Dräger attaches a great deal of importance to its research and development (R&D) activities. The Company there- fore works hard to expand these in order to increase com- petitiveness through new and improved products. Dräger has also expanded its R&D activities geographically, with
the extension of R&D centers in Beijing and Shanghai, China. These centers develop local product modifications and adjustments for the growing Asian market.
In fiscal year 2012, research and development costs in- creased by EUR 36.8 million to EUR 197.3 million (2011: EUR 160.5 million). This figure corresponds to 8.3 per- cent of net sales (2011: 7.1 percent). There were three rea- sons for this increase: Dräger increased the number and intensity of development projects; the Company also updat- ed a number of products in order to ensure their compli- ance, particularly with the RoHS II 1 European Union Guide-
line; and the annual average rise of the US dollar against the euro increased research and development costs. Dräger obtained services from external research partners in 2012 for a volume of EUR 33.1 million (2011: EUR 25.5 million). This amount accounts for 16.8 percent of total research and development expenses (2011: 15.9 percent), meaning that the ratio has risen by 0.9 percent- age points year-on-year. Dräger purchased external re- search and development services primarily in order to have access to expert knowledge in niche technologies for the development of individual components for devices and ac- cessories. This measure increases product quality and shortens development periods, meaning that devices can be launched more quickly, and it also increases flexi- bility. Dräger enters into long-term exclusive partnerships to protect the results of such external development work. On December 31, 2012, 1,215 employees worked in research and development in the medical and safety divisions worldwide (December 31, 2011: 1,060). 52 people worked in Central Basic Research in Lübeck at that time (Decem- ber 31, 2011: 49). In 2012, patent and trademark offices around the world issued 122 new patents to Dräger (2011: 118). The Company also applied for another 95 patents at international patent and trademark offices (2011: 87).
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Basic Research analyzed and assessed chances and oppor- tunities for Dräger business from a technological per- spective last fiscal year. Some of these analyses will be put into practice in 2013 as technology projects. Dräger also worked on application-based innovations in more than 40 technology projects. Eleven of these projects were com- pleted in 2012, seven for medical technology applications and four for safety equipment applications. These tech- nologies are now available for product development. They include innovations that can significantly improve the control of ventilation for patients in critical care, and tech- nologies that will enable Dräger to make its electro-chemi- cal sensors stand out even more from the competition. In the process, employees in Basic Research produced more than 30 inventions for which patent applications are cur- rently being prepared.
meDical Division
In 2012, Dräger again developed numerous new and exist- ing medical technology products: eleven new devices and device expansions (2011: eight) and four accessories (2011: five).
The new anesthesia workstation “Dräger Perseus A500” was one of the highlights. It was premiered to industry professionals at the World Congress of Anesthesiologists
(WCA) in Buenos Aires, Argentina, at the end of March 2012. The “Perseus A500” provides a flexible workstation design for hospital employees, a link to the Infinity Acute Care System Monitoring (IACS), critical patient care and automated functions that support work processes in the operating room. Our “SmartPilot View” calculates the com- bined effect of anesthetics and pain killers and displays them graphically. The new Version 2.0 software supports the “Perseus A500”. It can also depict laughing gas (N²O) and, as an additional innovation, includes the Dräger- developed Noxious Stimulation Response Index (“NSRI”). The Group has also added new functions to the IACS, therefore improving data exchange between therapy devic- es. The “Infinity Medical Cockpit”, for instance, takes over anesthesia data from the “Perseus A500” and displays it on a monitor in real time, together with the patient’s vital statistics. When the portable monitoring component “M540” is connected to the “Perseus A500”, it automati- cally adjusts its alarm pattern to the situation in the oper- ating room. The wireless LAN function (WLAN) for the portable Infinity “M540” monitor during patient transport is another innovation in the connection of the IACS. The “M540” automatically switches to WLAN operation as soon as it is removed from its docking station on the hospital bed. During transport, all vital statistics are transmitted using a wireless connection via the hospital network to continue recording electronic data.
research anD Development
R&D costs in € million 2007 2008 2009 2010 2011 2012
Medical division 89.1 104.7 107.8 101.1 111.1 135.8
in % of net sales 7.4 8.4 8.5 6.9 7.5 8.7
Safety division 31.2 34.6 39.3 43.9 44.8 57.9
in % of net sales 4.9 4.9 5.8 6.0 5.6 6.8
Drägerwerk AG & Co. KGaA 1.6 2.7 2.3 3.3 4.7 3.6
Dräger Group 121.9 142.0 149.4 148.4 160.5 197.3
in % of net sales 6.7 7.4 7.8 6.8 7.1 8.3
In order to meet requirements for safe and effective acute patient care, Dräger has had its “ICM” patient data man- agement system certified as a class II medical product. The new version, “ICM 8”, not only documents all relevant patient data as before, but also provides doctors and care personnel with a diagnosis and treatment assessment to plan further measures.
