Operations Management of DHL




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Preamble OF THE COMPANY

How it all began

Just months after man’s first landing on the moon in 1969, DHL begins operating the first international door-to-door express delivery service in the world. It all started out of chance in a local food store of San Francisco. The idea came out during the meeting of two friends Mr. Adrain Dalsey and Mr. Larry Hillblom in July 1969. Dalsey was a sales person and Hillblom was a flying courier, thinking about his recent $3,000 stock market earnings for investment. “Let’s start a new company.” was the idea that came into their minds. A real estate associate Lynn joined them, and DHL began its first courier service between the West Coast of America and Hawaii.
It is on the basis of the owners’ names the name of the organization was suggested.
Dalsey Hillblom Lynn
DHL’s first customers were the shipping companies, that required a service of early delivery of the shipping documents to reach their clients before the shipment it self, to make it easy and less time consuming. The banks that used company’s services of overnight delivery to beat the postal system and to ensure a safer transport of documents and cheques worth million of dollars.
By the time passing the rapidly growing network of enthusiastic customers in the USA, DHL begins to meet demands for an international service by opening territories in the Far East and Pacific Rim. DHL’s success provokes an envious response from rival companies and it has to fight a legal battle to stay in business. But this doesn’t stop further expansion: a separate company, DHL International Ltd., is established to focus on meeting the ever-increasing demand for international door-to-door deliveries.
The start of 80s marks a focus upon reliability, control, ease of billing, and flexibility of service: qualities which DHL meets customer needs to this day. To make sure the increasing size of DHL can still be managed effectively; a team of internal global strategies is formed to co-ordinate worldwide activities.
After thirty years of expansion there is few new territories left for DHL to move into. Instead the company concentrates on improvement by opening new service centers, forging new business partnerships and introducing new technology.
The company has its head quarters situated in Brussels, Belgium. Though it’s an American based company, still it has its head office in Europe due ownership specific reasons.
Around the world, the people at DHL remain committed to providing the fastest, most reliable and flexible door to door express delivery service their customers can buy. For more than thirty years DHL has set the pace in their industry. As their customer’s needs have changed, as they have been among the first to enter new markets such as China or Eastern Europe, DHL has developed innovative logistics solutions which both support their business and help them increase the value they offer. And today that means much more than simply ensuring that time sensitive documents, packages or freight arrive safely, on time, every time. More than ever DHL works in partnership with their customers often as an integral part of their business supply chain. Over the past three years it had invested more than US $ 1.5 billion worldwide in their people and additional state of the art handling, distribution and information systems, transportation equipment and facilities. That investment provides their entire customer’s with access to unrivalled infrastructure for the transfer of goods at a reasonable cost. So now DHL can do even more to make express delivery easier. For some customers DHL now handle a number of critical business functions from start to finish. For others their express logistics facilities increase efficiency quite substantially, creating benefits which can be passed to their customers. DHL aims to be acknowledged as world leader in express delivery, establishing industry standards of excellence for value and money. Nobody words harder to anticipate customer delivery needs than DHL does. Nobody understands those needs or the importance of promises made to customers better than DHL does. It’s that understanding which forms the bedrock of DHL’s customers’ continued satisfaction and their own success. So customer can be sure that if it matters to them, it matters to DHL.
Leading The Way In Air Express
DHL business, the first of its kind was founded in 1969 by three Americans, Dalsey, Hillbom and Lynn in response to delivery problems in the ocean cargo industry. By ensuring the delivery of paperwork before a consignment arrived in dock, DHL significantly reduced turnaround and total transit times. The vision grew to include the provision of worldwide express delivery service for large or small shipments by the most efficient means possible.
Exceeding Expectations
The benefits to DHL’s customers and their own customers were immediate. They have had a lasting effect on the way they continue to develop their services. Their customers expect the fastest possible transit times for their shipments; that every aspect of working with them will be straight forward; and that they will provide practical logistics solutions which help them achieve their commercial goals. DHL remains committed to exceeding those expectations wherever possible.
Global Solutions
As DHL’s markets have expanded, so the importance of technology in answering customer needs has grown at an exhilarating pace – likewise the need to develop individual, global solutions for a growing number of businesses with sites and customers throughout the world. For customers in the hi-tech industry for instance, or car manufacturers operating just-in-time methodology, the ability to transport samples or parts to the right place at the right time whenever necessary is critical to their success.
Heavy weight Capabilities
Increasing our heavyweight capabilities, particularly multiple piece shipments, has been another key element in DHL’s successful response to customers’ changing needs. Investment in improved ground coverage, hubs, IT and DHL air network plays a significant role. For instance, more fast direct routing has enabled DHL to provide heavyweight services from the US to Guadelajara and between Brussels and Gothenburg, at the same time increasing DHL already high service standards for smaller shipments.
Working with CUSTOMERS
To raise DHL global response even further DHL created a Network Global Account programme. Working closely with specific DHL customers whose businesses are truly global, the management teams’ prime responsibility is to develop and implement solutions appropriate for worldwide operations. The benefits to DHL customers are many and varied, depending on customers individual needs and the particular solutions developed. In any situation, however, by working to achieve more efficient distribution, costs in the supply chain are reduced and overall customer service improved.
Chronology
1969
Adrian Dalsey, Larry Hillblom and Robert Lynn (D,H, and L) create an entirely new industry. DHL is founded and begins operations. Starting door-to-door express service, its first courier route was between the West Coast of America and Hawaii.
1970
DHL is the first international express delivery company to introduce on-board couriers making customs clearance quicker.
1971
Expansion in the Pacific Basin continues with service to the Philippines.
1972
Service to Japan, Hong Kong, Singapore and Australia is initiated.
1973
DHL uses its substantial experience and expertise in the international air express industry to expand into Europe.
1976
The Expansion of the USA Postal Monopoly to Cover Electronic Commerce, written by DHL founder Larry Hillblom, is published and helps prevent the US Postal Service having a monopoly covering electronic commerce.
DHL begins service to the Middle East and establishes a strong presence in Saudi Arabia.
1977
Service to Latin America is initiated.
1978
DHL introduces DHL 1000, the first word processor to handle both English and Arabic languages.
DHL begins service to Africa.
1979
DHL successfully challenges the postal monopoly in the US, allowing it to ship time-sensitive documents.
1983
DHL introduces Laser Net – the first track and trace system – making DHL the largest IBM System 36 customer in the world.
DHL is the first to bring international air express service to the Eastern European countries. DHL opens its U.S. hub in Cincinnati International Airport.

