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Great. Okay, jolly good. Hi, welcome everybody out there. My name is Martin Ziegenbalg, Head of IR at Deutsche Post DHL Group. Welcome to the next edition of our Investor Relations series called Experience Excellence. Simply Delivered. We started off with that series a few weeks ago, featuring how digitization is helping our forwarding business. Today, we are going to look at how in our Supply Chain division, accelerated digitalization is going to support overall success. For that, as you know, we have today with us, Oscar de Bok, CEO of the Supply Chain Division, and a CIO and COO, Markus Voss, who's going to take us basically through the key findings. Oscar will help you to understand how the whole theme of digitalization plays out under Strategy 2025, particularly for Supply Chain.
Markus is going to introduce you to the methodology being applied, allowing that the best technology is available for each customer's request, which sounds very tailor-made, but still is perfectly organized for mass deployment, therefore, also a wide rollout in how we steer and track the benefits. That's going to help us through the next 60 minutes, including Q&A. Talking about Q&A, you find below in the window you're looking at a field where you can punch in your questions. I see those popping up here. Some of you have been starting to bring in the questions already, which is good. I think we should have at least half an hour later on also for Q&A. Without further ado, I would like to hand over to you, Oscar, please.
Thank you. I would actually start to introduce how it is linked to our Strategy 2025, how that actually links to what we're doing within Supply Chain, and that obviously then is the introduction towards the digitalization deep dive that we're doing today, run by Markus. What you see in the screen today here is, I think our purpose of connecting people, improving lives, has been very clear over the past period during the crisis that we all went through. I think the important part of today is to see how our mission and our focus is going to be achieved through the digitalization agenda. If we go to the next slide, you see the actual how the Strategy 2025 is translated into DHL Supply Chain. We call it Together Unstoppable.
Reason for that is because supply chain is not necessarily a network, but the strength actually sits in it when you do connect all the facilities that we have around the globe, and when you do connect the people through standardized ways of operating, the way we engage and train our people, and the way we make sure that our customers have consistent operations anywhere around the globe. That's where the whole name Together Unstoppable comes from, which is very well received and used by our people around the globe. You see it is split up in connected people. That's about making sure that we have a connected and consistent way on how we train and develop our people and how we create a diverse organization while being safe. Execution.
Edge is a very important one around how we make sure that we use our standardized ways of operating around the globe in order to be able to improve every single day. Delighted customers is actually how we then actually make use of those tools in such a way that we can fast respond and provide the flexibility that our customers require, specifically in these days, to actually delight them and fulfill their needs in the future. What we're really going to deep dive on mostly today is own tomorrow. This is how we create the digital supply chain, how we make that a reality going forward. Going to the next slide. These are the trends that you see in the market of today. Yes, we are the supply chain solutions company for the world, but a world that is really fast-changing.
If you divide it in some blocks, if you look at the digitalization agenda, it is faster developing than ever before. Also with some benefits that automation and robotics and digitalization is, actually, there's a lot available, it's very flexible, and it actually is at lower cost as well. There's a lot that you can do in our industry now with robotics and digitization. On the labor side, there is obviously a high request on flexibility to be able to move fast, up skill, down skill fast. I mean, we've learned that over the last period even more. That together with training people in different manners because we become more digital, so we have different skills that we need on the floor in our operations around the globe.
On the customer side, you see a fast development, and also here, even faster than ever before, the rise of e-commerce requirements because manufacturers need more alternative channels to be able to operate. I'll come back to that point in a second. You see the overall flexibility that is needed to design and adjust supply chains. We have examples over the past period that we had to basically reset supply chains, global supply chains of customers within weeks, to be able to respond to the various developments that we've seen around the globe. Moving from production areas, storage areas, change those, create the different supply chains throughout the various business units within DHL. We feel that our strategy is actually well set to address the challenges that there are in today's market, and that actually will give us the possibility to do own tomorrow.
Going to the next. This is a bit where you can see how over the past eight, nine weeks, we could actually clearly see how our, albeit, pretty new strategy really worked really well in these settings. You saw that our global standardization through our First Choice program, enabled us to really fast adjust our processes and our ways of working to adjust to the requirement of safety, but also the requirements when we had closures, to make sure that supply chains were reset. We've been able to do that while maintaining the safety and the health of our people. That's thanks that our safety agenda always have been high on our agenda, and we could actually use that really well during that period. Therefore, we actually had record performance in our LTIFR during this period.
