DEUTSCHE BAHN Gaining competitive advantage through innovations
From Supply Chain Management Encyclopedia
Russian DEUTSCHE BAHN Инновации как способ достижения конкурентного преимущества
All over the world companies that have achieved leadership on global scale successfully use strategies that differ from each other. However, while every successful company uses its own strategy, the underlying principles of action are basically the same. The 21st-century competitive landscape can be characterized by the fundamental nature of globalization and rapid and significant technological changes in all the spheres.[1] In many industries innovation is now the most important driver of competitive success. In order to survive in global competition companies must be technologically innovative. For this reason leading manufacturers create a competitive advantage through innovation. According to Deloitte's Global Benchmark Study of more than 800 companies, manufacturers around the globe view innovation as a key driver for growth. However, innovation means more than creating just new products. It also means capturing new customers with new requirements, taking risks by developing and entering newer market segments.[2]
The History of Deutsche Bahn
1835-1994
Deutsche Bahn AG was founded in the year of 1994, but before that a lot of things occurred so that Deutsche Bahn AG finally was able to see the light of day. The first railroads were opened in Germany in 1835. At that time, there were several private joint-stock companies that financed the construction of railway lines. Also, some investors, for example in Baden and Brunswick, were supporting the establishment of a state-owned railway system from the very beginning of the railway era in Germany. The Association of German Railway Administrations was founded in 1847 and at that time agreements on railway engineering standards and operational partnerships began to appear. [4]
The “golden age” of railways all over the world was around the year of 1886. That year the Prussian state took over the important Rhenish Railway Company and as a result almost all of the railways became state owned. In the third decade of 20th century, eight state-owned companies were administrated centrally, thus creating the Deutsche Reichsbahn. However, four years later in 1924, Deutsche Reichsbahn was re-structured, so that the new German National Railways (DRG) could operate on private sector principles. Before the Second World War, the DRG was fully integrated into the national-socialist state and was now again called as Deutsche Reichsbahn. Reichsbahn was involved in the crimes of National Socialism and without it the deportation of millions of people to the concentration camps would not have been possible. After the war, Bundesbahn was formed in West Germany as the Reichsbahn continued to operate in East Germany. [4]
1994-1999
After the reunification of East and West Germany, the Bundesbahn and Reichsbahn had to be united. Consequently, the joint-stock company Deutsche Bahn AG was founded in 1994. The following years were the years of change. In 1994 DB introduced the train-path pricing system being the first in the world. The energy-saving programme was also a part of the same concept. The next two years witnessed the rehabilitation of a number of important routes between former East and West Germany and passing of a law that allows local transport to be regionalized, thus creating more competition. Moreover, the second generation of high-speed train was introduced. Unfortunately an accident occurred in 1998 leading to the deaths of 101 people, which overshadowed the progress of DB. In 1999 the different business sectors of DB were set up as joint-stock companies. In this second stage of the rail reform, DB is run as a multi-level group of companies. The Deutsche Bahn AG works as the holding company. [4]
2000-2008
The new millennium brought innovative thinking to a different level inside DB, even though DB had been investing in innovations before as well. For example in environmental sphere. In 2000 the new CEO refocused company’s strategy that was all about improving competitiveness and not neglecting the needed investments. That year DB introduced the new and innovative high-speed train, ICE 3 that was able to travel with a speed of 330km/h. Also in that same year, the merger of freight transport divisions of DB and NS Groep N.V. formed the Railion joint venture. In 2002, the company acquired Stinnes AG and the Schenker Group. Next year, the “Transport and Logistics” corporate division was introduced. The division included Schenker, Freight Logistics, Intermodal and Railion business areas as the management company being Stinnes AG. 2007 was the best financial year for the company in its history that was at least partially due to the internationalization and the improvements in facilities and services over the past years before 2007. The privatization process of DB Group was agreed on by the Federal Government and the Bundestag in 2008. [4]
Past innovation - The T-Mobile Case
One way to seek competitive advantage is by introducing new innovations that bring additional value to its customers. This is exactly what DB has done in the past. Already in 2002, DB introduced WLAN technology in certain train stations (T-Mobile 2005). However, the biggest change between technology and railway traffic has been the project Railnet. This project was being carried by DB and T-Mobile in order to bring wireless Internet accessible for everyone travelling in ICE trains. DB was looking for growth through next-generation travel services. The aim was also to get new customer experiences and prepare the company for future services. The project gave DB a way to differentiate itself from other market competitors. [5]
Strategic Partner
T-Mobile Deutschland GmbH [6]joined DB as a partner to implement the project of innovative use of technology. The company, an operational subsidiary of T-Mobile International AG & Co. KG, which is a part of Deutsche Telekom AG, is a telecommunication service provider and has been positioning itselp as a mobile virtual network operator (MVNO) [7]. Technologies for mobile data transmission include telephony, navigation solutions such as EDGE and GPRS, W-LAN, UMTS and HSDPA [7]. Founded more than 15 years ago (in 1993, Bonn, Germany) T-Mobile caters a range of calling and cutting-edge services like tariff plans, mobile software solutions and other related packages throughout the regions of Europe using the flagship brand ”T-Mobile”. Additionally, the company has been expanding its business network operation throughout the region targeting general business market segment for its services.
