Supply Chain

SUPPLY CHAIN SOLUTIONS TAILORED TO YOUR NEEDS

visit www.dhl.com/supplychain

Understanding trends and challenges � � � � 4DemographicsSustainabilityGlobal economyPoliticsTechnology

Key industry dynamics � � � � � � � � � � � � � � 6AutomotiveConsumerEnergy & ChemicalsLife Sciences & HealthcareRetailTechnology

CONTENTSOur offering puts you in the lead � � � � � � 7

Plan – laying the foundationsSource – getting the materials you needMake – manufacturing the productDeliver – getting it where it needs to beReturn – receiving the support when it’s neededWarehousing services Transportation servicesManagement servicesValue added services

Our unique capabilities � � � � � � � � � � � � 12

Creating a competitive advantage � � � � 14

UNDERSTANDING TRENDS AND CHALLENGES

4 Trends and challenges

The growth of megacities Currently, about half the world’s population lives in urban areas, and by 2030 it is expected to reach 60%� This will drive demand for products, as well as forcing up the price of raw materials and food to supply these areas� To cope with these demands, megacities will need a well-structured transportation system with an improved infrastructure�

Ageing populationsPopulation ageing is happening across the world but is most advanced in highly developed countries� It occurs when the median age increases due to rising life expectancy and/or declining birth rates� This is leading to increased healthcare costs, higher demand for food supplies and an elderly generation with more buying power than ever� With fewer young people, it could be difficult to secure new talent for your workforce�

Expensive raw materials Declining natural resources, market fluctuations and local taxes have significantly increased the cost of fuel and raw materials� This has driven up manufacturing and transportation costs across all industries and inflated prices for consumers� This trend is influencing sourcing and buying behavior, and is forcing companies to rethink how they buy raw materials and manage the first stage of the supply chain�

Increased focus on sustainability Due to the increase in CO2 carbon emissions, companies need to be transparent about the eco-friendliness of their products by employing CO2 labeling� Sustainability will become a key buying criterion, with carbon emissions having a price tag� Both governments and consumers now demand sustainable business practices and environmentally friendly, ethically sourced products� However, while 40% say they want environmentally friendly products, only four percent actually buy them� This presents a major opportunity for companies that can optimize supply chain efficiency and make green goods accessible to more price-conscious consumers�

Growth in middle classes More than 70 million consumers are entering the middle classes each year, mainly in emerging markets� These consumers, which are increasingly aware of new products and technologies and have disposable incomes, present outstanding opportunities for companies�

Economic and environmental trends and challenges can have a significant impact on your supply chain. By keeping track of them you can anticipate threats and opportunities, and increase your competitive advantage.

70 MILLIONNEW CONSUMERS ENTER

MAINLY FROM EMERGING MARKETSTHE GLOBAL MIDDLE CLASS YEARLY,

3 OUT OF 5PEOPLE ON THE PLANET

BY2030

WILLLIVEIN ACITY

5Trends and challenges

Preparing for natural disastersThe number of significant natural disasters is likely to increase in the future� This means you need a solid business continuity plan, as well as risk management, disaster management, and humanitarian logistics strategies in place�

Changing economic paradigms More and more developed economies are currently facing financial market instability and recession� Economies, especially those in the Eurozone, are struggling to grow, and the volatile Euro is creating numerous supply chain challenges� End-to-end supply chain cost optimization is critical and professional supply chain risk management is required�

Growing complexity due to globalization When global trade grows, so does complexity� New technology and IT solutions are required for complex supply chains to keep them agile enough to adapt to volatile markets� In order to manage the higher complexity, companies need to ensure that they have full visibility across their entire supply chain�

Production shift to the East As the production of goods shifts from West to East, there is greater need for strong supply chain providers with global presence and local expertise� Choosing the right places for manufacturing, hubs and distribution centers and dealing with the lack of organized and reliable transportation providers in some markets can be challenging� This accelerating shift in economic power is leading to qualified individuals with analytical skills moving to the East�

Complying with the latest rules and regulationsTrade regulations vary by country and companies need to ensure they are closely monitoring the latest rules and regulations to stay compliant� The visibility and traceability of products and materials, the liability of secure supply chains, and the ease of returns are all important factors�

