DHL 2008 Annual Report Download - page 93

Deutsche Post World Net Annual Report 2008
 e  Division was restructured in March , creating two new
divisions:   focuses on activities with low capital commit-
ment.  e division brokers and optimises transport capacity.   o ers
customised logistical and industry solutions at every link in the supply chain, plus
outsourcing solutions for purposes such as address and document management. Both
divisions aim for organic and pro table growth.  is depends on the  nancial health
of our customers and trading partners, who have recently su ered from the economic
slowdown, and some of whom could even be threatened with insolvency. We endeavour
to contain the e ects of this development by improving processes and cutting costs. We
are also expanding our service portfolio for new sectors.  e crisis also harbours the
opportunity, however, that customers may be more ready to outsource their require-
ments. Rapidly growing cost pressure on our customers could boost this tendency.
Our answer to risk: quality
Our global operations require a highly advanced operating infrastructure.
Posting and collection, sorting, transport, warehousing, delivery and information
technology must all meet high standards. Speed and reliability are key success factors
in meeting our excellent standards of quality.
In the  Division, for example, extensive automation ensures pro cient and
consistent service. Since downtime can severely disrupt the transport of mail items
and merchandise, key infrastructure – sorting and conveyor systems, air hubs and
data centres – is continuously monitored. Detailed process, emergency and contin-
gency plans minimise the probability of business interruptions and of major  nancial
consequences.
 e  Division is the market leader in the international express business
in all markets outside the . Whilst we have pulled out of the  domestic market, 
international business remains a vital part of our global express network. At the same
time, we are substantially reducing our infrastructure costs there. We illustrate the
 nancial impact of these changes in the paragraphs on business strategy risks. Progress
on the restructuring is monitored on an ongoing basis; it is expected to be  nished by
mid-. Transitioning our international customers to a standardised  platform is
going to be a key challenge during the  rst two quarters of . We also aim to reduce
costs and raise productivity outside the United States in order to o set the  nancial
impact of the recession and the  erce competition. Moreover, we plan to make greater
use of cross- divisional synergies and to improve our range of products and services.
Satis ed customers are a core goal for all divisions. Loss of customers could jeop-
ardise the attainment of our revenue and earnings targets. In the logistics business, the
risk of losing major accounts is particularly signi cant. Under our First Choice pro-
gramme, we are rigorously aligning processes to customer needs. At the same time,
we are also aiming to improve cost e ciency, which in some instances requires capital
expenditure. Investment decisions in excess of   million are made by the Corporate
Investment Committee. A lower threshold of   million applies to capital expenditures
in Global Business Services. Approved projects are closely monitored, allowing material
risks to be detected early at the Board level and appropriate action to be taken.
Group Management Report
Risks
89