Challenges and Solutions
Although the project was very beneficial, it definitely wasn’t a simple one. The high-speed trains travel at speeds of 300 kilometers per hour and also several tunnels brought up challenges for the team working on the project. Solving technical problems wasn’t exactly a core competence for DB either. So, they had to a major change to the way they operated previously. In order to achieve this, they developed an ecosystem of partners that was backed with an outsourced model. The cross-functional teams and new business models added value to DB’s processes. It also helped that the core competencies of the two companies, DB’s knowledge of trains, services and passengers and T-Mobile’s strong customer relationship and mobile networks knowledge, complemented each other. Moreover, Cisco’s services were also being used during the process which was really invaluable for the outcome. [5]
Business Results
The project resulted in connecting passengers’ laptops and mobile phones to the nearest hotspot on a train that was connected to the broadband mobile network of T-Mobile. This allowed the passengers to use WLAN services constantly, which gave the passengers an ability to be available all the time. Thus, good feedback was expected and indeed received. Over 80% of the customers expressed interest and about 90% of those who tested the system were satisfied or even highly satisfied. This project shows that DB has innovative capability also in other areas besides logistics and transportation. Creating innovative solutions with customers and other companies brings one’s company to a new level, which can create long-term relationships. [5]
Recent Trends and Innovations in Deutsche Bahn
Innovation orientation is one of the factors that require the utmost attention and in order to remain competitive through these capabilities, DB created a platform (DB Schenker Labs) in 2007 which linked science and industry. This platform is part of the strategy division as well as DB Schenker Business Excellence and is ‘pursuing the goal of developing today’s ideas into tomorrow’s marketable innovations. [8] DB has created a climate for innovative stimulation and part of this, is close corporation with the scientific community, such as the Technical Universities of Berlin, Darmstadt, Dresden and Dortmund, as well as the Aachen University of Technology. Moreover, DB Schenker Labs is responsible for coordinating potential collaboration opportunities and projects of general interest. For instance, partners research technologies that have market relevance while DB shares its vast knowledge and expertise, which derives great interest mutual benefits from the collaboration. [8]
Examples of Successful Innovation at DB
Reducing Emissions
DB is engaged in plentiful innovation projects, ranging from emissions reduction to noise control. However, innovative solutions are implemented in multiple other spheres. The increasing importance of corporate social responsibility has led DB to invest in environmentally friendly transport systems. Since 1990, DB has reduced emissions of particles by 84 percent while nitrogen oxides by approximately 70 percent. Stronger EU regulations aimed at climate control have led companies like DB to pro-actively seek solutions to these newly faced challenges. To achieve further reduction, DB needs cleaner diesel engines, but as their manufacturer failed to provide them with such, the company began a two-year joint venture with engine manufacturer MTU, named LOCEX (Locomotive Clean Exhaust). This project seeks to find marketable for diesel traction. As a result of this successful partnership, DB began operations as the world’s cleanest diesel locomotive. [9]
Reducing Noise
Since 2007, DB has begun developing low-noise technologies for rail transport. The Federal Ministry of Economics and Technology as well as the German Railway Industry Association supported this initiative. Within the next years, commercially viable solutions should be developed, which can easily be incorporated into the rail system. Additionally, DB cooperates with 47 partners from road and rail transport and urban planning to achieve its strategic goal of reducing noise by 50 percent before 2020 in a project named “Silence.” [9]
Long-Freight Trains
‘’GZ 1000” is a government funded project of DB that intends to increase the length of freight trains from the currently maximum length allowed 750 meters to 1000 meters. Together with Dutch infrastructure operator KeyRail, DB seeks to increase network capacity by more loads per train and relieve seaport-hinterland bottlenecks. [9]
Paperless Airfreight
Paperless airfreight was also one way for DB to decrease pollution and sparing the environment. In 2008 DB Schenker made an agreement with Lufthansa that would take away the unnecessary paper airfreight handling. This e-freight has been used already in several different locations and it is expected to increase in the near future. E-freight has also other advantages besides the environmental factor. It improves data quality and efficiency is increased because of it. These are the reasons why Lufthansa is willing to acquire as many customers as possible for the paperless freight transport. DB Schenker currently handles paperless airfreight shipments in eight countries (Australia, Germany, United Kingdom, Hong Kong, Canada, Korea, the Netherlands and Singapore). [11]
DisKon
Diskon “Train Regulation and Conflict Resolution Management for the Best Railway” is a project that intends to develop tools and procedures with partner universities, which is to provide all rail companies on the German network with the most optimal solutions for timely solutions of their rail operations and aims to help operators to better forecast and solve conflicts between connections. [9]
