Introduction
The paper is a discussion on operations and operations management using DHL Aviations Hong Kong Ltd. as an example. The paper tackles about the operations of DHL in Hong Kong and other related issues concerning operations management.
Company Profile
DHL Aviation (Hong Kong) Ltd. or simply DHL Hong Kong is part of the expansion and growth of DHL Express International that originated in San Francisco and now owned by the Deutsche Post World Net (DPWN). DHL belongs to the international air express industry, whose business includes courier services, logistics, air and ocean freight, consultancy and other value-added services related supply chain such as network and facility design, warehousing, transportation management and consolidation, primary and secondary packaging, customs management, security and cargo insurance.
DHL started at Hong Kong in 1972 in order to provide services in the Asia Pacific Region. In 2000, the company’s Central Asia Hub at the Hong Kong International airport began operation that handles over 100 flights a day that further resulted to agreement and construction of the Express Cargo Terminal of the Hong Kong International Airport wherein DHL invested about HK$780 million and serving as the home of DHL’s Asian Network (DHL, 2006) that includes DHL Bangkok, China and others. The shipment handling operations of the DHL central Asia Hub is supported by Material Handling System with a throughput of about 20,000 pieces per hour.
DHL Operations
Supporting the company’s various services are the primary activities and complex process critical to DHL’s operations. These are: order taking, pick up, documentation, tracing of the supplies when information is needed, billing, packaging, transportation and delivery, problem solving as well as advice and information to the clients and partners (Kostecki, 1998). These are the activities involved in DHL’s operations management that make DHL productive and efficient. People involved at these particular activities work together aiming for a common goal which is to provide quality customer service at attractive prices. This is the goal the company has to achieve in order to obtain long-term profitability.
As an express carrier, DHL does not provide products but services. DHL Aviation Hong Kong or DHL Express HK is under the Express Corporate Division of DHL that offers companies and private customers courier, express, and parcel (CEP) services, excluding logistics which is handled by other divisions. DHL does not manufacture products but rather services thus the inputs associated with DHL is not raw materials but equipments such as computers for documentation and tracking of shipments as well as for communication with customers and business partners, and tracking device such as radio frequency identification (RFID); materials such as boxes, packaging tapes, tags and seals for the protection of the goods to be delivered; manpower or human resources such as delivery staff, drivers, customer service representatives, logistics analysts that provide advice and consultations, and managers that ensure who ensure timely delivery; and transportation medium such as ships for ocean shipments, airlines for air freight and trucks for land freight. With the case of DHL Aviation, they used more of air transportation thus they invested on a terminal at the Hong Kong International airport.
DHL’s Operations Management
Operations management is defined as the management of function that is responsible for all the activities directly concerned with making a product. It is responsible for collecting various inputs, and converting them into desired outputs (Waters, 1996). This definition is more common for manufacturing companies. However, when you are in the service industry, instead of product, services are created to achieve the desired outputs.
As an express carrier, timely delivery and customer satisfaction are its objectives. These objectives can be met by effective operations management. However, problems commonly arise in a company and through operations management problems can be tackled by observation, formulation, analysis and implementation (Hanson & Olsson, 2001). Through observation managers can be able to realize if there are problems. This can be done by collecting data and setting objectives. For example, DHL set their sales to increase by 5% in 2005 but the company was not able to reach this objective but instead sales dropped by 2%. Managers can realize problems such as untimely delivery and poor package handling as the probable cause of decreasing sales and can therefore provide solution through formulation. Formulation basically involves the review of related data, building models of the current situation and finding solutions to the problems. These solutions are commonly the basic operations management practice such as batch processing, theory of constraints, bottleneck analysis and improving customer service.
Analysis follows formulation in which managers examine the solutions provided and evaluate the best possible solutions to be implemented. Operations managers are also responsible for monitoring of improvements.
With the kind of services that DHL provides, it commonly used operations management practices such as batch processing. With its batch planning system, it can control the number of orders to be pack and to which country it will be delivered. Its batch planning system is computer controlled while its packing system uses automatic packing machine thus DHL is productive enough to be considered having good operations management.
However, since DHL Hong Kong delivers goods and provides services mostly outside Hong Kong, it still occasionally encounters late delivery due to inefficient customs controls and procedures. That is, DHL sometimes encountered problems in getting the parcels through the border controls and ensuring necessary documentations (Kostecki, 1998). To address this issue, DHL parent company puts local customs service department in every major country whose mission is to get the cargo through customs at the right time, and responsible for daily reports, providing detailed information about customs troublespots (Lorange, 1998).
References:
DHL Hong Kong online
http://www.dhl.com.hk/publish/hk/en/about/DHL_HK.high.html
Hanson, E & Olsson, M (2001) A case study in Operations Management and
Packaging Logistics, Logistics and Transportation Management Master Thesis, School of Economics and Commercial Law, Goteborg University
Kostecki, M (1998) DHL Worldwide Express: Providing Just-in-Time Delivery
Services Across Customs Borders in Central and Eastern Europe,
University of Neuchatel
Lorange, Christian (1998) Corporate Structure, Procedures and Responses
Relating to Trade Policy: Case Studies of Four Multinational Corporations, Neuchâtel, The Enterprise Institute of the University of Neuchâtel (manuscript of a diploma thesis).
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