SpecialFeature 1

Special Feature 1

Augmenting the Logistics Solutions Business in
Response to Changing Customer Needs
In recent years, the environment surrounding logistics operations has been undergoing a drastic change.
Economic growth in emerging countries and increasing e-commerce transactions worldwide have led to anexpansion of global logistics volume. At the same time, new issues, including labor shortages in Japancaused by its declining birthrate, aging society and dwindling population and soaring labor costs inemerging countries, have also become prevalent. These circumstances have resulted in rapidly growing
needs for operational automation and higher logistics efficiencies. This Special Feature highlights how ourLogistics Solutions Business has been responding to such changing logistics needs and describes thefuture direction of our efforts.

Company Introduction

To date, Toyota Industries has concentrated on providing
more efficient logistics solutions to customers in Japan,
the United States and Europe. In the latter two regions, ourfleet management systems to centrally manage a fleet of lift
trucks and increase the efficiency of their operations havebeen on the market for quite some time. In Japan, we havebeen providing total solutions, including automated storage
and retrieval systems, automatic guided vehicles (AGV),
warehouse management systems (WMS) and other logistics
systems and equipment, with a focus on resolving logistics
issues from the customer’s perspective.

Strategies andBusinesses

In the Materials Handling Equipment Business centeredaround lift trucks, Toyota Industries has been leading
the industry based on its strengths derived from global
production, sales and service networks and from its extensive
product lineup and customizing capability to meet customer
needs in every usage condition and business category.
In addition to merely providing products, we operate anenhanced, total support structure encompassing after-sales
services to ensure that customers always use our products inoptimum condition. Through this structure, we help customers
in different industries to achieve greater efficiencies in theirdiverse logistics operations.
(See page 31 for details of our global Materials Handling
Equipment Business.)

Responding to Changing Logistics Operations
Toyota Industries has made efforts to quickly and accuratelyrespond to customers’ logistics needs that have changed withthe times.

22Toyota Industries Report 2018

As mentioned earlier, more distribution centers havebeen built to deal with a rapid expansion of e-commercetransactions. At these centers, logistics solutions thatcombine software and equipment, such as lift trucks for which
we enjoy the world’s top share*1, automated storage andretrieval systems, conveyors and sorters, play an importantrole. To respond to a drastic change in logistics needs, werecognized that we must augment our Logistics Solutions
Business globally and improve our responsiveness tosatisfy these evolving needs. Based on this recognition, wewelcomed two logistics systems companies into the ToyotaIndustries Group, namely, U.S.-based Bastian Solutions LLC
in April 2017 and Netherlands-based Vanderlande Industries
Holding B.V. in May 2017.

n Growth of the E-Commerce Market(US$ Billion)
4,000
3,500
3,000
2,500
2,000
1,500
1,0005000(FY) 2015
Asia PacificFinancial Section /Corporate Information

Toyota Industries’ Global Business Centered onLift Trucks

For example, in the field of lift trucks, we have respondedto the ever increasing need for electric lift trucks by expanding
our lineup from conventional lift trucks that use lead-based
batteries to include models equipped with lithium-ion batteries
and fuel cells, so that we can propose optimal products toeach and every customer.
Additionally, we have started offering our own sales
financing services to provide more purchasing options forcustomers depending on their financing needs. We have also
taken on the lift truck business of Tailift Co., Ltd., a Taiwanesemanufacturer of lift trucks having strengths in low- to middlepriced models, as an effort to respond to a broader range ofcustomer needs.
A rapid expansion of e-commerce transactions in recentyears has prompted an increase in the number and size of
warehouses, and we expect this trend to continue for theforeseeable future. The increasing popularity of e-commerce
has also pushed up the number of small-lot deliveries toindividual consumers, necessitating quicker, more frequent
and accurate operations from receiving orders to sorting anddelivery.
E-commerce operators and transportation companies
now need to process a large number of parcels in a shorttime, and we have been fielding many requests for ourproposals for establishing more efficient logistics operations.

Promotion ofESG Initiatives

Telematics (fleet management system)*1: Survey by Toyota Industries Corporation
2016
North America

Central and Eastern Europe

2017

2018

2019

2020

Western Europe
Latin America

Middle East & Africa

Source: C reated by Toyota Industries based on “Study Report on a Structural Analysis of theICT Industry in the IoT Era and Verification of ICT’s Multifaceted Contributions toEconomic Growth,” Japan’s Ministry of Internal Affairs and Communication (2016)Automated logistics equipment: automated storage and retrieval system and conveyor

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Special Feature 1

Facilitating Mutual Understanding to Generate
Synergies

Strengthening the Logistics Solutions Business
GloballyHeadquarters: North Brabant, Netherlands
Main business: Logistics solutions provider*3
Net sales: Approx. ¥150.0 billion (fiscal 2018)n Bastian Solutions LLC*3: A
 form of business to manufacture major equipment and software in-house andprovide a total logistics system*2: A form of business that specializes in logistics systems integration, incorporating
equipment mainly procured from outside sources

