Executive Briefings

How DHL Express Improved Its Costing Analysis

A few years ago, DHL Express was in a downward spiral of data quality. The company had used a Microsoft costing tool deployed locally in the 200 countries in it operates. Graeme Aitkin, vice president of business controlling, said the tool used employee interviews to localize cost allocations, asking couriers how they spent their time every day. In the old days, he said, when the data wasn't available, it wasn't possible for a company to have a unified costing and pricing system across a global company.

"We could only build cost models on what we had available," said Aitkin. "Nothing reconciled to the financial results. We couldn't produce a standard cost of shipment or pickup because we didn't have the data. We couldn't distinguish fixed and variable costs."

Aitkin and his colleagues realized that by collecting and analyzing good-quality data from all of its transactions with the companies it serves, DHL Express could gain an edge when it came to accounting for cost and pricing. The consistency of a single, worldwide costing system that reconciled to the company's global profit-and-loss statement would improve pricing management and enhance profitability improvement.

"It was a huge investment, and we didn't overcommit and didn't overpromise," he cautioned. "Our business case only promised savings we could prove." Aitkin was also fortunate enough, he said, to have the support of a CFO who believed in the importance of data, and a CEO who also knew the value of data.

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Keywords: supply chain management, supply chain management IT, value chain, value chain IT, logistics IT solutions, supply chain planning, sourcing solutions

"We could only build cost models on what we had available," said Aitkin. "Nothing reconciled to the financial results. We couldn't produce a standard cost of shipment or pickup because we didn't have the data. We couldn't distinguish fixed and variable costs."

Aitkin and his colleagues realized that by collecting and analyzing good-quality data from all of its transactions with the companies it serves, DHL Express could gain an edge when it came to accounting for cost and pricing. The consistency of a single, worldwide costing system that reconciled to the company's global profit-and-loss statement would improve pricing management and enhance profitability improvement.

"It was a huge investment, and we didn't overcommit and didn't overpromise," he cautioned. "Our business case only promised savings we could prove." Aitkin was also fortunate enough, he said, to have the support of a CFO who believed in the importance of data, and a CEO who also knew the value of data.

Read Full Article


Keywords: supply chain management, supply chain management IT, value chain, value chain IT, logistics IT solutions, supply chain planning, sourcing solutions