1984
DHL succeeds in getting the French postal monopoly on letters abolished.
1985
DHL opens its first European hub in Brussels (Belgium), - still the largest express industry sorting centre outside of the USA.
1986
DHL signs an historic agreement with the Chinese government to establish a joint venture between DHL and Sinotrans.
DHL forms a joint venture with the People’s Republic of China and is the first to bring international air express services to that country.
1987
DHL challenges the Italian postal monopoly and customs procedures ensuring that its business is free from postal tariffs and delays.
1988
DHL Net, a high-speed global communications network used for shipment tracking, is established.
1989
Brussels hub is expanded into a “superhub” to keep up with rapid growth in international shipments.
1990
DHL sets up its first Express Logistic Centres (ELCs) giving customers the opportunity to provide next morning delivery of inventory anywhere in the world.
DHL forms a strategic business alliance with Japan Airlines, Lufthansa, and trading company Nissho Iwai.
1991
DHL establishes a computer link with HM Customs at London Heathrow Airport cutting clearance times by up to 50%. It becomes the model for other countries. DHL is the first air express network to re-establish service to Kuwait after the Gulf War.
1992
Service to Albania, Faroe Islands, Greenland, Estonia, Latvia and Lithuania is introduced.
1993
Special service ‘ECX’ is launched for the newly formed European Single Market.
DHL announces a 4-year $1.25 billion worldwide capital spending program. The investment is to be made principally in handling systems, automation, facilities and communications and computer technology.

1994
DHL opens new facilities for gateways and customer service centres in Athens, Bombay, Delhi, Hong Kong, Kuala Lumpur, Moscow, Osaka and Sydney. DHL opens a regional distribution centre in Bahrain, making it one of the largest international air express sort centres in the world. This expansion enables faster shipment processing and earlier delivery to 16 countries in the Middle East. DHL celebrates its 25th anniversary.
1995
DHL launches its corporate website www.dhl.com
1996
DHL becomes the first air express company to receive ISO 9002 for its Hub and airline operations at the US Hub in Cincinnati, Ohio. A state-of-the-art automatic sort system is introduced at DHL’s Brussels Hub.
1998
Deutsche Post becomes a shareholder in DHL.
1999
An investment of Euro 1.3 billion to purchase a new fleet of Boeing 757s, means DHL now operates the quietest and most advanced air express network in the world.

