distribution points in North and South America,
Europe and select locations in Asia, allowing for expedited transit times to large concentrations of
consumers.

2. Special Warehouse Solutions

D Vendor Hubs

warehousing and delivery of service parts, based on demand pull. Vendor hubs are usually located in
close proximity to the manufacturing facility.

D Reverse Centers

specially designated facilities for the receipt and handling of returned parts for repair, recycling or
disposal.

D Bonded Warehousing

Bonded warehouses provide secure environments in which customers' products can be held without
immediate payment of local duties and taxes.

D Shared-user Warehousing

Our shared-user facilities are designed to meet the needs of organizations of any size. Currently, we
provide shared-user services to leading manufacturers and retailers of medical supplies, consumer
products, industrial equipment, chemicals and technology. Through sharing of DHL's resources,
such as space, labour, equipment and transportation, customers benefit from synergies that
considerably reduce supply chain costs. Consequently, the customer can increase efficiencies
throughout their distribution network and maintain a higher level of service to their customers.
Outsourcing Projects

Outsourcing involves DHL taking over and managing previous in -house logistics operations, including:

► Distribution centers

► Transport operations

► Back-office functions

► Supply chain management functions

► After sales services

Value Added Services

► Co packing

► Product assembly

► Other value added services

1. Co-packing

We offer a comprehensive selection of manufacturing and packaging services through Power

Packaging a DHL Company.

By integrating manufacturing and packaging operations within their supply chains, our customers can:

► Add flexibility

► Improve service levels

► Reduce costs

► Accelerate time to mark

► Increase asset utilization

In addition to these core packaging services, Power Packaging brings a unique set of services and
capabilities for customers that include:

a. Beverage manufacturing:
Blending, mixing and filling of hot and cold fill beverages and concentrates in the following types of
containers:

■ Plastic bottles (PET) and glass containers (10 oz up to 128 oz)

■ Shelf-stable containers (paperboard, plastic cup and bag-in-a-box)

b. Dedicated facility services:

Turnkey manufacturing solutions including:

► Site selection/development

► Facility and systems design

► New facility start-up and operation

c. Other services:

► Packaging and raw material sourcing, procurement and asse mbly

► Batch/quality control tracking via digital easy -to-trace coding system

► Full range of secondary packaging services

2. Product Assembly

Postponement, quick response and mass customization are breakthrough business strategies enabled
via packaging services. Integrating packaging operations into distribution centers streamlines
fulfillment reducing cost, enhancing product visibility and control, and improving speed-to-market
and flexibility in the supply chain. Packaging services include:

► Postponement packaging - primary, secondary and specialty components

► Co-packing, kitting, assembly and repackaging

► Retail-ready, point-of-purchase displays

► Lot control via variable digital and laser printing

► Machinery system engineering - labeling, bagging, carton filling, club store packs, clamshells
and printed and unprinted film over -wraps
► Make-to-order pallets

► Product rework/redress

3. Other Value Added Services

a. Kitting/Pre-Assembling

Kitting is the addition of items such as accessories and batteries to the product pack. Pre-assembling is
completion of a finished product from component parts or pre-programming of products.

b. Re-Working/Re-Packing

Repacking for a specific customer can include repalletisation. Reworking is

the modification of products to suit a local market.

c. Packaging/Bundling

Packaging includes packing of products into suitable media for transportation and retail display.
Bundling is the assembly of a number of pre-packaged products to make up an integrated product
offering.

d. QA Control

Quality control ensures that product is received into and dispatched from the warehouse in a suitable
condition, free from faults and defects.

e. Labeling/Merchandising
The application of labels either to the product or to the packaging. Merchandising can include the
addition of price stickers or promotional items ready for retail display.

External Performance Measurement

While internal measures are important for detailed organizational monitoring, external performance
measures are also necessary to monitor, understand and maintain a focused customer perspective
and to gain innovative insights from other industries. The topics of customer perception measurement
and best practice benchmarking, which address these requirements, are discussed and illustrate d
below.

Customer Perception Measurement

To succeed in any activities of business one has to always cater to and satisfy the needs of the
customer. To do so, it is essential for one to know how the customer thinks in order to meet his needs
in a more satisfying manner. Therefore, an important component of leading edge logistical
performance is the regular measurement of customer perceptions. Such measures can be obtained
through surveys or by systematic order follow up. These surveys can be company - or industry

- sponsored. Such surveys ask questions regarding the firm's and the competitor's performance in
general or for a specific order in particular. Most of the surveys incorporates measurement of
customer perceptions regarding availability, performance-cycle time, information availability,
problem resolution and product support. The survey may be developed and administered by the firm
itself or by consultants, delivery agents or industry organizations.

International express door-to-door delivery overnight or by the end of the next possible business day
for goods subject to Customs clearance.

One, reliable company makes international shipping easy .

Need to get products, samples, or spares to someone fast? Then trust DHL's Worldwide Parcel Express
to expedite urgent shipments from your door, through customs direct to the receiver - virtually
anywhere in the world. One company means you eliminate all the hassles of international shipping.
You never lose sight of your shipments. And with DHL's customs expertise, you get instant advice
regarding local regulations and customs documentation, ensuring the smooth clearance of your
goods. When it comes to delivering your company's time - critical shipments - and your reputation,
rely on DHL's Worldwide Parcel Express.