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“Every supply chain company will have to keep a close eye on big headlines like geopolitics, climate change and wars. If you are a global company, there will be a crisis somewhere, every day,” says DHL Express’s CEO John Pearson, in a recent article in The Economic Times. DHL Express, he adds, is the undisputed global leader in international express shipping.
Pearson disputes claims that globalization is decreasing, thus making crisis management less of a supply chain concern. In actuality, he states that, “Globalization is not giving way to regionalization and aspects like friendshoring, nearshoring and stronger regional trade are not taking place in a way that makes an impact,” making it as necessary as ever for firms to work through frequent and prolonged crises. For many firms, this has caused globalization to take on a new face.
This new global face comes from adding additional facilities alongside current manufacturing bases, as a means of mitigating risk. India has become a popular location for new manufacturing plants, warehouses and regional offices. “China plus one” is another mitigation strategy by which western firms decrease their Chinese dependence by setting up facilities in Indonesia, India, Philippines, Vietnam, Mexico and Turkey. Chinese firms are doing the same, but they are also the nearshoring exception as they move into Mexico to fulfill their U.S. demand.
How does DHL remain global in a crisis, that is, how does it deliver to a global market every day? It attributes its ability to foresee and anticipate a crisis, and agility for carrying it through. DHL’s pandemic response was rooted in the 2010 Eyjafjallajokull volcano eruption in Iceland, which shut-down air travel in Europe for 30 days. DHL moved to an entirely ground network overnight, by leveraging its available assets and relationships. In sum, DHL scans externally, knows its internal capabilities and learns from the past.
Classroom discussion questions:
1. Refer to the six reasons domestic business operations decide to change to some form of international operation in Ch. 2 in your Heizer/Render/Munson textbook. What advantages propel firms to take on a new global face?
2. Refer to the Logistics Management section in Ch. 11. DHL Express was able to pivot from air to ground transportation in Europe following the volcano eruption. What tradeoffs exist between the various shipping systems?