2001
New technology for shipment tracking was introduced. i.e .m-track. While this technology has made shipment tracking more easy. SMS is sent to trace the shipment where customers get automatic reply.

Mission statement
DHL will become the acknowledged global leader in the express delivery of documents and package. Leadership will be achieved by establishing the industry standards of excellence for quality of services and by maintaining the lowest cost position relative to our service commitment in all market of the world.
Achievement of the mission requires:
Absolute dedication to understanding and fulfilling our customer’s needs with the appropriate mix of services, reliability, products and price for each customer.
Ensuring the long-term success of business through profitable growth and reinvestment of earnings.
An environment that rewards achievement, enthusiasm and term spirit, and which offers each person in DHL superior opportunities for personal development and growth.
A state of art worldwide information network for customer billing, tracing, tracking and management information and communications.
Allocation of resources consistent with the recognition that we are one world wide business.
A professional organization able to maintain local initiative and local decision making while working together within a currently managed network.
The evolution of our business into new services, markets or products will be completely driven by our single-minded commitment to anticipating and meeting the changing needs of our customers.

Departments in DHL
v Human resource and administration Department
v Service Department
v IT Department
v Finance Department
v Sales and marketing Department

Location
The process of determining the geographical area for a firms operation:
1. Factor must be sensitive to location.
2. Factor must have impact on the company’s ability to meet its goal.
Whenever the service organization choose a new location, it involves a series of steps.
1. Identifying the important location factors and categorize them as dominant and secondary.
2. Consider the different cities and narrow choice to specific location in city.
3. Collect data on alternatives from location consultants, state development agency and chambers of commerce.
4. Analyze the data collected beginning with quantitative factors. Factors that can be measured in dollar such as annual transportation cost (inbound and outbound shipment).
5. Bring the qualitative factors pertaining to each site into the evaluation. Qualitative factors cannot be measured in dollar terms, such as quality of life.
DHL in Pakistan
DHL is a Pvt. Ltd. Company and is registered under companies ordinance 1984. Major portion of shares is held by the Local investors while DHL international has 49% shares in the ownership.
There are five country managers. These country managers are looking after their areas of work. These country managers are directly answerable to the Director. Whenever critical decisions are made. A meeting of country management team is held and the important decisions are taken with consensus.
DHL Multan Region Office
Site specific features
Dominant factors

Proximity To Customers

Their potential customers are the exporters. And they have their units and offices in industrial area. So their office in Cantt. is near to their potential customers. LCs documents from the branches in Cantt.

Transportation cost

Their outbound transportation cost is minimum. Because the airport is near to their office. They sent cargo on their own vehicles.
Location of competitors
Their competitors are Fed Express & TCS. Their offices are on the Kalma Crossing.
Site specific factors
Most expensive area of Multan is Cantt. Secondly their customer come on cars and cargo come on wagon. So, traffic flow is also good there.
Secondary factors
It may also include “qualitative factors”. They have a very good repute in market. The quality of life in Cantt. is good. They want area that will be helpful to maintain their image. So, Cantt. is really helpful to them.

Capacity
Their maximum capacity is 8870 tons approximately on their own aircrafts carriers. And with the help of agreements with other “International Airline Companies” they can handle upto 15,000 tons
Number of countries/territories
Europe/Africa
130
Asia Pacific/Middle East
40
The Americas
58
Total
228
Number Of Offices
Europe/Africa
1,350
Asia Pacific/Middle East
3,424
The Americas
1,165
Total
5,939
Number of Employees
Europe/Africa
32,037
Asia Pacific/Middle East
17,732
The Americas
18,963
Total
68,732

Number of Courier Vehicles
Europe/Africa
7,266
Asia Pacific/Middle East
4,026
The Americas
4,034
Total
16,326
Number of Owned/Leased Aircrafts
Europe/Africa
122
Asia Pacific/Middle East
7
The Americas
125
Total
254
Number of Hubs & Sub-Hubs
Europe/Africa
16
Asia Pacific/Middle East
3
The Americas
17
Total
36

