In this special bonus episode of the “All Business. No Boundaries.” podcast, we listen in on a keynote by Sally Miller, Chief Information Officer, DHL Supply Chain at a recent industry event. During her talk, Sally explains why investing in innovation needs an all-in strategy that includes technology and talent.
In this special bonus episode of the “All Business. No Boundaries.” podcast, we listen in on a keynote by Sally Miller, Chief Information Officer, DHL Supply Chain at a recent industry event. During her talk, Sally explains why investing in innovation needs an all-in strategy that includes technology and talent.
Welcome to all business, no boundaries, a collection of supply chain stories by DHL supply chain, the north American leader in contract logistics. I'm your host will Haywood. This is a place for in-depth discussions on the supply chain challenges keeping you up at night. We're breaking beyond the boundaries that are limiting your supply chain. In this special bonus episode, we'll be listening to a keynote speech given by Sally Miller chief information officer at DHL supply chain from a recent industry event in her talk. Sally touches on why investing in innovation needs an all in strategy. That includes technology and talent. Let's dive in.
Speaker 2:So investing in innovation does take an all in strategy. We've learned that at DHL it's technology and talent. So today I'm gonna give a little company overview, talk about DHL, but also talk about the mega trends that are affecting the supply chain industry and what is making it so exciting. And we're all witnessing historic rapid paces of change. Then I'm gonna talk about our digitalization strategy. We've developed a strategy to globally evaluate new technology through idea, phase proof of concept and final product and deployment. And talk specifically about two examples. Cobots are success implementing those and the rising value we can get out of data, applying machine learning and AI, and how labor is impacted the industry. So Deutsche post DHL group is made up of five operating companies. We have the post and packet, which really is the German post office. If you ever have lived in Germany, uh, we delivered the mail to you, our express division, which is our international parcel business. The group last year recorded revenues of over 87 billion. We operate in 220 countries and we're the largest logistics player in the market. Our third company, our forwarding division manages air and ocean freight e-commerce solutions is fairly new to the group and is an international mail delivery for online retailers. And my group, my company supply chain, we provide warehousing and transportation services, value added services to companies globally. Uh, the supply chain group has over 177,000 associates. 55,000 of them are in the us. Last year. We had revenues of, of 14 billion. We operate in roughly 50 countries. Gartner, uh, last year rated us as the number one, innovative three PL in the industry. We've got a contract renewal rate of 94% and we frequently lead the industry in our record. So enough about us. And, and let's talk about the mega trends impacting the industry. The first one is the rise of eCommerce. We have 90 million more digital buyers today than we had in 2020. The rise in eCommerce is creating more frequent, smaller shipments and returns sometimes called the Amazon effect. This is creating more each picking operations, more touches and more need for labor. Speaking of labor at the end of the first quarter, this year, there were 11 and a half million job openings, almost six and a half percent of those were in our industry. The economy remains, you know, not normal every day is a new adventure, but one of the struggles that we continually face in the industry is a shortage of labor due to a lot of factors that I'm not sure we even know what the cause is. So the shortage of available labor, the growth in eCommerce is driving an increased demand for flexible, lower cost automation. And that is attracting investment. Thankfully supply chain, you know, who would've thought this 10 years ago, that the investment in the industry has created 51 unicorns, 26 of those were created in 2021. So this level of investment is causing new digital service offerings, robotic solutions, software solutions that are helping innovate the industry. So all three of these things have been rising and creating a significant impact in the industry and which caused DHL to create a global accelerated digitalization strategy. So why is that? It, at first it was more of a defensive maneuver to defend against disruption. We all know the stories of Uber and the taxi industry. So the creation of all these services made us aware that we had to, as the industry leader, identify trends and monitor and take advantage of the situations, let's face it. We have been operating in a manual environment for some time now, and 80% of warehouse operations are manual, and this is changing at a rapid rate. So some examples of solutions that we've recently implemented at DHL are autonomous forklifts, autonomous pallet. Unloaders a robotic arm to unload floor loaded cartons and cobots. So at DHL, we're focused on 12 categories. We do have a trend radar report that's available on our website that talks about these trends feel free to access it. I'm not going to talk about all 12 of these today. I'm, I'm going to pick out two of them, but these are the focus areas that we believe in the near term. Two to five years, we'll have the most significant impact on the industry today. We're gonna talk about assisted picking bots and data analytics, which is highlighted here as algorithmic optimization, but it takes the data to be able to develop the algorithms, to make the insights, to improve our operations. So I talked about our process at a high level for managing innovation, and we have a funnel. It's a proven