Strategy of the KION Group
Objectives of the KION 2027 strategy
Last year, the KION Group updated its KION 2027 strategy, which provides the framework for profitable growth across the Group and specifies groupwide targets.
Under the revised strategy, the full extent of the KION Group’s intralogistics portfolio is being aligned even more closely to the specific requirements of the various industries in which its customers operate. The integration of the hardware (industrial trucks and automation solutions), software (from control center to vehicle control), and services (from repair to financing) into a single offering is being driven forward as part of this strategy.
A sustainability target was added to the financial and non-financial strategic objectives specified for 2027. The implementation of the strategy is based on six newly defined fields of action, which are intensifying the focus on the cross-brand approach to sales, on the more ambitious sustainability program, and on cost efficiency.
The refinement of the strategy also led to a new and modified vision for the KION Group, one that more closely reflects the breadth and value offered by its sustainable, future-focused solutions: “We understand what our customers require for their intralogistics and supply chains better than any other company in the world and we supply them with long-term solutions that are the right ones for them, both today and in the future.”
The following targets have been set as part of the KION 2027 strategy:
- Growth: The KION Group aims to grow at a faster rate than the global material handling market by offering integrated, automated, and end-to-end solutions for specific industries and customer requirements in both its operating segments.
- Profitability:The KION Group is taking decisive measures to return to profitable growth and has the ambition to improve its adjusted EBIT margin so that it is permanently above 10 percent, for the Group as a whole and its operating segments Industrial Trucks & Services and Supply Chain Solutions.
- Efficient use of capital: The KION Group continually strives to optimize the return on capital employed (ROCE). Besides increasing earnings, the focus here is on asset management and efficient use of capital.
- Resilience and agility: 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 optimize the production network and internal processes.
- Sustainability: Through innovation, ideas, and decisive action, the KION Group is helping to drive sustainability in logistics. We have put in place ambitious targets and a clear sustainability strategy. The KION Group contributes to climate change mitigation and enhances safety for its customers and its employees by means of its products, solutions, and services and by making logistics processes more sustainable.
Strategic fields of action and measures in 2022
The following six specific fields of action have been defined for the KION 2027 strategy and translated into strategic programs to implement the individual goals.
Multi-branded Go-to-Market
By stepping up its focus on supplying integrated end-to-end systems from a single source, the KION Group is addressing the central customer demand for solutions that are simple, reliable, and flexible, as well as energy- and cost-efficient. The integration of the offering forms part of an overarching value proposition that taps into the potential of the individual brand companies and their successful positioning, targets the entire market, and sets the KION Group apart from its competitors.
Across the segments, the Group is moving forward with multi-brand solutions built on the use of networked trucks and AMRs and including a shared software platform and integrated services. It is also stepping up its multi-brand strategies on the sales side. Thus, KION intends to expand the dealer network in the fast-growing Chinese market covering all brand companies.
Growth plans for specific regions
The KION Group is helping to drive growth across its business through regional growth strategies that are flexible, efficient, and targeted at the requirements of the local market. Because a high level of market penetration has already been achieved in Europe, the focus here is on the APAC and Americas regions. To ensure maximum proximity to its customers, the KION Group is concentrating its efforts to achieve this regional growth on increases in local production capacity and further expansion of the sales and service network.
In China, the plant for the Industrial Trucks & Services segment in Jinan commenced volume production of counterbalance trucks in February 2022. An ‘Intelligent Experience Center’, where customers can see KION technology in action, was added to this production and development facility last year. A plant is also being built in Jinan for the Supply Chain Solutions segment.
The presence of the Industrial Trucks & Services segment in the North American market is to be increased significantly from 2023 through continued expansion of the local sales and production capacities.
Sustainability
Acting sustainably and responsibly is one of the key principles by which the KION Group operates. The Group’s focus on sustainability in the dimensions ‘people, products, and processes’ is reflected in its efforts to manufacture products that are as eco-friendly and safe as possible, to use climate- and environmentally friendly manufacturing processes, and to provide a safe and non-discriminatory working environment.
Further objectives and initiatives are specified in and pursued through eight fields of action that address the Company’s contribution to a climate-neutral, circular economy, its product portfolio, and its employees.
In the reporting year, verifiable ESG targets were incorporated into the Executive Board remuneration system, covering categories such as occupational health and safety, certification of environmental management systems, external evaluation of sustainability performance, and the KION Group’s appeal as an employer. A revolving credit facility linked to ESG criteria underlines this commitment.
