Business model and organisational structure

The KION Group’s business model is designed so that customers of all sizes and from all kinds of industries can obtain the full spectrum of material handling products and services from a single source. Thanks to its broad technology base, diversified product portfolio and worldwide service network, the KION Group has the most comprehensive portfolio of such products and services in the market.

The KION Group’s market activities are divided into five Operating Units: LMH EMEA, STILL EMEA, KION APAC, KION Americas and Dematic. LMH EMEA and STILL EMEA each concentrate on Europe, the Middle East and Africa. KION APAC and KION Americas hold cross-brand responsibility for industrial truck business in the Asia-Pacific region and the Americas respectively. Dematic is the global supply chain solutions business. While the Operating Units have full operational and commercial responsibility within their markets, KION GROUP AG is the strategic management holding company and is responsible for the groupwide strategy and groupwide business standards.

For internal management purposes, the KION Group has divided its operating business into two segments that correspond to the segments as required by international financial reporting standards (IFRS 8). The industrial truck business, including the supporting financial services, is shown in the Industrial Trucks & Services segment, while activities focusing on end-to-end solutions make up the Supply Chain Solutions segment. The two operating segments complement each other because they both have a strong market position and regional presence. The Corporate Services segment comprises the other activities and holding functions of the KION Group. These include service companies that provide services such as IT and logistics across all segments. > TABLE 011

Industrial Trucks & Services segment

The Industrial Trucks & Services segment encompasses the activities of the international brand companies Linde, STILL and Baoli, the local brand companies Fenwick, OM STILL and OM Voltas plus the financial services business.

Linde is an international premium brand and technology leader that meets customers’ most sophisticated requirements regarding technology, efficiency, functionality and design. In France, Linde products are sold under the Fenwick brand.

STILL is predominantly an international premium provider of trucks with electric and diesel-electric drives. It mainly focuses on the European and Latin American markets, with the national brand OM STILL serving the Italian market.

Baoli is the international brand for the lower end of the volume segment and the economy segment.

OM Voltas is the national brand company for the Indian market, through which the KION India Pvt. Ltd. subsidiary manufactures and sells electric and IC forklift trucks and warehouse trucks.

KION Financial Services (FS) is an internal funding partner for the Industrial Trucks & Services segment, providing finance solutions to support sales. Its activities comprise the financing of long-term leasing business for external customers, the internal financing of the short-term rental business and the related risk management. In the large sales markets with a high volume of financing and leasing, legally independent FS companies handle this business. So that it can fully cater to the needs of material handling customers worldwide, the business model of the Industrial Trucks & Services segment covers key steps of the value chain: product development, manufacturing, sales and logistics, spare parts business, truck rental and used truck businesses, fleet management and financial services that support the core industrial truck business.

The segment earns just over half of its revenue by selling industrial trucks. The product portfolio includes counterbalance trucks powered by an electric drive or internal combustion engine, warehouse trucks (ride-on and hand-operated) and towing vehicles for industrial applications. It covers all load capacities, from one to 18 tonnes. Worldwide research and development activities enable the Industrial Trucks & Services segment to consolidate its technology leadership, which it is extending in the areas of innovative, energy-efficient and low-emission drive technologies and hydrostatic and diesel-electric drive systems. In this field, the KION Group operates a total of 16 production facilities for industrial trucks and components in eight countries. So that it can ensure security of supply and the availability of spare parts for important components in order to meet customers’ specific requirements, the segment manufactures major components itself – notably lift masts, axles, counterweights and safety equipment. Other components – such as hydraulic components, electronic components, rechargeable batteries, engine components and industrial tyres – are purchased through the global procurement organisation.

As a rule, industrial trucks are built according to the customer’s individual specifications. Advantages for customers in terms of total cost of ownership (TCO) underpin the international Linde and STILL brands’ premium positioning. The trucks’ hallmarks are cost-efficiency, high productivity and high residual values. The international Baoli brand serves the lower end of the volume segment and the economy segment.

