Case study: DHL, smart management is smart business

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“Digitalisation isn’t just a vision or program at DHL Supply Chain; it's a reality for us and our customers, and it’s adding value to our operations on the ground. Customers are very happy about the productivity gains and equally excited about using innovative technology in their warehouses." - DHL Supply Chain CIO & COO Markus Voss.

Global logistics giant DHL believes customer-focused innovation is essential to maintaining leadership in logistics and setting the development path for the whole industry. As DHL sees it, the future of the supply chain lies in the connected warehouse, with tech solutions, such as wearables for workers and sensors in warehouses, connecting everything to a single network. DHL is widely adopting interconnectivity in the shape of IoT to optimise its business. DHL’s 2016 Logistics Trend Radar predicted that IoT would be the major force in the logistics industry over the next five years. DHL predicts that by 2020, IoT will generate up to US $1.9 trillion in additional value in the industry and as such, is a major area of exploration for the company.

Partnering with Huawei

  • In September 2016, DHL and Huawei agreed to set up a special innovation team to focus on IoT and cloud computing, and jointly develop logistics ICT solutions for industry customers.
  • In January 2017, Huawei and DHL Supply Chain completed POC testing on an NB-IoT-based smart cold chain monitoring solution as well as an eLTE-based wireless logistics park solution in Shanghai, which verified the feasibility of Huawei’s IoT solutions in DHL’s logistics business scenarios.
  • In February 2017, DHL and Huawei signed an MOU to deliver a range of smart logistics solutions for customers using IoT technology. Huawei and DHL agreed to collaborate on IoT-focused innovation projects to connect large numbers of devices with minimal power consumption, and deliver an integrated logistics value chain by providing critical data and visibility in warehousing operations, freight transportation, and last-mile delivery.
  • In September 2017, DHL and Huawei completed a joint pilot test of an NB-IoT-based yard management solution at Plant A of a major automotive conglomerate for which DHL provides in-plant logistics services. The solution focused on solving issues such as delays in parts supply caused by manually scheduling loading bays at automotive factories. By enabling the visibility and intelligent scheduling of loading bays using NB-IoT, the solution enhanced unloading efficiency and led to significant reductions in labour costs.

Yard management empowers smart logistics

A yard is the outdoor area of a manufacturing plant or logistics park, comprising all areas outside warehouses and workshops. Commonly, they contain multiple waiting bays and loading docks for suppliers’ vehicles to park and unload. Because the yard intersects the transportation and warehousing stages in logistics, loading and unloading efficiency directly impacts a factory’s operational efficiency.

Proof-of-concept for the yard management solution has been carried out in plant A, which is supplied by over 350 different parts suppliers. Their vehicles make over 1,000 trips a day to the plant, where they unload parts at 86 loading bays.

Previously, DHL allocated bays to different suppliers and manually scheduled unloading. The main problem with manual scheduling was the uneven allocation of loading bays, with some heavily congested bays seeing five times more traffic than less used bays, sometimes totalling more than 50 arrivals per day. Additionally, traffic congestion in and around the park based on a first-in first- unload approach plus fines for exceeding time limits meant that suppliers tended to arrive ahead of schedule, leading to queues, congestion, and competition for bays. Delays in unloading due to traffic congestion could result in manufacturing interruptions while workshops waited for materials to arrive. Moreover, adjusting the schedule due to changes in production planning was impossible.

At Plant A, suppliers and DHL had different unloading and scheduling demands. The plant wanted a higher on-time delivery rate and higher unloading efficiency from suppliers. In turn, suppliers hoped for a reduction in waiting times and an improvement in vehicle turnover rates, while DHL required better visibility of loading bay availability to enable intelligent digital scheduling and reduce labour costs.

Based on analysis requirements, DHL and Huawei developed a yard management solution that used NB-IoT technology and Huawei’s IoT platform. The solution applies loading bay availability as a key data dimension to make loading bay availability visible and enable smart scheduling.

NB-IoT is a narrowband radio technology standard for IoT defined by 3GPP. It offers low power consumption, deep coverage, and high connectivity, features that have already been verified in scenarios like smart meter reading and smart parking. There were three main reasons for selecting NB-IoT for the yard management solution: One, Huawei had already verified that an optimised solution for sensing and reporting the availability of loading bays could meet the requirements of logistics services in terms of power consumption, coverage, capacity, reliability, and delays. Two, the NB-IoT network was provided by a mobile operator that could take care of network maintenance and overcome the difficulty of deploying a network in Plant A. Three, the solution is highly replicable, with around 30 NB-IoT networks build globally in 2017 and experience at doing so growing.

Huawei Public Cloud for rapid integration

With features such as device management, connection management, big data analytics, operations management, security and open APIs, Huawei’s cloud IoT platform OceanConnect can rapidly integrate devices and enable application development.

Applying OceanConnect to the yard management solution allowed the development and integration of the whole solution to be completed quickly. When it comes to replicating the solution in the future, the cloud-based IoT platform will provide greater flexibility in network service choice and greater convenience for device and application interoperability.

DHL’s yard management application collects loading bay information in real time to make loading bay availability visible. It digitalises the service process and schedules operations by synchronising information from PC terminals and apps used by drivers and operators onsite.

By using loading bay availability as core information, the yard management application fulfils a host of functions. It monitors and displays bay availability in real time, plans and gives notification of delivery windows, provides a driver app that displays information about site entry and assigned bays, collects and analyses data on on-time delivery rates and unloading efficiency, and optimizes bay allocation and scheduling by analysing historical data.

In September 2017, the first stage of the solution was piloted in Plant A. Unloading efficiency was boosted by 25 per cent and average job time was cut from 2,330 to 1,750 seconds. DHL reduced on-site manpower costs by 50 per cent due to automated loading schedules and cut schedule creation time from 185 to 15 seconds, an 87 per cent increase in efficiency. Digitalising vehicle entry, waiting, and unloading times boosted on-time delivery from 40 per cent to 70 per cent.

Joint innovation

The success of the first phase led to the green light for the second phase − extending the solution to the whole plant. Its value has been felt industry-wide, with one luxury-brand car maker already planning to introduce the solution at one of its new facilities by early 2018.

DHL’s yard management solution is continuously being optimised, integrating upstream and downstream systems to enable whole-process intelligent scheduling, further increasing efficiency and lowering costs.

As their cooperation on IoT innovation deepens, DHL and Huawei are exploring innovative customer-facing logistics solutions on a global scale, including tracking and sharing high-value logistics containers, logistics asset inventory, and intelligent logistics parks and warehouses. Just as a long journey starts with the first step, DHL and Huawei will continue moving forward to ensure that IoT helps DHL go digital.

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