Our quality performance has been really high, again, by having well-trained people, we could then actually make sure that we keep the quality level high, and also by having, through our data analytics, good visibility, we've been able to manage that well. On the base of that, we have decided while in the middle of the crisis to continue to invest in training of our frontline supervisors. It's about 20,000 people, and it's an 18-month program that we're rolling out as we speak, because we've seen the benefit from it, and we'll see that there is more and more that we can get out of that in the coming period. We've also seen our customers are appreciating this. As we speak, we are in our Q2 customer satisfaction survey, and we've never seen such increases as we've seen at the moment.
We've been able, during this phase, to communicate and interact with all our 150,000 people because we're rolling out what we call our Smart Connect app, and that's an application where people not only get their communication from, but they communicate with each other in their sites, in their communities, but also from there, it becomes their digital enabler to interact with the company. That just gives you a few shots of impressions on how we've used our strategy to the benefit during the COVID crisis. Going to the next slide, gives you an indication. I was speaking before about how our customers have approached us still during the crisis to find alternatives, ways to extend the channels that they had. We've seen a lot of increase already before the COVID crisis, but even within the crisis as well on having alternative e-commerce channels.
We had just ready a complete set, and don't worry, I'm not going to talk you through the details of this slide, but it gives you an impression that we have a complete set of standard package of IT solutions end-to-end for e-fulfillment in the market. We've seen a vast growth in our new e-commerce business. As you can see here, 38% of our new retail business is in e-commerce. You can sort of spread them between the pure e-commerce for brand manufacturers, the pure e-commerce for retailers and e-tailers. Where you see most development of in recent periods is actually in the omnichannel B2B and B2C and regional fulfillment network.
What this actually is that you take traditional supply chains and you add the e-fulfillment angle to those existing stock points and use the infrastructure that we as DHL have in all Tier 1, Tier 2, Tier 3 cities to have forward stocking locations, to have fulfillment points close to the end customer. We could use this to help, and we've got some great examples around the globe where we within weeks set up, or even within a week, set up new operations to give our customers new channels to face the challenges of today's world. We could only do this obviously, and can only do this going forward if we have our investment in our accelerated digitalization agenda. As I mentioned before, our digital Supply Chain.
I think this is a good moment to actually hand over to Markus Voss to talk us through what that really is.
Thank you, Oscar. Yes, I'm very excited if we can move to page 10 to talk about the vast variety that we have available to us and how we very surgically bring those innovations, bring those technologies into our sites and actually roll this out in a mass deployment. Why is that so complicated? Obviously, it is not a one-size-fits-all. We are the world's number one logistics company. We're supporting customers all around the globe, and we're helping them to drive their digitalization opportunity. We're operating in 50 countries, and we have more than 2,000 sites globally. We would have loved to show you in real life in this session of how this actually feels and look like. None of these operations are 100% the same in terms of the products that we're doing.
You see the split here in terms of the sectors we're operating in. It is a big variety across all of those sectors, being retail and consumer the biggest here, but auto and tech coming straight thereafter. What we need to do is to drive the right technology into the right site so that we can gain advantage in terms of our operations for our customers, make them more agile and drive their Supply Chain in a more digital fashion. Within the next half hour or so, I will explain to you of how we do this and how we bring those technologies into each of those sectors. We have delivered, and we are in the phase of delivering a very comprehensive digitalization agenda. It's a standardized approach to identifying the key technologies at scale. If we're moving to the next slide, operator, please.
If we are moving to the digitalization. Here we go. We can see that we have the key technologies available at every site. Our goal is to have every site, every customer, and every employee experiencing the new digital supply chain. What I will also explain is how we very closely track the deployment of each of those digitalization initiatives and how we are measuring the benefits. With this, we are leveraging our scale to focus on a few focus technologies which we think are mature, and we are connecting agnostically to our system so that we have the ability to change, I will explain that in a moment a little bit more, the technology from one site to another in a very seamless manner.
On top of that, what is very important and what's going to be even more benefit are going to be driven by this, is the application of advanced analytics. With this, we are going to maximize the Supply Chain efficiency, the resilience, and the delight of our customers. That all is in line with our Strategy 2025 objectives. We want to outgrow the market, and we want to maintain our industry-leading margins at around 5%. The benefits will be we stay on top of being the provider of choice, investment of choice, and employer of choice. Let's look at our digitalization agenda in a bit more detail. At the core of this agenda is our operation. We see on this slide, the core components, where it starts with receiving, storage, picking, packing, dispatch, delivery, which is then going into the transport part of our operation.