The segment is underpinned by an extensive sales and service network comprising around 1,400 outlets in over 100 countries and staffed by approximately 17,800 service employees. Just under half of them are employed by the KION Group. In other cases, the Operating Units rely on external dealers.

The worldwide vehicle fleet, which comprised more than 1.3 million industrial trucks at the end of 2017, provides a stable basis for the spare parts, maintenance and repair business. The service business, which includes financial services, helps to smooth out fluctuations in the segment’s revenue and reduces dependency on market cycles. This business also strengthens customer relationships, thereby helping to generate sales of new trucks. Extensive supplementary services are offered, mainly for premium products. However, the proportion of service business is continually increasing in the other price segments too.

There are also individual orders for repairs and maintenance work as well as for spare parts. In addition, the segment looks after entire customer fleets, using special software to monitor the trucks in the fleets and to enable customers to efficiently manage their fleets.

The Operating Units also have extensive rental truck and used truck businesses, allowing peaks in capacity requirements to be met and customers to be supported after their leases have expired.

Financial services support new truck business in many markets, forming another pillar of the service business. About half of all new trucks are financed via the KION Group itself or via external banks and financing partners. Offering financial services is therefore part of the truck sales process. End customer finance is generally linked to a service contract throughout the term of the finance agreement. In the main sales markets with a high volume of financing and leasing, financial activities are handled by legally independent financial services companies. These activities include long-term leasing to customers and internal financing of the Operating Units’ short-term rental fleets.

Supply Chain Solutions segment

The Supply Chain Solutions segment is a leading global supplier of integrated automation technology, software and services for optimising supply chains. Since the start of 2018, all solutions have been marketed under the central Dematic brand, including those previously sold under the Egemin Automation and NDC Automation product brands.

Manual and automated solutions are provided for all functions along customers’ supply chains, from goods inward and multishuttle warehouse systems to picking, automated palletising and automated guided vehicle systems. Picking equipment controlled by radio, voice or light is available for nearly all goods and packaging types, whether it is used for case, individual item, split-case or pallet picking. Automated storage and retrieval systems (ASRS) such as RapidStore and high-performance picking stations (RapidPick) can be used to achieve very fast throughput times and picking rates. In 2017, an ultracompact order picking system was added under a global partnership with AutoStore^® that enables significantly more inventory to be stored within the same floor space. At the same time, cross-docking solutions increase the efficiency of the system as a whole by eliminating the unnecessary handling and storage of goods.

Real-time management of the supply chain solutions is based on the proprietary, software platform Dematic iQ, which can be easily integrated into customers’ existing application landscape. Dematic iQ offers much more than traditional warehouse management systems, helping with the data-based optimisation of all processes to ensure seamless order processing. It also supports performance management functions for measuring and controlling performance.

The segment is primarily involved in customer-specific, longer-term project business. With global resources, ten production facilities worldwide and regional teams of experts, Dematic is able to plan and implement logistics solutions with varying degrees of complexity anywhere in the world.

The (new) project business (business solutions) covers every phase of a new installation: analysis of the customer’s needs and the general parameters, provision of appropriate advice, computer simulation of bespoke intralogistics solutions in the customer’s individual environment, technical planning and design of the system, implementation of the control technology and its integration into the customer’s existing IT infrastructure, site and project management, plant monitoring and support for the customer during implementation of the system, including training for the workforce.

The system components, which are specified in detail for each customer project, such as automatic guided vehicles, palletisers, storage and picking equipment including automated storage and retrieval systems, sorters and conveyors, are manufactured inhouse at ten production facilities or, in some cases, by quality-assured third parties.

The breadth of this offering allows the segment to offer a one-stop shop for modernisation work and services (customer services), which usually cover the entire lifetime of an installation. The installed base of more than 6,000 systems provides significant potential for this business, including on-site support provided by approximately 1,300 employees (not including back-office staff) in over 20 countries. > DIAGRAM 003