Political conflicts often affect businesses� For example, the price and availability of oil in the Middle East or the closure of roads, railways, ports or waterways can result in a spike in price� Corruption causes problems in some markets and significant time can be spent dealing with the issues that arise�

Rapid technology developmentThe pace of technological progress is accelerating� New products are constantly being launched� People are overloaded with information and data security has become even more of a priority�

Shorter product lifecycles lead to various challenges: changing sales and distribution channels; new markets and business models; and volatile demand that can lead to supply shortages and ever-decreasing product prices� However, technology also works as an enabler, for example with Global Positioning Systems (GPS) and Radio Frequency Identification (RFID) providing better visibility and security� These can improve planning processes and have a positive impact on the whole supply chain�

ASIA ASIA ASIA

EUROPE AMERICA AFRICA

ASIA NOW PRODUCES 50% OF ALL WORLD VEHICLESASIA 40.6M EUROPE 21.1M AMERICA 17.6M AFRICA 0.6M. . .

A deeper understanding of economic and environmental trends and challenges can help you: • Respondtofast-changingconsumerdemands• Containorreduceescalatingcosts• Sourcelower-costmaterials• Enteremergingmarketswithlessrisk

Why monitor trends & challenges?

41%USE THEIR SMARTPHONE TO

PURCHASE

CONSUmER

AUTOmOTIvE

LIfE SCIENCES & HEALTHCARE

6 Key industry dynamics

Energy & Chemicals – a volatile industryEven during this global recession, demand continuestorisewhileresourcesbecomemorediverse and expensive. Energy companies mustadaptandreducecosts,whileimprovingefficiency and production.

Companies are increasingly improving their supply chains in order to maximize opportunities, reduce costs and achieve competitive advantage.

ENERGY & CHEmICALS

KEY INDUSTRY DYNAmICS

Retail – the retail revolution gathers paceShoppingusedtobesimple,withgoodssoldinstore, during normal opening hours. Technology isempoweringconsumersandencouragingretailers to buy and sell through an array of newchannels.Meanwhile,emergingmarketsarechangingthewayretailersoperateandcompete globally.

Retailers are under pressure to optimize supply chain efficiency and provide seamless service for customers. This multichannel market landscape requires dynamic supply chains in order to delivergoodstoallcornersoftheworld.

RETAIL

Life Sciences & Healthcare – an industry in transformationAcross the globe, the cost of healthcare provision is increasing due to both ageingpopulationsandhigher-pricedinnovative health technologies.

Companies are remodeling their supply chains in order to increase reliability and security, cut costs and reduce time to market for developmental technologies, and in turn achieve competitive advantage.

Consumer Goods Industry – a sophisticated and evolving industryGlobalization, economic uncertainty and increasedconsumerdemandforon-trendproductsarechangingthewayconsumergoods manufacturers operate and compete.

Consumers expect a vast array of products to be constantly available in local stores and online – at the right time and the right price. Consumer goods companies need global supply chains that are highly efficient, agile and sustainable.

Technology – a highly dynamic industryThe success of a technology company today is linked to its ability to meet and exceed consumer and business expectations and keep ahead of constant competitive pressure.

Supply chains need rethinking in order to maximize opportunities, reduce costs, minimize risk and compete more effectively.

Automotive - an industry in flux An increasing demand for innovative technology, a need to reduce fuel costs and improve safety, rising oil prices and a volatile economic climate all combine to make the market turbulent. You need flexibility and innovation to compete effectively in this rapidly evolving landscape.

Automotive companies need to rethink their supply chain strategies in order toexploitnewmarketopportunities,reduce costs and maintain competitive advantage.

TECHNOLOGY

various industry trends and market dynamics require you to adapt to changesandlookfornewsolutions.Wecanhelpyoutoconsolidateandsimplify your supply chain.