Forecasting
Forecasting is the prediction of future event used for planning purpose.
There are two types of forecasting methods.
1. Qualitative methods.
2. Quantitative methods.
Qualitative methods
Qualitative methods include judgement methods which translate the opinion of managers, experts opinion into quantitative estimates.
Quantitative methods
i. Casual method
ii. Time series analysis
Casual method use historical data on independent variables. Time series analysis relies heavily on historical demand data to project the future size of demand and recognizes seasonal trend and patterns.
A key factor in choosing the forecasting method is the time horizon.
Dhl forecasting method
DHL makes the forecast monthly by using the “Trend Adjusted Exponential Smoothing Method”.
And then combine each month forecast to get the Annual Forecast.
They do the forecast in start of the year for their operating plan.
Aggregate planning
Aggregate plan concerns with all types of product manufacturing.
In services organization it is called staffing plan.
Staffing plan
It present the number of type of employees needed to meet the objectives of the annual plan.
Planning process
1. Determining demand requirements
2. Identifying alternatives, constraints and costs
3. Implementing and updating the plan
DHL hires a large number of employees for its package sorting hub. The work is hard and routine, and the hours are long. The high level of productivity demanded by DHL occasionally generates complaints from Teamsters Union members. When faced with the alternatives of hiring full-time or part-time employees so that they can train them and, by means of thoroughly researched process and job designs, instill a strong sense of teamwork and job satisfaction. Although the work is demanding, DHL typically has many more applications than openings when it recruits employees.
Supply Chain Management
Supply chain management is just as important for service provider as for manufacturer. Service providers must purchase the equipment, supplies and services they need to produce their own service.
In DHL buying the equipment and supplies depends upon two things.
1. Level of expense
2. Emergency
Level of Expenses
Limitation is given for purchasing from petty cash to service centre manager. It is up to Rs. 2000.
If the level of expense is more than this then head office provides the required equipment and supplies.
In Multan office they need four computers. It is provided by IT Department. Computers came from Karachi.
Emergency
It also depends upon emergency. If they need the equipment urgently then service centre manager takes the quotation from market and scanned it to head quarter. The quotation that proves by head quarter they make the purchase accordingly to that.
Process of delivering
Their service is doen door to door. From pick up till delivery of shipment it involves a series of steps.
1. Pickup scan
a) Security check
b) Documents
c) Airway bills (two copies one is given to customers and other with the shipment).
d) Check time.
2. Check in scan
Station reaching time. Here operations takes place with shipment.
Two types of shipments.
i. Documents
ii. Commercial Shipments
Documents Commercial Shipments
Weight measure Invoice
Box Form E
Packing Weight measure
Jacket fits at the top of box Box
Packing
Jacket fits at the top of box
Airway bill and other relevant documents placed there.
1. Forward it to gateway
i. Pick Up Scan
ii. Processing.
a) Custom Check
b) Custom clearance
2. Next Forward
Hub or destinations. Depends upon the earlier availability of flighty.
3. Reached there
a) Custom arrival
b) Custom process
c) Custom clearance
Then send to gateway.
From gateway to station.
1. Check in scan
With courier at time. Deliver it to the door of customer (hand over to party).
International document tariff for accounts customers (non-dutiable)
Weight in (KG)
Rate Zone In US $
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Zone 7
0.5
26
26
27
31
32
32
33
1.0
42
42
45
50
53
53
54
1.5
55
57
61
67
72
72
73
2.0
57
59
64
70
75
75
76
2.5
60
62
67
74
79
79
80
3.0
63
65
70
77
82
83
84
Add. 0.5 Kg
3
3
3
3
4
4
4
International parcel tariff for accounts customers (dutiable)
Weight in (KG)

