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.

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