At DPD, a parcel is scanned about ten times during its journey. Numerous other core systems are linked to the scan data, including quite some tailored and legacy solutions. Until a few years ago, all those systems were running in-house at DPD Nederland. When he took office in 2017, CIO Christian Habraken discovered that the infrastructure was non-redundant. So it was high time for a total renewal, which marked the beginning of a close partnership with Open Line.
Transporting parcels from A to B; the parcels businesses seemingly has a simple primary process. But there’s more to it than meets the eye; The logistics sector too is not avoiding transformation. The sector needs to become more sustainable, client-focused and digitalised. Refurbishing while the shop remains open and is becoming increasingly busy: the continued growth in e-commerce is reflected directly in growth in logistics services.
Client satisfaction is key
Christian Habraken has now been CIO van DPD Nederland for 4.5 years. Increasing client satisfaction is the most important objective for his organisation. Habraken: “Our business model involves both a sending and a receiving client. We measure client satisfaction on both sides. This is mainly influenced by operational performance, such as driver performance and sorting at hubs and depots, but increasingly also by parcel journey transparency for which good quality data are essential. For example, we send a delivery notification with a one-hour window, which is subsequently met in more than 98% of cases.”
DPD’s ambition is sharp growth and the highest client satisfaction in the sector. That takes precedence over the desire to become a market leader. Increasing that client satisfaction is difficult, not only because DPD needs to establish a lead in this respect, but also because the parcel service is ‘paid’ by the sender and not by the receiver. However, the client satisfaction of the receiver is a contributing factor and increasingly receivers are sending parcels themselves, e.g. using online platforms where all providers are listed, including client satisfaction scores. Client satisfaction influences the choice of senders, says Habraken: senders want to dispatch their parcels to receivers without problems. Given the volume, a small disruption can impact thousands of parcels. The party that has its processes best organised will also lead in terms of client satisfaction.
Scan data underlie all types of processes
Habraken explains that during transportation, a DPD parcels is scanned about ten times. This stream of scanning data is linked to all types of applications: the invoicing system including data on distances, weights, dimensions and surcharges; the sorting software, which in the sorting centres determines which parcels should go which way; the dynamic route optimisation for drivers and for notifications to receivers; and the application that provides business clients with management information. DPD is also facing challenges in the IT renewal drive. The digital transformation is in full swing and much of the legacy has now been phased out. A large part of that legacy dates from the time that DPD was still a German company. DPD is now part of the French Groupe La Poste business. As new IT is becoming increasingly available, incorporating new solutions is becoming easier and easier. “Much of DPD Nederland’s turnover derives from cross-border consignments. This means that it is also important that digital transformation continues in other DPD countries, which in turn means that they too must transform to a new data structure using real-time connections.”
Not only transporting parcels from A to B, but also data
The parcel service has traditionally been very focused on achieving day-to-day operational targets. What needs to be dispatched today must be sent today. That is evident in the culture, according to Habraken: “This organisation still has the characteristics of a family business: we get it done together. Pragmatism is good. However, DPD has also grown significantly since 2010. This means that things become less transparent and the impact of system failures increases. Data and automation are now a vital link in the primary process.”
Consequently, one of the pillars of DPD’s IT strategy is to have proper, timely and complete access to data. “Data must be able to flow smoothly and quickly through our application landscape – we have to monitor that process in terms of speed and correctness.”
Keeping client satisfaction high by delivering the best possible service every day is essential for parcel delivery operators. For DPD, the main issue for the longer term is that it is vital to use innovations to continue to improve services and stay ahead of the competition. “Sending a message with a delivery window is currently no longer distinctive enough. We are therefore investing in innovation by having a team of people working on experiments and pilots independent of day-to-day business. Some of these are successful and we are turning them into new services for our clients on a project basis. Examples include real-time data processing and a solution that offers clients complete transparency into how their frequently international parcels are faring.”
