DHL Exel: Outsourcing Enables Transformation and Growth

DHL Exel Supply Chain was created in 2005 following the acquisition of Exel PLC by Deutsche Post World Net (DPWN). The resulting logistics division—a global leader in supply chain management—employs in excess of 150,000 people, operates in 150 countries and generates annual sales in excess of US$20 billion.

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DHL Exel Supply Chain provides transportation, distribution and logistics services to more than 75 percent of the world’s largest quoted non-financial companies.

This document describes the partnership between Accenture and the Exel organization, prior to the acquisition of Exel by DPWN.

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Contract logistics is an extremely competitive, low-margin business. For supply chain and logistics companies, therefore, high performance in cost management is imperative. But, due to a history of growth by merger and acquisition, Exel had found itself with a fragmented finance function, in numerous locations that was inefficient and, as a result, unnecessarily costly.

Following a detailed study, Exel’s management concluded that the best way to improve the company’s financial systems and processes and generate cost savings would be to enter into a transformational outsourcing arrangement with Accenture to rationalize Exel’s network of administration centers in the United Kingdom and Ireland and implement a single, standardized enterprise solution. A services provider itself, Exel understood the benefits of outsourcing non-core business processes. By enabling the logistics company to focus on core capabilities and smoothly integrate acquisitions, outsourcing would help position Exel to execute its strategy of rapid growth.

In 1996, Exel signed a 10-year outsourcing contract with Accenture covering the finance and accounting functions associated with Exel’s contract logistics business. Under this arrangement, Accenture consolidated 13 of Exel’s accounting and administration centers into a single Accenture-managed, shared services center in Bedford, England. Accenture also integrated six different accounting systems into a single, standard, Oracle-based enterprise solution.

In 2004, Exel progressed its outsourcing relationship with Accenture to transfer some finance and accounting services to Accenture’s delivery center in Bangalore, India. This transition took place over several months to ensure that contractual service levels would remain unaffected. Explains Stuart Young, Exel’s EMEA finance and commercial director, "Deciding to transition [to Bangalore] was a big step for us. I was nervous about putting a large amount of our accounting—a key service for us—offshore. I actually went out to Bangalore to meet the people there and I was very impressed with the service quality, the quality of the staff Accenture was recruiting and the quality of the management teams. The transition has gone very smoothly and we have now moved to business as usual.”

Subsequent to the acquisition of Exel by DPWN, Accenture had also begun helping DHL Exel Supply Chain incorporate its finance and accounting processes into the DPWN organization’s standard processes.

Exel’s outsourcing journey with Accenture has produced far more than a smooth-running finance and accounting function. It is a much deeper and more strategic relationship, designed around a jointly crafted and jointly managed outsourcing strategy that has greatly enhanced Exel’s profitability and market performance. The outsourcing arrangement has continued to deliver value, while Exel has grown to a market-leading organization with revenue that is now three times as large as its revenue in 1996. Throughout this 10-year period, the finance and accounting BPO services Accenture provides have evolved to help accommodate these changes, including the integration of the finance and accounting function of Tibbett & Britten — a UK logistics business that Exel acquired in 2004, and further changes are continuing to be implemented as the integration into DHL proceeds.

Perhaps the best example of the partnership’s strategic nature is its successful emphasis on continuous improvement. The initial (1996) project reduced Exel’s UK finance and accounting costs by 40 percent and reduced days sales outstanding by 30 percent. It also provided a much improved control environment, evidenced by 100 percent balance sheet reconciliations every accounting period.

With a strategically focused, streamlined and well-managed finance function, Exel positioned itself to more easily track customer profitability and credit issues—and to gain a better understanding of its cost base. Standardized and centralized systems added further value: The comprehensive and timely data they generated have helped line operators make better decisions that benefit Exel and its customers.

Lastly, Accenture’s continuing research has identified several essential traits of high-performance businesses. One of these is the ability to focus on mastery, innovation and differentiation in strategically critical core competencies, and achieve extended mastery by partnering in areas outside their core competency. By outsourcing key back-office business processes to Accenture, Exel is able to focus on what it does best—provide transportation, distribution and logistics support to companies around the world. Embracing a strategy of outsourcing to achieve transformational change, Exel has positioned itself as a forward-thinking and agile leader that is committed to achieving high performance.