Customizing solutions for the airline industry
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Customizing solutions for the airline industry Cost savings vs. Enhanced Customer proposition. Why not have both? DHL Supply Chain Ocean House The Ring Bracknell Berkshire RG12 1AN United Kingdom Telephone: +44 1327 308 474 Email: email@example.com www.dhl.com All information is correct as at time of printing: August 2009 08-09/CV/5046
DHL Supply Chain Airline Business Solutions 1 THERE IS SOMEONE WE WANT TO SATISFY EVEN MORE THAN YOU: YOUR CUSTOMER In our business as one of the world’s largest airlines At DHL we believe our approach represents a fundamental and managing 12% of the world’s cargo (spending shift from a catering-led approach. We consider the over $2bn p.a. with commercial airlines) we airlines’ onboard requirements, examining the end-to-end recognize and share the pressures facing the airline process and re-evaluating the total supply chain. industry – escalating commodity prices, increasing competition, stricter safety regulations and higher The airline catering model is based around logistics. value inventories. “Flight catering is 80% logistics and 20% catering (some said 70:30 and others 90:10)”1. It’s with this in How should airlines respond to fluctuating consumer mind that DHL has entered the market, applying its demand, lower passenger yields, food cost inflation and strategic thinking, operational excellence, supply chain the price of fuel? Who will survive and how will we and business transformational expertise into the global work together to weather the storm? airline services market. Our aim is to drive mutual commercial benefit through improved efficiency, The successful airlines will be those which can adapt to product selection and cost reduction. change, and make it work in their favor. In the current business climate is the answer to trade your customer DHL Supply Chain provides a range of industry-specific proposition for cost savings? We think there is a better solutions. These incorporate consultancy services, way. DHL’s Airline Business Solutions aims to help business solutions and design, sourcing, production, airlines take a strategic approach to business storage, assembly and delivery to after-sales and returns. transformation related to their ‘above the wing’ Our customers can rely on us to utilize the wealth of expenditure, creating value by reducing cost, while skills and capabilities within our organization to develop improving the customer experience. innovative solutions that work for their industry and their environment, no matter how demanding. 1 Professor Peter Jones, University of Surrey, OnBoard Hospitality, February 2009
2 DHL Supply Chain Airline Business Solutions 3 THERE IS SOMEONE WE WANT TO SATISFY EVEN MORE THAN YOU: YOUR CUSTOMER We have vast experience in managing extremely We drive sustainable competitive advantage for complex supply chains across a broad range of our customers by getting their products to market business sectors, from aviation to automotive, consumer faster and more efficiently. Whatever their size, our to technology, food retail to fashion and industrial to customers can rely on us to draw on our local insight healthcare. Each of these industries has its own critical and global scale to deliver value across every aspect of activities, whether it be delivering chilled/frozen food to their supply chain. Our role, in short, is to help make supermarket stores nationwide on a 15 minute deadline, our customers successful. delivering time-critical sensitive healthcare products, or managing customized line feeding of car parts to a And what is our knowledge based on? In addition to continuous production line. being the largest global supply chain and freight forwarding business, we also operate 350 of our own We use our industry and supply chain expertise to turn aircraft, as well as utilizing the capacity of many other complex customer requirements into flexible solutions airlines. We have representation at over 220 airports which meet customer challenges head-on. It’s your globally and partner with some of the leaders in the perspective we take and it’s your business needs industry to provide specialist transportation services. we anticipate. We make it our business to understand We have airside facilities and are highly experienced in your goals, objectives, key customers and competitive managing airside operations, with approved drivers and issues to help improve their business models. We vehicles as well as knowledge of aviation legislation and work closely with our customers, shoulder to shoulder insurance requirements. with their management teams to establish trust and confidence to develop same-side-of-the-table behaviors to drive mutual success.
