PostNL Delivers New Business Models with Low-Code
- Anticipating a massive increase in demand for parcel deliveries due to the growth of e-Commerce, PostNL sought to replace a legacy order management system architected for a peak of 600,000 parcels per day
“We’ve only just scratched the surface.” Jasper ten Hove is humble when he talks about the work the IT department has done for PostNL.
ten Hove is the Manager of Logistical e-Commerce IT at PostNL, the Netherlands’ national postal carrier and one of the largest logistics and parcels companies in the Benelux. He is talking about the lifeblood of PostNL’s ever-growing parcels business: their new fit-for-purpose, custom-built order management system. This system – and the method by which it was built – has helped PostNL process 1.1 million parcels per day, a product of significant, continuous year-over-year growth, and eliminate a two-year IT backlog in just two quarters’ time
All these results, and yet, for ten Hove and his colleagues at PostNL, these achievements are just the beginning of their long-term business strategy. Their team has created a virtuous circle of value through speed of development, continuous feedback loops, and a keen alignment to business goals.
The greatest achievement the logistics provider has made is placing software firmly at the center of the way they do business. PostNL’s IT department is transforming PostNL from a mail and parcels company that delivers software into a technology driven company delivering mail and parcels. All powered by a new way of working that stems from a microservices-architected order management system that is likely the most complex low-code implementation ever attempted.
What led PostNL to the Mendix low-code Platform was a combination of changing market demands and the need to adapt their IT systems to match their business vision.
PostNL’s entire foundation was built on mail—the delivery of letters and parcels right to the mailboxes of 17 million customers throughout the Netherlands and Belgium. PostNL still delivers 8.1 million letters per day, but in the past 15 years the company has seen an explosion in their parcels business, catalyzed by massive growth in e-Commerce.
“A screaming shortage of capacity,” is how ten Hove describes the effects of e-Commerce on PostNL.
But PostNL delivers. For a business built on mail, PostNL has made the successful shift to parcels. So much so that in 2020 the parcels business of PostNL officially overtook mail as the biggest part of their business. Essential to that achievement is their order management system.
Anticipating a rise in parcel orders Chris Neuteboom, product owner for the order management system, and his team began to develop a solution in 2007. This system could handle—what at the time Neuteboom and team thought was remarkable scale—600,000 orders per day. The order management system was your classic technological monolith: developed with traditional programming languages, on an old operating system, with third-party developers.
The order management system was critical to PostNL’s core business. And like many monoliths, the order management system that Neuteboom, ten Hove, and the rest of the team had built no longer held up to the demands of a market that was growing and changing quickly. E-commerce continued to boom, and parcel orders were trending well north over the anticipated peak of 600,000 per day.
Beyond issues of scaling a system to meet growing e-Commerce demand, Logistics demands a constant improvement in business process. To optimize these processes, a logistics provider needs to:
- Quickly update software, sometimes in real time
- Avoid or mitigate downtime for vital systems
With their monolithic order management system, combined with increasing demand, supporting this level of scale and process improvement was not possible.
PostNL’s vision goes beyond a more modernized order management system. Yes, they need to keep up with parcel demand – that will continue to increase. In fact, in a pandemic-hit 2020, parcel demand was reaching holiday-season peaks almost year-round.
But even in 2015, PostNL had ambitions beyond parcels for other lines of business such as time-bound, furniture delivery, fulfillment, or health and medicine. All of which require supporting software that reflects many of the same input/output processes of parcels but have varying delivery and data needs.
Different packages require different information, but generally follow the same input/output process as parcels or mail. Large cargo and pharmaceuticals, for instance. The business process around order intake for these items is a very similar process, but the two have very different informational makeup. Each requires different equipment and delivery personnel. One is time-sensitive, the other usually not. One may require refrigeration, the other may be a refrigerator.
PostNL distinguishes these items by identifying different businesses they call operators. An operator has its own logistical function to best match an item’s unique needs, meaning the order management system would have to change according to what was being delivered through it.
With a vision to be a market-leading logistics provider, and the ambition to realize this through constant, instantaneous changes to process, PostNL realized that it was impossible to meet this standard with their order management system in a brittle, monolithic state.
“It was slow. It was complicated. It was a black box for us,” said David Ramp, Order Management Platform Owner at PostNL. “It didn’t function anymore; there were too many constraints.” To lay the groundwork for future scale, and to help transform PostNL into a market-leading, efficient logistics provider, something needed to change.
Planning a New Route
Monolithic systems were once suitable for use cases like order management, but their defined, stable architecture means that the rapid changes required to keep up with an ever-evolving business environment are difficult to impossible. To achieve their vision, PostNL’s team needed to thread a tricky needle. They needed to provide a conduit for constant change and optimization without sacrificing stability and reliability.
In 2015, Neuteboom, ten Hove, and Ramp began re-architecting the order management system. But the process was slow-going. When coding with traditional languages, what appears to be a simple business process is wrapped in complex syntax, forcing readers to interpret what it means before suggesting changes to improve it. The process, due in no small part to speed of change, was slow-going. By 2019, the team had only accomplished roughly 40% of the work.
