DHL in China: The role of logistics governance

In developed economies, the flow of information and materials proceeds relatively unimpeded by the logisitcs governance because many of the larger governance obstacles are removed over time in an effort to improve economic performance. In developing economies, the flow is often blocked by deeply embedded obstacles that inhibit the efficient flow of materials and information among participants in the logistics chain. For the emerging logistics industry in developing economies, these governance obstacles constrain the design of the logistics chain, improvement of services, add costs, and hamper the opertional and financial performance of the logistics chain. For management, consideration of the impact of logistics governance on design, implementation and performance of the logistics chain is part of the strategy. There are several lessons learnt from DHL's experience with logistics governance in China. Ignorance of the details of the governance or the role of the governance in the logistics chain while attending to marketing, investment, or technology strategies can be a fatal mistake. Logistics governance issues are an essential component of any China strategy for logistics.