4 DHL Supply Chain Airline Business Solutions 5 AIRLINE BUSINESS SOLUTIONS Procurement & Sourcing AIRLINE BUSINESS SOLUTIONS DHL are a large business with a turnover in excess of solution through a comprehensive range of services optimizing our network, whilst seeking continuous €41.6bn and we have real credibility in transforming and operating models. And by partnering with world improvement and cost reduction. We take responsibility businesses. As a result many customers come to us with class organizations, the DHL approach creates a ‘best for assembling and controlling the resources, capabilities their business problems, often broader than purely of breed’ solution and allows for the creation of a more and technologies of our own organization (3PL) or AIRLINE supply chain. targeted customer proposition. The result is a customized, sourcing from the right third party service providers Food leaner, more cost effective, responsive business model to (4PL), whether they be producing raw or finished Services BUSINESS Logistics Through our supply chain consulting and network meet and adapt to changing market dynamics. materials (food or retail). We assume accountability SOLUTIONS design studies, we help customers with the big picture; for the management, performance, cost and we understand what’s working and what can be Past experiences have taught us that in order to gain the development of the entire business solution. optimized for improved operational efficiency and best sustainable return for your business, a strategic enhanced customer service. approach and partnership is key. Tactical initiatives Whether our customers want a full end-to-end seamless can then be implemented to fulfill the strategic solution or just an element of the solution, DHL can be Our business has a long and successful track record of objectives by adopting a true end-to-end approach for relied on to help fulfill their business objectives. delivering step change transformational programs the provision of ‘above the wing’ services. that address large, complex and underperforming The four key principles to our ‘above the wing’ airline business-critical issues. These can be driven by an Successful transformational change requires a strong solutions are: Commercial internal or external trigger for change and generate relationship between both parties: shared vision • eliver great tasting food D Model significant customer value. We plot out the path, and goals, shared risk and reward with joint • Optimal cost procurement re-engineer and work with our customers to deliver incentives to motivate both parties to exceed expectations. • Intelligent logistics the change. • Flexible commercial model By adopting our airline business solution as a Fourth DHL is able to offer airlines a ‘one-stop shop’ utilizing Party Logistics Provider (4PL) or 3PL provider we will our expertise to design the appropriate business adopt lean thinking across the end-to-end process,
6 DHL Supply Chain Airline Business Solutions 7 WORKING WITH THE RIGHT PARTNERS TO DELIVER GREAT TASTING FOOD AIRLINE BUSINESS SOLUTIONS We will find the right partners for your region with Consumer knowledge - we provide airlines with real Food safety - highly qualified teams assure the quality the capability to design and consistently produce customer insight and ensure that we are responsive to and the safety of the food that is produced. We ensure Consumer an enhanced customer experience. Whether it be changing consumer and market trends; whether that rigorous hygiene standards are maintained knowledge recruiting specialist chefs to adapt the latest restaurant be a greater demand for seasonality, healthier options, through all stages of the supply chain from the trends into a premium in-flight dining experience or international recipes, or perhaps for different packaging raw materials that are bought through to the finished Food Food-related safety procurement utilizing the latest manufacturing techniques to to reduce the impact on the environment. This insight products which leave our facilities. produce best quality offering at the right price, DHL is gained from our customers and partners’ experience, can find them. incorporating the latest retail and restaurant trends Food packaging - through our innovation, industry supplemented with targeted market research. insights and materials knowledge we can introduce new packaging options to enhance the look of the Food-related procurement - our partners understand product, reduce space and support environmental Menu Food Non-premium food your customer proposition and using this knowledge and sustainability objectives. We also show great design Services production determine whether to make or buy in prepared goods. consideration to ensure ease of use by the consumer and They utilize their buying power to purchase quality service delivery by cabin services. materials, ingredients and services from preferred suppliers at the best price. Tray assembly - we look to constantly innovate our assembly processes based on our learnings across a Premium Food Premium and non-premium food production - from wide range of industries to deliver cost savings. food packaging creation of premium food menus to buy on board retail production services, our partners have the knowledge and expertise Menu design - through our chefs’ knowledge, Tray using the latest food production, innovation and food consumer insight and food science expertise we can assembly science techniques to consistently produce high plan, design and seek to push the boundaries for quality food and improve the customer experience. new menus.