Rate Zone In US $

Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Zone 7
1
48
48
48
54
54
59
68
2
54
54
55
62
63
68
77
3
60
60
62
69
71
77
86
4
67
67
69
76
80
86
95
5
73
73
77
83
88
95
104
6
79
79
84
91
97
104
113
Add. 1 Kg
6
6
7
7
8
9
9
General sales tax: general sales tax (GST) is charged as per sales tax act.
Transit time zone:
Zone A Next Day
Zone B 2nd Day
Zone C 3rd Day
Zone D 4th Day
Above transit times are based on cut off times applicable to courier pickup and are reflective of actual working days and contents being shipped.
Terms and conditions of carriage
All services provided by DHL, are subject to terms and conditions, as stated on the reverse side of the shipper’s copy of the DHL Airwaybill.
Insurance
Insurance is available on all shipments at a premium of 2% of the declared reconstruction value of the shipments.
Volumetric weight:
Where the shipment exceeds the standard size, the weight will be calculated as:
Height ´ width ´ length (cm)/6000
The calculated weight will compared to the actual weight and the higher of the two be charged.
International destinations
(jumbo junior, jumbo box and mega box)
Zone 1
Zone 2
Zone 3
Zone 4
Bahrain
USA
Hong Kong
Kuwait
United Kingdom
Singapore
Qatar
Canada
Australia
Saudi Arabia
Austria
Indonesia
UAE
Belgium
Korea, South
Oman
Germany
Malaysia
Jordan
France
New Zealand
Lebanon
Netherlands
Taiwan
Syria
Spain
Thailand
Yemen
Denmark
Vietnam
Italy
Sri Lanka
All other DHL
Switzerland
Bangladesh
Destinations
Cyprus
China
Turkey
India
Andorra
Myanmar
Ireland
French Polynesia
Norway
Philippines
Sweden
Pacific Islands
Finland
Brunei
Marshall Islands
Bhutan
Laos
Maldives
Nepal
US $ tariff for jumbo junior, jumbo box and mega box
Zone
1
2
3
4
Middle East
N. America & Europe
Asia
Rest of the World
Jumbo Junior
Flat fee upto 10 kgs
Additional kgs
70
5
79
5
89
6
102
6
Jumbo Box
Flat fee upto 25 kgs
Additional kgs
113
5
128
5
143
6
157
6
Mega Box
Flat fee upto 35 kgs
Additional kgs
163
4
179
5
200
5
221
5
Jumbo junior: 41 (L) r 34 (W) r 25 (H) cm (Max. weight allowed 15 kgs).
Jumbo Box: 45 (L) r 48(W) r 40 (H) cm (Max. weight allowed 40 kgs).
Mega box: 53 (L) r 48(W) r 57 (H) cm (Max. weight allowed 50 kgs).
Terms and conditions
Junior jumbo, jumbo box and mega box must not contain DHL prohibited or restricted commodities. No reduction in charges for shipments weighing less than 10, 25 and 35 kilograms sent in a jumbo junior box, jumbo box and mega box respectively.
Transit times
Zone 1 48 hours
Zone 2 48-72 hours
Zone 3 48-72 hours
Zone 4 96 hours
Above transit times are based on cut off times applicable to courier pickup and are reflective of actual working days and contents being shipped.
International destinations (heavy parcel express)
Zone 1
Zone 2
Zone 3
Zone 4
Bahrain
USA
Hong Kong
Kuwait
United Kingdom
Singapore
Qatar
Canada
Australia
Saudi Arabia
Austria
Indonesia
UAE
Belgium
Korea, South
Oman
Germany
Malaysia
Jordan
France
New Zealand
Lebanon
Netherlands
Taiwan
Syria
Spain
Thailand
Yemen
Denmark
Vietnam
Italy
Sri Lanka
All other DHL
Switzerland
Bangladesh
Destinations
Cyprus
China
Turkey
India
Andorra
Myanmar
Ireland
French Polynesia
Norway
Philippines
Sweden
Pacific Islands
Finland
Brunei
Marshall Islands
Bhutan
Laos
Maldives
Nepal
Duty charged by destination customs is paid by the consignee
US $ tariff for heavy parcel express

HPX

Heavy Parcel Express

Destination
Up to 50 kgs
Additional kg
1
228
3
2
252
4
3
276
5
4
300
5
Maximum weight upto 500 kgs.
Terms and conditions
Heavy parcel express, must not contain DHL prohibited or restricted commodities. No reduction in charges for shipment sent using this service.
Transit times
Zone 1 48 hours
Zone 2 48-72 hours
Zone 3 48-72 hours
Zone 4 96 hours
Above transit times are based on cut off times applicable to courier pickup and are reflective of actual working days and contents being shipped.