Every operation in Supply Chain is touching that. We have looked at the key digitalization enablers of what will drive benefits in a very holistic manner. It starts from process automation. We do have supporting robots, like cleaning robots in every of our operations. I'll go through this in some detail. I will be able to show you some videos of how this actually feels in a site which is digitalized. On top of that, we are driving the customer Supply Chain analytics and delight our customers with new insights so that they can optimize the inventory, having the right inventory at the right place, closest to the next point of consumption.
To complement this, we're also driving digitalization in each of our support functions, whether that's IT in terms of predictive IT maintenance or finance, where we have predictive cash flow optimization, or in the HR, where we very closely look at how we can further increase staff engagement and retention. I'm going to go now into the details of how we are matching the right technology to the sites. About two years ago, we've already had numerous ideas and initiatives ongoing in terms of driving digitalization into our supply chains. Great ideas, we needed to maximize the pace through a very focused and orchestrated effort to drive things more into the go-live phase. What we see here now is where we stand. We have still numerous and unlimited ideas. We're focused on 12 key technologies, which I'll explain in a moment.
We have more than 80 partners that we have engaged who know us and who we help to further develop. 1,800 opportunities that we have identified already in June 2020. We have more than 400 customers already touched, meaning we have introduced digitalization initiative into their operations and more than 620 go-lives. That's a quite massive scale that we have brought in a very short period of time. Going into these 12 key focus technologies. I will give you a few examples of some videos of how you can see how this works. We start in a moment, but let me just go through this in some detail. Assisted picking robots will help in e-commerce operation. We'll see a video of that. Goods to person is reducing the amount of travel that our associates have to go, and the goods are being transported to them.
Wrapping robots, a simple but very powerful technology in every operation. We have technology where we can wrap robots with the foil. Indoor robotics transport, which is a way of introducing fully automated vehicles to transport pallets and get much closer to that idea of a full autonomous logistics. We're driving robotic arms into our operations to help when it comes to value-added services or co-packing exercises. That work, which is very manual, can be replaced very quickly with robotic arms. On the lower part here, we see those which are massive scale in terms of how we can deploy them. They do require less capital investment, but they're very powerful and we'll see in a moment a few ideas on that one. Smart operation wearable devices are a big topic. Intelligent process automation, algorithms, and other supporting robots are things to mention here.
Maybe we just move very briefly to the first video, which will explain one of the key components of our operations, which is indoor robotic transport and the transportation of pallets. It's something that happens everywhere. If you can roll the video, operator, that we can see the forklift moving around our operation. There is no human being around here. It's fully autonomous. The pallet is being picked up, and we can see that over a relatively long way of travel, it is all done completely automatic. It can be introduced in a very short period of time. It's connected to our warehouse management system. I'll talk to that in a moment a little bit more. It's then brought to another place where all of this otherwise would have to be handled by a forklift operator.
That's a massive scale that we will be able to deploy because this type of operations is happening everywhere. How do we bring them, this type of technology, into the right site? Moving on to page 19. This is an illustration of how we map those key technologies, those focus technologies to our sites. We have characterized all of our sites with their profile, so we know exactly how many picking, how many pieces are being inbound, outbound, what is the size of the operation, how many operators do we have, how many shifts are we operating. Depending on the characteristics of that site, we can very clearly define what is the right technology for that site.
That is easy for a site, for an operator to work with the central teams to identify initially the right product and then move to the next phase of implementation. With this, we have 100% fit of the right technology for the right sites. That is where the power of scale comes into our operations. The next one I would like to explain is the next video, if you can roll that. That's an example of our e-commerce operation. You can see here, one of our partners, Locus, where we can see that it's a very user-friendly interface that the operators are working with. Piece picking here, there is just one item that needs to be put into the trolley of this bot, and then it's transported to the pack station where it's then sent to its final destination.
We have this deployed, and we have just announced that we're going to deploy another hundreds of those bots into our operations, both in North America as well as in the European Union, as well as the U.K. and Ireland. Applicability for piece picking and e-commerce operation, but the right technology, again, to the right site is where it drives the power. Let's move on then how we are tracking our progress around those introductions of those key technologies, robots into our operations. We are tracking this. I have daily visibility, Oscar has daily visibility of where we are in terms of the rollout of our sites. We have the key view on all technologies.