8 DHL Supply Chain Airline Business Solutions 9 OPTIMAL COST PROCUREMENT & SOURCING SOLUTIONS AIRLINE BUSINESS SOLUTIONS We determine our customers’ real procurement needs In-house design - the formula for success is based on a Optimum cost procurement - due to the size of and produce long-term solutions. We do whatever it flexible, innovative approach backed by deep procurement our group and the expertise of our people we unlock In-house takes to deliver their objectives. expertise and the insights gained from working relationships hidden savings and utilize our global buying power. design team with some of the world’s biggest companies. Dedicated teams Through our people and processes we enable optimum From strategic sourcing to fully outsourced can be established in-house, leveraging a considerable cost procurement which leads to improved asset procurement, our capabilities cover every aspect of skilled off-site resource using procurement technology. utilization, reduced sourcing cycle time, increased Global today’s purchasing and supply management functions. supplier-led innovation, improved working capital Consultancy Global sourcing - our performance is maximized by & cash flow and process improvement. sourcing leveraging our experience in local, regional, and global supply markets with our significant market Inbound management - the integration of purchasing power. Our transparent commercial purchasing within our solutions creates the basis Procurement approach to procurement gives us the edge, meaning for establishing a total end-to-end process for & Sourcing that ultimately our customers benefit from getting logistics process management. Purchasing and products to market more quickly and cost effectively procurement thus becomes the enabler for the logistics and without the internal resource needed. ability of a company. Inbound Purchasing management strategies Purchasing strategies - we have developed an unrivalled Consultancy - we can help with every aspect of the combination of capabilities, particularly in complex, procurement challenge and the objective is to deliver service-based categories. We deliver results by drawing tangible and sustainable benefits for our customers. upon a proven combination of methodologies, tools, We provide a structured approach that accurately Optimum cost systems and specialist expertise to help in generating identifies value improvement opportunities, then procurement the best possible purchasing strategy (developing key we ensure the benefits are delivered and locked in for supplier partnerships to e-tendering). the long term.
10 DHL Supply Chain Airline Business Solutions 11 INTELLIGENT LOGISTICS, MEETING YOUR CURRENT AND FUTURE BUSINESS NEEDS AIRLINE BUSINESS SOLUTIONS As the world’s largest contract logistics specialist we Through performance measurement we: To keep our customers ahead of the game, DHL pride ourselves on consistently delivering excellent • L isten to and understand the voice of our customer adopt a proven process improvement methodology. We Carbon operations. Our customers can rely on solutions • Provide the customer with detailed collaborate with our customers to identify opportunities assessment that work harder for their business through our management information to re-engineer or continuously improve operations DHL commitment to listen and innovate, supported by • Conduct operational performance reviews based on their business objectives. Storage Aerospace our disciplined approach to performance measurement, • Support problem solving and continuous quality assurance, project management, environmental improvement Environmental management and sustainability are management and process improvement. core to our business. Customers are expecting greener Planning is critical to business success, that’s why solutions and we are market-leading within the airline Fleet Inventory We engage with our clients on a consultancy basis, DHL has made project management a core discipline industry, actively tracking and minimizing our effect on management management but unlike other consultants, we deliver from and a key differentiator. Through our DePICT® project the environment and sourcing products from sustainable Logistics implementation to steady state. It is for this reason management methodology, we ensure that the solution sources wherever possible. that we focus all of our expertise and experience on is implemented on time, to budget and becomes an driving sustainable competitive advantage for our operational reality. We define roles, expectations, scope DHL as a business is committed to the environment customers now and for the future. and goals, then monitor projects so closely that we can and through its environmental program, GoGreen, is Waste and anticipate and respond to risks and opportunities before targeting a reduction in its carbon footprint: 10% by returns Security Our performance metrics provide DHL management they happen, which is key to keeping a project on track. 2012 rising to a 30% reduction by 2020. management teams with the appropriate tools and management information to understand performance and manage the We are passionate about quality assurance. Quality Print Freight business on your behalf. is about finding ways to constantly raise the bar. When management forwarding we say quality, we mean delivering the highest levels of accuracy, on-time performance, and exceeding food hygiene and regulatory requirements, to drive ultimate value for the customer.
