Vendor News: Microsoft, DHL Join Forces to Bring Xbox 360 to Retailer's Door

Thousands of video game enthusiasts in Europe and North America were able to flex their thumbs on the controls of their Xbox 360s over the 2005 holiday season due to the unique logistics collaboration of DHL and Microsoft Corporation.

The November 22 U.S. Xbox 360 product launch and the December 2 European rollout culminated a year's worth of planning and execution dedicated to one objective: Moving Xbox 360s across three continents on time and on schedule.

"Microsoft set specific deadlines and promised the world it would meet them. In so doing, Microsoft challenged DHL to think creatively, and to anticipate the unpredictable scenarios that often accompany a major product launch during peak season," said Jane Sabin-Pass, Global Customer Manager, DHL Global Customer Solutions. "The precise delivery schedules were a testament to the skill of both companies to link the global supply chain with flawless accuracy and transparency."

The Xbox 360 project drew upon 15 years of collaboration between Microsoft and DHL, which included the successful rollout of the first Xbox console in November 2001. Knowledge of each other's systems and processes played a vital role in expediting Xbox 360 launch schedules, reducing implementation lead times, and meeting strict deadlines.

Among the milestones of the Xbox 360 project:

  • Enhancement of a trans-Pacific rail-steamship service where ocean freight shipments entering the Port of Los Angeles from Hong Kong were met at the docks by dedicated trains that carried consoles and accessories directly to Microsoft's North American distribution center in Memphis, Tenn. The service shaved several days off of the standard transit times and ensured predictable and cost-effective deliveries to support the initial rollout and subsequent replenishment of inventory.
  • A unique aircraft loading solution for European air consignments enabling Microsoft to fully optimize the space aboard each aircraft without compromising the integrity of Xbox 360 units. Because the pallets' original height prevented them from fitting in the lower deck area of the aircraft, DHL developed a program to "down-stack" each pallet at origin, load them securely into the aircraft belly for flight and then re-build the pallets into their original SKU configuration at destination.
  • The enhancement of DHL's sophisticated event management tool that seamlessly connected Microsoft with suppliers, contract manufacturers, carriers and even other transportation providers to deliver near real-time visibility of in-transit inventory.

Launch planning began in November 2004 when both companies mapped out shipping strategies and laid the foundation for the robust I.T. network that would serve as the project's central nervous system. By August 2005, with the first of the Xbox 360s ready to ship, the project shifted into high gear.

Electronic Data Interchange messages from production sites in southern China enabled Microsoft and DHL to pro-actively update status information and maintain real-time visibility as Xbox 360s rolled off assembly lines onto barges bound for Hong Kong's Chek Lap Kok airport.

As consoles and peripherals were loaded aboard aircraft, the DHL system automatically triggered "Advanced Ship Notices" to the U.S. and European distribution centers, providing the receiving points with the time to efficiently pre-plan their capacity needs.

At each step in the process, DHL's automated systems validated all shipment load information, guaranteeing that the appropriate volumes of Xbox 360 units were delivered to the proper destinations at the agreed-upon times. To ensure proper redundancy, DHL created back-ups of each message transmitted.

Supporting the initial launch phase, the DHL regional team in Singapore led the implementation project, deploying multiple Boeing 747 freighters procured by Microsoft to transport consoles from Hong Kong to the main distribution centers in Memphis and Dueren, Germany, 60 kilometers from Cologne.

DHL staff in Hong Kong also arranged for commercial airlift to ship thousands of kilos of Xbox 360 peripheral equipment such as controllers, cables and other Xbox 360 accessories to North America and Europe.

DHL in Seattle and Cologne performed custom clearance, and synchronized deliveries with Microsoft's distributors to ensure sufficient high security trucks were positioned to deliver the consoles from the airport to Microsoft's distribution centers in Memphis and Dueren. DHL Cologne then organized truck deliveries from Microsoft's distribution center to retailers across the continent.

The joint Xbox 360 effort is far from over. Charters continue to arrive in the U.S. and Europe. DHL has purchased significant ocean freight capacity to move consoles and peripherals long after the initial launch, and will continue to support the Microsoft roll out of Xbox 360s around the world. Microsoft and DHL are also now working jointly on implementing a new warehouse in Southern China to support fulfillment of Xbox 360 in Asia during 2006 and beyond.

Source: DHL International Ltd.

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