LogoTakt
LogoTakt is a joint-project, which is part of an initiative called “Intelligent Logistics”, and seeks to optimize the logistics chain by achieving more efficient coordination between various modes of transportation. This will facilitate the more timely and cost-efficient supply chains, as links between truck and train shipments will be better linked and the timespan for shifting truck shipments to rail can be shortened. The Federal Ministry of Economics funds the project and among the project’s participants are Volkswagen, BOSCH and the University of Karlsruhe. [9] [12]
DB has some 1000 engineers working all around the world to help countries in developing logistical and supply chain solutions. DB seeks to become emission-free by 2050 and collaborates with many partners that are likeminded. The efficiency of rail logistics is very substantial and will only be enhanced as the need for sustainable transport grows and urbanization on all continents remains ongoing. DB’s expertise is used to further promote the use of sustainable railway solution abroad. For instance in Saudi Arabia, a country that six times larger than Germany, but served by only two rail lines. DB is responsible for the Saudi Land Bridge project, which is to create a continuous real connection between the Red Sea side and the Persian Gulf side of the country. [9]
Future of the Deutsche Bahn’s Main-line Service: The ICx Case
Strategic Partners: Siemens and Bombardier
Siemens AG (headquarters located in Germany) is the largest electrical engineering holding, the global leader in engineering solutions for a wide range of industries. More than 50 years the name Siemens is the synonymous with advanced technology, progress and steady growth. Today the holding is represented in more than 190 countries and has over 405 000 employees. For a long period Siemens remains a main partner of Deutsche Bahn AG. Other partner of DB is Bombardier Inc, the world’s leading rail technology innovator which has a broad portfolio of products and services from civil aircraft to rail transportation equipment, systems and services. Bombardier Inc is involved in project Icx and supplies with the carbody sidewalls that have a 15 per cent weight reduction in comparison with standard model.
Concept
In order to meet the requirements of various transport tasks Siemens in collaboration with Bombardier has developed a unique model drive concept – ICx. With the goal to increase flexibility and to guarantee high operational availability the model of Powercars with identical traction technology has been designed. As the result there is a new standard in intercity traffic.
The Powercar
As it was mentioned above the idea behind the ICx’s drive concept is to achieve a high degree of modularity and therefore flexibility through implementing autonomic, powered identical cars and integrating the components of the traction system beneath these cars. The configurations are possible when the adaptation to specific transport tasks is needed, i.e. acceleration, speed and/or passenger capacity. Even the modification of first-class seats to second class is provided.
Optimized usable floor space and modular interior design
In order to design a floor space and to make it usable the principle of the empty tube was exploited. The configuration of the passenger area is with a modular layout, all the innovative ergonomics and kinematics was applied to furnishings that can be varied at will resulting in possibility of making last-moment changes in accommodation. Special seats are mounted on C-rails so that they can be easily moved.
High Travel Comfort
As it can be seen on the fig.X the ICx’s interior design concept is a key factor not only in distinguishing current project from the existing alternatives but also in assuring a certain level of travel comfort, e.g. lightning concept stands for the atmosphere and illumination from the large panoramic windows; a substantial increase in service options comes from the galley area; wheelchair lift and roomy universal restroom make travelling not just enjoyable but accessible for those with limited mobility; constant visual and audio information about the itinerary and the available services alongside with the mobile Internet access keep passengers constantly informed.
Eco-friendly Operation
The innovations come from the need to decrease energy consumption by 30%. A combined usage of lightweight trailing bogies with inside bearings (more developed variant of the Bombardier FLEXX Eco® trailing bogie) and weight-optimized power bogies (has already been successfully in use in high-speed transport and double-decker trains), and the further refinement of the aerodynamic design helped reduce weight and energy consumption.
Innovative Communication System
The SIBAS PN railway automation system implemented in the ICx contains two essential part: control units and modules connected via the train bus. This integrated system has as well a lot of other functions such as: control and information tasks, vehicle diagnostics, maintenance and commissioning support
Electronic vehicle control system
The components that build together the central vehicle control system are electronic vehicle control equipment, conventional vehicle control equipment (control lines, contactors, and switches) and various control units. The flexible car concept is connected with the future vehicle control system that together is a suitable instrument for a flexible car setup To provide a customer with maximum autonomy in each individual car will be implemented control units.