Our service is based on listening to you, understand-ing your industry specific trends and getting insight into the key challenges you are facing� We believe that by understanding your issues, we are in the best position to anticipate your logistics requirements� We can then provide industry-specific solutions tailored to your needs�

We provide secure, agile and sustainable solutions that enable you to expand internationally and reach every market that matters, now and in the future�

No matter the size of your company or what industry you are in, you can rely on us to draw on our local insight and global scale to deliver value across every stage of the supply chain� By working together we can lay the foundation for an optimized supply chain� We help you to get the materials you need, support you in manufacturing your product, and help you get the finished products where they need to be� We also offer aftermarket services when required�

In a highly competitive, fast changing environment we help you achieve sustainable competitive advantage by getting your products to market faster and more efficiently�

Our goal is to deliver consistently excellent operations� How are we bringing that to life for you? Through the industry expertise of our global, regional, and local teams and their commitment to innovation and quality� We follow a disciplined approach to performance measurement, quality assurance, project management and environmental management� Delivering excellence is woven into our DNA�

From planning to sourcing, manufacturing to storage, distribution to returns, we offer solutions across your entire supply chain to help streamline your business, allowing you to stay one step ahead.

OUR OffERING PUTS YOU IN THE LEAD

7Our supply chain offering

• Developflexiblesolutionsinresponsetofast-changing demand

• Minimizeyourrisksandreducecosts• Sourcelowcostmaterials• Enteremergingmarketswithoutincreasingyourrisk• Ensurehighqualityacrossyourentiresupplychain• Maintainhighstandardsforcorporateandsocial

responsibility

We help you to

• ProcurementServicesWeprovidesourcingandprocurementservices, leveraging economies of scaletodrivedowncostsandimprovemargins. from the initial consulting and demand planning to negotiation, buying, tracking, receiving and inspection on arrival.

• InboundtoManufacturingWetakeresponsibilityforoptimizingallinboundtransportation.Wecollectthe right components from multiple suppliers at the right time, giving you theconfidencethatdeliverieswillbesynchronizedwithyourproductionschedule.Weprovidefullwarehousingsolutions,togetherwithlocalshuttleservicesandin-plantmovementofmaterials.Weensurealeanerenvironment through tighter control, visibility and improved use of resources.

our supply chain offering8

• SupplyChainConsulting(SCC)By understanding and anticipating your business and logistics needs in anever-changingenvironment,ourteams provide a reliable source of expertise.Wecanprovideyouwithadvisory and/or consulting services, forexampleanin-depthanalysisofallnetworkflowsandsupplychainprocesses across your organization in ordertore-engineeranddevelopanoptimized supply chain.

• LeadLogisticsProvider(LLP) Webuildperformance-drivenpartnershipswithourcustomers.Asasinglelogisticspartner,wetakeover responsibility and accountability for the design, management and optimizationofend-to-end-supplychains.Wehelpourcustomerscreatecompetitive advantage and provide themwithstrategic,financialandcommercial value by improving control, visibility and flexibility.

• PrimaryPackagingWedesignandoperatepackaginglines that reduce lead times and costs and increase the quality of finished products. Using our experience of packaginggoods,wecanhelpyoutomeet the highest quality standards, reduceriskandlowercapitalexpenditure.

• In-PlantServicesfrom labor and yard management to sitecleaning,wehelpyoumanageyoursitemoreeffectively.Withexperience in implementing safe, consistentin-plantprocesses,wecanhelp eliminate incidents, reduce costs and increase productivity.

• InventoryManagementWemanageyoursuppliers'performance and optimize your inventory to make sure that stock is available and maintained at an agreed optimum level against your sales forecast.

PLAnLaying the foundation

soURCeGetting the materials you need

mAKemanufacturing the product

sUPPLy CHAIn soLUtIons tAILoReD to yoUR neeDs

SupplyChainPlanning

Ourcorelogisticsservices:Warehousing,Transportation,ValueAddedServices,ManagementServices

InboundLogistics ManufacturingLogistics

9our supply chain offering

• FinishedProductsWestoreyourfinishedproductssafely.Weplandeliveryroutes,thendeliverthemwhentheyareneededtowhereveryou need them and track the vehicles they travel in.