From a product perspective, the focus last year was on the ongoing development of energy-efficient solutions. The KION Group is forging ahead with the development and refinement of energy-efficient drive solutions, from internal combustion engines to various electric drive systems and fuel cells. In 2022, KION Battery Systems GmbH launched a second production line for lithium-ion batteries that will be used to power mobile warehouse trucks. At the same time, the KION Group’s brand companies broadened the use of lithium-ion batteries to include additional load ranges and applications. Through a minority stake in software specialist ifesca GmbH, the KION Group also continued to develop AI-based energy management solutions.
Further information can be found in the section ‘Non-financial performance indicators – Sustainability’ and, in particular, in the Group’s 2022 sustainability report, which will be published in April 2023.
Automation and software
In the field of automation, the KION Group offers specific and scalable solutions for a wide range of customer requirements, from single forklifts to automated warehouse trucks and fully automated large-scale warehouses. These are helping customers move closer to the goal of a ‘lights-out’ warehouse. At the same time, the KION Group is adapting its solutions to fit customers’ existing and increasingly digital processes. The digitalization of customer solutions is centered around the proprietary warehouse management system Dematic iQ in conjunction with cloud innovations, artificial intelligence, and machine learning.
New AMRs designed to transport materials horizontally in warehouses and factories were added to the portfolio of automation solutions last year. Substantial orders underline the sales potential for the KION Group’s AMR solutions, which is partly being fulfilled through a strategic partnership with Chinese AMR specialist Quicktron. One to watch in this context is the LoadRunner. This AGV, which uses AI-based swarm technology, was developed in conjunction with the Fraunhofer Institute for Material Flow and Logistics and was successfully trialed at a leading logistics company in 2022. Launched in the reporting year, the IMOCO research project is aimed at enabling AI-assisted trucks to navigate autonomously in fast-moving intralogistics environments.
The implementation of these AMR solutions is supported by cloud-based control software. Dematic also expanded its portfolio through a partnership with Google Cloud aimed at accelerating cloud innovations and using these to develop the next generation of warehouse management solutions. And in the third quarter of 2022, Dematic entered into a strategic partnership with Dexterity in order to integrate the North American company’s software as a service platform for robotics intelligence into its own system-based solutions and software.
Performance and agility
The KION Group is making its business model more resilient by continually improving its efficiency and agility.
Through the Business Transformation initiative, the KION Group is working on harmonizing its landscape of processes, data, and systems across the Group and across all functions so that it can be even more effective in reaping economies of scale and scaling up new Group-wide solutions.
The focus in the Industrial Trucks & Services segment is on developing a global platform for the value segment. At the heart of this is a modular platform that will make it possible to manufacture more cost-effectively and thus be more competitive on price. Around 50 variants of diesel and electric forklift trucks will be built on the platform, using standard components wherever possible. This will also reduce the time needed for servicing. Product types in the load capacity range of 2–2.5 tonnes, which constitute the bulk of the volume segment, were launched onto the market in 2022. The Supply Chain Solutions segment is also driving the scalability of products and solutions by refining its subsystems and standard modules. This will have a positive impact on costs and efficiency and give the segment a competitive edge in terms of quality and sustainability.
The optimization of the production network is also helping to improve efficiency. The relocation of the manufacturing of STILL reach trucks from Hamburg to Stříbro in the Czech Republic is set to be completed in 2023, for example.
Both segments also took decisive action to minimize the adverse impact on financial performance caused by the supply chain disruptions and by the increases in the prices of bought-in parts (see ‘Business performance in the Group’).
Values, people, and leadership
The KION Group’s corporate values of integrity, collaboration, courage, and excellence guide our individual actions and how we work together.
The HR strategy therefore focuses on recruiting and developing talented individuals from around the world for the intralogistics Group, on equipping internal teams with all necessary skills, and on further embedding a diverse, equitable, and inclusive culture that secures the commitment of employees and unlocks their long-term potential to the fullest possible extent.
The global Diversity & Inclusion Council was set up and began in work in 2022. It aims to establish a culture of inclusion and diversity that puts people and their mental health first and gives opportunities for career progression. The council focuses on raising awareness of these issues among managers and employees around the world, on developing and coordinating relevant initiatives, and on monitoring the implementation of these.