The challenge: data centre innovation
DPD Nederland opted a few years ago for a partnership with IT service provider Open Line. The reason for the partnership was a question asked by Habraken when he took office. “At that time, DPD had its own data centre in the office, where virtually all applications were running. Our office was under the flight path of Eindhoven Airport, so all kinds of aircraft were flying over our heads. I asked what had been arranged regarding risk management. As it turned out, there was no fallback or redundancy, there were just backup tapes being taken to an external party. DPDgroup did not actually have a corporate data centre; as a result of DPD’s commitment to ensuring that its countries have local autonomy, they were expected to provide their own infrastructure. That made it clear that DPD Nederland would come to an immediate standstill without a data centre.”
Looking for a suitable partner
Habraken quickly initiated an RFP to set up an external redundant data centre. “We were looking for a partner who was ISO-14001 certified, who offered great value for money and who could provide a scalable solution. And we wanted a party of more or less similar size and culture”, Habraken explains. “We obviously focused on cultural fit – it was also a stipulation in the RFP – but in the end it still boils down to gut feeling. Whether it clicks becomes clear once you have met each other several times. And in the end, you just have to start working together too. I knew from previous experience with Open Line that CEO Jo Verstappen would immediately jump in if something was really happening. Given the challenges, that was a rather comforting idea.”
It was decided to set up a new data centre at Open Line. “Although it was briefly suggested to arrange a fallback first and then set up a redundant data centre, Jo Verstappen suggested moving to a redundant data centre in one go – he guaranteed it would go well. Together with Open Line, it was decided how and when certain groups of applications would be transferred. The preparations took a total of six months, but the migration itself was successfully implemented in just two weeks. The migration took place during DPD Nederland’s peak period, i.e. just before Christmas, because the lease on the premises was expiring. “That meant that things were pretty tense”, says Habraken. After the migration, the entire system was replicated to a second data centre.
Effective cooperation results in more business
Since then, not only has the data centre infrastructure been transferred to Open Line, but they also handle the server management, making the collaboration more and more tight. In doing so, the roles are gradually shifting, according to Habraken. As a result, DPD Nederland’s IT department is increasingly positioned as a control organisation, which also means a transformation for the IT team. This means that encouraging and securing cooperation between all the IT service providers DPD deals with is becoming more and more specialist work. Habraken on DPD’s IT strategy: “Processes that specialists can handle better than you should be outsourced. Infrastructure, WAN and telephony have been therefore been outsourced. We do however retain applications that are directly linked to our primary process. In line with our sourcing strategy, Open Line will also provide the workplace.”
That award is due in part to the positive way in which the collaborative relationship has developed. “That's what they have gained from building a successful partnership. It is proof that trust has been created”, Habraken summarises.
An important element in that relationship is that Open Line does not rigidly adhere to the SLA, and in doing so takes into account, to a certain degree of course, DPD’s culture. Habraken explains: “Our pragmatism occasionally gets in the way. We are therefore excellent firefighters, in the sense that we solve everything together. If there is a problem, it is nice to have your partner provide support instead of saying 'this is not part of the SLA. Open Line simply helps, explains and advises. On the other hand, they also educate us to some extent by providing more structure. In addition, Open Line now provides structure by informing us about security issues and patches. They are right on the ball.”
“We are currently putting the final touches to eliminating legacy applications. Furthermore, we are also seeing the private cloud gradually giving way to the public cloud, where a small number of applications are now running. Local autonomy has advantages, such as choosing an IT partner but also space for innovation. However, you also miss out on economies of scale, which is something we are working on with DPDgroup now. We have also taken the first steps towards creating a digital twin, which will allow us to simulate and test scenarios. Are, for instance, our depots in the most logical locations? Can you reroute some of the logistics during traditional peak periods – such as public holidays – to better distribute workloads and maintain service levels? You could also apply that kind of thinking to DPD’s European organisation. In short, there's always plenty to optimise. And we are looking further ahead more than ever.”
Parcel delivery operator DPD Nederland is part of the international DPDgroup, which in turn is part of the French Groupe La Poste. La Poste is the second largest postal operator in Europe, with a turnover of €11 billion in 2020. DPDgroup has 75,000 staff and more than 42,000 local pickup parcel shops. Every day, DPDgroup distributes 5.2 million parcels in more than 230 countries. The Dutch organisation employs 550 staff and has 1,300 pickup points.