Dhl Case Study

Q4. Identify and describe three (potential) fail points and/or bottlenecks.

Identify fail points and bottlenecks are very important process for a service company, because fail points in service process which will lead to problems and bottlenecks in service process which will lead to backups and slow delivery. For DHL, we have identified two potential fail points and one bottleneck, the two fail points are lack of effective guarantees and statement for failure time-limited service; DHL refuses to provide services for specific consignments shipments, and the bottleneck is delivery speed and transit time of DHL is easier influenced by destinations’ public holiday.

4.1 Lack of effective guarantees and statement for failure time-limited service

DHL provides various express services to customers, the time limited service is a part of these express services. The time-limited service is more expensive than general express services, because the time-limited service with faster arrival speed and shorter transit time than general express services. In general, users of the time-limited services who have urgent documents or packages need to send, and if these documents or packages do not arrive within allotted time, these users will suffer heavy losses.

Due to time-limited service is important for its users, and failure time-limited services will result in heavy losses for users, so DHL should provide clear indemnity statement and effective guarantees for failure time-limited service. But we did not find clear indemnity provisions for failure time-limited service when we visit DHL’s official website. In fact, we found  a question posted by a customer on FAQ page of DHL’S official website, there is “If my time-limited service is not delivered within allotted time, whether I can claim indemnity?” DHL answered :“ In general, there is rarely situation, if this situation should occur, please contact DHL customer service hot line to seek solutions.” the answer of DHL indirect show DHL does not have effective guarantees and clear indemnity provision for failure time-limited service.

This fail point is able to result in a series of problems, such as how users of time-limited service who can be compensated when the service fail, how much compensations should be provided to users when the service fail, and etc. The losses result from failure time-limited service which is larger and heavier than losses result from failure general services, and users of time-limited service who pay more than general service. Hence, even assuming DHL provide compensations to customers based on general indemnity provisions which is not suitable.

4.2 DHL refuses to provide services for specific consignment shipments

DHL has more limitation for type of consignments, they refuse provide express services for some specific consignment, such as liquor, liquid cosmetics, handiwork and etc. This fail point reduces a large number of potential customers, for example, due to liquor and cosmetics with cheaper price in America and Europe than in Asia, so more and more people tent to purchase these “specific products” from America and Europe through online pattern. The kind of transactions heavily depend on international express companies and are able to provide more customers to DHL. But DHL refuses to provide services for these “specific products” which not only reducing potential customers, but also result in large number of customers move to choose DHL’s competitors (such as UPS, FedEx and etc).

In other hand, some negative impacts and distrust attitudes result from this fail point. These negative impacts and distrust attitudes increase customers’ perceived functional risks when they use express service at next time. Customers may consider “why DHL refuses to ship specific consignments?” “whether DHL does not have enough capacity to protect our possessions?”. Hence, due to the perceived functional risk and negative service experience on DHL which result from this fail point, even if customers want to send “general products” at next time, they will not tent to select DHL.