Neuteboom sums up the goals of the new order management system well: “We wanted to build a system which was more flexible, so that we could go into the future and make really fast and secure changes to offer new services to the market.” Part of re-thinking their architecture meant turning the order management system into a framework that PostNL could build once and reuse across their operators, adjusting as-needed based on the item being delivered.
It was no easy task, considering that for each parcel, there are 18 events or touchpoints in the processing chain that guides the parcel towards its destination. This chain contains metadata including where the package should be delivered, at what time, and if a signature is required or not. Comprised of duplicate services across 32 sorting centers, the new system would need to process upwards of 10 million transactions per day.
Neuteboom, ten hove, and Ramp began to look for alternative development methods, allowing them to move faster and ready their organization for the future. Ultimately, they chose to re-architect their entire system with Mendix, delivered in a vast microservices architecture.
Your Package Is On Its Way
With a goal so ambitious, PostNL put a team together. Internally, they worked together with business stakeholders to ensure the applications they built truly met the needs of users. Externally, PostNL enlisted the help of Mendix delivery partner CAPE Groep to re-build and rearchitect the order management system, transforming it into the framework upon which PostNL’s business runs.
Their starting point, according to CAPE Groep program manager Arthur van Leeuwen, was “finding the most efficient way of bringing software to the market. You need to think about how you model the reuse of application parts and consider the quality of code and models. You have to integrate quality into all those aspects to lower the cost of ownership.”
Terence Duinkerken, CAPE Groep developer, elaborates on scaling across the network of distribution centers: “How do you scale the physical business and basically copy that way of scaling? We developed a very large microservices landscape to support this.”
The team devised an architecture consisting of a portfolio of 64 microservices. Each of PostNL’s 32 sorting centers would be assigned two dedicated services—an input service, responsible for receiving orders, and a process service, handling changes to orders. Each service would be assigned a duplicate version in the event that the other goes down, ensuring high availability and creating a failsafe that strengthens PostNL’s commitment to delivering on time. This mesh of applications would then send the parcel’s route to a field services platform and transmit order updates to the rest of PostNL’s ecosystem to inform users about the status of the order. The system promised impressive reach. 4.5 million people would be able to follow their packages and re-route deliveries, if necessary.
Realizing the complexity of the proposed system, and the consequences that might have on maintenance and updates, PostNL and CAPE Groep utilized the Mendix platform to ensure active monitoring of the delivery process and proactive visibility into the state of their solutions as they’re deployed. “It offers other upsides as well,” Duinkerken states. “If you have an application per sorting center, when you roll out a new version you can treat one sorting center as a canary in the cage. You can test for a few days, and if it all goes well, roll it out over the rest of the landscape.”
Having translated their vision into a sophisticated architecture and project plan, and with CAPE Groep in place to help develop the system, PostNL got to work.
Delivering with Low-Code
In the four years that preceded the Mendix project, only 40% of the order management project was delivered. Using Mendix and microservices, and with the assistance of CAPE Groep, PostNL delivered the remainder of the solution in just 12 months.
Core to this were Mendix’s model-based development, seamless cross-departmental collaboration, and Mendix Cloud. Using Mendix’s visual development language, building these applications and replicating them across the 32 depots was far simpler than traditional programming and duplicating would have been. To PostNL’s IT team, Mendix is a perfect fit for logistics because it visualized business processes. “Low-code is excellent for quickly and continuously adapting workflows,” ten Hove says. “That’s basically what an order manager is: a combination of workflows.”
With code, it can be difficult to impossible for developers to show business domain experts how line after line of code translates into a business process they would recognize, and more difficult, still, to collaborate in real-time to solve problems. According to Neuteboom, that’s easy with Mendix. “With microflows and notation, it’s quite readable. You recognize your business processes in it.”
With Mendix, what PostNL created was inherently user-friendly, understandable, and maintainable. Where this proved most valuable for Ramp is in the collaboration between stakeholders and IT. “Low-code makes business topics more understandable because it’s a business process. So, you have a common language that we can talk about. It’s so much clearer in discussions with your business stakeholders, what you’re building – what the choices and possibilities are.”
PostNL is running the entire framework on a microservices architecture, deployed on Mendix Cloud, a fully managed deployment target. Beyond hours gained on their sleep schedules, Neuteboom, ten Hove, Ramp, and their team are assured that these critical workloads are supported by a 99.95% uptime guarantee, auto recovery, and automated backups. Each application deployed into the landscape is fully cloud native out of the box, allowing the team to focus on constant improvement, rather than fine-grained infrastructure and architectural configurations.
By combining microservices and Mendix’s visual language, collaborative features, and monitoring capabilities, the new system allows PostNL’s IT team to make changes to software down to the molecular level: changes made at the depot-level, at the operator level, or even features that support the customer, like a capability for a business customer to re-schedule a delivery to arrive within their business hours. PostNL can routinely customize and optimize these 64 microservices without downtime, with a well-defined DevOps philosophy and CI/CD capabilities that include version control, application quality monitoring, and a control center affording visibility into the entirety of their application portfolio.
