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In Tune with Technology – DHL Technology Sector Week

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In Tune with Technology – DHL Technology Sector Week

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DHL Technology Sector

DHL Technology Sector

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Welcome to the exciting world of technology, one of the key sectors we serve at DHL! To highlight some of the particular characteristics and supply chain requirements of this industry, as well as DHL’s unique capabilities for the sector, we have launched Technology Sector Week. Each day during this week, we will take a closer look at the distinctive needs and attributes of the technology industry, as well as at DHL’s tailored strategy towards the sector, as we stay “In Tune with Technology.” As a recognized-thought leader in the industry, we will highlight a number of DHL’s key strengths in serving the sector, with a new focus each day of the week. Please explore our offering and stay “In Tune with Technology” with DHL!

Technology Week

Day 1

Technology Trends today

Technology is all around us and influences everything we do – in our work and in our spare time. We depend on it in so many aspects of our daily lives – from the web and email, to mobile communication and entertainment devices, even to our car’s electronics to get us safely to our destinations, not to mention healthcare, and much more.

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This is a fast-paced industry characterized by constant innovation and short product cycles – in some cases, not unlike the fashion business. It is made up of large corporations, niche players and up-and-coming heroes. Competitive markets are the norm, with ever-falling product prices requiring effective cost management.

With change the only constant, technologies are converging, sales and distribution channels shifting, and new markets opening up all the time. Several disruptive new technologies will further fuel the pace of change. All of these technology advances and market shifts will have far-reaching consequences on business and society, and will have a huge impact on technology supply chains. This week, we explore the challenges and opportunities in the global technology market and the supply chain solutions that help companies in the sector keep up with consumer demand and stay ahead of the competition.

Connecting the Dots for the Technology Sector

The technology market has never been livelier and our focus on the sector at DHL is really starting to show dividends for our customers. We are taking this opportunity of Technology Sector Week to tell you more about what we’re doing for this industry.

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Things move fast in technology. Success depends on speed and cost, because products age as quickly as consumer tastes change.

DHL has a strong footprint in the technology sector, built on long-term customer relationships, global presence in mature and emerging markets, and a broad range of solutions and services delivered by all business units in the Deutsche Post DHL group.

Add to this our experienced technology community with proven supply chain expertise and I think we have a pretty good shot at realizing our goal to be the logistics provider for the technology industry.
Scott Allison
SVP Global Sector Head Technology Sector

PCs & Notebooks and EMS

Cloud computing, takeovers, and consumers who want it all now: that is life in the world of PCs & notebook computers. For their part, EMS (electronic manufacturing services) companies face the challenge of increasing cost pressure and are thus looking for more efficient ways to manufacture technology products.

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Things change very fast in this subsector and companies shift their business focus amazingly quickly. One driver is certainly cloud computing, which will impact functionality of devices. There are big changes underway right now in the way software is distributed, too.

Leading PC & notebook companies share the vision that consumers can use software on demand. In terms of what these changes mean for logistics, DHL has traditionally been strong in shipping materials and finished goods through our network using air freight or ocean freight. Time to market is essential in this subsector, so direct distribution solutions are high on the supply chain agenda. We have also created regional gateways for customers, where we ship goods in bulk, then separate them for their different destinations and further distribute them to final customers. That cuts transit times and improves CO2 efficiency.

We're also seeing changes in terms of production locations. Of course there are challenges in the emerging markets, like customs regulations and security issues, but DHL is well placed to help customers with end-to-end supply chain solutions there. We also provide these customers spare parts logistics (SPL) services and are growing these capabilities, including providing repair services. In sum, our PC & notebook customers are moving fast, and they need a supply chain partner that is just as fast and responsive.

Day 2

Enabling Growth

Much of the growth in technology is driven by new innovations and improved technical capabilities, along with expansion into new markets and business segments. With burgeoning middle classes eager to spend on technology products, emerging markets hold the highest growth potential for the technology industry.

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Speed, reliability and reach are critical factors in the technology supply chain, in order to capture revenue opportunities and growth potential. The sector’s supply chain partners are also expected to ensure reliable execution under all circumstances.

Product launch expertise, where alignment of supply chain and marketing campaigns is crucial, is a further key requirement. In addition, the capability to support service-related supply chains with repair and return options, for instance, plays an integral part in providing end-to-end supply chain solutions.

Enabling Growth for Technology Customers

By understanding and focusing on customer needs in the technology sector, DHL is in a better position to enable their growth, particularly in emerging markets.