In addition to launching the “Perseus A500”, Dräger fur- ther developed the “Primus” and “Fabius” anesthesia devices portfolio. The display of additional trends on the “Primus” helps to optimize patient ventilation. Dräger developed the “Fabius + XL” on the Shanghai site specifically for its customers in emerging markets. The device has been significantly improved in terms of design, ergonomics, ease of use and workstation design. In addition, in Venti- lation the Group has also further developed the “Savina 300” device. With its additional ventilation modes and monitoring functions, it provides customers with even more therapy options. We introduced additional components, such as the multi-monitor bracket “Pendula”, for hospital infrastructures. Our “Advanced workplace design” con- cept offers product solutions for hospitals, which take par- ticular account of aspects such as safety, ergonomics, efficiency and comfort.
safety Division
Research and development in the safety division once again launched a large number of products in 2012: The division brought a total of 14 new products to the mar- ket (2011: 18).
A highlight in 2012 was the launch of the “Dräger X-act 5000” automatic tube pump. This is a protected all-in-one solution for measurements with Dräger short-term tubes and sampling. The “Dräger X-act 5000” recognizes the tube type with a barcode scanner and automatically adjusts all measurement parameters without requiring any addi- tional input. This simplifies measurement preparations and reduces potential error sources. Dräger also further
optimized its tube portfolio with the introduction of new nitrogen dioxide tubes.
In the portable gas detector business, Dräger launched the “Dräger X-am 5100”, a small, light, one-gas detector that is perfectly suited for meeting the requirements of personal gas detection. It can be fitted with an electro-chemical sensor either for hydrogen peroxide, hydrazine, hydrogen fluoride or hydrogen chloride. The Group also expanded the stationary gas detection portfolio. The “DrägerSensor EC” and “DrägerSensor MEC” electro-chemical sensors completed the Polytron-8000 series. For the first time ever, we are offering a product family that reflects all station- ary gas detection measurement technologies. This provides customers with a wide range of combinations for mea- surements, all depending on the specific application and regulatory requirements.
We added the “Dräger Merlin Software” to our “Dräger PSS Merlin Telemetry System.” We therefore provide the firefighting sector with a software-based telemetric moni- toring system that always gives a precise overview of all re- spiratory protection devices in operation. The software enables fully automated registration and compiles opera- tional reports.
There were also new developments in respiratory protec- tion systems. We developed the “Dräger Hybrid System (DHS) 7000”, a modular respiratory protection system, for the US market. Users can operate the system as a filter, fan or compressed air breathing apparatus with just one mask. The “Dräger Oxy 3000” is a respiratory protection device that operates independently of the ambient air. It enables the user to escape from environments in which smoke or toxic gas may pose a hazard, or where there is a lack of oxygen.
New technologies and materials mean that products can be made more user-friendly and new product characteris- tics can be developed. For example, respiratory protec-
98 reSearch aND DeVelOpMeNT | purchaSINg | QualITy
tion filters can be even more specifically tailored for various areas of application and the performance of gas sensors can be improved. This enables Dräger to increase custom- er safety as much as possible and to offer lower costs on account of an optimized process chain.
purchasing
Strategic Purchasing is responsible for obtaining all of the materials and services required within Dräger – from electronic printed circuit boards and complex mecha- tronic systems such as cockpits and trolleys, plastic and machining parts, to fleet management and IT services. Purchasing volume last year was EUR 999 million (2011: EUR 980 million), more than half of which can be at- tributed to production materials. In 2012, Strategic Pur- chasing consistently developed its material groups and supplier strategies and also stipulated the general terms for cooperation with suppliers. Dräger’s global purchas- ing strategy is based on four pillars: innovation, quality, reli- ability and competitiveness. This strategy has enabled the Group to overcome the challenge of higher turnover in the fiscal year and therefore increased production quanti- ties, in com bination with increasing pressure to lower costs.
innovation
Dräger concentrated last year on two strategic elements in- tended to provide an innovative approach to purchasing: This allowed further improvements to time to market – that is, the shortening of the time that passes until a product idea becomes a product that is ready to be launched – and an important contribution was also made to design to cost within Dräger. Design to cost means that products are designed and constructed with a view to keeping manu- facturing costs as low as possible. Both succeeded by involv- ing Dräger’s strategic partners at an even earlier point in the development process. This is where Strategic Pur- chasing, in conjunction with suppliers, plays an impor-
tant role involving significant responsibility in the product development process.
supplier Quality
The objective of the supplier quality improvement pro- gram, or SQIP, launched at the end of 2010, is to optimize all aspects of Dräger’s supplier portfolio. In fiscal year 2012, this improvement program enabled Dräger to reduce the failure rate of 20 SQIP suppliers by up to 35 percent, for example.