• SecondaryPackagingAsareliableandhigh-qualitypackagingpartner,weoffertailored,lowrisk,end-to-endsolutions,enabledbyourglobalnetworkofexpertise.Byestablishingconsistencyandleveragingbestpracticesglobally,weprovidesolutionsthat bring design to life and create value. our packaging services increase efficiency by integrating outsourced packing operations into our distribution centers.

• ReverseLogisticsBymanagingreturnseffectively,wehelptorecapturevalueandreducewrite-offs.Wedesign,planandimplementreversesupply chains using the latest technologies to maximize the value of returned goods and increase profitability.

• RecallSolutionsWeprovideanend-to-endsolutionforlargescalerecallofdefectiveorinadequategoodswithspeed,flexibility,controlandprofessionalism,whilstadheringtostatutoryregulatoryprotocols.

• ServicePartsLogisticsUsingourglobalnetworkofwarehousesandcontroltowers,wecanorder,storeanddelivercriticalsparepartswithshortlead times to your field engineering and maintenance staff.

• EnvirosolutionsWedesignandmanagewasterecyclingsolutions,integratedwithexistinglogisticsflows,whichconsistentlyreducecostand environmental impact.

DeLIveRGettingitwhereitneedstobe

RetURnReceivingsupportwhenit’sneeded

Ourcorelogisticsservices:Warehousing,Transportation,ValueAddedServices,ManagementServices

DistributionLogistics AftermarketLogistics

Continuouslyevolvingandimproving,ourwide-rangingsolutionshelpmanyoftheworld'sleadingbrandstoaddresstheirmostcomplex,pressingoperationalneeds-fromtransportationto management services.

WarehousingservicesCreating and operating customized warehouse solutions that deliver bottom-line benefits lie at the heart of our services� When scale or complexity demands a dedicated solution, we are able to provide a bespoke design, innovative planning and state-of-the-art operation and management�

Multi-user warehousing – multiple customers share the same physical platform and the same processes� It’s a scalable, re-usable solution that provides better cost, service and quality� Aimed at emerging markets and smaller overall operations with a standard or menu-driven service offering�

Shared-user warehousing – several customers share the same physical building but with separate areas and dedicated teams� The costs of the site are shared (e�g� security, local functions) and labor can be moved to adapt to peaks in demand� This is suited to larger customers in developed markets�

Dedicated warehousing – a dedicated facility with limited sharing of cost between contracts and operations� This solution is perfect for organizations where location is key for historical, manufacturing or tax efficiency reasons� Where possible we use the benefits of a campus solution to share some services, such as quality control, IT infrastructure and security�

Our supply chain offering10

OUR SUPPLY CHAIN SERvICES

Multi-market hubs – a shared or multi-user facility serving a number of end markets� This may be used within a trading zone or community (for example the EU) or for cross border distribution� We operate multi-market hubs in a range of locations, linking warehousing capabilities with managed transportation and import and export expertise�

Transportation services Shipping and freight expenses can consume over half of your total logistics costs, but don’t have to compromise your profits� By increasing visibility and raising inventory accuracy, our solutions put you in control� Using an efficient mix of carriers and fleet resources, our management and administration optimize all movements, safeguarding service levels while minimizing costs� We offer multi-modal access to emerging markets, including dedicated and shared-user solutions for domestic and international transportation�

Managed transport – our managed transport solution provides transparency, consistency of performance and operational efficiencies� We offer independent centralized transport management which delivers the following benefits:• Visibility throughout the supply chain through a

reliable global distribution network• Outsourcing of non-core activities and simplified

channels of communication• Interactive performance measurement and

improved warehouse efficiencies• Carrier rationalization and transport invoice

management

Domestic transport – we operate our own transport fleet in many countries for Full Truck Load (FTL) and Less than Truck Load (LTL) services� In some cases this service is also extended to parcel movements and home delivery (in conjunction with other DPDHL group companies) to provide a full domestic solution�

International transport – we work closely with transport providers within the DPDHL group, including Global Forwarding, Freight and Express, as well as specialist transport providers outside the group�

management servicesLabor management – labor usually represents 50% to 60% of distribution costs� Our labor solutions help you manage these costs and improve the capabilities of your people� We combine labor-management technology, engineered productivity standards, comprehensive operating practices and performance recognition� Our scale and expertise allow us to bring qualified, experienced industry experts to the task when you need them most�

