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DHL Resilience360

- An innovative approach of managing of Weather Incidents in logistics

Customer Solutions & Innovation

Resilience360 | DHL DHL |

Source: Deutsche Post DHL; 1) Centre for Research on the Epidemiology of Disasters ; 2) Supply Chain Resilience 2011, survey of 340 organizations; 3) World Economic Forum Supply

Chain and Transport Risk Survey 2011; 4) Jeff Dobbs, Global Sector Chair, Diversified Industrials and a partner with KPMG in the U.S 5) Hendrick & Singhai, “The Effect of Supply

Chain Disruptions on Long-Term Shareholder Value, Profitability and Share Price Volatility,” 2011 6) McKinsey survey in Sep. 2006 (3,172 responses from executives across full range

of industries); 4) McKinsey survey in Sep. 2006 (3,172 responses from executives across full range of industries);

Key Facts about Risks in Global Supply Chains

NOT EXHAUSTIVE

Number of natural disasters has

increased by almost three times

over the last 30 years1)

73% of interviewed companies

experienced at least one SC

disruption in 20122)

Companies experienced on

average a 10% reduction in

shareholder value, after a supply

chain disruption5)

Only 9 % of American supply

chain executives said that they

could assess the impact of a

disruption within hours4)

Centre for Research on the

Epidemiology of Disasters

93% of the leaders of the

worlds top companies in the

CEO summit in 2012 said they

were unprepared for supply

chain disruptions3)

Only 9% of companies claimed

high confidence in mitigating

their key supply chain risks and

only 15% have detailed

assessment models6)

Global supply chain risks and respective disruption management are

becoming a prevailing topic

http://www.clresearch.com/home


Source: Desk Research: News Agencies (CNN - The global supply chain: So very fragile, Bloomberg - Toyota May Lose 500,000 Vehicles of Output Post-Earthquake, Analyst Says,,

Rheinische Post - BMW stoppt Produktion in drei Werken)

BMW halted production, losing

7,000 vehicles in a week after

a volcanic ash cloud delayed

delivery of vital electronic

components

Western Digital production of

hard drives was completely

stopped due to flooding in

Thailand 2011, causing a total

cost of ~USD 250mn

Toyota produced 500.000 less

vehicles than planned and

quarterly profit shrank by 75%

following the tsunami in Japan

2011

Winter ice storm emergency in

northeast of America caused

flight delay and cancellation.

Oil production had to halt,

losing more than 400.000

barrels per day

Porsche befell a production

loss of 450 cars per day, due

to a flood in Slovakia which

blocked car bodies from being

transported to the assembly

factory in Germany

After the super typhoon in the

Philippines, operations of 16

ports were suspended and

several flights were canceled.

Supply Chain Disruption Examples

Disruptions have a significant bottom-line impact –

Supply chain risk management as opportunity for significant savings


Customer

Network data

Site contacts

Volumes & priorities

Supply Chain expertise

Best Practices in

Contingency Management

People on the ground to

take actions worldwide

Partners

Real time incident feeds

Statistical risk evaluations

Competences for risk-

specific deep-dives

Incident Monitoring Risk Assessment

Input from … …to create one joint platform for

Supply Chain Risk Management

Source: DHL Supply Chain Risk Management

DHL

I 1 I 2

• Multi-tiered visualization of

your global and end-to-end

supply chain

• Create transparency on

exposure and vulnerability

in over 20 global risk

categories

• Rate resiliency and ensure

coverage of backup plans

• Identify risk hotspots and

recommend suitable

mitigations & alternatives

• Near real-time 24/7

alerts on supply chain

relevant incidents and

risk warnings

• Filtering options to alert,

based on specific

categorization of risk and

its severity level

• Trigger follow-up actions

immediately

DHL Resilience360


Four areas of risks are in scope: operational risks, natural

disasters, hazards, and socio-political risks

Supply Chain Risks in Scope

Illegal Cargo

Introduction

Counterfeiting

Cargo Theft

Regulatory

Supplier Financial Stress

Law

Enforcement

Customs Efficiency Strike

State Insecurity

External

Intervention

Terrorism

Corruption

Extra Tropical

Cyclone

Tropical Cyclone

Wildfire

Lightning

Tsunami

Industrial Fire

Utility Failure

Flood

Volcano Earthquake

Tornado Hailstorm IT Failure Risk

Risks out of scope: market risks, exchange and interest rate fluctuation, production risks, product quality risks, lack of logistics

capacity, legal risks, cyber attack risk, environmental or brand reputation risks