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Technology is a key indicator of the health of the economy and is primarily driven by consumer demand, which we are able to measure across multiple industries. Therefore, we place a significant focus on this sector at DHL and, as such, our ability to service multiple parts of this sector’s supply chain in order to satisfy consumer demand.
Despite the challenges we face in the global economy, we still see significant opportunities in the mature economies.

In the emerging markets, such as Africa, the Middle East, Russia and the CIS, and Latin America, we see substantially more opportunities for growth, as our technology customers migrate their focus to these more profitable markets. Because we have long operated in these markets,

we have a wealth of local and regulatory knowledge within DHL.
By partnering with our customers, we are able to mitigate many of the supply chain challenges often associated with these markets, allowing our customers to focus on their customers.
As a result, our technology customers profit from better connectivity, higher security, better visibility and better transit times. It's a winning combination!
Stuart Whiting
Head of Global MNC, DHL Express

Mobile Devices and Networks

While volatile demand remains a challenge, there are opportunities for the mobile devices and networks subsector to be found in emerging markets like Africa, as well as in integrating repair into the supply chain.

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In the mobile devices and networks subsector, the end customer clearly drives the supply chain challenges and cost, while extreme demand volatility is a reality, as competition is fierce and product availability often influences last-minute decisions by consumers.

Companies in this subsector need to work more closely with the end customer from a logistics point of view to iron out some of these issues - and this is an area where DHL can help by facilitating this dialogue and providing more flexible supply chain solutions.
Flexibility, scalability and agility are key in this changing market. At DHL, as a leader in this service arena, we will continue to invest in capabilities to serve the aftermarket, including repair services integrated into the distribution model.

Day 3

Lean, Fast & Flexible

Demand for technology products is largely driven by the health of the economy and consumer spending. The latter is often seasonal, linked to other products, or, increasingly, influenced by social media – all making sales less predictable.

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In addition, long supply chains are highly exposed to disruption such as natural disasters or labor fluctuations. Under these challenging circumstances, supply chain flexibility is crucial.

More Efficiency and Flexibility

Tapping new sources of cost efficiency while increasing flexibility in the supply chain are key ingredients to success in the technology sector.

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In the world of technology, as prices drop, there is a huge squeeze on margins, so companies are looking to reduce costs in the supply chain. Thus, while revenue maximization is key in the early stage of a product, a highly cost-efficient and flexible supply chain is needed to safeguard margins when product prices are falling.

At the same time, many technology companies are looking to manage their supply chains, including aftermarket logistics, from a global perspective. This means consolidating and globalizing the suppliers and strategy.

These companies are finding that, by partnering with DHL, they can tap into these new sources of efficiency and flexibility through our full range of technical services, including repair & return, service parts logistics, and recall solutions.
Jim Mulhern
SVP, Global Head of Business Development, DHL Global Forwarding

Imaging, Printing & Enterprise Computing

Nothing stays still in this subsector. Software companies buy hardware companies and vice-versa; technology develops and then becomes out of date; even in difficult economic times, it’s very dynamic.

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Thus, while we are seeing consumption slowing in the US and Europe, business customers are nevertheless upgrading their IT systems and data management, and spending on this infrastructure to ensure better efficiency and a competitive edge.
Supply chain risk is something companies in this subsector are very sensitive to - whether from natural disasters, geopolitical unrest, or fuel price fluctuations - and are looking for ways to de-risk the supply chain.

Most companies, however, continue to want the cost benefit of offshoring, while spreading the risk more and increasing flexibility by holding some inventory in the region of consumption.
Companies are also looking to maximize return on the product in after-sales support and service parts, as well. As part of our spare parts logistics offering at DHL, for example, we commit to providing spare parts to our customers within two to four hours. DHL Freight brings spare parts to stock locations, and DHL Express then delivers the urgent spares to the engineers to make the repairs or maintenance.

Day 4

Simpler, safer, more secure

Technology products tend to be high-value goods, which call for appropriate security of the supply chain to minimize losses. It is estimated that theft on commercial vehicles in Europe amounts to EUR 8.2 billion annually, and technology products are a primary target.

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Full visibility across the end-to-end supply chain is essential, therefore, so that high-value goods can be tracked more easily and corrective actions can be initiated proactively.

Moreover, many technology firms do not actually touch or see their product themselves anymore, before it makes its way to their end customers. So, ensuring their brand is protected by providing them with the peace of mind that their products are in safe hands is all-important. Logistics providers, therefore, need to be able to offer global supply chain management, lead logistics provider (LLP) and control tower solutions, harnessing advanced, end-to-end visibility tools.