Competitive priorities
DHL’s competitive priority is on time delivery. On time delivery measures the frequency with which deliver time promise are met.
Their mot is “Latest Pickup and Earliest Delivery”.
What they do is they have agreement with almost all international airlines in the world. They give priority to their shipments. e.g. If someone want to send his shipment to America from Multan they choose the earliest flight available then send it to their Hub. Form Hub it will directly go to America on their own courier Aircraft.

Quality
Quality ensures that it will meet specification. It is really very difficult to measure the quality of services. Because services is intangible.
In DHL quality is measured through on time delivery and information about the shipment status.
Previously they are offering only one track – e-track. But now they are also offering m-track.
E-Track
in e-track customer know about the shipment status through internet. Just go to their number web site enter the airway bill of shipment. And it will tell you about the latest status.
When the shipment release from its host airport the sort system relays information back to the computer in the control room. As each shipment is recognized, its arrival is acknowledged and this date is transmitted back to the country from which it has been sent.
Within seconds the customer service agents in the country know that the shipment has been sorted. They are also updated when the shipment has been allocated its onward flight number. When that flight leaves with the shipment on board the system once again updates DHL computers world wide. But in the whole procedure the customer must have access to computer and internet.
M-Track
but now with the help of m-track they give more comfort to customer. By using mobile phone at any where in the world they know about the status they know about the status of their shipment.
Another fast and convenient tracking tool
DHL m-track offers yet another way to track your shipments via wireless network. This is DHL’s latest innovation designed for use with any kind of mobile phone, that supports sending/receiving of text message (SMS).
SMS stands for short message services exchanges between the SMS-Center of the Mobile Telecommunication Operator and the Customer. SMS is the most widely deployed wireless technology used in GSM, CDMA & TDMA networks across the world. Short Messages is an easy, cost effective and convenient way of communicating “limited” information between mobile users and via SMS centres.
DHL m-track is ideal for they busy executives who needs to access the status of their DHL shipments at any time, whether in or out of the office.
DHL m-track reuses the DHL web track applications to provide DHL shipment tracking for single airway bills. Like DHL itself, it is reliable and accessible.
Efficient and cost effective
DHL m-track costs only the minimal charges for the initial Short Message (SM) to request shipment status information.
The changes vary from country to country from network to network and from subscription to subscription, but the cost for international SM is usually the same as a local SM. As our valued customer, your shipment status will be delivered free of charge, sponsored by DHL.
Access DHL m-track any time, anywhere
These days, users generally access DHL information services through a PC or other fixed terminals with internet access. DHL m-track allows you to access a DHL service wherever you mobile phone can make a GSM call. You will benefit from greater service access 24-hours a day, form almost.
Track your shipments wherever you are
Using DHL m-track is as simple as sending any other short message.
Just follow these steps to track a shipment.
v Select “Send SMS” from the mobile phone menu.
v Key in a DHL airway bill number.
v Send the message to the DHl m-track phone number: +44 7720 33 44 55 (DD HH LL on the mobile’s keypad).
The latest shipment status of up to 160 characters per message will be received within 10-60 seconds.

TQM
Leader ship in action
Total Quality Management (TQM)
As the acknowledged global leader in express distribution and logistic services, DHL is continuing to set industry-leading standards for Total Quality Management.
TQM is not any technique. It is basically a philosophy. It revolves around one thing “customer satisfaction”.
How this customer satisfaction will achieve.
1. It will achieve through:
a) Employee involvement.
b) Continuous improvement.
For employee involvement DHL gives the training to its employees with the passage of time.
Their “Human Resource Department” arranges the training for their employees. Almost twice a year they offer training to their employees.
Awards and rewards
They also give rewards to stations. If station achieve their revenues up to certain level. Then reward in cash is given to station which is distributed among the employees according to their position.
Continuous Improvement
This will be achieved though:
1. Understanding customers’ needs and expectations.
2. Exceeding their promises and commitments.
3. Defining new industry service levels.
This will be supported by continuing their investment in people, technology and infrastructure within the region.
This will be maintained by the systems and procedures that are in place throughout our organization to optimize quality, reliability and consistency in their activities.
They must all be dedicated to this mission. DHL’s reputation depends on all of them working as a team to satisfy and retain the single most important person in their business.