We know where they are in the funnel of whether we're in the deployment phase, whether we have gone live, and we can further drive centrally the adoption of those technologies for the right sites. That is very powerful in driving this mass deployment. The result of that you see on page 22. As I said, we started a long time ago on our digitalization program, but we really pressed the acceleration button in 2019 and now still in 2020 are growing exponentially in terms of our application of key digital enablers, like you've just seen into our operations. Right now, we are at around 1,800 initiatives which are underway. Some of them are still in the opportunity assessment stage, when we then go into some more site assessments so that we know exactly of how this is going to play out.
We go into the planning approval, deployment, and then the go- live state. As you can see, more than 620 initiatives of those digital enablers, digital solutions, focus technologies that we have already gone live. Just to repeat this again, we want to have every site, every customer, employee that is experiencing this new way of working in Supply Chain. Very exciting times for our industry. Now, this is about quantity, but we also want to see how this plays down in terms of benefits for our investors and for our customers. Just an example here in terms of driving the technology and also understanding of how we monitor and steer the return on investment.
For our wearable devices, which I'll also show you a video in a second, we have a very clear assessment, as I explained earlier on, that we create a business case for the rolling out of those wearable devices. Obviously, we get the invoices from all partners. When it comes to the benefit tracking and our validation approach, that we know what we are implementing and what to expect in terms of operational efficiencies and then also monetary efficiencies. We have a dashboard where we can see very clearly how many scans, for example, with those wearable devices are being conducted on an hourly basis. We can see that actually this technology is being used. We measure the impact on our direct labor and the depreciation.
Finally, a global view, a divisional performance management, where we see down to every site, the positive P&L impact, so that our level of confidence in all of these rollouts is further increasing, that we know that it actually works, and it does drive the benefits that we associate with each of those technologies. Since I've spoken about those wearable devices, maybe we can roll the next video, this SmartOps video, which is an example actually in one of our operation in Vietnam, where we've introduced wearable devices. You see a before and after here. The colleague is picking some pieces and has to go back on the right-hand side to the control station to get the next task. While with the wearable device, already the new task is being directed to the device so that we have huge efficiency gains.
There is not all this unnecessary travel back to a station where the next task is going to be delivered. Next example would be then the end-to-end digital process where the operator and the site supervisor can also look at how the performance is actually looking like. We see another example here right now, I think it's been rolled already, which is our safety measures. Again, the picture of a safety moment can directly be captured in the moment when it happens. It's been transported. We can see what's going on. A preventive action can be taken. All of this is happening directly on the floor where this happens rather than something which has to be done via a control tower.
The other point which I wanted to mention is that we can see in real time the productivity of the associates. Instead of going back to a place in a meeting room where then the performance of the day is going to be discussed, we already see this on the screen and the dialogue between the supervisor and the associate can happen directly on the floor. Very exciting technology. The software makes the biggest difference in terms of the value that we can bring to this new technology. We're moving on to page number 27, where we're further driving then the extent of how we roll out these great technologies into our sites. Early on, we used project- by- project and we created BCA by BCA, and then obviously the IT integration and some customization.
Which is good, and we have seen some great returns on that, but it does not utilize the scale of DHL. What we have moved on to now is moving to leveraging our scale, using our global capability, and then only do a very small customization locally. That brings more success to the sites, much less risk in terms of introducing it, and we can further turn things into new ways of accelerating the rollout. We are realizing our economies of scale, and obviously also the cost advantage. With this, we can then also move technologies, whether that's wearables or a bot or an indoor robotic transporter, automated forklift from one site to the other, without creating a huge overhead in terms of movements and readjustments of the same technology to the next site.
We know where it fits, and we can move it, and we have already seen this. We can exchange robots from one site to another. We have different peak times for certain operations, then we deploy those robots at a new site in record time. Which gives me an example to show one video of our customer, which is a video of a company called Optus. I will probably pause in a moment because it will be worthwhile for you to listen for a moment to our customer, what they are thinking about our ability to scale and to fast-track deployment with this new way of working. If you can roll the video, please.
We went down. DHL was able to provide us with commitment for people, staff, training, project teams, IT, and they were confident enough to say that they would be able to get us up and running again within a week. I'm really pleased to say that they delivered on that promise.
You're saying that we were able to stand up a complete warehouse and start shipping to customers from nothing to doing 7,000 shipments a day in a week?
Absolutely.
That sounds pretty extraordinary to me.
In all my years, it is the only time I have ever seen it happen. It was done.
