Management approach to products and solutions

The further development of the KION Group’s multi-brand strategy goes hand-in-hand with the comprehensive management of the Company’s product portfolio based on a global platform and modular strategy in the Industrial Trucks & Services segment. To this end, the technical functions of R&D, procurement, quality assurance and the production system have been brought together in a central KION organisation headed by the Chief Technology Officer (CTO). Dematic was also included in this organisation in the reporting year.

Based on centrally coordinated and prioritised activities, specialised product-development teams at KION’s global development locations produce customer-specific solutions for the individual operating units. To leverage synergy effects and to consolidate knowledge Group-wide, a cross-brand, transregional development approach is increasingly being adopted.

In the reporting year, work continued on the long-term development of a product roadmap underpinned by a variety of review periods. The setting of Group-wide benchmarks and frameworks is intended to enable the improved evaluation of capacity for innovation and the strategic focus of the product portfolio.

Currently, a range of energy-optimisation programmes are running under the umbrella of the CTO organisation. Among them, the KVCO (KION Variant Complexity Optimization) programme aims to optimise the variant landscape – reducing product complexity and diversity, shortening development times and unleashing efficiency potentials.

The KION Group’s expenditure on R&D in fiscal year 2017 totalled €212.3 million (previous year: €147.1 million). This is equivalent to 2.8 per cent of Group revenues. The increase of expenditure is attributable mainly to the complete inclusion of Dematic from fiscal year 2017 onward.

The KION Group protects its product developments fully and comprehensively against imitation, and follows a rigorous patent strategy. In 2017 the KION Group, including Dematic, registered 101 patent applications for the first time (previous year: 93). At the end of 2017, the KION Group had 2,808 (as at the end of 2016: 2,689) patent applications and patents granted.

As at the end of the reporting year the KION Group employed 1,533 full-time staff in the various R&D (research & development) departments – a year-on-year increase of 3.8 per cent, attributable mainly to the expansion of the Automation and Digitalisation departments (see the section Research and development in the Annual Report 2017).

Comprehensive Group-wide approach

R&D at the KION Group essentially works on a cross-segment, cross-brand and transregional basis, which ensures that research findings and technological know-how are shared across the Group. The resulting uniform standards and global coordination of its engineering activities will enable the Company to offer more product variants at lower expense and with shorter development processes.

The CTO organisation plays a crucial role in this respect, as it coordinates and brings together the development projects which the operating units’ project management teams define based on the requirements in their markets. These requirements are determined based on findings from customer discussions, market research and competitor analyses. The KION Group currently sees significant trends in the areas of digitalisation, automation and network, energy efficiency, and robotics solutions.

In Product Strategy Councils (PSCs), the development programmes are discussed, agreed and submitted to the Group Executive Board for decision, with the KION product strategy providing the necessary guidance from a Group perspective. Three times a year checks are performed to establish whether the development team’s proposals correspond to the Group’s strategic objectives and budgets. The approved development projects are then further planned and implemented in the CTO organisation. The goal is to achieve Group-wide harmonisation of product development objectives according to their scope and format. Based on comparable information, this produces an agreed requirements profile for a KION Group portfolio that meets the needs of the market and objective.

The sharing of experience and know-how between the various segments and brands is of particular importance in this regard. One example of this is the use of agile development methods. After shaping the development process at Dematic for several years, the processes are also being implemented progressively in the ITS segment. In the area of mobile automation, a topic that interfaces the two segments ITS and SCS, exclusively agile methods are used to develop the subject areas of automation and connectivity.

The overarching objective spanning all activities is to increase customer benefit in all market segments and sales regions. Specifically, this means being able to offer high quality and superior product performance at a competitive price through the consistent use of module and platform strategies.

Sustainability aspects are taken into account in various ways in the KION Group’s product development activities across all the different objectives and development focus areas. Efforts to achieve the lowest possible TCO (Total Cost of Ownership) for all products in the Industrial Trucks & Services segment are inextricably linked to the development of the most environmentally friendly and efficient drive technologies. KION’s Supply Chain Solutions segment also focuses on solutions that are as energy and space-saving as possible, thus maximising cost efficiency and minimising their environmental impact.