12 DHL Supply Chain Airline Business Solutions 13 INTELLIGENT LOGISTICS, MEETING YOUR CURRENT AND FUTURE BUSINESS NEEDS Building on our customer-focused culture and Our inventory management system allows us to to all levels of staff and have a wealth of experience and passion for successful operations we can bring a efficiently manage the flow of materials, people and knowledge of airport operations around the globe. unique set of skills and capabilities to the airline equipment to a high degree of visibility. Enabling our sector to help develop a competitive advantage customers to reduce their inventory and have access to Waste management - our Environmental Compliance for our customers. These include: greater availability. Solutions group within DHL delivers an environmentally focused approach to waste management. We promote Business solutions - through our industry knowledge Freight forwarding - we are the No.1 provider of air re-use, pre-treatment and segregation of waste to and expertise we turn complex customer requirements and sea freight operating globally in over 150 countries. improve recycling rates and eliminate landfill. into flexible solutions that appear seamless and simple, We source products from around the world and have while meeting our customers’ challenges head-on. the infrastructure and network to design a customer Print management - we provide expert management solution based on the desired service levels and optimize of all the printed and digital materials through Williams Full outsourced solutions - as a successful Fourth transport costs. Lea, renowned as world leaders in the provision of Party Logistics Provider (4PL) we can apply the Corporate Information Solutions. resources and expertise of the DHL organization to take Our fleet management solutions use the latest full responsibility for the complete management of our technologies related to vehicle design, traceability customers’ end-to-end operations. and regulatory compliance. This advancement gives our customers the operational confidence to meet Facilities and inventory management - we manage their desired service levels in the most efficient and the design, build, implementation and operation of environmentally friendly manner. dedicated and shared-user facilities – including bonded, temperature-controlled, industry-specific (e.g. airside) Security - we co-operate with regulatory authorities and conventional warehousing. Whether facilities are to design and implement regional and global security provided by us or sourced from a third party provider. policies and procedures. We provide security training
14 DHL Supply Chain Airline Business Solutions 15 A FLEXIBLE COMMERCIAL APPROACH AIRLINE BUSINESS SOLUTIONS In any operation we believe that different commercial DHL is committed to balancing both operational options should be available, depending on our and financial needs to provide best value. Sharing Closed customers’ needs. risk and reward gives both parties the incentive needed book to form long term strategies. Through the open book Our open book management model gives our customers commercial model we can provide structured savings. full transparency of the financial information regarding their operation. This enables us to work together By adopting our airline business solution as a Fourth to make more informed decisions and ensure our Party Logistics Provider (4PL) or 3PL provider, DHL can Open customers have greater control over their budgetary add real value to your business by: 3PL book spend. Through this model we are able to work towards • Reducing operating costs through improved aligned goals, eliminate conflicts of interest and distribution, transport, procurement and staffing Commercial provide the flexibility over the term of the contract • Reducing your working capital through reduced Model to support any changes in the customer’s strategic inventory and improved availability direction. Open book information includes, but is not • Reducing fixed capital expenditure through improved limited to, revenue, profit, cost of goods and services, asset utilization across our network cash flow and expenses. Ultimately, the DHL solutions deliver enhanced Our commercial model of closed book management customer value by improving product quality, Lead logistics Risk and and accounting is very much still prevalent in today’s availability and customer service performance, whilst provider reward business. Benefits of this include having fixed pricing reducing cost and capital investment which results in with a matrix of charges depending on volume and improved profitability and shareholder value. the services required.
18 DHL Supply Chain Airline Business Solutions 19 MANUFACTURING & RAW MATERIALS EXPORT / IMPORT ACTIVITIES PRIMARY MOVEMENT DISTRIBUTION CENTERS SECONDARY MOVEMENT B2B & B2C DISTRIBUTION AFTER-SALES & reverse logistics NO MATTER HOW COMPLEX YOUR BUSINESS IS, International/national transportation, order processing, inventory management Integrated services - trucking, warehouses, air/ocean import/export, customs team Transporting from import to warehousing, including management of fleet Warehousing - can include ambient, chilled, frozen, bonded, automated Movement of finished goods from distribution centers to local areas By specialist trucks, vans or by post to businesses or consumers Management and transporting of used/ damaged/unwanted goods THERE IS A SOLUTION FOR YOU Customizing feeding line- Supplier component A scalable warehousing and Warehousing of motorcycles, side parts to a continuous collections, consolidation distribution solution for tyres packaging and delivery to production plant and forward distribution to to allow for seasonal demand national and international AUTOMOTIVE production lines across EMEA dealers Consolidation point for DHL provide all