Dematic SWOT Analysis

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Dematic SWOT Analysis

Dematic is a leading supply chain solutions company that implement automated systems for warehouses, distribution centers and production facilities. Its Global headquarters are in Atlanta, Georgia, and features more than 60 engineering centers in 25 countries, with more than 7.000 employees worldwide. Dematic is part of the KION Group. The company has over 200 years of history and has always been at the forefront of innovation in its sector. In this report, we provide an analysis of the strengths, weaknesses, opportunities and threats (SWOT) of Dematic.

Strengths

  • Dematic is the largest manufacturer in the Supply Chain Solutions market. Also, it is the leading vendor in the Automated Guided Vehicles (AGV) and Automated Mobile Robots (AMR) market segments.
  • The company has innovation ingrained in its culture. From the development of Automated Storage and Retrieval Systems (AS/RS) to the pioneering of sorting and accumulation conveyor systems, it has always been at the forefront of the introduction of new changes and technologies.
  • Beyond its long history, Dematic is still a top innovator. Examples include new designs in high-speed order assembly for mixed case goods and high-speed conveyor sorting. Also, it introduced a Micro-Fulfillment system, a hardware-software solution for rapid online order fulfillment.
  • As the industry shift from being hardware-centric to software-centric, Dematic has successfully positioned itself to make this transition. For example, they hired Bernard Biolchini, an executive with ample experience in the IT industry, into their leadership team.
  • The company has over 6,000 systems installed of all sizes and levels of complexity. As a result, they can offer solutions that are proven, optimized and well know in the market.
  • Dematic is also a leader in promoting a culture of wellness. For example, the National Association for Business Resources named Dematic as the Best and Brightest in Wellness for 2019. The award highlights organizations that implement efforts to foster a healthier place to work and live.
  • The company continuously expands its offering through strong strategic partnerships.

Weaknesses

  • The company has experienced high levels of growth in the past years, and with those come management and organizational challenges. Some employee reviews point out to the side effects of management transitions and not optimal change management. It is essential to mention that this is expected to happen to any company that experiences sudden growth and changes.
  • Employees reviews point out to lots of travel, long hours and understaffed projects. Dematic sales have increased at a staggering pace. The challenge for the company is to hire and onboard new personnel to keep pace. Otherwise, it risks a decrease in employee morale (which in turn could increase turnover rate).
  • As a result of growth, the company has become very large. In a sector increasingly exposed to new tech disruptions, large companies like Dematic could have more difficulty integrating change that smaller, leaner new competitors.
  • The Kion Group, Dematic parent company, and its subsidiaries are involved in some pending lawsuits. While there is no way to ascertain if existing risk provisions will be sufficient, they are not expected to have a material impact on the finances of the company.

Opportunities

  • The supply chain market is likely to reach $75 billion by 2030, from $32 billion in 2019. Such growth represents a significant opportunity for Dematic to expand and develop its services.
  • While the company's position on the North American market is strong, it has a high potential for growth in the EMEA region, especially in central and Eastern Europe. To accomplish this objective, Dematic can leverage the sales structures that its parent company, KION Group, has in place.
  • Leveraging new technologies to optimize supply chains is a top priority of companies in all industrial sectors. Major players are implementing changes in crucial logistics functions, including supply chain planning, procurement, sales, operations and customer services. These represent good opportunities for new sales for Dematic.
  • Supply chain logistics are becoming increasingly digitized. As a result, companies will need to increase investment in new supply chain solutions. Dematic can capitalize on this trend with its unique portfolio of products and services.
  • The company business is exposed to risks arising. However, dependency on sound project management can also be an opportunity. Achieving excellence in project management makes Dematic more profitable and foster better customer relations than its competitors.
  • As new technologies for supply chain automation consistently appears, so does the need for replacement investment, which represents an excellent sales opportunity for Dematic. This especially true in emerging markets, which still lags on these technologies.

