Dialogues

Red & Yellow: The Colours of Global Domination

Interview with Dr Frank Appel, Chief Executive Officer, Deutsche Post DHL Group

Anyone who drives down Singapore’s Tampines Road can be forgiven for being awestruck by the massive building looming in the horizon. It is almost impossible to miss it. Occupying a massive warehouse footprint in excess of 90,000 sqm, the facility is DHL Supply Chain’s recently launched Advanced Regional Centre (ARC). Built at an investment of more than S$160m, the ARC features an S$18.8m multi-customer automation system with advanced robotics.

While the scale of the facility and level of innovation are impressive on their own, it is the visual identity and branding of DHL’s red and yellow that leads the company to easily stand out from the rest. DHL’s pride in its corporate colours is obvious not just because their deliverymen and vans are in red and yellow, but their multi-million dollar facilities too.

“You cannot miss DHL. The ARC is perhaps the biggest facility in Tampines LogisPark, and easily twice the size of the next biggest building in the area. It really amplifies the strong branding of DHL, and is designed to meet the increasing quality requirements of our customers in the Asia-Pacific region,” comments Dr Frank Appel, Chief Executive Officer of Deutsche Post DHL Group, who was in Singapore for the launch of the facility on 19 April 2016.

Dr Appel’s pride in the company is evident during our short interview. In this issue of Supply Chain Asia magazine, Dr Appel shares his biggest challenges as CEO of the company, insights into the current China’s economic outlook, and thoughts on Amazon’s recent quest into offering its own delivery services.

Investment is in solutions, not in buildings

While there have been several similar investments in facilities by others in the logistics industry, Dr Appel does not believe there is a glut of such distribution centres in Singapore.

“The buildings themselves do not hold much weight. It is about having a talented workforce and providing quality solutions to our customers. Although our ARC is one of the largest facilities in this park, we already have a number of customers using the space,” says Dr Appel, who frequently cites the company’s high quality solutions as the main reasons for returning customers.

The strategy behind ARC is to allow customers to enjoy the benefits of automation solution without the need for significant capital investment. The technological enhancement uses 130 robotic shuttles to pick and store products from 72,000 locations spread across 26 levels, improving picking efficiency by 20 per cent and utilising 40 per cent less space than conventional warehousing operations. This is the first of its kind deployed by DHL globally and creates a model for the future of warehousing in land-scarce countries and dense cities where land availability is limited and expensive.

The ARC is touted to have one of the first multi-faceted systems of this size at totes level in Singapore, which reflects Singapore’s long-term strategy in handling higher value products, as opposed to lower value products in pallets.

China is just fine

Predictions of deepening China’s economic woes are plentiful, with some experts convinced that the country will soon face an economic crisis similar to Japan’s and that its standing as an Asian superpower will soon diminish.

Dr Appel, however, begs to differ.

“I think the concerns regarding China are vastly exaggerated. China’s economy is still growing well compared to others.

I think people forget that if an economy becomes bigger, the percentage growth will obviously decrease due to the larger denominator. Bear in mind that 10 per cent out of 100 is significantly less than 6 per cent of 1,000, and that is exactly what is happening. We need to understand the difference between absolute growth and percentage growth. The absolute growth is still higher than it was 10 years ago,” explains the CEO.

He added that the main difference in regards to China is not its perceived lowered growth. Rather, it is a change from an import/export economy to a more domestic-driven one. China continues to be a key market to DHL, and the company intends to continue expanding its investment into innovation in the country.

Afterall, the country is currently ranked second globally when it comes to overall spending in research and development.

Amazon: Friend or foe?

Amazon has received plenty of attention in the news when the company announced it has signed a deal to lease 20 Boeing 767 cargo planes. With Amazon being an important customer for DHL, is Amazon’s foray into logistics considered a stumbling block?

“I would like to make it clear that all e-tailers are important to us and we enjoy working with them. We are not, however, worried if they decide to invest in their own logistics network. This is because DHL is a leader in providing quality solutions and we are leaders in innovation. As long as we continue on this path, I believe we will stay ahead in the industry,” remarks Dr Appel, who cites DHL’s large-scale parcel lockers pilot for private households in Germany as one of its recent ambitious projects.

While the industry is slowly receiving its due recognition, logistics is still an underrated sector.

“I think our industry is under-appreciated. Not many people realise the difficulty of working in such a dynamic environment with daily challenges, ranging from something as minor as a traffic jam and difficult weather conditions to natural disasters. It is an industry that requires a lot of knowledge and experience. We can do this because we have a strong courier background and the right expertise in our half a million employees. Logistics is our core strength and our global network is our intellectual property. It is extremely difficult to duplicate what we have on the get go. We still welcome competition of course. Competition is always good for the business and the customers,” he adds.

Not always a bed of roses

While DHL is now recognised as one of the world’s leading brands, the company’s outlook has not always been rosy. In fact, DHL was facing several challenges when Dr Appel took over the reins in 2008.

“When I took over, it was a very difficult period, and it is not solely due to my predecessor’s untimely departure. Not only were we experiencing the 2008 financial crisis, we also had to manage our heavy losses in the US. Finally, we were able to sell our bank, Deutsche Postbank, two days before Lehmann Brothers went bankrupt. We also fixed our problems in the US within a relatively short timeframe.

After managing these really urgent issues we took our time to concentrate on the long-term strategies, which we announced one year later,” says Dr Appel.

In his eight years tenure as CEO of the company, Dr Appel is most proud of the customer-oriented culture his management has developed.

“Our focus in our customers has led to us being a powerhouse across all four divisions with very good global market positions. I am very proud of that,” explains Dr Appel, who holds a doctorate in neurobiology, and was a former consultant at McKinsey who then moved on to Deutsche Post DHL Group.

With 500,000 employees under his charge and his list of achievements, it is easy to label the 55-year-old German as a workaholic. But he believes in the importance of setting aside time for his family and hobbies.

“It takes a lot of discipline to ensure that I am not only consumed by work.

Afterall, I have great leadership teams in every region. I trust them to continue their excellent work without my need to micromanage them. Sure, there are instances where I have to roll up my sleeves and spend more time in, but that is a universal scenario. That is just life,” says the father of two.

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