Power Outage

Telecommunication Outage

Pandemics

Proximity


Hotspot Analysis

Hotspot selection based

on risk score and resiliency

rating and importance

• Prioritization of critical

SC entities

• Plausibility check of

results

• Recommendation

on next steps

• Reports per risk and per

site

Resiliency

Rating Severity Score

Scoping &

SC Mapping

Node assessment

as part of network

Node redundancy in

network

• Resiliency rating based

on alternative capacities

and time-to-recover

• Assessment through

expert dialogues from

logistics and

procurement

Node assessment as

stand-alone entity

Node failure &

recovery

• Risk Exposure

scores based on

reliable databases

• Existing mitigation

measures and impact

scores captured through

customized survey

Scoping of network

to important entities

• Product Groups

• Key Suppliers

• Key Markets

• Value Chain

• Risks in scope

Mapping of supply chain

with all entities and flows

Data preparation for risk

assessment tool


Which sites are

important?

Which sites are

endangered?

Which sites are

not replaceable?

Which sites need

to work on their

resiliency?

After the 4 steps of analysis the you will know on which sites you

need to focus to increase your supply chain’s resiliency

Risk Assessment - Methodology


Supply Chain Mapping


Earthquake Tornado

Exposure Risk Mapping - Overview


Exposure Risk Mapping - Details


Survey for Impact Assessment

Exposure

Score

PRIMARY LOCATION

OF OPERATIONAL

IT SYSTEMS

• Centralized datacenter

to host systems

• Local IT systems

REDUNDANCY OF

INFRASTRUCTURE

Power supply

Network &

telecommunication

CENTRAL DISASTER RECOVERY

• Class 1 – Disaster proof

• Class 2 – Disaster resistant

• Class 3 – High availability

• No disaster recovery in place

LOCAL DISASTER RECOVERY

• Class 2 – Disaster resistant

• Class 3 – High availability

• No disaster recovery in place

4

3

2

1

4

3

2

5


Risk Assessment Site Report


A unique combination of a consulting-based study and usage of global

supply chain risk intelligence to derive a bespoke analysis

Risk Assessment - Benefits

KEY BENEFITS

Identify your choke points, critical

locations and clustering

Determine risk hot spots and where the

benefit of investing in mitigation work is

to maximize benefits

Make better informed sourcing, supply

chain set-up & network re-designing

decisions based on risk profiling

Plan for the worst case scenarios with

ready to execute back-up plans


Customer

Network data

Site contacts

Volumes & priorities

Supply Chain expertise

Best Practices in

Contingency Management

People on the ground to

take actions worldwide

Partners

Real time incident feeds

Statistical risk evaluations

Competences for risk-

specific deep-dives

Incident Monitoring Risk Assessment

Input from … …to create one joint platform for

Supply Chain Risk Management


DHL

I 1 I 2

• Multi-tiered visualization of

your global and end-to-end

supply chain

• Create transparency on

exposure and vulnerability

in over 20 global risk

categories

• Rate resiliency and ensure

coverage of backup plans

• Identify risk hotspots and

recommend suitable

mitigations & alternatives

• Near real-time 24/7

alerts on supply chain

relevant incidents and

risk warnings

• Filtering options to alert,

based on specific

categorization of risk and

its severity level

• Trigger follow-up actions

immediately

DHL Resilience360


Incident Monitoring Overview


Incident Monitoring Details


Dashboard overview tracking new incidents & node status

New incident 1

Feedback on status &

actions

Status: Disrupted

Comments:

• Shipments delayed for 2

days

• Future disruptions

expected

4

Updated status 5

Alert Profiles (Filter) 2

Capability to trigger stored

emergency plans & inform

up- & downstream sites

6

Incident Monitoring– Schiphol Airport Flight Delay Example


Alert message for site 3


Incident Monitoring – Supply Chain Relevant Incidents


Example Weather/Natural Disaster Incidents


Incident Monitoring - Benefits

Incident Monitoring will make the supply chain more reliable with

full visibility and the flexibility to react in case of unforeseen events.

KEY BENIFITS

Secure scarce material, transport and

production resources during a disaster

Avoid emergency logistics costs due

to unplanned coordination of mitigation

actions

Save time for production re-sourcing,

re-planning and alternative sequencing

Turn a disruption into an advantage


Thank You!

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