export/import DHL receives, stores and Delivery of bulk petroleum Collection of finished Just-in-time delivery of inbound deliveries prior activities for construction manages products at a facility to a national supermarket windows from two factories, materials, components and to kitting, assembly and materials plus timed located inside a plasterboard garage forecourt of over cross docked where orders maintenance parts to 2,500 INDUSTRIAL transportation of components distribution to enable a manufacturing plant. Products trackside and depot railway 270 sites are consolidated for daily and to a train manufacturer in project in a highly populated are then loaded onto trucks onward delivery to stores engineers throughout the UK We are confident that we can meet your business Our best example of the savings can be seen with the central role in planning and managing other supply Barcelona city to run on time for further distribution challenges faster and more effectively. Our scale and NHS Supply Chain business. In 2006, we entered into chain service providers on behalf of its customer, Inbound to manufacturing- Global clinical trial study Inbound transportation and Off-site hospital warehouse Movement and kitting Over 200,000 deliveries of Providing storage and express expertise mean that, the chances are, we’ve already a 10 year contract with the English National Health including freight and express services. including freight, customs management including storage at -150ºC and onward and on-site customer service of expensive drugs to 26 medical devices to diabetic distribution of replacement clearance, and inventory blinding packs, labeling, and shipping within re-usable point to reduce hospital countries with labeling, patients in Italy IV infusion pumps to cover solved your problem many times in the past. In fact, Service (NHS), where we are responsible for managing HEALTHCARE management for an temperature monitoring liquid nitrogen containers traffic and avoid duplication refurbishment units within UK literature and quality checks the likelihood is that we’ve made it a best-practice the procurement of over 620,000 healthcare products Our flexibility and adaptability mean that we can manage orthopaedic manufacturer of stocks hospitals solution, ready to be implemented by an account team and targeted with over £1 billion savings to be channeled fluctuating daily and weekly demands. We operate a Shuttle and line-side Inbound and outbound Management of inbound Warehousing, assembly of Management of materials Delivery and installation Return and repair services that intimately understands the market. back to the NHS, to improve patient care. network of distribution centers and transportation for services to production transport management freight from port to a central products and distribution of through Europe, Middle East of photocopiers and home for mobile phones including a leading supermarket retailer, which entails picking lines for a global computer through a control tower European distribution center products for an information and Africa of backup power cinema etc to the home or swap stock distributed direct TECHNOLOGY manufacturer in Ireland service for a global PC for a printer manufacturer management and storage to the end user We’ve described our business excellence and here are just It’s not just about delivery: our power packaging and packing of store products with an accuracy rate of supplies office so that it is ready for manufacturer specialist use straightaway few examples of our depth and breadth in practice: operation is the largest contract manufacturer of food over 99.8%. Within individual locations the volume can and beverage products in North America. We produce rise to up to 2 million cases per week with a demand Providing shuttle transport Management of point-of-sale Using our dedicated planning Warehousing operations that Storage, kitting and Distribution of consumer of packaging deliveries to a for 52 beverage distributors center, DHL manage all provide multi-user services preparation (including local goods from a multi-user We perform global supply chain management for a everything from beverages to cake mixes for some of fluctuation of 40,000 cases per day. Due to the design leading global brewer across three regions, globally primary movements for one of and processes to store, handle language printing of vacuum ambient and temperature- CONSUMER from 300 vendors in Asia, the world’s leading consumer and distribute goods for food leading toy retailer, managing the buying process and the biggest consumer brands in the world in a variety of setup, the distribution centers also act as a hub within a cleaners to be distributed to controlled facility across Europe and the Americas manufacturers manufacturers emerging countries) Spain transportation for suppliers principally from Asia to packaging options. hub and spoke network to move bulk supplies efficiently the Americas and Europe. Our warehousing operations around our facilities for distribution to the stores. The management of up to The management of over Start-up distribution center Distribution of chilled and Two-man home delivery Collection of returned in each region manage peak seasonal demand of over Our European, inbound logistics solution for a leading 4,000 container movements 1,000 containers of inbound in Slovakia for a supermarket frozen goods to over 400 service for larger goods such products, waste and from Asia and 1,300 road / products from printers across chain’s expansion into this supermarkets nationally as sofas and brown goods packaging plus product 50,000 orders a day employing 1,100 personnel. To luxury car manufacturer, has resulted in considerable RETAIL rail movements from across the globe into China, US and new country recalls for a retailer of baby Europe into