Hartmut Sievers Vice President Direct Purchasing KB Rail ... · Growth potential will lead to further rail investments but price pressure will increase 2023 13,6tkm Passenger rail

Knorr-Bremse Group

Keynote 1: Knorr-Bremse, Bahntechnik

Hartmut SieversVice President Direct PurchasingKB Rail Group

09.03.2017

Forum Supply Chain Excellence 2017

Connecting Excellence

SUPPLIER

Knorr-Bremse Group

Aviation industry – Forum Supply Chain Excellence 2017

Agenda

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Point 1 Knorr-Bremse Rail Group – company, market, challenges

Point 2 Knorr-Bremse Rail Group Purchasing – organization, challenges, expectations to suppliers

Knorr-Bremse Group

Every day, more than a billion people all over the world rely on systems from Knorr-Bremse

SYSTEMS FOR RAIL VEHICLES

• High-speed trains• Regional & commuter trains• Metros• LRVs• Monorails

COMMERCIAL VEHICLE SYSTEMS

• Trucks• Trailers• Buses• Engines• Special vehicles

• Locomotives• Passenger cars• Freight cars• Off-train

3


Knorr-Bremse Group

Development of sales

520 7401,494

2,743

4,241 4,300 4,303

5,2065,831

1990 1995 2000 2005 2011 2012 2013 2014 2015

2014 2015 ∆Sales €5,206 million €5,831 million +12%

Net income €560 million €645 million +15%

Investments €161 million €210 million +30%

Research and development expenditure €296 million €347 million +17%

Employees (incl. leasing; as per Dec. 31) 23,916 24,275 +1.5%

4

Development of sales (in € million)


Knorr-Bremse Group

43%

57%

Sales by divisions

2014 2015 ∆Knorr-Bremse Group €5,206 million €5,831 million +12%

Systems for Rail Vehicles €2,982 million €3,341 million +12%

Commercial Vehicle Systems €2,228 million €2,492 million +12%

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Systems for Rail Vehicles

Commercial Vehicle Systems

Sales by divisions 2015


Knorr-Bremse Group

Product portfolio – varied sub-systems and additiona l services

ON TRAIN


• Auxiliary Converters

• Battery chargers

• Train Control Management Systems

• Spare Parts and Overhaul Management

• Repair and Service

OFF TRAIN

• Braking Systems• Windscreen Wiper and

Wash Systems

• Entrance Systems • Air Conditioning • Power Electrics• Energy Metering

• Platform Screen Doors

• Platform Edge Doors• Safety Gates

• Rail SignallingSystems

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• Freight and Locomotive Brake Control


Knorr-Bremse Group

“Best in class” – solutions for the entire life cycle

VEHICLE BUILDERS VEHICLE OPERATORS

STRONG PARTNERSHIP WITH OUR CUSTOMERS

• Joint development of innovative solutions and products• System development and construction• Life cycle cost-optimized solutions• Project management• Pre-installed units (plug & play)

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Knorr-Bremse Group

The worldwide OE railway market was decreasing in 2 016; for the years 2017 – 2019 we see a stable trend; positive impulses received f rom the service market

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World - OE World - RailServicesReduced world market mainly impacted by China and North America AAR

Increasing opportunities esp. in modernization business

� Stable OE market

� Capturing new opportunities in RailServices

EuropeNorth America

� Increasing Passenger market � Decrease in AAR overall market,

for OE and RS

South America

Asia / Australia w/o China

Russia + CIS China

� Overall stabilized on low level

� Reduction in Locos, increase in Mass Transit (e.g. Metro Moscow)

� Slight increase in Japan and India

� Small decrease in Australia and South East Asia

� Decrease in Mass Transit due to phase out of Brazilian projects

� Freight market slightly decreasing

� Significant decrease HS

� Increase in Mass Transit

� Increase in RS due to growing installed fleet


Knorr-Bremse Group

The business of KB is demanding. Challenges are com ing from the market environment, from operators, car builders and competitors. Howev er we are prepared!

Securing cost position

Generating growth

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Summary: Business Environment

Market Operators Car builders Competition

RailServices market as growth driver; OE growth expected to be on a constant low level

Competition Rail against Truck / Busses / Taxi services (e. g. Uber)

Focusing on high fleet availability and further increasing life-cycle cost orientation

More competition in traditional regional businesses (e. g. tender for NRW with DB, Albellio, Keolis etc.)

Increasing competition driven esp. by internationalization of car builders (e.g. CRRC) and consolidation in the market (e. g. Hitachi / Ansaldo Breda)

Consolidation of rail supply market(e.g. Wabtec bundling, potential new entrants in established markets)

Chinese competitors might come with Chinese car builders


Knorr-Bremse Group

Even if the overall market outlook is still positiv e, new technologies endanger the future growth

Source: h&z Rail Study, SCI Verkehr figures

Mobility demand 2013-2023

� Urban transport with strongest long term trend mainly from new projects in China & India

Conclusion

� New modalities and mobility services will significantly impact the business model of operators− Mainline bus services are a

convenient and cheaper alternative to railway

− Urban mobility providers like UBER, Lyft, DriveNow, etc. benefit from their big data customer analytics and can often provide better services than urban rail operators

� Growth potential will lead to further rail investments but price pressure will increase

2023

13,6tkm

Passengerrail

Freight

≈ 690,1bn

672,0pkm

Urbantransport

2013

4,5pkm

10,7tkm

448,0pkm

3,6pkm

≈ 462,3bn

World wide sales transportation development

+5%p.a.+5%p.a.