A wide Range of Solutions for Technology Customers

Achieving visibility in the supply chain is the key to both simplifying otherwise complex logistics set-ups and to ensuring shipment security.

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Customers need full visibility across the end-to-end supply chain so that high-value goods can be tracked more easily and corrective actions can be taken immediately.
At DHL, we provide our technology customers with global supply chain management, LLP and control tower solutions, employing our sophisticated, end-to-end visibility tools. In fact, we recently rolled out the DHL High Value Freight solution for less than truckload (LTL) shipments across Europe, to complement the full truckload (FTL) service.

We also offer the visibility and security of realtime tracking of ocean-going containers through our DHL Ocean Secure service.
Gio Theunissen
DHL VP Technology

Consumer Electronics

The consumer electronics subsector faces a number of challenges and opportunities when it comes to maximizing efficiencies. Low-cost, contract manufacturing remains a key doctrine, while more efficient distribution solutions are gaining traction.

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With 40% of global manufacturing still in China, many technology companies have taken note of the country’s push to encourage manufacturers to move away from the traditional developed zones towards the west – the so-called “Go West” policy.

Questions remain for many businesses, however, over the cost implications, skills of the available labor pool, carrier capacity, and the legislative and regulatory environment.
Companies need to conduct a thorough cost/benefit analysis and monitor the situation with their respective suppliers and partners. At the same time, many consumer electronics companies are taking a closer look at their distribution models and considering more innovative and efficient solutions.
Late configuration in the supply chain is another area of interest, given that regional and national customization is unavoidable, and that time to market is a factor in determining what is configured where.

Again, this is an area where we are opening up a new dimension of possibilities, including through our end-of-runway Center of Excellence coming into operation in Leipzig in Q2 2012. In all of these areas and more, we are working closely with consumer electronics customers to open new frontiers in supply chain efficiencies.

Day 5

Preparing for the Future

As we have seen this week, there are a number of global and industry trends affecting the technology sector and its companies’ supply chains.

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To be successful in future, these companies will need to be ready to adapt their business approach and supply chain strategy if they are to stay on the crest of these trends, and not miss the next wave of change.
While manufacturing long ago shifted to Asia, the epicenter of consumer demand is shifting to new growth areas in Asia, Latin America, the Middle East and Africa. Simultaneously, recent events have demonstrated the vulnerability of complex and far-reaching supply chains to external forces.

Some companies, for instance, are considering bringing production back from the other side of the globe and closer to customers, with less risk of disruption to the supply chain.
Understanding the needs and differences in customer buying behaviors allows targeted alignment of service levels and is the blueprint for a new business model for corporate supply chains. Companies with the vision to perceive market shifts and understand the importance of adapting their business and supply chain strategies to meet these challenges and opportunities, will be the winners of tomorrow. They also understand that this task is much less daunting if they have a supply chain partner with the same vision.

Consumers drive Change

Increasingly, technology is driven by the consumer’s needs and wants, while consumers, in turn, have much greater choice. Beyond hardware, software and brand are major differentiators.

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As our customers change with this evolving market, we can help by paying more attention to what they need – and what their customers need.
Consumer demand and product innovation drive shorter lifecycles. New products can quickly become commodities, where the only differentiator is price. As our customers change with this evolving market, we can help by paying more attention to what they need - and what their customers need.
Consumer demand and product innovation drive shorter lifecycles.

New products can quickly become commodities, where the only differentiator is price. Almost half of the 2011 Top 20 list are from the technology sector, including such leading brands as Apple, DELL, Cisco, Microsoft, Intel and HP.

They all have been acknowledged for their leadership in demand driven supply chains, which allows them to stay close to their customers with innovation in product development and operational excellence in their supply chain - and DHL is passionate about supporting them in this, going forward.
Kerry Mok
SVP, Global Head of Technology and Asia Pacific Service Logistics & Technology, DHL Supply Chain

Semiconductors

Because semiconductors are inputs to various electronic and consumer goods – from computers to cars to home appliances – the health of the subsector depends on consumer demand for these finished goods.

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The manufacturing of semiconductors includes several steps, from sourcing, to testing, before final distribution to end customers. At DHL, we’re committed to really understanding semiconductor customer needs and providing end-to-end solutions.

DHL has established a best-in-class supply chain process and competency center with dedicated, highly qualified resources. This solution set combines premium customer service with expertise in air, ocean, road, rail and customs formalities, global reach and online, realtime visibility of critical shipment touch points. Already operational since early 2011 for a major semiconductor customer, the next phase will be to make the advantages of the Capital Equipment Competency Center available to other semiconductor customers.