Kion strategy adapts to digitization trends

German material handling giant Kion Group AG today announced a steep jump in revenue and said it is updating its business strategy to adapt to the industry trends of digitization, automation, and Industry 4.0, a European term for the Internet of Things (IoT).

Frankfurt-based Kion reported 2017 revenue of $9.4 billion, an increase of 37 percent over the previous year, citing the impact of its 2016 acquisition of logistics systems integrator Dematic Corp. and a rapid expansion in the industrial trucks and services segment, which includes forklifts, warehouse technology, and related services.

Kion generated net income of $523 million, an increase of 73 percent over last year's figure, the company said. Kion attributed the gains to the impact on its U.S.-based divisions of the corporate income tax rate reduction included in the federal tax reform bill signed into law in December.

Kion also rolled out a long-term strategy, dubbed "Kion 2027," which it said refreshes the firm's most recent plan, launched in 2016 and known as "Kion 2020." The new strategy calls for Kion to emphasize innovation, digitization, automation, and efficient energy use over the coming decade, the company said. Kion's new approach will help the company "focus much more on a joint customer-centric strategy for innovation, sales, and branding," Kion CEO Gordon Riske said in a statement.

Kion did not share many details about how its change in strategy would affect its existing portfolio, but the company said that the increasing digitization of customer solutions would lead to the development of fully automated "lights out" warehouses that incorporate robotic solutions and advanced automation. The firm said it would support more efficient energy use by developing and commercializing new energy sources for its catalog of industrial trucks.

The adjustment is a reaction to changes within the firm itself as well as the market at large. Since launching its initial long-term plan two years ago, Kion has made major changes, headlined by its acquisition of Dematic and a subsequent overhaul of the structure of the firm's various departments.

One impact of this realignment was Kion's announcement in 2017 that it would rebrand its Dematic, Egemin Automation, and NDC Automation units under a single name and begin to sell all its warehouse automation solutions under the Dematic name beginning in 2018.

Kion's change in strategy comes as several competing players have made moves to adjust to changing business trends. Dematic's rival in the systems integration sector, Intelligrated, was acquired in 2016 by industrial powerhouse Honeywell International Inc. And in 2017, forklift vendor Toyota Industries Corp. (TICO) acquired the systems integrator Bastian Solutions LLC.

Kion's financial success also reflects broad industry trends in the growth of e-commerce and rising consumer expectations for expedited home delivery, according to Joe Vernon, North American supply chain analytics and transformation leader at the New York-based consulting firm Capgemini America. "The issue driving more technology and automation in warehouses is speed," Vernon said. "The consumer expects to order an item and have it shipped the same day, and sometimes even delivered the same day. That has a ripple effect not just through [e-commerce], but [consumer packaged goods] and other distribution channels." To keep up with these demands, retailers are looking to warehouse technologies that support advanced automation by coordinating the activities of forklifts and unmanned vehicles, and then tightly synching their movements with conveyance and sortation solutions, Vernon said.