I think pretty powerful message from Optus, which is the second biggest telecoms operator in Australia. I guess for those of you not so well attuned with the Australian dialect. It's been powerful in one week, and that is getting much, much closer to the vision that we have, that we want to deploy supply chains within days, maybe at some point in minutes, so that we can enable our customers to grow much faster, to adapt, to be able to respond to new demands very quickly. This is a great example and testament that this strategy is working. Now we're moving on then to the next phase here. The benefits of also using technology in creating the linkage between our warehouse management systems and those robotic solutions. We have introduced a Robotics Hub, and that is a plug-and-play solution that minimizes the deployment effort.
That's the one thing that traditionally, it still cost a lot of time and also money, in terms of bringing a new solution, whether that's the Locus solution you've seen earlier or many others that we are deploying, like 6 Rivers or many of our partners that we work with, to a new site. What we are doing now is to create this Robotics Hub. It's a collaboration between Blue Yonder, Microsoft, ourselves, to build a piece of software that will be the linkage between the warehouse management system that we have deployed at our sites to those vendors, to those robotic solutions. We have already shown that that reduces the cost and the effort, and time to introduce a robotic solution to a site by 60%-70%.
It's great to see that this agnostic way of connecting is already showing up as huge benefit for us in the future. The whole complexity goes away, the costs are getting lower, and our customers get the value, and they get the right robotic solutions for their site with good cost, with good quality, and time. This will help us to move those robots also very efficiently, and I'll get to my last point of this small talk here. It also enables us to standardize the access to our data. I was mentioning that we can capture all of the events that are generated by a forklift, by a robot, or by a wearable device, so that we know exactly what's going on, where do we see, and where do we detect new things in terms of the Supply Chain that we need to respond to.
There is higher demand or there's lower demand, so that we can work on. With this solution, this Robotics Hub solution, we get also very standardized access to those site. I will give you one example on the left-hand side of this chart on page number 30, which again brings us back to the full vision of our digital supply chain strategy that we are driving in our Strategy 2025. That is the customer supply chain analytics. By knowing what's going on, by understanding in a central manner of where we detect any type of new demand, we can also help to optimize the inventory management. We'll have a second example of a customer of ours, which I'll very briefly introduce on page number 35, and then we roll the video.
Which is an airline company that has given us the task to help them with providing the right meals and all of the consumable products onto their flights. We have looked at the sensors and the key things that we are detecting in their supply chain. The customer is facing some inefficient sourcing and some of the right products on the wrong flights. We help them to build a diagnostic model to understand, optimize the inventory levels so that we have the right consumption products on the right flights. Obviously, that decreases the cost because nothing is traveling which doesn't need to be traveled. We have a full digital twin of the supply chain and can model it, and the customers are delighted by getting the right supply on that. Just one example, and maybe we can very briefly roll that video from the CEO of SATS.
Features is the ability to constantly monitor demand consumption. The airline will get a better sense of which meals are more popular, and therefore, using the logistics component, they'll be able to move the right menus to the right routes. It matches up against the taste of the demographic on those particular routes. That's a level of sophistication that the industry hasn't really gotten to yet. Combining what SATS does with what DHL does on the logistics side, and then using data analytics to know those consumption patterns, we should have a much better chance of delighting the customers on board.
Another great customer sentiment, and I can only subscribe that. This is a new way of looking at supply chain and really digitalizing it and using then data analytics to drive much more efficiency and agility. How are we marketing this also internally? We have put together, and very soon we'll also expose this externally. We've put together a web page where we can see all of the details, all the technologies, where we can drill down. I hope this is also animated here, but we can see that for each of the technology that we have identified as focus technologies, that our colleagues can look at those specific technology. They can see the videos, they can see the testaments of the customer, but also the benefits and the time to engage, who to work with, everything that they need to know about this digital transformation.
We have the collaterals, including all of the library and the back end, what needs to be done. Obviously, as I explained earlier on, an innovation tracker where we see very clearly also new things coming into the pipeline. Something that we haven't yet put into the focus, but has the ability to very soon come as 13th new focus technology. We'll have the program governance and all the regional engagement laid out. With this, on the summarizing page, I just want to illustrate that we have the digitalization agenda started, and we see great progress. We have this standardized approach where we identify the right technology for the right sites so that we don't have any false startups or disappointments. We have seen great progress with these 1,800 opportunities and more than 600 go lives. We're talking about real go lives.
This is something that our customers and employees can touch and feel. We have started this plug-and-play Robotics Hub, which will enable us to move robots from one place to another with very low effort. That will give this program a further push. I'm expecting an even higher exponential acceleration of our numbers in terms of go live. We are augmenting this with data analytics to understand all of the data in the Supply Chain, to be able to use the right assets at the right time and enable a better decision making. With this, we are going to make this digital supply chain a reality. Thank you.
