Overarching topics

Customer satisfaction, innovations and supplier management are important overarching topics.

Because of the materiality of DEUTZ AG as the executive parent company, there is currently no system that monitors overarching topics in the Group as a whole. Our reporting therefore focuses on DEUTZ AG. The local senior management teams regularly report on relevant matters to DEUTZ AG’s management.

Customer satisfaction

DEUTZ AG has adopted a zero-error strategy. Our main aim in pursuing this quality assurance programme is to ensure that we always meet our customers’ expectations. The idea is to detect errors before they actually occur. And where errors do occur, we have to learn from them quickly in order not to make the same mistakes again. A further objective concerns delivery performance. A high standard of delivery performance means delivering engines and parts at the right time and in the right quantity and thus enhancing customer satisfaction. The aim is for customer satisfaction to be as high as possible, which is why it is regularly measured using various means.

Comprehensive measures under the zero-defect strategy

DEUTZ AG is lowering its defect rate using a range of measures that, depending on their scope, are defined by the responsible departments or in conjunction with the Board of Management. The senior management team also plays its part by receiving regular reports and making important decisions. In all parts of the Company, action is being taken to improve quality. In 2016, we developed a concept to implement our quality assurance programme, designating certain employees as ‘multipliers’ and providing them with the necessary training to run workshops. This system was further refined in 2017. At two half-day sessions, managers and employees were given intensive training on topics such as customer satisfaction, quality of work and constructive approaches to dealing with errors.

A survey carried out in collaboration with the Laboratory for Machine Tools and Production Engineering (WZL) revealed that the culture of quality assurance among middle-management employees at DEUTZ AG was very strong on average in terms of external customer focus.

We regularly gauge the levels of satisfaction among DEUTZ AG customers in order to identify areas where we could improve. The customer feedback is used to create action plans that are designed to improve aspects such as customer communication, the availability of contact persons and the transparency of pricing.

The senior management team is closely involved in the implementation of measures.

Quality assurance begins with suppliers

DEUTZ AG works together with its suppliers to systematically apply the advanced product quality planning (APQP) process, with the aim of safeguarding and continually improving the quality of delivered parts. This ensures that supplier parts are procured in accordance with the product development process and are of the required quality before volume production begins. Suppliers’ delivery reliability and quality performance are also regularly evaluated.

An external service provider works with the Business Intelligence unit to analyse the results of the customer satisfaction survey. In addition, a monthly report on all quality- and customer-relevant KPIs as well as a weekly status report on the most important problems is sent to the unit heads and the Board of Management to ensure a rapid response time where targets are not being met.

Regular reviews

At DEUTZ AG, a monthly report on defects reported by customers is presented to the Board of Management and the relevant departments, based on which rapid remedial measures are defined. The proportion of employees trained as part of the quality drive stands at 55 per cent and is increasing all the time. An annual management review examines the financial and non-financial quality KPIs. Here too, the measures taken on the basis of previous reviews are analysed to see how effective they have been. The 2016 survey revealed that customer satisfaction had increased overall compared with 2013, with an increase in scores recorded in most categories.

Innovations

Our aim is to position DEUTZ as a leading manufacturer of innovative drive systems.

Innovations at DEUTZ AG are primarily in one of the three following areas:

  1. Alternative fuels: As well as looking at liquefied petroleum gas (LPG), we are focusing on natural gas, hydrogen and fuels generated from renewable sources.
  2. Hybrid drive systems: A key pillar of our development work is the combination of internal combustion engines and electric motors (hybridisation).
  3. Digitalisation: There is a particular focus on innovative digital solutions that offer our customers new services (connectivity, smart services for engines).

Centralised research and development

At DEUTZ AG, most innovations originate from the central R&D department in Cologne-Porz. Our DEUTZ Corporation and Torqeedo subsidiaries are involved at an early stage in product planning so that they can actively contribute their market-specific requirements to the development and innovation process. DEUTZ Corporation focuses in particular on US emissions legislation (EPA, CARB). Torqeedo is most closely involved in the innovation process when it comes to hybridisation and electrification.

Within DEUTZ AG, the product management department is responsible for monitoring the market and for the product requirements that result from this. Members of the Board of Management are among those that attend its quarterly ‘Product Boards’, at which market trends and preliminary development work are discussed and other development activities are initiated and prioritised. New developments are brought on and assessed with the aid of the well-established product development process (PEP). Internal and external development work is carried out in order to achieve the Company’s targets. In the case of external development work, we collaborate closely with development partners that include suppliers, universities and research institutes.

