Strategy of the KION Group*
Objectives of the KION 2027 strategy
The KION 2027 strategy specifies groupwide targets for profitable growth and the fields of action through which the KION Group intends to meet these targets.
Under the strategy, the KION Group is systematically aligning its intralogistics portfolio with the specific requirements of the various industries in which its customers operate. The hardware (industrial trucks and automation solutions), software (from control center to vehicle control), and services (from repair to financing) are being integrated into a single offering as part of this strategy.
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 firm action to bring the business back on course for profitable growth. Its ambition in this respect is to raise its adjusted EBIT margin above 10 percent on a permanent basis, both at Group level and at the level of the Industrial Trucks & Services and Supply Chain Solutions operating segments.
- 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 2023
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
The KION Group is striving for a 360° approach to intralogistics, encompassing a network of well positioned and clearly differentiated brand companies, a comprehensive solution portfolio, and a tailored go-to-market strategy. The positioning of the KION Group’s various brand companies is aimed at achieving broad coverage of heterogeneous markets and wide-ranging customer requirements. The distinct offerings and identities of the brand companies are designed to create a clear core value proposition for each brand company.
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 one-stop 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.
For example, the reporting year saw the KION brand companies Dematic and STILL team up to implement multi-brand intralogistics solutions for customers that combined their respective product portfolios into a single, overarching system. Dematic and Linde also successfully supplied customers with combined solutions in 2023. In addition, the KION Group continued to drive forward the development of cross-brand software and hardware for use in applications such as networked trucks and AMRs.
Growth plans for specific regions
The KION Group’s two operating segments are driving their growth by ensuring that they are fully aligned with the requirements of their regional and local markets. 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. For example, the dealer network in North America was expanded through various partnerships.
In Jinan, China, at the site where the plant for counterbalance trucks was completed in 2022, the KION Group is making progress toward the completion of the new Supply Chain Solutions plant. Furthermore, the KION Group started construction of a state-of-the-art distribution center for spare parts in Kahl am Main in February 2023. This new site will raise the efficiency of parts delivery in Europe to the customers of both segments. The Supply Chain Solutions segment, meanwhile, is expanding its international presence with a site in the Gulf region.
Sustainability
Acting sustainably and responsibly is one of the key principles by which the KION Group operates. The Group’s focus on sustainability across the three strategic dimensions of people, products, and processes is reflected in its efforts to make products that are as eco-friendly and safe as possible, to use climate- and environmentally-friendly manufacturing and business 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 employees and its focus on a sustainable product portfolio.
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 and a promissory note issued in 2023, both of which are linked to ESG criteria, underline this commitment.
At the start of July 2023, the KION Group signed up to the Science Based Targets initiative (SBTi), which provides an underlying methodology and scientific basis for KION’s ongoing support of the United Nations’ Paris Agreement and its goal of limiting global warming to 1.5°C. Through the SBTi, KION has enshrined its long-term goal of reaching net-zero greenhouse gas emissions along its value chain (scopes 1, 2, and 3) by 2050, and set related interim goals up to 2030.
In addition, KION continued to focus on developing and enhancing energy-efficient solutions in the reporting year. As a result of its efforts in this regard, the Company’s proprietary fuel cell systems and AI-assisted energy management solutions were developed to market maturity. The KION Group also entered into a strategic partnership with Li-Cycle Holdings Corp. (Li-Cycle), a key player in resource recovery from lithium-ion batteries. The objective of the collaboration is to recover the most essential materials from the lithium-ion batteries that KION supplies itself.
Further information can be found in the 2023 sustainability report, which is published separately.
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 embedding its solutions into customers’ existing and increasingly digital processes. The digitalization of customer solutions is centered around the proprietary warehouse management system in conjunction with cloud innovations, artificial intelligence, and machine learning.
The ongoing development of AGVs and AMRs that can be easily integrated into customers’ production and warehouse environments was a priority in the reporting year. The KION Group is involved in a number of important research and development partnerships as part of its efforts in this regard. An interface standard for communication between AGVs that was jointly developed by the KION Group has already undergone one round of trials. The implementation of these solutions is supported by cloud-based control software.
Work on cloud innovations was expanded again, including through the partnership with Google Cloud, with the aim of developing the next generation of warehouse management solutions. The KION Group’s objective in this regard is to make the supply chain more resilient and to develop market-ready solutions by combining Dematic’s expertise in supply chains with Google Cloud’s technologies for cloud computing, artificial intelligence, and machine learning.
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 groupwide solutions.
The focus in the Industrial Trucks & Services segment is still 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. Over 30 new trucks using the modular configuration concept were already brought to market in the reporting year. The Group plans to launch more than 20 models with a modular configuration by the end of 2024. The Supply Chain Solutions segment is also driving the scalability of products and solutions by refining its subsystems and standard modules.
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 was completed in 2023.
In procurement too, the KION Group is aiming to increase the resilience of supply chains and the supplier base in order to minimize disruptions to production and other areas, and to safeguard profitability. The steps taken to achieve this include the establishment of 360° risk and capacity management and the introduction of a second source supplier strategy that strengthens the supplier base. These and other measures enabled the KION Group to achieve net savings in its production and non-production procurement and to improve the rate of ‘on time, in full’ (OTIF) deliveries in all regions.
Values, people, and leadership
The KION Group’s corporate values of integrity, collaboration, courage, and excellence guide both individual and collective actions.
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, which was set up in 2022, 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.
* The content of this chapter/section is disclosed voluntarily and is therefore unaudited.