DHL Express needed to procure a state-of-the-art sorting system to expand operational capacity at the new Munich Gateway. The challenge was securing the best price to match the budget while maintaining stringent quality standards and operational goals. This case study explores how NLPP (Non-Linear Performance Pricing), the cost and performance optimization tool by Saphirion, was applied to achieve significant savings and increased sorting capacity. It shows how systematic price analysis can deliver substantial operational improvements for one-time investments.

Deutsche Post DHL Group analyzed all supplier offers with NLPP to better understand each offer's price-performance ratio. These insights were used in negotiations to improve efficiency and capacity while maintaining cost efficiency.

The implementation consisted of the following steps:

1. Early Engagement of Cost Engineering: The DHL Cost Engineering team was involved early in the project.
2. Defining Requirements: DHL Express defined the initial requirement for the sorting equipment capacity in parcels per hour as a reference for further improvements.
3. Application of Performance Pricing Methodology: NLPP was applied to determine the best possible price/performance ratio based on clearly defined performance drivers such as sorting capacity, reliability, etc.

Through NLPP insights, DHL Express negotiated price and specification improvements with the supplier, resulting in a 20% increase in sorting capacity and significant cost savings compared to the initially calculated budget.

• Best-, Market- and Worst-Price Benchmarks: NLPP calculates three benchmarks for each offer, providing a clear price range. This allows understanding of the upper and lower limits of what a justified price should be for a given level of performance.
• Data-Driven Targets: The Target price calculated by NLPP is a precise price estimate based on the relationship between price and performance derived from the supplier's quotes. This objective, data-backed target is a strong foundation for negotiations, moving away from subjective pricing and value-based discussions.
• Enabling specification improvements: NLPP's focus on the relationship between price and performance allows for a more nuanced discussion with suppliers that can extend beyond price reductions to include specification improvements. By understanding how different performance parameters impact the price, it becomes possible to negotiate for better specifications without necessarily increasing costs, aiming for the best price-performance ratio.
• Universal NLPP Methodology: The core principle of analyzing the relationship between price and performance has proved valuable for recurring purchases for a long time and now for significant infrastructure investments, with NLPP's capability to calculate precise target prices for "any kind of products and services procured."
• Standardized Analysis Toolbox: DHL could apply a consistent price and performance analysis methodology across procurement scenarios, including significant capital investments like the Munich Gateway.

The DHL Express Munich Gateway project demonstrates the effectiveness of NLPP for one-time investments. This case study exemplifies Deutsche Post DHL Group's commitment to operational excellence and cost-effective infrastructure development by systematically applying performance pricing methodologies. The project delivered significant value through reduced costs and increased capacity, establishing a benchmark for analytical methods of future logistics infrastructure projects.