Interview with the Board
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“Those who lead the way set the destination.”
Interview with the KION Group’s CEO Gordon Riske about the added value of intralogistics – and the role of sustainability.
Mr Riske, the market for intralogistics products and services has been growing at an above-average rate for many years, around 1.5 times as fast as the global economy. What is driving this impressive growth?
Riske: Our industry is growing as the international division of labour progresses and global competition requires every company to strive for maximum efficiency. This has brought about a global market of around €150 billion. In Germany alone, intralogistics companies employ a total of approximately 125,000 people. Every year, goods such as forklifts, warehouse equipment and other industrial trucks as well as the corresponding services worth more than €20 billion are produced in our industry.
This is a remarkable development, considering that ultimately intralogistics does not create added value. The transport of goods from A to B is an operational necessity that must be handled as efficiently as possible. The goods themselves are not upgraded as a result.
Riske: I beg to differ. Our industry has been growing significantly for many years precisely because we can offer tangible added value with our products and solutions. Granted, we are not a traditional product supplier, but we see ourselves as enablers that offer opportunities to make production and shipping better, faster and more efficient.
Just take a look at the last 150 years of economic history: Since the beginning of industrialisation, competition has not only been determined by the product you make, but increasingly also by how efficiently you produce it and bring it to the customer – and, for some years now, how sustainable your actions are.
From traditional assembly line production at the time of Charles Taylor and Henry Ford, to concepts such as Kanban or just-in-time, to Industry 4.0, which currently dominates the competition for the most efficient production: None of this would have been possible without efficient intralogistics. When we talk about artificial intelligence in manufacturing today, about machines that will run mostly without human control in the future, it’s clear this will only become reality if intralogistics creates the foundation.
The basic idea is always the same: The right part at the right place at the right time. The more efficient intralogistics is, the more efficiently and cost-effectively this task can be performed – and the more competitive the respective company is.
What’s the situation in retail?
Riske: It’s very similar. The cheapest price has long since ceased to be the sole criterion for making a purchase. Maximum availability and the shortest possible delivery times, sometimes within a few hours, are becoming increasingly important for consumers’ decisions. So, demands on warehouse and picking systems are exorbitant when it comes to speed, flexibility and accuracy. Booming e-commerce, for example, would quickly reach its limits without efficient intralogistics.
Here, too, intralogistics plays a decisive role in determining who is ahead of the pack. In short, intralogistics has become the central success factor of every industrial or retail enterprise. This may not represent any added value in the strict sense of the definition, but it is crucial for the future viability of every company.
Is an end to this development in sight? Every market will be saturated at some point, won’t it?
Riske: I doubt that will be the case anytime soon, especially since we still see great potential in markets such as India or China, for instance when it comes to the use of industrial trucks. Moreover, intralogistics is not a specific product. We offer solutions that are always state of the art. This is why, looking ahead, we also pursue very specific trajectories with our new ‘KION 2027’ strategy: automation, digitalisation, energy efficiency, innovation, combined with a clearly defined demand for maximum performance.
But sustainability is not part of it …
Riske: On the contrary! However, our understanding of sustainability is very comprehensive; in other words, sustainability defines all our actions and cannot be limited to a particular direction.
In the field of energy, in particular our specific offers for the energy-efficient use of our products, we have already incorporated important aspects of sustainability into our product development: namely resource efficiency and climate protection.
This literally pays off for our customers. Because energy-efficient intralogistics is a prerequisite for efficient production. And the relevant data reveals even at a cursory glance that there is great potential for companies and the environment alike.
So sustainability is primarily focused on the use of the products?
Riske: Yes, of course, because this is where the biggest lever for reducing energy consumption lies. At LMH EMEA, we have demonstrated this with extensive lifecycle analyses: More than 80 per cent of a product’s energy consumption occurs during the use phase.
Innovations such as alternative drives help to tap this potential. For example, electric drives in industrial trucks have a much higher efficiency than systems with internal combustion engines. And modern warehouses require only around half the energy for order picking. Anyone who applies innovative technologies here to make improvements will not only be ahead of the competition, but will also make an important contribution to climate protection.
Economic benefits combined with ecologically responsible action: That’s our understanding of sustainability.
Where else can we see this understanding?
Riske: Of course also in the way these products are created, for instance when we talk about health and occupational safety or environmental protection. Here, too, we help our customers implement sustainable processes and thus meet the high demands of being responsible for their employees’ health. Even though a large number of processes will be fully automated in the future, we will always need people. Safety and ergonomics therefore continue to play an important role. And besides social responsibility, we must also consider the economic aspect here. Safe and secure operations mean fewer breakdowns and only supreme ergonomics offer maximum efficiency in operation and lead to lower long-term absenteeism. Once again, sustainability and economic efficiency go hand in hand. By the way, this is a topic to which our company also devotes a great deal of attention.
At the same time, digitalisation and automation make people obsolete, replacing them with machines…
Riske: First off, it’s a matter of assigning people to where their abilities are needed and where they can provide maximum benefit. You’re right, very simple tasks in particular are increasingly being taken over by machines. But that’s not necessarily always a negative development, because these tasks are often neither very attractive to employees nor particularly value-creating. At the same time, the new, highly automated systems bring about a multitude of new tasks that entail new, attractive jobs for many people. In the end, the number of new, value-creating jobs to be created will be higher than the number of less attractive ones being eliminated.
It is up to us, the companies and society as a whole, to shape this substitution process responsibly, for instance by providing adequate training and further education, so that individual employees are spared negative effects as far as possible. People are the yardstick; their well-being must always be the focus of attention. And this applies to all the change processes that we as a society will undergo in the coming years.
So, can we understand this as a clear commitment to corporate responsibility?
Riske: Absolutely. And we are not the only ones who hold this view. Most of our customers also regard responsible, sustainable action as an inherent part of their corporate identity. We have a duty to them, just as we demand responsible action from our suppliers and business partners. We want to live up to this obligation and at the same time consider the interests of our employees, shareholders, neighbours and ultimately society as a whole. To this end, we also have our sustainability programme, which we are advancing consistently. As with everything we do, we have a clear claim to leadership – because only those who lead the way set the destination.