To be able to fully meet the needs of its customers worldwide, the KION Group business model covers all areas of intralogistics with high-performance products and tailored services. These range from product development, manufacturing, sales and logistics, the spare parts business, truck rental and used trucks, fleet management, system and software solutions, through to financial services. This enables KION to offer its customers solutions that are always an outstanding match for their specific intralogistic requirements. The key components of this portfolio are illustrated in > Figure 9.
Within the scope of the KION sustainability strategy, three action fields address the Company’s product-related sustainability aspects.
One separate action field is dedicated entirely to the topic of energy- and resource-efficient products. This is to encourage the development of alternative drives and technologies based on Li-ion batteries or fuel cells. Today over 80 percent of the industrial trucks in the KION product mix are already powered purely by electricity (> Figure 10). Another of the core topics of product development activities within the KION Group concerns reducing the fuel consumption of forklifts powered by internal combustion engines.
Besides the safe use of products, the ‘Product responsibility’ action field also focuses on compliance with legal provisions and standards as well as requirements surrounding servicing and (dis)assembly.
Figure 10KION Group product mix by truck type (order intake 2016)
Last but not least, the ‘Innovative solutions and customer benefit’ action field is aimed at the customer-focused further development of the KION product portfolio, in which sustainability aspects are playing an increasingly important role. In close discussion with customers and other stakeholders, including universities and research institutes, KION aims to produce innovative solutions tailored to each target group’s requirements. At the same time, the focus is on process optimisation as well as on new or additional services, such as in the area of fleet management. The objective is to continually improve efficiency and resource conservation, which benefits customers and the environment in equal measure (see the action fields table in the Corporate Governance section).
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. 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 is also included in this organisation following its acquisition in November.
This reduces product complexity and diversity, and shortens development times. Based on the 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 and -region development approach is increasingly being adopted.
Beyond Western Europe, in the Industrial Trucks & Services segment the KION Group adopts a cross-brand approach using cost-effective product development and manufacturing platforms which also offer a strong regional differentiation regarding industrial trucks. In 2016 new platforms for internal combustion and electric forklifts as well as for warehouse technology were created, and products brought to market. For the volume and economy segment, the ongoing further development of the Baoli platform and its localisation to suit different regional markets is of particular importance. In western Europe the brands Linde and STILL will continue to use fundamentally different platforms to maintain the defining characteristics of their brands, but they will increasingly deploy shared modules and common parts.
In close collaboration with its Industrial Trucks & Services and Supply Chain Solutions segments, KION is currently focusing on synchronising its various automated guided vehicle (AGV) offerings on one technology platform. In this regard, cross-segment software integration supported by Dematic iQ will be particularly significant. This proprietary, open software platform can be integrated easily into the customer’s existing application environment, and is used for data-driven optimisation of all processes for smooth order processing.
Product development – from requirement to finished product
R&D (research & development) at the KION Group essentially works on a cross-segment, cross-brand and cross-region basis, which ensures that research findings and technological know-how are shared across the KION Group. 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 respective markets. These requirements are determined based on findings from customer discussions, market research and competitor analyses. The development programmes are discussed and agreed in Product Strategy Councils (PSCs), and then submitted for decision to the Group Executive Committee (GEC), which comprises members of the KION Group Executive Board and the Presidents of the operating units – with the KION product strategy providing the necessary guidance from a Group perspective. Twice a year a check is carried out 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 projects are evaluated and prioritised based on a clearly structured process, which is applied in the same form for all organisational units. The goal is the Group-wide harmonisation of objectives relevant to product development 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 overarching goal 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 the environmental impact.
The KION Group places the highest requirements on product safety and ergonomic design, which means customers can also offer their employees maximum safety and optimise occupational health protection 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.
The KION Group’s expenditure on R&D in fiscal year 2016 totalled €147.1 million (previous year: €130.5 million), equivalent to 2.6 percent of the Group’s revenues (> Figure 11).
Figure 11 R&D expenditure1 (in € million and % of revenue)
1 R&D expenditures (P&L) - amortisation expense + capitalised development costs = total R&D spend
The KION Group protects its product developments fully and comprehensively against imitation, and follows a rigorous patent strategy. In 2016 the KION Group including Dematic, registered 93 patents (previous year: 70). At the end of 2016, the KION Group had 2,689 (end of 2015: 1,641) patent applications and granted patents. This sharp increase is primarily due to the inclusion of Dematic for the first time.
At the end of the reporting year, the KION Group employed 1,477 staff in the various R&D departments. This corresponds to a year-on-year increase of 39.8 percent, which is attributable mainly to the acquisition of Dematic (see the section Research and development in the Annual Report 2016).
Learning from customers
The close and active way the Company involves customers in the product development process is characteristic of 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 industry 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.
For example, the Linde TruckClinic format was developed a few years ago to integrate customers into the product development process in an even more targeted way. Now, the TruckClinic is an integral part of Linde Material Handling EMEA’s stakeholder dialogue activities. The process takes several months and starts with market analyses and discussions with in-house industrial truck operators as well as sales agents and suppliers. Alongside Linde trucks, customers then test vehicles from various competing manufacturers in a neutral environment for several hours before completing questionnaires. During this time, they can also express specific needs and wishes. The main focus of the feedback is on truck ergonomics, efficiency and safety.
STILL EMEA has also been using a comprehensive customer feedback system for many years now. It 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 a 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.
Supported by competitor analyses and market and trend research, the feedback gathered also flows into product development activities. Newly developed products are also trialled by customers to gain key insights into how well they received them. Further customer feedback is gathered through regular visits, the Service Helpdesk and the complaints management procedure. Events, such as Linde Material Handling EMEA’s World of Material Handling customer event which spans several weeks, and STILL EMEA’s customer days, also help with information-sharing.
At Dematic, systems often take many years to implement, during which customer surveys are carried out continuously; their results are integrated in the processes as far as possible. This transparency allows optimisation potentials to be identified at an early stage, and enables customer requirements to be met. Dematic also attaches particular importance to regular market research surveys in individual regions of the world. It uses these surveys to regularly assess its customers’ needs and compare them with its portfolio.
Quality management spans the entire value chain
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.
When selecting suppliers, the Company attaches great 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. If suppliers fail to maintain their management system, the business relationship with them is usually ended.
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 pursues the ambitious goal of further optimising 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 failure rate in the field, the KQCO (KION Quality Cost Optimization) initiative was launched in 2017.
Customers, suppliers and partners are also involved as far as possible in the quality assurance system at Dematic through transparent, robust and traceable 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.