Threats

  • Economic cycles affect the market for automated supply chain solutions. Downturns could lead to fewer sales or customers not fulfilling payments on time. However, the market has some degree of immunity to these cycles.
  • Dematic business is project-based. As a result, threats can arise if schedule and budgets deviate from those agreed with customers. Therefore, the company needs to focus on project management excellence.
  • The company business is often dependent on individual customers and sectors. As a consequence, any adverse issue experienced (e.g., drop in revenue or financial matters) by major customers could threaten the business.
  • As supply chain technologies rely more on software interconnectivity, the Dematic exposition to risks arising from IT systems not working flawlessly increases.
  • Furthermore, new laws like the European General Data Protection Regulation (GDPR) and more data privacy laws expected to come, bring new, unforeseen software requirements to an industry increasingly dependent on it.
  • Dematic parent company KION Group consolidates its earnings in Euros. Therefore, it is exposed to currency risk because the bulk of business of the company is conducted in North America, on US Dollars.
Sources
Sources

Quotes
  • "Cyclical fluctuations in macroeconomic activity affect both the market for industrial trucks and the market for automated supply chain solutions, although the latter has greater immunity to economic cycles."
  • "In the customer project business, risks can arise from deviations from the schedule originally agreed with the customer, potentially leading to revenue and profit being recognized in subsequent years or, in isolated cases, contractual penalties having to be paid. "
  • "Another possible risk is that the technology deviates from the promised specifications, which may result in additional completion costs."
  • "The long-term nature of individual projects can lead to cost increases over the term of the project that were not anticipated in the project costing and cannot be passed onto the customer."
  • "The main sales risks – besides a drop in revenue caused by market conditions – result from dependence on individual customers and sectors."
  • "Because of its customer project business, the Supply Chain Solutions segment generally has a greater dependence on individual sectors and individual customers than the Industrial Trucks & Services segment."
  • "A high degree of interconnectedness between sites and with customers and other companies means that the KION Group also relies on its IT systems working flawlessly."
  • "There are further IT risks in connection with the European General Data Protection Regulation (GDPR), which came into effect on 25 May 2018. It contains a host of new data protection provisions that were not included in the previous legislation."
  • "It is exposed to currency risk because of the high proportion of its business conducted in currencies other than the euro."
  • "The Supply Chain Solutions segment hedges itself against currency risk on a project-related basis."
Quotes
  • "Currently transitioning with some upper management and dealing with change is usually rough."
  • "While it is great that the company is large and provides for many opportunities, that means there are always a lot of initiatives being implemented across the company. This can be difficult to keep up with an understanding of each of those initiatives and efforts across multiple departments."
  • "Travel and long hours when on site. On call support for developers."
  • "Everyone is running in different directions instead of creating synergies and common solutions."
  • "The worst thing that happened was the acquisition by the German company. Things were messy and they got messier."
  • "Too much work, in need of more engineers."
  • "Time, Career Path, Opportunities, Long Periods of Working"
  • "Very large company so it's hard t make changes happen quickly."
Quotes
  • "growing demand for intralogistics products, solutions and services as a consequence of globalisation, industrialisation and fragmentation of supply chains as well as efficiency increases that are needed due to limited warehouse space and changing consumer requirements."
  • "the trend towards outsourcing of service functions for industrial trucks, outsourcing of entire logistics processes in the supply chain solutions business and growth in demand for finance solutions."
  • "Growing demand for automation solutions and fleet management solutions in connection with the rapidly expanding e-commerce sector and the implementation of Industry 4.0 projects."
  • "Strengthening of the market position in the EMEA region – above all, central and eastern Europe – by using the sales structures of Industrial Trucks & Services"
  • "Further expansion of its position in the market for intralogistics solutions based on the growing acceptance of automation concepts."
Quotes
  • "The KION Group is aligning its business with an increasingly digital world. The digitalization of customer solutions, which will even include fully automated warehouses incorporating robotics solutions, will be accompanied by the digitalization of internal processes. "