Torqeedo provides innovation boost

In 2017, we acquired Torqeedo GmbH. The company serves as the nucleus for the E-DEUTZ strategy, under which we aim to develop hybrid and all-electric drives for off-highway applications. Torqeedo’s expertise in electric-powered drive systems is providing a huge boost to innovation at DEUTZ.

Every year, Torqeedo brings new products to market that consolidate and extend its competitive edge in the market for electric drives for boats.

As previously mentioned, the DEUTZ AG senior management team is closely involved in innovation activities via the ‘Product Boards’. At these meetings, which are attended by representatives from product planning, sales and service, the Board of Management discusses the status of preliminary development and approves suitable projects for the next stage of development. Subsidised projects are discussed by a committee below the level of the senior management team. An innovation process is currently being worked on in this area.

DEUTZ broadens its technology portfolio

Last year, we presented a number of pioneering new developments that stemmed from our innovation activities. At Agritechnica, the world’s biggest agricultural machinery fair, we unveiled our Stage V-certified engine range, our new in-line engines with capacities from 9 to 18 litres, and the E-DEUTZ strategy for hybrid and all-electric drives. We are also committed to investing in the digitalisation of our service products. As well as the DEUTZ Connect app, a tool for remote engine diagnostics, we have a new web shop that has brought the DEUTZ service network online.

DEUTZ AG uses a bonus-driven ideas management scheme to harness the creativity of its employees. Last year, the ideas that they submitted (an average of 24.1 per 100 employees) generated a benefit of more than €200 thousand.

Multitude of patents and awards

We use patents, patent applications and utility models to safeguard our expertise against unauthorised use by third parties. In 2017, DEUTZ AG submitted 20 new patent applications, six of which were in Germany. DEUTZ AG now holds a total of 125 patents registered in Germany and 189 registered elsewhere.

Torqeedo has brought a multitude of new products to market in recent years. It has also received numerous awards for these, including the Pittman Innovation Award from Sail Magazine in the US for its Cruise FP Rudder Drive, and the NMMA Innovation Award 2017 from the US National Marine Manufacturers Association for its Cruise F.

Supplier management

DEUTZ AG’s overarching supplier management system 1) is designed to continually improve quality, lead times, commercial conditions and general communication with our suppliers. There is a clear focus on supplier development. As part of this quality improvement process, target defect rates are defined for each product group, communicated to the suppliers and regularly monitored, with remedial measures initiated where necessary. Our overarching objective is to have zero defects. All new suppliers need to be approved by DEUTZ based on self-declarations, feasibility studies, and supplementary documents and criteria. This process usually includes a site audit. The DEUTZ Group uses only certified original equipment suppliers (certified to ISO 9001:2015 as a minimum). Purchasing at the subsidiaries, particularly DEUTZ Corporation and DEUTZ Spain, is modelled on the supplier management system in use at DEUTZ AG.

Performance measurement tool

DEUTZ AG manages its suppliers using a ‘supplier cockpit’. We use this to monitor suppliers’ performance from purchasing, delivery and quality perspectives and, in the case of development partners, with regard to their research and development capabilities and their ability to innovate. Before being included in the cockpit, suppliers must first be categorised accordingly. Their results for the individual KPIs and how these change over time are used to initiate remedial measures and improve performance.

For further information, please see the Compliance and Customer Satisfaction chapters.

On a monthly basis, the senior management team at DEUTZ AG is provided with information about the procurement budget and other KPIs in the balanced scorecard. This monthly procurement management report contains key figures for the Board of Management, including key financials and KPIs related to quality. The underlying targets were confirmed by the Board of Management.

Supplier due diligence process being set up to ensure compliance

DEUTZ AG assesses its suppliers using self-declarations and audits, including preventive audits where necessary. As previously mentioned, the Company also uses a ‘supplier cockpit’, a piece of supplier management software that can be used to categorise suppliers and track their performance. A supplier due diligence process is currently being set up to ensure compliance. The first global surveys are currently being evaluated. The TSD (Total Supplier Development) steering committee meets every two weeks to discuss data from the supplier cockpit and determine what action needs to be taken. A system of risk management for suppliers is also in place, covering risks such as insolvency, corruption, natural disasters and local developments.

Regular review of KPIs

DEUTZ AG compares the current and target figures in regard to cost savings, supplier performance and quality KPIs. The degree of target attainment is also checked. In 2017, we visited and audited a large number of suppliers. The defect rate (ppm) for deliveries was lower than ever before last year.

1) The statements relate to direct suppliers that have a contractual relationship with DEUTZ.