process, our innovation funnel, where we take in ideas from multiple places, they can be customers, the industry research, you know, vendors, venture capital companies, startups. And we look at those focusing on the 12 categories, and then we'll try things. We will get our hands on things and help companies, especially in the startup phase, evolve and iterate in the development of products so that they can be useful and generate an ROI for us. And then once they reach the stage where they do what they say they can do, they move to product stage where we can deploy them to any of our 500 sites. That might be a fit. What we have learned is not everything fits in every profile of an operation and the ability to identify the best fit for a solution and to improve the solution, to generate an ROI and be effective is, is very important. And it takes a cross-functional team to do that successfully. We develop a playbook and then the solution is ready for deployment. So an example, I mentioned collaborative robotics, obviously designed to work well with people. We just celebrated our hundred millionth pick on the locus solution and our Patagonia site. Last week, we first deployed the solution five years ago and our first site and now have over 2000 bots deployed. So this is a solution that really helps us with the shortage of labor and especially during peak periods where we have to flex up and down. It's a great solution because the training time is greatly reduced and people are productive much faster than in a manual environment. So any type of cobot assisted picking solution really helps us during peak times deal with labor shortages. So I, I remember five years ago when we first started talking about robotics and supply chain, I used to get all these questions you're taking people's jobs. You know, that was the, uh, line of questioning. And we would come up with some slick answers. But I do think that the evolution of these solutions has really saved us, especially last year through peak. And it's very interesting to see associate behavior. They're a great recruitment tool. We're finding that we have higher applicant flow in sites where we have robotics and technology deployed. We have lower turnover rates and we get great feedback from our associates. And these are real quotes from associates who've worked, and we did the first deployment of autonomous forklifts at a site in Finley, Ohio. It reduces walk time. And what I've noticed when I, I tour through sites is it creates almost a quieter environment. It's just more pleasant, more efficient, less travel time. And the associates get to go home and tell their family they're working with robots. I tell my kids that they don't care, uh, data analytics. So another category. So this is just a staggering statistic to me, 90% of the data that's been collected since the beginning of humankind has been collected in the last two years, we're generating or collecting 2.5 quintillion data bytes a year. Oh, sorry. Every day, obviously I don't know what quintillion is, but it's big. So what we're all doing is creating a digital twin. So a digital representation of a physical process, which is generating all this data and creating tremendous opportunities to revisit processes. You know, for years, one of the greatest challenges that we had was how to create an accurate daily labor forecast. And one of the reasons why it was so tricky was cuz we were dependent on a customer's volume forecast and we know how that goes, take the revenue for the month, divide by the, you know, average price of unit and come up with a daily volume calculation, which in supply chain really doesn't help us predict labor. So now we can look at historical order drops, inventory patterns in several different data points and come up with a more accurate volume forecast than our customers. Can we then couple that with our labor data, how productive we are based on certain profile characteristics, and we can come up with a much better forecast of what we need to meet the service levels. So that's one example of many use cases of how increased data is going to help us improve processes and optimize labor. And it's all leading to increased needs to orchestrate the activities in our customers, supply chains, as well as transportation networks and the physical sites that we run. It will take more skilled, analytical problem solving GMs and supervisors to operate in the supply chain industry going forward than it has in the past. That will create more highly skilled jobs and better opportunities for people, but also challenges for us to get the right people, to make insights from the data, make best use of the technology, to improve things for our customers. So orchestration and all facets is going to be rising and focus going forward. So it, it is an exciting time to be in the industry. I've been in the industry for probably 25 years. Now worked my way up through programming, you know, implementation skills. It's changing at a rapid rate. The, uh, advances in technology and opportunities to apply them are at historic rates. But it's coupled with immense challenges. It is really difficult to operate in the, the low availability of labor. The rising eCommerce demand is going to continue. We all believe returns. I think as I briefly mentioned, is an untapped area that will continue to have the opportunity to be managed more effectively than it is today. Increasing investment. You know, as long as the market doesn't tank, I think will continue, but maybe with a bit more scrutiny on, uh, profitability and value. And it does require all in to, to make this happen.
Speaker 1:If you enjoyed the conversation today, please share it with a friend and rate us on apple podcasts. You can find us online at dhl.com/all business, no boundaries and follow us on LinkedIn and Twitter at DHL supply chain. We'll see you next time.
Speaker 3:<affirmative>.