Mobility innovations disrupt rail industry

� Toronto Opened new rail connection in 2015 to airport

� Forecast of daily 5.000 passengers did only match 2.200 passengers

� UBER X-offer is more convenient and cheaper for many business travellers from suburbs

Source: independent study of h&z: h&z Rail Study 2016 –Future Challenges in the European Rail Industry

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Knorr-Bremse Group

The market pressure and the increasing cost pressur e from public authorities force operators to focus on lifecycle costs and higher pe rformance

Business Case focus

Leasing ratio

Average order size

Necessity to re-think current business models

Source: h&z Rail Study 2016

2010 2020E2015

1218

2020E

?

2010 2015

25%

2010

15%

2020E

?

2015

Outsourcing of services

2010 2020E2015

Standardized product, less individualism

On-time delivery crucial

Acceptance of lower quality standards

Total cost as top focus(cost per km)

Product relatedProcess related

� Customer requirements shift from long-term and high quality to more cost oriented

� New customer segments arise or grow in size, demanding different product & sales strategies

� Current business models have to be evaluated and re-shaped to address additional growth potential

Source: independent study of h&z: h&z Rail Study 2016 –Future Challenges in the European Rail Industry

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Knorr-Bremse Group

Our customers form strategic alliances and operate globally

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Increased competition and complexity in the rail business

Concentrations

Market consolidation and car builder cooperation

Globalization and cross-regional activities

Talgo

Pesa

CAF

Stadler

GE

RotemHitachi

KawasakiCRRC


Knorr-Bremse Group

KB Rail addresses the market change, including own cross selling

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� Adaption of KB Rail organization with target to realize market share growth through a X-System sales focus

� Active management of project pipeline across all sub-systems

� Regional alignment / project ownership / key accounting of international projects across regions / business units / channels


Knorr-Bremse Group

Based on our vision, we focus on value creation for customers and differentiation from competitors

Vis

ion We are the trusted global provider of innovative and reliable solutions

for homologated safety and eco-efficiency rail applications over the entire life cycle.

� How can we create further value for our customers?

Knorr-Bremse Connected / X-System Strategy

� How can we create a differentiation from our competitors?

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Knorr-Bremse Group

Agenda

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Point 1 Knorr-Bremse Rail Group – company, market, challenges

Point 2 Knorr-Bremse Rail Group Purchasing – organization, challenges, expectations tosuppliers


Knorr-Bremse Group

GLOBAL PURCHASING EXCELLENCE – We claim to be a high performing Purchasing Organization to support the success of th e Knorr-Bremse Group

Our vision:In the Knorr-Bremse Group, our goal is to establish a world-class purchasing organization that is a leader in its field. We aim to be a reliable partner to everyone along our value chain, making a substantial and, in particular, ongoing contribution to the success of the Knorr-Bremse Group.

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Knorr-Bremse Group

Our Purchasing & Supplier Quality strategy combines both cost competitiveness and logistical excellence. Modern instruments form the lever of our achievements

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EDI quotaInSupply quota

Consignment quota

Flexibility

Complaint lead time

Inventory turnrate

Contract Quality

First Time Right

Charge Back quota 8D reaction time

Delivery Reliability [%]

SavingsPayment

TermsContract Coverage

Delivery Quality [ppm]

Non Conformity Rate [%]

FAI Quota

Supplier Consolidation

Leading KPI

Supporting indicators


Knorr-Bremse Group

Central Purchasing develops strategies to ensure lo cal execution for the future needs of the business

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HVAC

PowerTech

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dsAviation industry – Forum Supply Chain Excellence 2017

Knorr-Bremse Group

Our expectations to our suppliers are high – for the sake of our common success!

This is what we need from our suppliers! Continuous improvement of processes

Productivity improvement

Technological progress

Innovative products

Professional location footprint

Long term product

availability

Fulfilment of sustainability requirements

Zero defect quality

mindset

Professional deviation

management

Common target achievement

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Knorr-Bremse Group

Just stating expectations is not enough. We support the realization by different tools, processes, methods and concepts

Selection of methods to ensure target achievement

Products Tools

Integrated supply chain models

Standardization of processes

Supplier Early Involvement Concept

Cost Engineering$

Electronic supplier communication

Supplier Performance Development

@

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Processes


Knorr-Bremse Group

Continuous cost contribution• Yearly challenge to reach cost improvement targets• Main levers: negotiation, re-sourcing and VA/VE measures

Supplier innovation• Cost innovation as first priority• Chances based on IoT technologies

Integration of acquisitions• Chances for well-established group suppliers• Challenges by new requirements

Currently we focus on continuous cost contribution, supplier innovation and the integration of our acquisitions

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Knorr-Bremse Group

Thank you very much for your attention!

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Phone: +49 89 3547-1622

Fax: +49 89 3547-1196

Mobile: +49 160 581 2209

Email: [email protected]

www.knorr-bremse.com

Knorr-Bremse

Systeme für Schienenfahrzeuge GmbH

Hartmut Sievers

Moosacher Straße 80

D-80809 München, Germany

Documents

Hartmut Sievers Vice President Direct Purchasing KB Rail ... · Growth potential will lead to further rail investments but price pressure will increase 2023 13,6tkm Passenger rail