IT management – whether you require a new solution from scratch or integration with your existing system, we design, implement and validate global IT and project management solutions to match your needs� We bring consistent, high-quality, cost effective IT services to your supply chain� With experience of working with every system in the business (Oracle, Red Prairie, SAP, Manhattan to name a few), we understand how to optimize IT solutions and consistently review and deploy new capabilities as they come on to the market�

Business continuity management – if your supply chain is disrupted by a natural disaster or other destructive events, it could have devastating consequences� We can help you create a robust Business Continuity Management (BCM) strategy� We undertake pre-emptive continuity planning to identify the risks in your supply chain and put strong measures in place to mitigate them� You can then be sure there is a back-up plan for whatever happens�

Real estate management – a well-executed real estate strategy can make a significant contribution towards meeting your operational requirements and budget� Real estate plays a vital role in supply chain strategies, as nearly every warehousing or distribution center decision features a real estate component� Whatever and wherever your market, we can bundle real estate and logistics services to offer a single-sourced comprehensive solution that reduces end-to-end supply chain costs, minimizes risks and improves efficiency�

value added servicesWe reduce costs, cut inventories, and help you improve the match between supply and demand� Our value-added services leverage smart integration of warehousing and dispatch solutions� Sub-assembly, packaging services, customization, postponement, kitting, sequencing and pre-retail activities are some of the ways our team can improve the performance of your supply chain and give you competitive advantage�

11Our supply chain offering

Everyday,acrosstheworld,ourpeopleworkwithahugevarietyofcustomerstosolvetheirpracticalissues.Weconstantlyseekbetterwaystomakeithappen.

Unparalleled industry expertise For the best results in your competitive market, we work closely with you to develop flexible, efficient ways to cope with short product lifecycles, changing customer demands, new sales channels and global distribution challenges� We offer expertise across a range of industry sub-sectors, and are able to share best practices to drive further savings�

Helping you focus on what you do bestSupply chains are often complex and always time-critical� By focusing on what you do best and outsourcing non-core functions, you can reduce capital costs and simplify your operation, while optimizing your results� As your Lead Logistics Provider, DHL can orchestrate multiple suppliers and operations across the supply chain, taking overall ownership� Dashboard visibility and control enables you to make proactive and informed decisions� We always ensure you have a single point of contact who understands your strategy along with an expert team supporting it�

A commitment to excellence For us, Quality Assurance and Process Improvement are about more than merely meeting standards, regulations and directives� Through a structured and systematic approach, we continuously improve standards and customer satisfaction� Using Six Sigma and Lean methodologies, the DHL DMAIC process (Define, Measure, Analyze, Improve and Control) is at the heart of all our projects� Our relentless pursuit of excellence gives you a real and sustained competitive advantage�

Our unique capabilities12

OUR UNIqUE CAPABILITIES

Greater market agility To get you moving quickly, we are constantly developing new and improved solutions� At the DHL Innovation Center, we bring together dozens of dedicated academic, industrial and technological specialists from our innovation team� Their developments have included DHL Smart Sensors for accurate geo-tracking, the use of RFID across the supply chain, and the provision of real-time information on shipments�

Unrivalled global reachWith our unrivalled global capability and experience in emerging markets, we can help you access new growth opportunities and low-cost operations across DHL's divisions – Supply Chain, Express, Freight and Global Forwarding� With local expertise in over 220 countries and territories, combined with financial strength, we have the flexibility to scale up or down to meet your requirements�

Dedicated account management In an increasingly complex international environment, we know that global businesses require structured and aligned account management that matches their global ambitions� To ensure this, our industry leading experts work closely with you at a local, regional and global level to meet your business challenges and exceed your business objectives�

Achieving the highest standardsWe can help you to meet exacting standards of health, safety and security� DHL offers consulting and advice on global safety regulations� We undertake thorough training and timely monitoring, as well as in-depth auditing and regular inspections of our sites�

Helping to boost your green credentials Enhance your brand reputation and bottom line while decreasing your impact on the environment� We were the first logistics company to set carbon efficiency targets through an environmental protection program� Our GoGreen innovations enable customers to offset handling and transport costs against climate protection projects� We also provide product refurbishment and recycling solutions�

Weunderstandyouarefacingmanychallengesthatimpactyoursupplychain.To get the best results, you need a supply chain that adapts to those challenges.