Thank you.
Great. Thanks, Markus and Oscar so far at this stage for introducing us to the theme of digitalization and how we actually do deploy this, and it's good to have a fact-based discussion on that for a change. We are getting in a couple of questions. We're going to start out with a few, trying to check a couple of factual aspects, before we get to what I think is the most relevant to our listeners out there. Oscar, you mentioned e-fulfillment. This is an important theme. Do you have some sort of quantification of what percentage of the Supply Chain division's business is in e-fulfillment or how much of the growth is coming from e-fulfillment?
Yeah. 38% of our new business in the retail sector is coming from e-fulfillment. The retail sector itself is about close to 30% of our overall revenue. It's a quite substantial part. I think what is interesting, that is the traditional part, but you also now see more in some of the business-to-business sectors, technology, industrial, also more fulfillment related businesses coming in. It is a development, a growth that is really integrated in many of the sectors we operate in.
Okay, perfect. Now more to the theme of digitalization. Markus, do we have something like a percentage goal as to how many of our sites we want to cover at the end of the process, or is this going to be an ever-revolving process?
It is for me, it is all in type of approach. We want all of our sites, all of our customers, all of our employees to be touched by this new way of building digital supply chains. I have yet to find a site which is not applicable to any of our technologies. There is definitely room. If we think about the software part and the wearables, it's something that is scaling very well, and also in sites where we have maybe lower labor cost situations.
Obviously, the question is, we're using off-the-shelf technology from the technology providers. If I get you right, the trick is not just to have, if I put myself in a competitor situation and say, okay, let me get this technology as well.
No, I think our strength is in the integration to use our rights, our best practice on this First Choice methodology. We have standardized way of dealing with our supply chains and then augmenting this and putting the right technology into the sites and helping the sites to further excel and achieving their full potential. I don't think it is you just throw in a few new devices and then wait for the benefits to come. It needs a full thorough process of how this is going to be deployed, how to measure the benefits, and how to also help the culture part of it. To engage with the employees, to engage with the customers, and get the buy-in on each of the components.
I think in addition to that is that we can fast scale it up. Whatever we have learned in the first two operations, we can then actually roll out in the following 40. Because what Markus was explaining before, we've done the analysis on where a certain solution would fit. A customer doesn't need to come to us, we will come to them, to actually apply what the actual solution is. That's always an integration of various solutions. The way Markus's team have worked on IT part, where we've combined various IT softwares, et cetera, integrated that, applied it in such a way that it actually becomes more effective. The same way it works actually with robotic solutions.
Okay. Well, Muneeba from Bank of America, I think that takes care of some of your questions. There's one detailed question on page 29, actually. You make the differentiation between strategic DHL and non-strategic sites or customer-owned sites. Can you quickly help us with the logic behind that?
There is a difference in terms of the IT systems we're operating at sites. In the majority of our sites, we're running our warehouse management systems, our IT solutions. There are some customers which prefer to operate on their own systems. It's the nature of the contract logistics. You usually take over an operation, and sometimes it's greenfield and will be a strategic DHL system. Sometimes it's an existing operation, and we take over and gradually turn this over into what we consider best practice. There are other systems that we need to integrate, and the Robotics Hub solution helps us then to be faster also on those sites which are customer operated in terms of their IT solutions.
Okay. I hope that makes that one clear. Last from Muneeba's list is CapEx. Supply Chain overall, not exactly a CapEx-heavy division in the group context. How do you see investments into this type of technology sort of moving the needle bits more towards asset heavy, or is that not a significant factor?
I don't think it will be. Of course, there is a bit of a movement because there is indeed investments. As I said at the beginning of the presentation, investments in, specifically when you talk about robotics, they're not the type of investment that they used to be 10 years ago, where you had to invest in a lot of steel and fully automated sites that were then stuck for the coming 15 years in one financial model to be amortized for that specific solution. The great thing is this, is that the investments are a lot lower. They're a lot more flexible because you can move robots between sites depending on capacities. The CapEx is, yes, it will increase a bit, but not substantial. It remains flexible.
Okay. Well, that brings us basically to the core of the question that we've got a couple of asking people like Mark McVicar from Barclays or Cristian Nedelcu, and also Muneeba. How do we get our arms around the financial benefit or the impact? How do you measure it? I think it's finding about the right balance between efficiency gains actually being monetized and a competitive advantage to win the contract. How do you weigh that?
