Business Rules as Applied by Deutsche Post

If customers are promised fixed prices, then margins cannot be optimized by varying your pricing but only by optimizing the terms and conditions of your purchases. In this case that means looking at the logistics chain and making the fullest possible use of the discount rates offered by the United States Postal Service (USPS) to third party providers who take on a share of the market for postal delivery services. USPS continues to enjoy a monopoly on the "last mile".

Deutsche Post, DHL (North America) has captured a not inconsiderable share of the market for postal delivery services to wholesale customers in the United States. What were the challenges that it had to overcome - and that it has to tackle again and again?

DHL's aim is to transport the mail items (currently around one million each day) as close as possible to their destination – ideally to the local post office – and in doing so to perform a masterpiece of logistics, namely to achieve the maximum possible discount from USPS in each case. Making optimum use of the discounts for its daily mail volumes is a driver of competitiveness for DHL. The challenge lies in the complexity of implementing the discount regulations and in the fact that USPS regularly changes these regulations.

DHL has modeled and automated part of this price catalog using the Visual Rules business rules management system (BRMS), which is part of a comprehensive logistics platform that was completely revamped in 2010 and has been operational since November 2010. Since then, DHL has benefited from the advantages of this modern platform, in particular its rule-based approach to “manifesting” – i.e. taking the steps that are necessary for qualifying mail items in line with the USPS pricing model and for subsequently producing transportation manifests and inspection reports.

Competitive Advantage with Visual Rules for Deutsche Post

• Changes to USPS's pricing model, to DHL's own customer base, and thus to DHL's logistics infrastructure are now fed into the BRMS quickly (in other words, not tied to inflexible software release cycles) by a small number of staff.
• USPS's discount regulations are now implemented transparently in DHL's platform. They are kept constantly up to date with the involvement of business experts. Robert Werner, Head of Functional Architecture, DHL Global Mail comments: "Instead of 2,000 lines of spaghetti code, we've now implemented the USPS price catalog in the form of readable modules that are validated by business experts. As a consequence, updates to business logic and to the IT application can go hand in hand. We now have a full understanding of the implemented regulations – and what’s more, we can quickly implement any changes."
• Visual Rules helps DHL experts to calculate charges correctly. USPS applies formidable penalty rates whenever charges are calculated incorrectly.

Rule-based "Manifesting": Qualifying Mail Items

1. Qualifying of up to 1,000,000 mail items per day by DHL: The applicable price scale for each wholesale mail item is identified using a rule-based process.
2. Postage calculation: The next step is to calculate the postage for each mail item using a rule-based process, to produce and print manifests, and to store these data.
3. Postage Reports: Each day, inspection reports for the day’s mail volume must be provided to USPS, so it can verify compliance with the regulations governing the application of its discount rates. These reports are extracts from automatically generated rule-based regulation documentation.