Strategy of the KION Group
Objectives of the KION 2027 strategy
In 2018, the KION Group began implementing its updated strategy, KION 2027. It provides guidance on the strategic direction to be taken over the next decade and 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.”
Following the integration of Dematic, the KION 2027 strategy’s aim is to unlock the potential of the entire Group and place an even greater focus on a shared, customer-centric innovation, sales and brand strategy. The emphasis is on developing and marketing integrated, automated supply chain solutions and mobile automation solutions for customers around the world. In the Industrial Trucks & Services segment, consultancy and project work are increasingly being added to the traditional portfolio of products and services. And in the Supply Chain Solutions segment, the range of solutions for customers is being expanded through partnerships, among other things. The KION 2027 strategy provides the framework for profitable growth in the Group and sets groupwide targets:
- Growth: The KION Group aims to grow at a faster rate than the global material handling market by evolving into a solutions provider in both segments.
- Profitability: The KION Group wants to retain its position as the most profitable supplier in the industry and improve its EBIT margin so that it is permanently in the double-digit range.
- Efficient use of capital: The KION Group is working steadfastly to optimise the return on capital employed (ROCE). Besides increasing earnings, the focus here is on asset management and efficient use of capital.
- Resilience: Profitability throughout the various market cycles is to be guaranteed by a robust business model. This will involve greater diversification in terms of regions and customer sectors alongside efforts to expand the service business and further optimise the production network.
Strategic fields of action and measures in 2018
Five fields of action have been defined for the KION 2027 strategy – energy, digital, automation, innovation and performance – for which a wide range of strategic measures were implemented in 2018:
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 has become a global market leader for electric forklift trucks and warehouse trucks. A focus of the strategy is to develop and commercialise new energy sources for industrial trucks and related services, such as the provision of advice on energy matters.
Several measures enabled the KION Group to move a step closer to its objective in 2018. Energy-efficient lithium-ion batteries, which offer a number of benefits including shorter charging times, lower operating costs and greater range and availability, are now an option for the entire Linde and STILL fleet. The RX 20 electric forklift truck made by STILL won the International Intralogistics and Forklift Truck of the Year award in the Counter Balanced Truck category (see ‘Research and development’). Furthermore, Linde’s new rental concept is encouraging the use of energy-saving drive technology in intralogistics. The benefits for customers are flexibility and financial security over the entire usage period. Through its strategic partnership with EP Equipment, Co., Ltd., Hangzhou, a leading Chinese manufacturer of warehouse trucks, the KION Group improved its market position in the entry-level segment for lightweight warehouse trucks. It will also drive forward electrification based on lithium-ion technology in this segment. The KION Group is also a leader in fuel-cell technology, as evidenced by a rising number of customer orders.
The KION Group is aligning its business with 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.
The important role that digitalisation plays was recognised with the creation of a fifth Executive Board role in 2018. Susanna Schneeberger has operational responsibility for the Supply Chain Solutions segment (Dematic) and, as Chief Digital Officer (CDO), coordinates the further development of the IT systems and manages the groupwide activities aimed at digitalisation and networking products and processes. The new KION Digital Campus, established in early 2018 as an agile innovation laboratory for new digital solutions and business models, is an example of the speed of digital change within the KION Group. The laboratory instructs teams in agile work methods and software developers help them to rapidly create minimum viable products for initial use in test phases. The first solutions developed in the Campus include a chatbot app for service technicians and an application for data-based fleet optimisation.
The KION Group’s solutions will enable customers to use automated technologies effectively and will help them to achieve 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 continue to 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.
Building on its leading position in the AGV and AMR segment, Dematic improved its range of automated guided vehicle systems significantly last year. Dematic’s new robotics centre of excellence, which focuses on developing and implementing robot-based automation, delivered the first market-ready product in July. The new robotic piece picking module completes the automation of order processing and increases throughput.
The Dematic iQ software, which enables real-time management of material flow solutions, was expanded with the cloud-based asset performance management system Dematic iQ InSights. This new module increases warehouse efficiency through end-to-end facilities management. Linde and STILL have also extended their digital offerings, in particular for fleet management.
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.
In addition to the investment in the KION Digital Campus, a further example in 2018 was the integration and refinement of the offering of Comnovo, a start-up acquired in 2017. Comnovo has developed Safety Guard, an assistance system that uses ultra-wideband technology to increase safety in Logistics 4.0. The assistance system now plays an important role in delivering Linde’s VISION ZERO, an advisory and training package designed to increase productivity and prevent accidents at work. The KION Group also expanded its collaboration with external research institutes and scientists, for example as part of QBIIK, a joint research and development project between STILL and the Federal Ministry for Economic Affairs and Energy aimed at improving self-learning autonomous truck technology. KION Invest is a newly established unit that works with start-ups to drive forward new technologies and innovative business models that will benefit KION Group customers in the future.
The KION Group is continually improving internal efficiency, optimising the performance of its products from a customer perspective and fully leveraging synergies.
In 2018, the KION Group continued its efficiency drive at European production sites in the Industrial Trucks & Services segment. The new and largely automated powder painting plant came online at the Linde site in Aschaffenburg during the first quarter of 2018. A new logistics centre at the STILL site in Hamburg serves as the hub for internal logistics, including the storage and dispatch of large truck parts. Dematic is now able to serve customers in the European market even better thanks to its new factory in Stříbro in the Czech Republic, which commenced operations in the first quarter of 2018. It produces modules for multishuttles and modular conveyor systems.
Efforts were also focused on even more efficient product development based on a global, modular platform strategy that allows for localisation with minimal effort. The diesel trucks developed in the Chinese research and development centre, for example, are also available on the North American market through local supply chains. The offering for the US market comprises three warehouse trucks and a new diesel truck with a load capacity of four to five tonnes.