Yeah. I think there's three elements. One is it provides flexibility, because let's not forget that in today's market, you have to be able to cope with far more volume fluctuations than ever before. Not only because of the COVID crisis, but also before. That was already the case because of the growth of e-commerce. That puts the pressure in the supply chain all the way to the end. Flexibility is one that is required. The second one, indeed, is competitiveness. We think this will translate in growth because we can be more competitive because we provide both better flexibility and more efficient operations. Then, of course, there's also productivity aspect on it. I think it's the combination of the three that will give the benefit. Now, there is some share that we do with customers as well.
In some cases, a customer gets some part of the benefit as well, and therefore that will then translate in growth again.
That's when you have an existing site and start to introduce technology.
Exactly.
Okay. For brand new customers or brand new sites?
For brand new, it translates into growth because we have already seen that we can, and you've probably seen that more than I, where we have been able to win business because of the type of solution that we offer. Because we have a proven track record that it works because we have already done it somewhere else. I think that's the big benefit that we have. Anybody can come with an idea from the shelf. Really coming and saying, we know it works, we've done it, and these are the benefits, gives customers confidence to actually come with us.
Just as a quick reminder to everyone out there, if you want to have your questions answered here, you just need to punch them in quickly. We've got still a list to work down here. Mark McVicar, you also asked about where do we stand in return on invested capital. We are not showing this on a regular basis, but I think it's no secret that DHL Supply Chain is higher than the Group's average. Group average, as you know, is just above 11%. That's including IFRS 16 for the connoisseurs and you're in the high teens. I think that translates also, and that corresponds to an about 5% EBIT margin.
Correct. Yeah.
To get an idea about that one. Cristian Nedelcu from Barclays was friendly enough to ask that. Going into, hopefully, the post-pandemic phase, what is your sense how your customers want to adjust their supply chain strategy or their setup?
Yeah.
Maybe just if I go first. What I'm seeing also in my conversation, I'm sponsoring a number of customers myself, is that there's more and more demand of going into these, I guess, adaptive solution and being more agile, being more responsive.
We have, obviously, a number of disruptions in many supply chains going, maybe potentially also a bit more local, having then things like the European Fulfillment Network where we can source and help to bring the right product to their point of consumption much, much closer would help. I do get a lot of questions on how can we embark on this digitalization journey. I think we have demonstrated in the crisis that we continue to invest in this. This is the future of the supply chain, and that is something that our customers, I think, will be all around the globe asking more, get us more of the solution to be able to respond to those crises, and ensuring social distancing and things of that sort much more easily.
I think I agree. With every discussion you have with customers, flexibility, being it in small within a site or the overall supply chain, is key, and the whole digitalization is a main contributor to providing flexibility going forward. It is flexibility, and the other thing is being able to respond fast. That's also why we wanted to show you those examples from these customers, because those are examples where indeed, within a week, we've set up something completely new.
That is what the responsiveness the customers of today need. We don't know what tomorrow will bring, but the one thing what we do know is that fast responsiveness, agility, and flexibility is what they need.
To have these proven and tested technologies and this approach available, is that sort of improving also our performance for startup projects?
Yeah
relative to the BCA then, right?
Yeah. Well, Markus, you can explain this in detail.
Yeah. Obviously, we are measuring our performance on startups. I think I was mentioning before that, for example, that robotics solution that helps us to cut time and risk quite substantially in the double-digit numbers in terms of percentages on cost and also time, is helping a lot in terms of ensuring that we know what we go live with, we've seen it before, we know how it works. There is no risk, and that brings our achievement in terms of achieving the BCAs into the right zone.
Yeah. I think with the standardization agenda that we started a while back, the stability that we can give to customers and the security that an actual startup will be stable and perform the quality that they require and our financial indicators, and you see that in all the numbers at the moment, that is definitely a big step.
Okay. Thinking further, so you're saying you're targeting sort of 100% rollout effectively. If I go ahead a couple of years, do you see something like a dark warehouse where there is no human being any longer?
No, and I think that, sorry for interrupting you, [crosstalk], but I think that's also what we're trying to convey today, is that the people aspect remains a very critical one. We have 150,000 people. With this and the growth we're having, that still will be similar to that number. What is important is that our people are trained, engaged, and always are trained for the way we operate tomorrow. What we actually see is that with these investments, when you talk about, well, many of the examples that were mentioned, is it actually motivates people because the environment you operate in is far more interesting than, let's say, the traditional dark warehouse that you would have in the past. Now suddenly you work with robots, you work with data. On your wrist, you actually have the details. You can communicate with your peers.