Creating a competitive advantage14

A roadmap for successIn the first place, we take stock of your requirements� We then use our industry expertise to address all your business challenges, critical success factors and deliverables�

Once this has been agreed upon, we use our project management process to deliver the results� We run and measure the operations using quality rules and guidelines� Process flows and procedures are underpinned by our IT systems and we drive improvement through our DMAIC cycle (Define, Measure, Analyze, Improve and Control)�

A comprehensive infrastructure We have an unparalleled infrastructure of accredited facilities that are aligned across our DHL business units (Freight, Global Forwarding and Express)� This supply chain means we can deliver integrated solutions that are underpinned by validated systems, processes, implementation experience and our quality framework�

Unrivalled industry expertiseOur track record and dedicated industry experts give DHL an unrivalled pedigree� Our experience across different industries helps us provide high quality solutions that match your business needs�

Whether we are integrating systems across a supply chain, or driving down distribution costs, we’re constantly looking for ways to innovate�

A strong focus on the customer Each industry sector faces its own unique challenges� That is why we put the customer at the heart of all our solutions� It enables us to innovate and transfer the expertise and experience we have from other sectors�

Committed to partnershipIn summary, we offer the expertise, the understanding and the skills to deliver real benefits� We have an extensive range of products and services that can be scaled and replicated to meet your needs�

We will continue to listen to your requirements and help you to explore new markets and products so you have a sustainable supply chain for the future.

CREATING A COmPETITIvE ADvANTAGE

DHL at a glance

THE LOGISTICS COmPANY FORTHEWORLD

A global network composed of more than 220 countries and territories and about 275,000 employ-ees worldwide offers customers superior service quality and local knowledge to satisfy their supply chain requirements� DHL embraces its social responsibility by supporting climate protection, disaster management and education�

DHL is part of Deutsche Post DHL� The Group generated revenue of more than € 53 billion in 2011�

DHL SUPPLY CHAIN

As the world’s leading contract logistics provider we create competitive advantage for our customers by delivering exceptional operational service and innovative solutions across the supply chain�

Comprising a global network of 125,000 dedicated employees, in more than 60 countries, DHL Supply Chain provides the best supply chain solutions across a number of industry sectors including automotive, consumer, chemicals, energy, engineering & manu-facturing, life sciences & healthcare, retail, and technology�

As the most trusted operator in the logistics industry, DHL Supply Chain delivers on promises�

DHL is the global market leader in the logistics industry and “The Logistics companyfortheworld”.DHLcommitsitsexpertiseininternationalexpress,air and ocean freight, road and rail transportation, contract logistics and international mail services to its customers.

• Exchange: DAX • Ticker symbol: DPW • Fiscal year end: December • Revenue in 2011: € 53 billion • Sector: Logistics • Modern postal system founded: 1490

• Market leader in contract logistics with 8�3% market share • Revenue SUPPLY CHAIN 2011: € 13�2 billion • Approx� 125,000 dedicated employees • Present in more than 60 countries • >2,000 customers across all vertical markets • 2,400 terminals, warehouses, offices • ~23,000,000 m2 of storage area

• Went public: 2000 • CEO: Frank Appel • Head Office: Bonn, Germany • Employees: Approx� 470,000 • Sales in 220 countries and territories • 120,000 destinations worldwide

facts & figures DPDHL

Facts&figuresDHLSupplyChain

EXPRESS

International Express

SUPPLY CHAIN

Contract Logistics& Business Process

Outsourcing

Road Freight

GLOBAL FORWARDING, FREIGHT

Air and Ocean Freight

Die Post für Deutschland TheLogisticsCompanyfortheWorld

www.dhl.com/supplychainwww.dhlsupplychainmatters.comsupplychain@dhl.com

valid: 09/2012

DeutschePostDHL– The mail & Logistics Group