Remote Data Transmission
For the necessary information diagnostic on the land side were created the remote data transmission and tracking unit transfers which carry out the requirements of the mobile integration platform (MIP) and are flexible in terms of modules adaptation for specific application. SIBAS PN a new innovative railway automation system was created by Siemens. The system is based on SIMATIC components. The communication network consists of two sub levels: ETB (Ethernet Train Bus) and PROFINET vehicle bus. Both systems are based on Fast Ethernet (100 Mbit/s).
International operation
The initial configuration is designed for use in Germany and Austria, and the ten-car trains are also configured for Switzerland. The first order also includes trains for Netherlands, and trains for other European countries (Denmark, France, Luxemburg, Poland, Czech Republic, and Italy) are available when requested.[4]
Companies learn new technology to achieve competitiveness or find more efficient ways to compete to do the same work. Innovation can be done by implementing new product design, the new production process or simply a new approach to marketing or a new method of employees training. The majority of innovations are in fact simple and small. They based more on the accumulation of small improvements and achievements than on a single major technological breakthrough.
Except of few numbers of cases innovations are the result of extraordinary efforts. The company has successfully introduced new or better ways to produce or serve; to reach a goal it often passes through a serious critic and overcoming significant obstacles. In fact in order to achieve success in implementing innovations it is usually required pressure, awareness of the need and even certain aggressiveness. Cases of DB Company show that innovations do well only few companies. For railway innovation is more than technology, it is something that was implemented and used by customers. Finally, innovation will become even more important in the future.
References
- ↑ Hitt, M.A., Keats, B.W., and DeMarie, S. M. (1998) ‘Navigating in the new competitive landscape: Building strategic flexibility and competitive advantage in the 21st century’, Academy of Management Executive, 12(4): 22-42
- ↑ From: http://www.deloitte.com/view/en_GX/global/industries/manufacturing/manufacturing-issues/creating-competitive-advantage-through-innovation/
- ↑ 3.0 3.1 3.2 3.3 3.4 DB images: A limited number of images may be used from DB by Volker Emersleben 2011. [www-page] [retrieved December 13, 2011]. From: http://scm.gsom.spbu.ru/images/6/62/3545v11.jpg [
- ↑ 4.0 4.1 4.2 4.3 4.4 Deutsche Bahn (2011). Chronology. [www-page]. Updated October 22, 2009. [retrieved December 2, 2011]. From: http://www.deutschebahn.com/site/bahn/en/group/history/chronology/chronology.html
- ↑ 5.0 5.1 5.2 Railnet (2006). Deutsche Bahn and T-Mobile Deutschland Transform German Rail Travel. [www-page]. [retrieved December 13, 2011]. From: http://info.cisco.de/anwenderberichte/files/TMobile_DBahn_Final.pdf
- ↑ From: http://en.wikipedia.org/wiki/T-Mobile
- ↑ 7.0 7.1 From: http://www.cbronline.com/companies/t_mobile_deutschland_gmbh
- ↑ 8.0 8.1 DB Schenker Labs (2011). Bridges to science. [www-page]. [retrieved December 13, 2011]. From: https://www.dbschenker.com/site/logistics/dbschenker/com/en/about__dbschenker/best__practice/studien/innovationsmanagement__lab__en.html
- ↑ 9.0 9.1 9.2 9.3 9.4 9.5 Technical innovations (2009). Beacons of successful innovation. [www-page]. [retrieved December 13, 2011]. From: http://www.deutschebahn.com/site/nachhaltigkeitsbericht__2009/en/our__products/innovation__management/technical__innovations/technical__innovations.html
- ↑ Energy saving and climate protection programs (2008). The Transportation and Logistics DB Schenker FZE Michael Barber Adrian New & Meshkin Co. Iran. [www-page] [retrieved December 13, 2011]. From: http://www.meshkinco.net/files/DB%20Schenker%20Global.pdf
- ↑ E-freight (2008). First paperless airfreight transport from Germany. [www-page]. [retrieved December 13, 2011]. From: http://www.dbschenker.com/site/logistics/dbschenker/com/en/about__dbschenker/best__practice/innovation/e__freight.html
- ↑ LogoTakt (2008). [www-page]. [retrieved December 13, 2011]. From: http://www.logotakt.de/
- ↑ http://www.railwaygazette.com/nc/news/single-view/view/db-keeps-icx-options-open.html