It is far more exciting to work. Obviously, we are investing in our people to make sure that they can cope with it, but it's the whole thing about collaborative robotics that actually is the key thing because we believe that a collaborative robot gives the biggest possibility to be flexible. Then you can respond faster and act faster on changes on day-to-day basis.
Okay. You mentioned growth. Growth in terms of business in a given site, or do you see expansion also in the number of sites or customer industries, or what's your growth focus there?
Yeah. We obviously have to read a little bit the market of today and what that indicates. If I just put COVID discussions aside, we see two things. We see growth in market share, which is one. We see growth in top line, post the impacts of COVID that we're having. We're seeing particularly growth with existing customers, so extending activities with existing customers because they have seen the benefit that if you then can copy-paste what we already have, it makes it more interesting for them to go with us. As I think we started saying about 10 months ago, is where in the past five years, the focus of Supply Chain has been a lot on standardizing and creating that quality level in the way we operate. By now having that platform, we can accelerate our overall growth.
Now, obviously, with COVID, we will see obviously some impacts on that, and then we will have to recover from that. We also see that customers have now learned to appreciate even more the type of services that we can provide and how fast we can respond. That was the point I was making before about this customer survey. It really has gone beyond any expectation of ours in these weeks, the feedback that we get in our customer survey. It means that they do see the value that we have been bringing. Therefore, I think that our actual renewals will go up, and that will actually provide further growth.
Okay. We're getting closer to the full hour, but still a couple of questions coming in from David Kerstens, but also Angus and Chris. Technology that you have identified, do you feel like you want to be owner of that technology? Is that a potential M&A target that we would be looking at, or do you want to stay rather provider agnostic and see what comes next?
My view on this one is that we are going to stay rather provider agnostic. The market is still moving quite dynamically. We have seen over the course of the last couple of two, three, four years, new partners coming up onto the scene. It's still something where we are constantly looking at new solutions, which one is going to win the race here. We are partnering with those providers, partners. I don't see us at this moment in time investing in a majority share into those partners.
Okay. One further from [Christian, UBS]. E-commerce, e-fulfillment, does this change the average size of the operation that we are running? Is it rather smaller size or is that more a case for multi-user sites or campuses?
It's a great question. The answer is all of the above. On the one hand, you will have for omnichannel, you will have the large centralized stock points, which becomes multichannel stock points, where you not only provide into the traditional retail chains, for instance, but also direct to consumer. You use the same stock for it, you have different operations in order to pick and prepare and fulfill. That one, it will still be big centers. On top of that, you will actually use the presence that we have because we're practically in every main city you can imagine. We're using those sites, then yes, we're talking about a multi-customer setting, where we then have those local forward stocking locations.
Those indeed are smaller operations, but where you combine several smaller operations closer to a city, where you then actually can fulfill on need and deliver same day, up to the needs of our customers.
If I could build on that, providing also visibility to our customers who want to go on the e-commerce channel, that they know where they have certain stock. Do they have something in Barcelona still, or is the next kind of available stock, is it somewhere else? We have a one-stop, maybe one for next IR session, we have a solution which gives us that visibility in real time of where to source from and where to fulfill the demand of a certain customer from.
Yeah. If you're interested, I think it will be really good because that one slide that I showed, there's a whole thing behind it where you can actually see the total package that we provide.
Okay. Good. That means we have pretty much worked down the list of questions we just got over the past 30 minutes. Thank you for all of you placing those questions. I hope I did a decent job in addressing them all to the right people. You mentioned the next upcoming events. We will continue, of course, with our virtual formats. The next one's going to be on Data Analytics on a group-wide level. Of course, we are also very keen to probably more towards the latter part of the year to get you all in front of actual operations on onsite visits. Something to look forward to. In the meantime, thank you very much, Oscar, Markus, for taking the time and helping our investors and analysts to better understand how to manage supply chain operations in today's world.
For you, I hope this was a bit of a helpful exercise. If you are next confronted with some sort of bombastic propaganda from any of our peers, please feel free to cross-check and to see how workable that is. Okay, that concludes today's tutorial session. Again, thank you very much.
Thank you so much.
Thank you out there for following, and keen to hear your feedback later on and keep in touch. See you sometime soon.
Thanks for your time.
Thank you very much.
Thank you.
Bye-bye.