Strategy of the KION Group

The focus in the 2017 reporting year was on implementing strategic measures under the Strategy 2020.

In the context of its overarching growth initiatives, the KION Group made improvements to its production operations and its sales and brand strategies in order to support joint business development. As part of this process, the Stříbro site in the Czech Republic is being expanded to include a new plant for Dematic’s automated conveyor systems. This capital expenditure project, which began in March 2017, will enable multishuttles and modular conveyor systems to be built at the plant from 2018 to support the SCS segment’s strategy for growth in Europe. Baoli raised its profile as an international brand for the lower end of the volume segment and the economy segment by founding KION Baoli EMEA. This business is being expanded in central and eastern Europe, and elsewhere, using the infrastructure of Baoli’s sister brand STILL. This will also improve the opportunities for joint business development by ITS and SCS. Business was stepped up significantly in North America by introducing five new trucks, the development of which was decided upon under the Strategy 2020. KION North America, along with its truck brands, is now listed as an official supplier for numerous customers of Dematic. This collaboration also included joint appearances at trade fairs (see the ‘Customers’ section). Once the product launch of warehouse trucks scheduled for 2018 has taken place, KION will have a complete product portfolio tailored to the American market. Electric forklift trucks and warehouse trucks are an extremely important element in the implementation of integrated supply chain solutions. In 2017, the SCS segment laid the foundations for a one-brand strategy. Bringing together the full SCS range – including the automated guided vehicle systems – under the global Dematic brand and dropping the existing Egemin Automation and NDC Automation brands will make it easier to position the range in a customer-focused way in all markets. As part of this, Egemin was integrated into Dematic, thereby creating benefits both for innovation management and customer management.

Both segments have also made further improvements to their product range. In the ITS segment, Linde Material Handling began selling electric forklift trucks with more powerful lithium-ion batteries in the fast-growing two to three tonne load capacity range. A new solution for pallet handling and order picking in narrow aisles was also brought to the market. Virtually all warehouse logistics activities can now be carried out with a lithium-ion variant. STILL expanded its product range with new ride-on pallet trucks and pallet stackers that will increase handling capacities. In addition, it launched new picking trucks on the market and now also offers a broad portfolio of products featuring lithium-ion technology. In September, Dematic signed a global agreement with the Norwegian warehouse systems provider AutoStore^®, thereby expanding its range of integrated omnichannel solutions with an ultracompact goods-to-person warehouse order picking system. Around the world, Dematic will be offering a system solution as well as extensive services. Version 2.5, introduced in July 2017, of the Dematic iQ software platform includes a new system solution for material flow analysis.

The steps taken to increase efficiency included, in particular, the redesign of the plant structure at LMH in Aschaffenburg and the elimination of ramp-up problems at Dematic’s site in Monterrey, Mexico. Following the transfer of warehouse truck production to the Stříbro plant and the relocation of Linde Hydraulics, the focus in Aschaffenburg is now on electric forklift trucks and diesel trucks. This means production processes can be structured more efficiently in future. Moreover, Dematic realised its first cost synergies through the shared use of corporate services at the level of the KION Group.

In the year under review, the KION Group further developed its Strategy 2020 to create “KION 2027”, which it began implementing at the start of 2018 once the Supervisory Board had given its approval. “KION 2027” builds on the success of the Strategy 2020 (formulated before the acquisition of Dematic), under which profitable growth, efficient use of capital and a high level of resilience to economic fluctuation have been achieved over the past five years. The strong position achieved with the Strategy 2020, particularly in the ITS segment, is to be consolidated. Another objective of “KION 2027” is to unlock the potential of all the companies in the Group and to focus even more on a joint customer-centric strategy for innovation, sales and branding. The main emphasis in this regard will be the overarching development and marketing of integrated, automated supply chain solutions and mobile automation solutions. Overall, the KION Group is striving to steadily increase its share of the global material handling market and to continue to have the highest profitability in the industry. The other aims are to ensure the Group remains crisis-resistant and maintains an adequate return on capital employed.

“KION 2027” provides guidance on the strategic direction to be taken by the KION Group over the next decade. The strategy is aligned with the KION Group’s vision: “We are the best company in the world at understanding our customers’ material handling needs and providing the right solutions.” The KION Group is much more than the sum of its brands and regions.

At the core of the strategy lies the range of material handling solutions offered to customers. The KION Group wants to evolve more towards being a solution provider in both segments. In the ITS segment, consultancy and project work are increasingly being added to the traditional portfolio of products and services. And in the SCS segment, the range of solutions for customers is being expanded through partnerships, such as with AutoStore^®.

Five strategic fields of action have been defined for the “KION 2027” strategy:

• Energy: In the material handling market, the KION Group wants to lead the way in terms of efficient energy use by its products and solutions. Thanks in no small part to the high energy-efficiency of its premium brands’ products, the KION Group is a global market leader for electric forklift trucks and warehouse trucks. A focus of the strategy will be to develop and commercialise new energy sources for industrial trucks and related services, such as the provision of advice on energy matters.
• Digital: The KION Group will transform its business in an increasingly digital world. The digitalisation of customer solutions, which will even include fully automated warehouses incorporating robotics solutions, will be accompanied by the digitalisation of internal processes. Digital solutions will be developed for customers to improve the efficiency of their intralogistics. The KION Group will digitalise its inhouse processes so that they are more effective. It will not only integrate software into solutions but also increasingly market it to customers as a separate product. New internal organisational structures will enable the KION Group to cater to the high expectations regarding the speed at which solutions are created and adapted. This will pave the way for agile development and embed it across the KION Group.
• Automation: The KION Group’s solutions will enable customers to use automated technologies effectively and will help them on their journey to a ‘lights-out’ warehouse. Today, the KION Group and its two segments cover the complete spectrum, from customers with just one forklift truck to those with fully automated large-scale warehouses. It will develop different solutions so that it can offer all customers a scalable automation solution that is suited to their particular requirements and to which extra components can be added.
• Innovation: The KION Group is driving innovation in the material handling market with an effective innovation ecosystem and cutting-edge, rapid development processes. It is developing new technologies into innovative products for use in both segments. To this end, it enters into strategic partnerships with research institutes, universities and innovative companies so that it can go to market quickly with new products and solutions.
• Performance: The KION Group is continually improving its internal efficiency and the performance of its products from a customer perspective. It is continuing to fully leverage its synergies as a strategic management holding company.