DHL's Swiss knife revisited

More than a month ago, I discussed DHL's risk management approach that resulted in DHL Resilience360. I concluded that the approach seemed to be interesting, but the available information was shallow.

I tried to get in contact with DHL to find out more about this tool, and - after a first unsuccessful attempt - I was invited to either visit DHL in Troisdorf or to follow a live presentation via WebEx. To save resources, I chose the latter - and eventually we set a date for the presentation.

To start with my overall impression: The tool and its capabilities are impressing. There might be aspects, where you could argue, that the methodic foundation might be weak. But, from my point of view, the tool offers much more than I dared to expect.

Figure 1: Visualization of a global supply chain, including risk assessment of the supply chain elements

Strategic level: supply chain visualization and risk assessment of the (static) supply chain

The application provides two general functionalities: On one hand, it supports the supply chain configuration on a strategic level. By a geo-referenced visualization of the whole supply chain, i.e. all own suppliers' and customers' locations, and infrastructure nodes plus all relations between those nodes, it provides a worldwide overview  (see figure 1 above). From a conceptual point of view, the visualization of a supply chain is nothing extraordinary. However, the practical implementation of a worldwide visualization is at least a first step to create some visibility. And - visibility is one of the key words to implement an effective SCRM. The transportation links also reflect the actual route of a shipment, so again, the data is geo-referenced.

Figure 2: Detailed risk assessment of a node within a supply chain ('risk scores')

Each node and each link has additional risk-related information. Those information can be collected by semi-automatically sending out questionaires with risk-relevant questions to the operators of the facilities. The answers are then used as input into a risk assessment, so that a number of different risk factors can be evaluated focusing on exposure, impact, and severity. The algorithm that calculates the risk values has not been discussed, so that might be an open issue. Nevertheless, the values offer the risk manager a first idea where 'hot spots' in terms of high risks might exist - and why those locations might be hot spots (see Figure 2). They also indicate, where to develop measures to manage risks.

Figure 3: Country-focused risk evaluation

The risk assessment on the strategic level can be additionally supported by a country-focused risk evaluation (see figure 3). Those information are based on a number of different sources. They do not only reflect the current risk situations for different factors such as terrorism, corruption, or cargo theft, but also give the risk manager an idea regarding the risk trends for the aforementioned factors. Of course, this feature of the application does not generate a 'WOW!'. But - it can effectively support the supply chain (risk) manager because it is part of an integrated system.

Figure 4: Risk monitoring using geo-coded near-time incident data

Operational level: Incident monitoring

 

The second functionality of Resilience360 is an almost real-time (thus 'near-time') risk monitoring. It is a 'near-time' monitoring, because the (currently five) providers of risk-related incident information, such es data on strikes, terror attacks, environmental changes, delays, etc., first validate the data and their sources, so the information can be confirmed. The risk news are also geographically referenced, so they can be displayed on the map in the system (see figure 4).

Figure 5: Matching incident data and supply chain characteristics to identify affected supply chain elements

To realize, how those incidents might influence the supply chain, the user can define some kind of 'influence area' for the incident. By matching the geo-referenced 'influence area' with the also geo-referenced supply chain, the supply chain risk manager can immediately identify affected parts of the supply chain (see figure 5). Thus, this functionally can effectively support the operational risk monitoring even of complex supply chains.

The functionality explained above, i.e. the strategic supply chain mapping including risk-related information and the operational risk monitoring of supply chains and their processes, are - I must admit - impressive. The online and browser-based application can be used almost intuitively. The functionality seems to incorporate a lot of practical ideas and methodological aspects.

Data availibility is a crucial point

 

Aren' t there any limitations? Yes, there are. It's the required data that defines if the application is helpful or not. The incident data is provided by external sources - so that should not be a problem of availability. It should also not be a problem to get location-related data of own facilities. But, it is getting more and more difficult the more a company tries to integrate supplier and customer data. And the data availability will be worse when it comes to integrating tier-2 or tier-3 suppliers (or customers of customers). This is not only true for the static data, i.e. locations, relations, and risk data, which might be difficult to compile. The situation get worse when dynamic data such as actual shipment data is required for the operational risk monitoring. Again, the data acquisition might be easy when the company has full responsibilities for shipments, and thus has the shipment data. (Alternatively, if DHL is the LSP for the company, DHL should be able to provide all detailed shipment data.) But, if some third party is responsible for planning and control of shipments, it seems unlikely to get hold of the data. This is, of course, not a problem of the tool, but it is a crucial point for the applicability of DHL Resilience360.

As mentioned above, the calculation of the risk values for exposure, impact and security is - at least to me - a black box, so an evaluation of the methodology is not possible.

Wish list of supply chain risk managers

 

Risk managers might have some points on their wish list. This could be the assessment of follow-up risks, based on a current incident somewhere in a supply chain. If the tool would be able not only to identify those parts of the supply chain that are directly affected but could also calculate or estimate the consequences for later processes in the supply chain, it would be of great help for a consequences analysis and for prioritizing counteractions. Another wish could be a stronger decision support. Currently, the application works as management information system (MIS), that provides data for a supply chain (risk) manager. However, generating alternatives, such as chosing alternative routings, or shifting production from one location to another, is a task carried out by the manager. If the system could simulate alternative routings, or the consequences of changing production and delivery plans, the manager could focus on evaluating those alternatives and then choose the optimal alternative. This would shift the application to a decision support system (DSS).

Summary

Beside those aspects mentioned above, the DHL's Resilience360 is a very strong and - as it seems - highly sophicasted tool that support strategic and operational tasks in supply chain risk management. It provides much more functionality than other tools available. However, the question of gathering enough and high-quality (i.e. detailed) data from all supply chain partners is a crucial point for the tool.

(All screenshots by courtesy of Deutsche Post AG.)