How DB Schenker restored the reputation of its IT team

DB Schenker’s IT leaders have had to work hard over the last few years to reverse an internal feeling of ill-will towards the logistics company’s IT team after two years of downtime and outages.

Dan Carpenter, GM of IT at DB Schenker.

From 2010 to 2012, DB Schenker's systems failed on numerous occasions, predominantly due to glitches with its warehouse management system. The public face of those outages was noted in a delay to Dell hardware shipments, which was blamed on an upgrade to the system.

While the company's relationships with clients survived intact, the outages put considerable pressure on DB Schenker's operational warehouse team, which extended into a general resentment of the IT department.

“It delayed goods. They were sat on the floor without being shipped,” Schenker’s new chief information officer Dan Carpenter told iTnews.

“There were no major issues with our commitment to our clients, it just put pressure internally within the organisation - they had to make sure we could still deliver to client service levels.

“That gives IT a bad name within the company - like we’re making people work longer hours. There was a lot of stress and ill feeling toward IT in the company.”

Schenker opted to restructure the IT department - under then-CIO John Jessen, who recently departed to the same role at Speciality Fashion - to stabilise systems and deliver faster, more consistent application development. The restructuring program formally concluded at the end of 2012, but it informally continues as a rolling review of practices.

The restructure involved a move from Schenker's legacy, in-house data centre to a managed, hosted service with Optus and a reduction in IT headcount from 50 to 38, but more importantly - from a cultural perspective - a concerted effort to improve the IT department’s relationship with the business.

“It was more of a cultural change, and putting proactive managements tools in place,” Carpenter said.

“A lot of the outages could be traced to the development lifecycle - not enough thought went into how long [something] would last. It was [about] shifting the amount of due diligence that goes into deployments.

“We improved the attitude of the support team so their reaction times were faster. We educated IT professionals to understand the business a bit more, so they could understand the implications of their actions. And we improved development lifecycles so there were no changes to the live system that didn’t have full quality assurance and testing and authorisation for deployment."

Downtime, Carpenter said, "is now a thing of the past.”

Schenker's systems had 15 outages in 2012, down to four in 2013, and the company has only experienced one so far in 2014.

The change required mentoring, review sessions, a commitment to ITIL service management practices, and a culture that encouraged staff to propose fixes and ideas for how future problems might be avoided.

That was complemented by the rollout of quality control technologies - such as the Nagios application and monitoring tool - to help identify potential issues before they occurred. 

Schenker remains confident the Exceed warehouse management platform it was using throughout the period of the outages remains fit for purpose - given the downtime stemmed from how the system was being used rather than technical problems - and will soon upgrade to a new version (Infor warehouse management) in line with an APAC directive.

The upgrade is one of three new core applications Schenker plans to roll out over the next few years. The company is moving towards consolidating systems across its global operations, and as such the Australian business is scheduled for a new global freight management solution and local transport solution within the next 18 months.

The legacy Translogix system Schenker Australia has been using for transport over the last six years will be replaced by a global rollout of an Oracle-based transportation management application, a platform that is forecast to go live in 12 months time.

The new globalised freight management system - which Carpenter confirmed would also be an off-the-shelf product - will be rolled out for a go-live by around Q3 next year.

Beyond the additional functionality of these new systems, he said, "the more as a global player that we use standard solutions across each country and region, the easier it is to have complete transparency for clients across the board".

“It’s something I welcome. I’ve been championing the centralising of a lot of our applications for four years," Carpenter said.

"It’s very hard to provide the level of functionality that global clients require at a country level. One country couldn’t afford to implement this much on their own, so it’s really leveraging the global scale of the company.”

Given the new global approach, the majority of the development for the new systems will be located in a resource pool outside of Australia - specifically China - but support and local knowledge of the products will remain in-country, Carpenter said. He has already initiated the training of local subject matter experts to support the migration.

“We’re always looking for opportunities to reduce our operational costs. We’re already utilising [the China resource pool] to hand off module development, and they hand it back to us for QA and testing and development.

"We still have local IT experience and support in every state supporting all our internal business units.”

Longer-term, one of Carpenter’s goals is to prepare the business from a technology standpoint for breaking into new markets.

While Schenker’s strength today is in the high-tech sector, the company is working “very hard” to crack the healthcare and perishables markets. Carpenter’s goal is to provide technology that will convince businesses in these sectors to partner with the logistics company.

He is specifically interested in environmental monitoring - technology that enables clients to track information relating to temperature, vibrations, GPS, wi-fi signal and other details of their products while in the transport process.

“We haven’t got all that visibility there at the moment - we’ve got location tracking that we share with customers through our web portal. The next step is environmental monitoring.”

Carpenter expects to be able to appoint a supplier for build this solution from Schenker’s existing pool of clients.

The company is increasingly looking to its logistics and freight clients for a partnership in which the client provides services back to Schenker. It’s an arrangement the company recently implemented with Dell, a long time freight customer who took on Schenker's data centre services as of July.

Schenker came to the end of a hosted data centre contract with Optus at the end of 2012, and during its search for a new solution, decided that the best deal was actually offered by one of its existing clients.

“Dell provided the solution we needed at the best price,” Carpenter said.

“We have about 140 servers hosted with Dell. Everything is virtualised - which is different to Optus - every application server we have has been virtualised, and that has reduced the requirement for hardware.

“We are more and more looking to establish partnerships with Australian-based vendors for products. And also where it makes sense, to review our existing clients and the services they offer. We are looking for where there is synergy between logistics and freight for a certain client, and they have applications and services that we require, and if the price is right and the service is the right quality, we can align ourselves that way as well.”