production facilities UK warehouses products in the UK handle the seasonal variation, DHL has set up its own cost reduction and more responsive logistics planning. for a kitchen manufacturer temporary employment service. This arrangement As the Fourth Party Logistics Provider (4PL), DHL’s Receiving inbound garments The warehousing, picking and The distribution to a network Pickup and return distribution provides us with greater flexibility, whilst retaining control tower operation has a key success factor in the from the Far East to three packaging of branded items of 175 national fashion stores to factory outlet for a fashion the business knowledge by attracting more returning European element of inbound logistics, involving 500 warehouses in Europe ready for distribution around label FASHION France seasonal employees. Through this initiative our quality automotive component suppliers in 17 countries and improvement process has led to a 30% increase in leading to just-in-time delivery of customized parts to efficiency since its start-up. the production line. Acting as the 4PL, DHL played a
20 DHL Supply Chain Airline Business Solutions 21 WHAT MAKES US DIFFERENT? 1. Customer focus - We aim to think from our 3. Business transformation - Globally we have customers’ perspective and to anticipate their teams dedicated to business transformation using 1 corporate needs. We make it our business to the most comprehensive change management tools Customer understand their growth objectives, key customers, and processes available. These include our industry- focus 2 profitability goals, competitive issues, and more, leading methodology DePICT®. No project goes live Leverage scale helping to improve their business models through within DHL without adopting this methodology. focused relationship management. Success can only be achieved with shared vision and shared goals. Together with effective leadership, 4 We work closely with our customers, often shoulder customer focus and employee engagement Delivering 3 to shoulder with their management teams – building we create the drive for successful operational value confidence and trust in the delivery of their service change to happen. Business transformation whilst encouraging same-side-of-the-table behavior to gain mutual success. 4. Delivering value - We can deliver value through streamlined processes, greater efficiency, innovation, 2. Leverage scale - DHL are active in more than thought leadership and adopting best practice 220 countries and territories, around the world, from our global business in a broad range of employing around 310,000 people. With each of these industries. This allows our customers to have the countries, territories and markets comes different opportunity to realize both cost savings and an challenges, and our ability to meet these challenges enhanced customer proposition. has led us to hold a No.1 position in many of our markets. But to us, being No.1 is about much more Then the process starts all over again… than size. It is about being a leader in service, innovation and meeting our customers’ needs.
22 DHL Supply Chain Airline Business Solutions 23 Proactive Solutions; Personal Commitment; Local strength, worldwide DHL is a Deutsche Post DHL brand with a vision to successful staff recruiting and human resources development. FOR MORE INFORMATION become “The logistics company for the world”. Our Ultimately we have committed people that don’t accept the DHL will always strive to understand your airline promise to customers is to provide simplifying services status quo – every day, across the world, our people work business needs and work with you to develop the and sustainable solutions, and to always demonstrate hard to stay informed about local markets and growth most intelligent solutions. respect without compromising on results. trends, and we proactively inform our customers about new solutions and opportunities, gained from experience in other Simply email Chris Jackson or Richard Cawthra at: We bring together the combined strength of DHL markets and operations around the globe. This creates real firstname.lastname@example.org Global Mail, DHL Express, DHL Freight, DHL Global growth opportunities for our customers. We’re a name Forwarding and DHL Supply Chain services. you can trust in places you may not. Alternatively you can telephone DHL Supply Chain on: +44 1327 308 474. We aim to be the First Choice – our way of working, our Deutsche Post DHL is not just the largest logistics corporate culture, our ambition to be the first choice company. It is also rated as one of the most innovative for our employees, investors and customers. The goal of companies in the industry worldwide. The Group First Choice is to establish a customer-oriented culture contains its innovation activities in the DHL Innovation throughout the company. For us, this means offering new Center, which opened in 2007. To bring new logistics and existing customers even better services, to ensure that products to the market, the DHL Innovation Center they continue to work with us and recommend us to others. maintains strategic partnerships with leading global That is the path that will take us forward, in all divisions all companies as well as research alliances with the logistics over the world. First Choice is a central tool for us to reach institutes of universities and societies around the world. our objective of becoming the “provider of choice”, the “investment of choice” and the “employer of choice”. We continue to improve the overall customer understanding and drive our organization to become DHL is only as good as its employees, and that’s why we even more customer-centric and to be first choice for work hard to design policies and concepts focused on our global customers.
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