Previously, changes to their previous, monolithic system could have potential, far-reaching effects to the rest of its code. Now, if a change needs to be made, it can be made in mere days, without affecting the remainder of the landscape. “You simply deploy a new app,” said ten Hove. In previous days, ten Hove recalled, “adding in requirements that are specific to the sorting center would have taken us a couple of weeks.”
With the new order management system, IT is now firmly placed at the center of PostNL’s business model. The system has proven itself capable of processing as many as 1.1 million parcels per day, with more growth on the way. The IT team has eradicated a two-year backlog of requests in just two months’ time.
Success with the software they are developing requires a focus not on the technology, but on the business problem. Such a philosophical shift has created new business opportunities.
PostNL refuses to rest on its laurels. The architecture underneath the new order management system serves as a proven foundation and template for other lines of business.
Take orchestration, for instance. Bram Grijzen, another PostNL veteran, serves as the chief platform owner of the orchestration platform. The platform he oversees works between the senders, operators, and receivers. Grijzen states the purpose of the platform simply: “Create supply chains for every single item.” An order comes in, is enriched with additional data, then AI is used to generate a prediction of when an item will arrive. That prediction then informs the execution plan, which takes into account a receiver’s delivery preferences and past delivery history. The orchestrator runs the plan through various constraints to validate the plan. The type of package determines the deliverer. For example, a bicycle courier can’t deliver a sofa.
The goal for PostNL is not only operational efficiency, but to deliver a best-in-industry customer experience. The orchestration platform puts customers in control of their delivery. PostNL is also able to measure everything from the health of the system to the value of decisions that are made by way of cost efficiency, NPS scores, and churn scores.
Another system built on this low-coded framework is the Time Bound Network for parcels, which allows PostNL to offer delivery within tight timeframes across different types of parcels. Ramp owns the Time Bound Network and talks about its ability to scale in volume and quality based on the requirements of different lines of business: “It manages 50,000 to 60,000 orders an hour. But, for example, the health line of business is much lower—5,000 orders per day—but requires more quality per order.”
PostNL is using the framework to accelerate improvement of these adjacent parts of their business, as well. Beyond Time Bound for parcels, and the launch of the new orchestration platform, new platforms are being built to support fulfillment, home goods, and health or medicine deliveries, re-using components and know-how from the order management project.
This new architecture is proof that building a robust, mission-critical system doesn’t necessarily mean it has to be large, opaque, and etched in stone. It’s offered flexibility, creating countless possibilities for improvement and growth. PostNL now quickly implements changes to offer faster delivery times, creates entire new lines of business, and enhances customer benefits by experimenting with technologies like AI.
PostNL’s work and technological achievements are garnering nationwide recognition, and deservedly so. Reflecting the magnitude of this success, PostNL received a Computable Award, one of the most important IT honors in the Netherlands. Customers are receiving different kinds of packages in new ways of; in the case of health and medicine parcels, lives are being improved. PostNL is not only a leader in Logistics but is proving to be one in IT as well.
The shift to this new architecture is a digital representation of the shift PostNL is making in reality, as well. Once a project-based organization that would make changes or build new functionalities on an ad-hoc basis, PostNL IT now has persistent teams running, maintaining, and continuously improving their platforms. “People are in here for the long run,” ten Hove says of the transformed department.
PostNL has become an IT company. And the IT department is nurturing a community of iterative building, experimenting, and collaboration within their department and with other business-stakeholders. With these changes to IT, ten Hove sees a lot of opportunities for motivated developers and technically-minded people within PostNL, and for a broad range of technical hires to come. “The technical stuff is in the hands of the people that are motivated to make the difference.”
Ramp thinks back to his early days in PostNL. He remembers the constraints he faced went beyond the technical. What worked back then doesn’t work now for the organization’s needs and customers’ demands.
Much like the underpinning architecture of the platforms they’ve created with Mendix, PostNL’s new way of working has created a sustainable framework that will grow with the team for years to come. Team members are encouraged to raise new ideas and experiment.
ten Hove continues to look forward to new opportunities this new way of operating offers. The construction of this new framework offers something more than streamlined logistics and halved operational costs. “It gives us this perspective of being something more than purely a logistical provider,” he says, envisioning PostNL marketing and selling the functions they’ve built to help other logistics businesses and operators, and to build a stronger ecosystem that helps consumers get their parcels.
PostNL plans to grow. In the works are 12 more depots across Holland and Belgium, an anticipated increase in parcels, more drivers, more new lines of business. At the heart of this growth is the IT team.
They may be finished with initial build of the framework, but it’s just the beginning.
“In all fairness,” ten Hove says, “my teams will probably say there’s still a lot of work to be done. In that respect, maybe we’ve only just started this.”
“We’re only finished if we stop.”