While logistics giant DHL is busy getting on with the day job of supporting complex supply chains across the UK, Paul Richardson thinks about the opportunities offered by the applications of data and new technology.
In an ever-shifting political and business landscape, the managing director of specialist services at DHL Supply Chain believes the information it collects will secure its importance to clients – whatever else changes.
And with technological advances causing the company to adapt in previously unimaginable ways, Richardson exudes excitement at the possibilities of technology rather than fear as to whether a new customer service model will adversely affect the logistics firm.
Previously leading the company’s fashion and retail division for 15 years, Richardson has seen a huge change in the way the retail sector operates, including its approach to waste management. “Thirty years ago, we were focused on servicing our retail customers’ stores. Now we service the consumer, which is a really different change for a supply chain company.”
Richardson was responsible for clients such as Marks & Spencer, Debenhams, House of Fraser and Burberry, and says DHL’s work with all of them has changed “beyond belief” during the e-commerce revolution.
“We are now responsible for a wider range of services,” he says. One of these is e-fulfilment, of which DHL is now the second largest provider in the UK. This includes determining the location and design of warehouses, arranging delivery fleets and planning seasonal increases in activity.
Although he has moved away from focusing solely on retail, Richardson remains intrigued by the sector’s future and suggests that innovations such as 3D printing could create another step-change: “You will be able to find a product online and direct that to your 3D printer to produce it at home.” While some way off yet, this would mean the potential to entirely packaging eliminate for items ordered this way.
“It is expensive but, let’s face it, so was the first PC,” he adds.
“The most valuable commodity of the future is data. Supply chain companies like DHL are in the best place to take advantage of that, so I don’t think a changing environment is a threat for us at all”
A more urgent innovation is Amazon’s Dash replenishment service, launched this year, which automatically orders products such as dishwasher tablets when a customer is running low. It works by connecting with smart devices in the home, including washing machines, which place an order as soon as their supply is almost empty and without the customer needing to do anything.
There is potential, Richardson says, for this to be expanded to a broader range of products, revolutionising the way people shop online. But are such innovations a threat to DHL as its original business of providing delivery services become less day-to-day?
Richardson believes his company can prosper in the changing environment due to its use of data and ability to branch out into new areas: “The most valuable commodity of the future is data. Supply chain companies like DHL are in the best place to take advantage of that, so I don’t think it is a threat for us at all.”
One of the new areas the business has branched out into is running waste facilities. Gatwick Airport recently announced it would start processing around 10 tonnes of mixed food waste a day at an on-site £3.8m MRF and energy-from-waste facility run by DHL. The plant will process mixed waste including food, packaging, cups and meal trays from international flights.
The waste processing plant and biomass boiler is due to become operational in March 2016. The energy produced will power the plant and provide heat for the North Terminal.
DHL provides a similar offsite service for Heathrow, Richardson says, and it is currently applying to build a plant in Colnbrook Lakeside after applying first in 2013 before reassessing its options.
Another way DHL has recently been able to save money for airlines is through its use of data analysis. By using its own prediction of what volumes of each product are likely to be consumed by customers on every flight, airlines can cut down on excess products being stored on their planes. This in turn cuts down waste and reduces the fuel needed to power the plane by lowering its weight.
“We scan every croissant and sandwich; everything that is not consumed we will scan off the aircraft. We’ve got all this data telling us what is on the aircraft and we have all the data telling us what was consumed.
“Putting the two together means you can accurately predict what it is you need to be modelling for the aircraft.”
Another new area for DHL is its work to design and produce uniforms. Earlier this year, the company signed an initial seven-year contract to produce uniforms for the Metropolitan Police Service (MPS), and it is targeting more public sector contracts for its National Uniform Managed Service, which is says will create more efficiency savings as more organisations sign up.
Richardson says: “Because we are responsible for the design, we are responsible for the provenance of the material and the product that is used to produce it. We have much more scope to understand the full life cycle of that product.”
Managing a product for its entire life cycle is something many in the recycling industry would like more producers to do. When asked whether new Extended Producer Responsibility legislation should be introduced to encourage other businesses to offer such services, Richardson is cagey.
“We are pretty neutral. We are not policy-makers. What we do is take whatever is thrown at us and turn it into something that works. I think DHL will carry on doing the right thing, but I do agree the right policy is important.”
He says that pressure to prevent food waste from being disposed of in landfill had helped to push the Heathrow and Gatwick deals through, but maintains that they would have happened eventually due to their financial benefits.
This chimes with the Government’s current preference for voluntary agreements on issues such as food waste reduction and cutting administrative burdens on business. While schemes led by organisations such as WRAP on standardising local authority collections are popular, some in the industry fear such measures are less likely to be adopted by smaller businesses with tighter profit margins.
But Richardson says smaller firms need not find it difficult to adopt sustainable practices. His company runs six shared-user sites to service its smaller clients, and this allows them to make the same savings as a larger company: “They allow you to be part of a network of companies that have services that aggregate everything together. They can get the same level of economies of scale, basically.”
Usually a transporter of packaged products, DHL produces its own packaging in partnership with fellow supply chain firm Williams Lea Tag. Their product is call Co-Pack and involves packaging for more that one product in one box, such as combined Easter egg and mug gifts.
“If you buy something on an aircraft that has five products in it and they are coming from four manufacturers, we are designing packaging to be able to cope with that. Years ago, you wouldn’t have thought DHL would have done such a thing – it is more of a manufacturing problem. More and more you are seeing us getting into factory-type work.”
Richardson looks after DHL’s Envirosolutions service, the “integrated approach to waste, recycling, energy and environmental compliance”, which he says has shifted towards more circular economy thinking since he took over.
“Because we manage the warehouse facility we also manage the fleet network. We have the ability to use the capacity in our trucks to backhaul waste from what would be a very costly location to process it in one centre.
“In the main most of our customers are very responsive [to CE ideas], but what they are not interested in is just how you manage waste. What they want to understand is how DHL can bring a different intelligence to running waste.”
Or, as he puts it: “If you can’t measure it, you can’t manage it.”
CV: Paul Richardson
Managing director of specialist services at DHL Supply Chain, 2011-present
Managing director of fashion and retail at DHL Supply Chain, 1996-2011
General manager of Marks & Spencer client at Tibbett & Britten, 1987-1996
Richardson is a chartered fellow of the Institute of Logistics & Transport. In his spare time, he has a passion for motorcycles
- This article was updated on 7 November to revise the Gatwick plant’s expected opening date