Risk management at Deutsche Post DHL Group DPDHL

Table of contents

List of Abbreviations

List of Figures

1 Executive Summary

2 Introduction

3 Company and sector description
3.1 Deutsche Post DHL Group
3.2 Sector

4 Theoretical basics of risk management
4.1 Definition of risks and risk management
4.2 Objectives and requirements of risk management
4.3 Necessity of risk management for companies
4.4 Norms and standards for risk management

5 Risk management at Deutsche Post DHL Group
5.1 Purpose and strategy
5.2 Risk management circle
5.3 Measures
5.4 Limits of risk management

6 Conclusion

Appendix: ITM Checklist

Bibliography

Internet sources

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

List of Figures

Figure 1: DPDHL Strategy 2025

Figure 2: Opportunity and risk management process

Figure 3: Classification of risks and opportunities & assessing qualitative risks

1 Executive Summary

Deutsche Post DHL Group (DPDHL) is a German company headquartered in Bonn and the world's largest logistics group with currently over 550 thousand employees. The company is in very good shape despite the Corona pandemic and counts among its core business logistics services such as mail and parcel delivery, air and sea freight, express delivery, e-commerce solutions and supply chain management. The company's stability is due in part to the successful implementation of its risk management.

Risk management is a corporate area whose tasks include identifying, assessing, managing and monitoring company-specific risks in order to safeguard the company's existence and increase in value. The orientation is always linked to the corporate goal and strategy and is regulated by the internationally valid ISO 31000.

DPDHL has been reporting publicly on this area of the business since the introduction of the German Control and Transparency Act (Gesetz zur Kontrolle und Transparenz (KonTraG)) in 1998. With the help of transparently communicated risk management processes, the Group creates clear structures and guidelines that enable it to maintain an overview of its global supply chains and to manage regulatory, (geo)political, financial and social risks in real time.

Some measures indicate that DPDHL's risk management is implemented sustainably and successfully. Not all risks can be reduced or even avoided, which is why risk management as a management task is always linked to strategic decisions and all managers in the Group are involved in communication, right up to the Board of Management.

2 Introduction

Characterized by continuous change, we live in a time when there is great progress in technologies and the global networking of people and organizations. Services are experiencing increasing demand and people are trying to live as efficiently and conveniently as possible.

As a result, global supply chains are becoming longer and longer, with doorstep delivery of goods on the rise. The Corona pandemic, which has been spreading globally since the beginning of 2020, continues to fuel the trend towards digitization, which enables people to communicate, do business and consume with each other despite the pandemic.

DPDHL is the largest international logistics company that has felt the impact of the pandemic in all aspects. Supply chains are collapsing, the economy has been abruptly cut back, jobs involving human contact pose health risks - yet DPDHL can be seen as a beneficiary of the crisis. People around the world are increasingly turning to online shopping due to the risk of contagion, and companies are relying on flexible supply chains like never before.

The logistics group has posted record results since the pandemic began. To achieve this, a company needs flexible structures, financial reserves and especially strong risk management (RM).

Are DPDHL's RM measures equivalent to its leading position in the global logistics sector?

In order to answer this question, the risk management of Deutsche Post DHL Group is analyzed in the course of this assignment and evaluated on the basis of the theoretical foundations of the relevant literature.

3 Company and sector description

3.1 Deutsche Post DHL Group

DPDHL is the world's leading logistics provider, operating on land, at sea and in the air. The company as it can be found in the DAX today emerged from the Deutsche Bundespost and was privatized in 1995. (Cf. Bundesanstalt fur Post und Telekommunikation Deutsche Bundespost, 2022).

It provides logistics networks for global mail and goods flows as well as related information and financial activities. With the Deutsche Post and DHL Group brands, the company has a unique range of services covering all aspects of logistics and communications. In addition, the offering includes easy-to-use standard products as well as customized solutions ranging from dialog marketing to the industrial supply chain. Deutsche Post supports its customers in the distribution of press products as well as advertising and catalogue items and offers total solutions for corporate communications. Beyond pure transport, additional services are also provided and, for example, software for address management or the management of distribution areas for direct mail is made available.

Since the time of privatization, the company has experienced steady growth and is now one of Germany's largest corporations, with revenues of € 66.8 billion and EBIT of € 4.8 billion in 2020 (Cf. Statista GmbH, 2021, p. 13 et seqq.). With about 550 thousand employees in 2020, DPDHL has demonstrated revenue growth of 27 % and EBIT growth of 160 % over the last 10 years.

The core business "Post & Parcel" has been extended by business units "e-Commerce Solutions", "Supply-Chain-Management", "global forwarding freight" and "Express". Based on the company data, it can be seen that DPDHL is very future-oriented and is using the digital age, as well as the current pandemic, as an opportunity to expand and develop its business areas. Although the originally strong core business with nationwide mail delivery has been declining for many years, delivery volumes of parcels and especially the express segment are continuously increasing. In 2020, positive EBIT was achieved for the first time in the e-commerce area with a 20 % increase in revenue.

3.2 Sector

The logistics sector has many nationwide and international players, with DPDHL having the highest nationwide revenue in 2020 by a margin of nearly 50 %, while Europe-wide, with a total of € 29.8 billion, the gap is even greater at around 70 % to the second largest, also German, Deutsche Bahn AG (€ 17.4 billion) (Cf. Statista GmbH, 2021, p. 33 et seqq.).

Internationally, the first time competitor UPS Inc. could show a higher revenue (€ 72.2 billion) in 2020, while DPDHL remains the largest air freight forwarder, as well as the second largest ocean freight forwarder in the world, according to available figures from 2019. The German group can also secure the largest market share in terms of revenue in contract logistics with a total of 5.9 %, followed by XPO Logistics with 2.4 %.

The logistics sector has seen steady growth in recent decades, due in part to the innovations of containers and the Internet. The international networking of companies and the associated global trade have been extremely expanded, from which the sector has been able to benefit greatly. In the process, new players with digital solutions were able to assert themselves and establish themselves on the market, mastering the growing demand for smaller-scale and more individual logistics solutions.

However, the logistics sector is heavily dependent on the behavior of private households, the production and working methods of companies, as well as foreign trade, as the Frauenhofer Institute for Integrated Circuits IIS summarizes in their article. In doing so, they identify eight different megatrends that have the potential to disrupt the sector: Digitalization, 3D printing, autonomous driving, robotics, information society, diversification, servitization and sustainability (Cf. Fraunhofer Institute for Integrated Circuits IIS, 2022).

The newly emerged term "glocalization" involves diversifying supply chains in transportation and logistics and bringing different suppliers from different countries and regions or even more local suppliers/manufacturers into the portfolio. The term is a combination of globalization and localization. In the long term, production will be geared towards increased localism and sustainability, resulting in shorter value chains. In the process, the vulnerability of supply chains to errors must be reduced and supply chain risk management strengthened (Cf. Ernst & Young Global Limited, 2022).

At the same time, it can be assumed that many of the aforementioned trends will mean a decrease in personnel capacities for companies in the future.

With regard to the e-commerce solutions created and the associated, growing business area of DPDHL, many measures can already be seen at the German logistics group to help shape the future of the logistics sector and to position itself optimally now.

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