The KION Group places the highest requirements on product safety and ergonomic design, which means customers can also offer their employees maximum protection as well as optimise occupational health and safety through ergonomic workflows. This also brings long-term cost and competitive advantages for customers. Last but not least, statutory provisions such as those relating to environmental protection, occupational health and safety as well as ergonomics also mean that sustainability aspects are continually being integrated into the development process.

To pay even greater consideration to sustainability aspects in product development activities going forward, the Group is currently considering whether to make this topic a focus area right at the start of the product development process in the stage-gate process.

Close and active involvement of customers in the product development process characterises the way the KION Group and its operating units manage innovation and develop products. After all, tailored and cost-effective products are only made possible through precise knowledge of each sector’s and market’s requirements. This is why the KION Group and its subsidiaries have for many years taken a wide range of approaches to engaging in dialogue with customers and stakeholders such as universities and scientific research institutes.

To involve customers in an even more targeted way in the product development process, the Group uses tried-and-tested methods such as the Linde TruckClinic. Dematic and STILL also survey their customers on a regular basis to evaluate their specific requirements. STILL EMEA has also been using a comprehensive customer feedback system for many years now, which is based mainly on two instruments: the Customer Satisfaction Index serves as a daily benchmark of customer satisfaction, while the Net Promoter Score, which is calculated globally, shows how likely customers are to recommend STILL. An average of 2,300 customers are surveyed each month on their experiences of using STILL products and services, and the results are evaluated. Newly developed products are also trialled by customers to gain key insights into how well they receive them. Additionally, sector trade fairs and events such as Linde Material Handling EMEA’s World of Material Handling customer event that spans several weeks, and STILL EMEA’s customer days, also make a very significant contribution to information-sharing.

All operating units offer their customers comprehensive product training and instruction, which in some cases goes well beyond statutory requirements. An example of this is the Linde Safety Scan, which was established in the reporting year. Through this, Linde Material Handling makes its safety experience available even for the design of internal logistics processes, and supports customers in analysing and eliminating safety risks. Specially trained experts – the Linde Safety Consultants – evaluate the internal movement of people and vehicles within a facility, and together with the customer produce specific recommendations for action regarding organisational and technical solutions. They also support customers in implementing these recommendations. Underpinned by LMH’s long-standing experience, the Linde Safety Scan helps to increase the safety of the customer’s employees and vehicles, while at the same time improving productivity.

Quality is a key component of the promise to deliver the benefits offered by all KION Group products. Quality assurance therefore plays an important role right from the very start of the value chain, reducing potential quality risks in service provision.

The quality management systems of the KION Group and its operating units have held ISO 9001 certification for many years. The STILL EMEA production plant in Hamburg has been ISO 9001 certified since 1995, and Linde Material Handling EMEA’s production plants in Aschaffenburg have been certified since 1996. The Dematic quality management system has also been ISO 9001 certified since 2008. Around 90 per cent of all production plants are certified, and in 2017 the new plant in Stříbro in the Czech Republic joined them. With the creation of the central CTO organisation, numerous product development structures have also changed; as part of the next ISO 9001 certification pro­cess in 2018, the CTO organisation will also therefore undergo certification.

When selecting suppliers, the Company attaches the greatest importance to quality and reliability. The KION Group expects suppliers to have an established, recognised quality management system, and to document and archive proof of their quality performance. New suppliers confirm they have these systems in place as part of the supplier self-assessment at the start of the business relationship, and are audited by KION accordingly. If suppliers fail to maintain their management system, the business relationship with them is usually ended (see the section Sustainable procurement).

The KION Group can confine quality risks to a considerable degree through demanding quality standards in development, rigorous checks across the entire process chain, and close customer and supplier contact. Alongside this, the KION Group aims to achieve the ambitious goal of further improving quality-failure statistics over the long term, minimising truck downtimes, and introducing standardised quality assurance processes around the world. To achieve this, and to minimise the operational failure rate, the KQCO (KION Quality Cost Optimization) initiative was launched in 2017 and its quality objectives were further expanded.

Customers, suppliers and partners are also involved as far as possible in the quality assurance system at Dematic through transparent, robust and verifiable processes. These focus on product safety and product-related environmental protection, whereby all process levels are planned, monitored and documented according to customer and product-specific criteria.