Quotes
  • "The Supply Chain Solutions segment (Dematic) is the largest manufacturer in the relevant market segment. This is also the case in the fast-growing AGV and AMR segment, where Dematic is the leading vendor, according to Interact Analysis (2017)."
Quotes
  • "Dematic today announces a partnership agreement with OPEX Corporation that enables Dematic to act as an integrator of Sure Sort™, a small-item sorting system."
  • "The agreement expands the omnichannel order fulfillment offering of Dematic and provides customers with more options that bring productivity and efficiency to item order consolidation."
Quotes
  • "November 21, 2019 — Intralogistics innovator Dematic has been named Best and Brightest in Wellness® for 2019 by the National Association for Business Resources."
  • "The Best and Brightest in Wellness Award recognizes and celebrates excellence in health awareness by highlighting organizations that promote a culture of wellness"
  • "Organizations like Dematic that plan and implement efforts to allow their employees and the community to become a healthier place to live and work."
Quotes
  • "Dematic is your trusted partner to design, build, implement, and support automated system solutions for warehouses, distribution centers, and production facilities."
  • "To develop the ideal system configuration, Dematic uses an industrial engineering approach focused on operational excellence."
  • "Dematic is your single-source partner to manage and control the entire integrated engineering and implementation process."
  • "Dematic is responsible for all aspects of system integration from defining the business objectives and solution development to implementation and long term support over the operational life of the system."
  • "Global headquarters in Atlanta, Georgia "
  • "60 engineering centers in 25 countries"
  • "More than 7,000 employees worldwide"
  • "Over 6,000 systems installed — all sizes and levels of complexity, from lower-cost manual options to fully-automated systems."
Quotes
  • "Dematic has an impressive pedigree as an innovator. "
  • "Dematic has often led the way when it comes to designing and implementing revolutionary new strategies and solutions to transform the efficiency of supply chain logistics."
  • "From the development of Automated Storage and Retrieval Systems (AS/RS) to the pioneering of high speed sortation and accumulation conveyor systems, Dematic has consistently been at the forefront of logistics and materials handling systems innovation."
  • "New designs in high-speed order assembly for mixed case goods and high-speed conveyor sortation demonstrate our latest technological advancements."
  • "So too does the introduction of the Dematic Micro-Fulfillment System, a powerful hardware and software solution to meet consumer demand for rapid online order fulfillment."
Quotes
  • "One of them said to me that he looked at conveyors, sorters and other automated technologies as commodities."
  • "“Hardware providers need to become software providers,”"
  • "Software will drive the materials handling industry, says Dematic’s CEO."
  • "The one way for us to achieve the requirements of our customers is to become more software-centric. It is the core and center of where our industry should be."
  • "It is a transition that comes naturally to him: Prior to joining Dematic 5 years ago in Europe, he worked in IT and process automation at companies such as HP, AMD and Schneider Electric."
Quotes
  • "This market is likely to reach USD 75 billion by 2030, from USD 32 billion in 2019."
  • "Enablers of digital supply chain include Artificial Intelligence (AI), 3D Printing, Cloud Computing, Big Data and Predictive Analytics, Robotics and Automation, Data Capture, Driverless Vehicles and Drones, Digital Twin, IoT, Blockchain, Augmented and Virtual Reality, Wearable & Mobile Devices and 5G connectivity."
  • "Companies have started implementing technological changes in crucial logistics functions across various internal processes covering supply chain planning, procurement, sales & operational planning and customer services. "
  • "Even Dematic who is pioneer for warehouse automation solutions, is extending its solutions for Micro-Fulfillment with Dematic Multishuttle and Goods-to-Person picking solutions."
Quotes
  • "Dematic Celebrates 200th Anniversary. Designing and delivering innovative solutions. "
Quotes
  • "Dematic is a leading supplier of integrated automated technology, software and services to optimize the intelligent and connected supply chain."
  • "The company employs over 7,000 skilled logistics professionals to design, build and support technology solutions that enhance material and information flow."
  • "Leveraging AI, Machine Learning and Big Data, Dematic continues to provide solutions tailored to the improvement of operational performance and profitability for the dynamic business landscape of today. "
  • "Dematic is one brand under the KION Group of companies and has implemented more than 6,000 integrated systems for a global customer base that includes small, medium and large companies doing business in a variety of market sectors."