This year will be all about integration for DHL as last December Deutsche Post, owners of DHL, completed the acquisition of UK logistics company Exel for £3.7 billion, creating the world’s biggest logistics, sea and air freight group.

The integration is expected to take between two and three years, with the bulk being completed in the first 12 months. Nigel Underwood, who was CIO at Exel, is to head IT at the merged company, and is no stranger to integrating companies’ IT operations. Exel acquired Tibbett & Britten and Fujitsu Logistics in 2004 and successfully merged the IT operations of the three companies in the following 12 months. The rationale for those mergers was to offer its customers – who include Boots, Burberry, Mothercare and Proctor & Gamble – integrated logistics services with air, sea and freight across international boundaries and through an end-to-end supply chain.

The deal with DHL has similar objectives. “By bringing together these powerful high-quality organisations, we are creating the largest logistics company in the world,” said Deutsche Post CEO Klaus Zumwinkel. “Our group will set the future pace in the forwarding and supply chain industries, enabling us to serve even better the global needs of our customers.”

The logistics unit will operate under the DHL brand and corporate rebranding began this year. The company says the overriding approach to integrating IT operations is ‘business as usual’ under its current IT model. In parallel, the integration of IT will follow a three-phased approach: initial data sharing and assessment, IT synergies and alignment, and then in-depth long-term IT strategy planning in consultation with customers.

Former Exel CEO John Allan will run the combined division, which will employ 150,000 people and be headquartered in Bracknell. “Strategically this acquisition is a good fit as both organisations were looking to increase their geographical footprint to meet the challenges of globalisation and growth in outsourcing,” says Allan. “Now we will be able to provide customers with an even wider range of products and value-added services management by a talented group of people.”

"“Strategically this acquisition is a good fit as both organisations were looking to increase their geographical footprint to meet the challenges of globalisation and growth in outsourcing”"

John Allan, CEO, DHL Logistics Division

DHL was already number one or two in many markets globally, and last year had piloted a new system to enable customers to book online for its full portfolio of products. It had carried out upgrades to its handheld devices to GPRS, and reengineered processes and carried out backoffice integration with the handheld devices, all of which was giving it significant business benefits. Before the acquisition Exel had recently completed enhancing its global IT infrastructure, which underpinned its complex supply chain operations. Putting the IT operations together and driving the benefits from them will be the urgent challenge for the company.But the parent company is pressing ahead with its strategic approach to the logistics market, and in February this year the company announced its DHL Innovation initiative with IBM, Intel, Philips and SAP, which is designed to develop innovative logistics solutions to increase the efficiency of the supply chain. The aim is to make the supply chain more efficient by uniting the flow of information and physical goods through increased automation, visibility and improved collaboration. Initial projects will look at industry-specific RFID applications, which will be tested in the supply chains of the partner companies.

It has also launched a three-year global quality initiative, called First Choice, as part of its corporate strategy to sharpen its customer focus and improve product and service quality.

The company says it comprises a package of medium term measures designed to meet customer needs, with the aim of improving customer communications, loyalty and improving business processes across the organisation. It will begin with a series of reference projects, like planning of aviation, proactive shipment tracking and tracing, call centres and global business services, and the first stage involves around 50,000 managers, whose task will be to steer individual initiatives.

continuing to exploit the growing demand in the outsourcing market for supply chain services. It recently opened a third high-tech UK distribution centre for Unilever. The Staffordshire site will be managed by DHL and manned by 200 DHL staff for the food manufacturing giant, and uses the latest technology to store, pick, repack and dispatch goods to around 2,000 stores across the UK.