24

Toyota Industries Report 2018

Management system

Shuttle-type automated storage andretrieval system

First Global Alliance Meeting held in June 2017 in the Netherlands

Financial Section /Corporate Information

Since its establishment in 1952, Bastian has expanded its
logistics solutions business primarily in the United States.
Bastian is a turnkey contractor and major logistics
systems integrator that offers a total solution package fromthe selection of optimum hardware and software to systemdevelopment in order to meticulously satisfy individual needsof customers in different industries and sizes. Its thoroughpost-installation support services, including the remotemonitoring of operational status, also help customers set up
efficient logistics operations.
Capitalizing on thesestrengths, Bastian provides
solutions to customers

Vanderlande, which operates in Europe as well as
globally, is a leading logistics solutions provider in the world.
The company offers systems to distribution centers andwarehouses of e-commerce operators, retailers and parcel/
postal services as well as baggage handling in airports.
Vanderlande internally develops a broad lineup of logistics
equipment and related software, including automated storage
and retrieval systems, sorting systems and conveyors,and offers systems tailored to customer needs. It has anoted strength in starting up large-scale projects and has
built a strong customer base by providing enhanced aftersales services through its global network and earning trustfrom leading companies in various industries. Additionally,
Vanderlande’s baggage handling systems have been installed
in a number of large hub airports across the world.

Promotion ofESG Initiatives

Headquarters: Indiana, U.S.A.
Main business: Logistics systems integrator*2
Net sales: Approx. ¥30.0 billion (fiscal 2018)

Robotic batch order picking

n Vanderlande Industries Holding B.V.

Bastian, Vanderlande and Toyota Industries are in acomplementary relationship both in terms of businessdomains and geographic areas of operations. As such, webelieve that the collaboration among the three will enable us toprovide solutions even more suited to customer needs.
The joining of the three companies has also drawn agreat deal of attention from customers, and we have alreadybegun to receive inquiries for new business opportunities thatwould have been difficult to capture for each company alone.
Examples include an inquiry for introducing Vanderlande’s
system in Japan and a business negotiation undertaken
jointly by Bastian and Vanderlande in North America. The
three companies are working together to link these newopportunities as a means of providing greater value tocustomers.
Going forward, we will formulate a TALG Vision & Strategyfor achieving growth over the medium to long term. Withthe three companies making concerted efforts, the Toyota
Industries Group will reinforce its Logistics Solutions Businesson a global scale and provide new value to customers.

Strategies andBusinesses

Our Logistics Solutions Business is centered around logistics
systems and equipment, and ramping up our efforts toreinforce this business had been an urgent task. Bastian andVanderlande each have unique strengths in this area.

in various industries, ranging from major retailers andtransportation companies to e-commerce operators andmanufacturers of pharmaceuticals, automotive parts and otherproducts.

Providing New Logistics Value

Company Introduction

Collaboration of the Three Companies to Expand Business Globally

As a new structure to promote the Logistics Solutions
Business across the entire Toyota Industries Group throughcollaboration among Bastian, Vanderlande and Toyota
Industries, we created the Toyota Advanced Logistics Group(TALG) in June 2017. Jointly with the Toyota Material HandlingGroup (TMHG), a global structure in our Materials Handling
Equipment Business that mostly deals with lift trucks, we helda Global Alliance Meeting and started discussing ways togenerate synergies through the collaboration of the Lift TruckBusiness and Logistics Solutions Business.
Based on our past M&A experience, we believe that
it is crucial to understand the strengths and status of thethree companies and build a trust-based relationship first,
as opposed to rushing to integrate business, since eachcompany has a different history and corporate culture.
According to this policy, we had a discussion in June 2017

on specific action items and the organizational structure of
TALG to promote collaboration, and established regionaland functional Working Streams. Through these Working
Streams, we are undertaking efforts toward the generationof synergies across various areas of operations from sales,
joint procurement and collaborative development to mutual
product supply, sharing of production know-how andimproved customer service through the mutual utilization ofservice networks.

Message from the Director in Charge
In recent years, I have felt a considerable change in customer needs driven by thegrowing e-commerce market and labor shortages. For example, there has been an
increasing need for totally managing the entire logistics operations within a plant and an
accelerated move among distribution companies toward automation. Thus, I believe thatreinforcement of the Logistics Solutions Business on a global scale represents both atask and a great growth opportunity for Toyota Industries.
Currently, Toyota Industries is not the industry leader in the logistics solutions field.
However, we are confident that we are able to grow into a significant player by leveraging
our accumulated logistics improvement know-how while mutually sharing the individual
strengths of our partners, Bastian and Vanderlande, and maximizing synergies.
In achieving growth, we must facilitate a mutual understanding among the threecompanies and patiently work to align the future courses of action. By doing so, weintend to attain the global top position not only in the Lift Truck Business but also in theLogistics Solutions Business.

Yojiro Mizuno
Senior Managing Director

Baggage handling system in airports

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