This was a major success for both the Group and its suppli- ers. The Group also used the experiences gained from this quality improvement program to make tangible im- provements to its basic cooperation with suppliers. Two examples of this are a more efficient initial sampling pro- cess and an optimized complaints procedure.
At supplier day, held on March 6, 2012, Dräger rewarded six top suppliers for the first time for their excellent per- formance in the categories services, quality, innovation, logistics, and competitiveness, with one supplier also declared the overall winner in all categories. The event slo- gan was “Who stops becoming better, stops being good”. Supplier day is an important part of Dräger’s collaboration with preferred suppliers and strategic partners. It has been made an essential part of supplier management that will take place annually in the future.
reliability
An improved comprehensive supplier management system also played an important part in the success of the Com- pany this year. Close collaboration with Dräger’s suppliers enabled the Company to continuously improve supply capacity in all locations, even in conjunction with increased unit output. The guarantee of success was provided by numerous workshops with selected suppliers. These work- shops will be repeated in the future.
competitiveness
If Dräger is to remain internationally competitive, it must take action concerning not only the purchase of raw materials, but also non-production materials and services. Throughout all of last year, raw material provision was at all times guaranteed to be in line with consumption dur- ing production. Prices fluctuated, as also happened in 2011, but remained for many raw materials under the level of the previous year. Platinum powder and aluminum in particular were purchased considerably more economically by setting prices early.
In terms of strategy, in 2012 Dräger worked on the reorgani- zation of purchasing processes with a view to increasing competitiveness. This allowed further decisive progress to be made towards the implementation and networking of a tailored value analysis concept: Dräger Value Managers in purchasing are now involved in product development and further development processes from a very early stage. The content of the main processes – value analysis and target price analysis for optimizing product costs – was set out again and the timing was adapted to the individual product development phases.
An important function within Strategic Purchasing is what is known as Global Commodity Management. This func- tion is responsible for drawing up a strategy for each mate- rial group and implementing this Group-wide. The sup- plier strategies for the strategic partners are drawn up in response to these strategies and applied throughout the Company.
Following the reorganization of Purchasing in 2010 and the establishment of the strategically focused Global Com- modity Management in Mechanics and Electronics, the next optimization step was implemented in this area mid-2012, with the aim of obtaining components and mod- ules as efficiently as possible around the world. The task of Global Commodity Management was given a significantly
more strategic focus in order to better meet the demands placed on a comprehensive material group and supplier management system, particularly with a view to stand- ardization and the implementation of Group-wide solutions. A clearly measurable improvement in supplier quality and reliability was visible within just a few months of imple- mentation.
A further strength in the implementation of Dräger’s pur- chasing strategy last year was the limiting of supplier numbers in order to simplify processes within the Com- pany. Dräger’s aim in this regard is to conduct more business with its compatible suppliers. This will ultimate- ly help the Company to improve all four pillars of the purchasing strategy.
Quality
Dräger has implemented a variety of activities and pro- grams in recent years aimed at improving the quality and reliability of its products. The “Six Sigma” method is particularly noteworthy and has already been introduced in large areas of the Company. Preventative quality work in development projects and the continuous improvement of existing products meant that quality key figures, for example device breakdowns among Dräger customers, im- proved significantly again in fiscal year 2012.
Last year, Dräger focused particularly on improving the quality of products made in the US. The established “Six Sigma” method was also used for this. In addition, the introduction of quality management instruments in the development process on American sites continued. These were successfully implemented in Lübeck some years ago.
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proDuct Quality anD safety
A new Dräger process landscape was developed in fiscal year 2012. This involved the description and assessment of internal processes so that they can be continuously im- proved, along with efficiency in production and the provi- sion of services in line with customer requirements. The business and support processes documented in this system provide the basis for the different process-oriented qual- ity management systems. In many countries the certifica- tion of these systems is a legal requirement for the launch of products, such as medical technology, gas detection devic- es or personal protective equipment. Furthermore, cus- tomers often demand to see proof of the Company’s man- agement systems for quality, occupational health and safety, and environmental protection, prior to placing an order.
For this reason, all 14 production sites have for some years had quality management systems certified in accordance with DIN EN ISO 9001. As in the previous years, this cor- responds to a rate of 100 percent. In addition, the manage- ment systems of ten (previous year: nine) of our 14 produc- tion sites are also certified in accordance with OHSAS 18001, an international standard for occupational health and safety. The management systems were checked again in 2012 in internal and external audits and were confirmed to be working effectively. You can find more information on this subject on the Dräger website at www.draeger.com/ certificates.