Technology company in global dialog
Innovation and customer proximity are the keys to success for Erbe Elektromedizin GmbH. Christian O. Erbe, managing director of the family-owned company in Tübingen and president of the IHK Tübingen-Reutlingen, is also the newly elected president of the BWIHK.
The Erbe Elektromedizin GmbH relies on the intensive exchange with researchers, doctors and patients – worldwide.
There are many global challenges for companies in Germany. Do these slow down your business?
The major crises are not at all to be minimized. They also present us with major tasks and touch every company. It is said that medical technology is exempt from crises, but the global challenges also have an impact on us. Supply chains, for example: we have problems getting products and being able to manufacture them. Of course, we have a shortage of skilled workers, 80 vacancies that we urgently need to fill. And of course there’s the issue of energy, where we don’t even know how high prices will go. These are issues that naturally affect us. We don’t yet know how they will affect the company’s results. But in the 171 years that we have been on the market, we have always managed to keep going. I am sure that we will also now find solutions to bring the company over these hurdles.
You are now realizing a major investment – in manufacturing in Rangendingen. What is the background here?
Not everyone knows Rangendingen, which is about twenty minutes away from Tübingen by car. There we have a plant where we manufacture sterile disposable instruments for various medical disciplines, such as general surgery, gastroenterology, urology or gynecology, surgery. We want to expand this. These instruments are used at workstations that we manufacture at our plant in Tübingen. The instruments are intelligent, as we equip them with software, and together with the workstations they form a system that is tailored to the workflows in the operating room. Demand for such products is rising steadily.
How does your company hold a top position in a competitive global market for so many years?
We actually come from technology: our core competence is working with electric current, with which we can cut tissue and staunch blood – simultaneously. Such devices can be found in all operating rooms in the world, including those of our competitors. That is why we also rely on other technologies related to high-frequency surgery. One of them is non-contact surgery with gas plasmas. Another technology is waterjet surgery,with which tissue can be cut without injuring vessels. Then there is cold surgery, which allows us to remove uninjured tissue for accurate diagnosis. Our thinnest, most delicate instrument for taking a tissue sample is a probe with an outer diameter of 1.1 millimeters. With these different modules plus software, we can configure the workstations very individually. The doctor specifies, we program. We can manufacture such a tower in 22,000 variations, for 22 language areas – in other words, very individualized. This is our unique selling proposition and our great competitive advantage in the world markets.
“It has so far always continued in the 171 years that we are on the market. I am sure that we will also find solutions now.”
How important is the Tübingen site in this regard?
The Tübingen site is very important for us. Here we had from the first day, so since 1871, very close cooperation with various institutes of the university. Today, we do research all over the world, but we still do it in Tübingen. It has to be said that the institutes at the University of Tübingen enjoy an excellent reputation worldwide. This real top level is of course to our benefit.
How do you organize knowledge management worldwide, including between your national subsidiaries?
So we have 18 subsidiaries at the moment. In them, of course, work sales employees, employees from the marketing area and also research employees who are deployed decentrally, but are affiliated with the central research department in Tübingen. Whether in Singapore, in the United States or in China – they are very close to the doctor and the patient. Even “on-site”, so during operations in the room. They observe and exchange with the doctors, they bring suggestions. So we bring together the medical know-how of the doctor and our technical expertise. This is how synergies are created, also in Tübingen in our research department, which now has 60 members. Human physicians, physicists, chemists, biochemists, fluidicists, plasma experts and now also experts in artificial intelligence and machine learning work here. Results are fed in here, evaluated and discussed. This is how ideas are then created, which become products..
You move with the products internationally in very different jurisdictions…
In fact, comes to the technological approach, so what we get technical, what is feasible, the second approach, what are we allowed at all. In the case of the approval system, we had hoped that at some point we would have a large system that would apply worldwide. Unfortunately, the opposite is the case. The systems are drifting apart, each country has its own approval criteria, it is becoming more complex, more difficult, more demanding, more and more documentation is required. That’s a significant cost, and that’s also the answer to the question of why medical devices are disproportionately expensive. A customer can find a cable much cheaper, even at a home improvement store. I can then show him how much documentation we have to have for that one cable, how many validations that goes through, or how many sterilization cycles it is designed for. There are examples where the documentation requirements are absolutely excessive. Many country markets have yet to find a reasonable middle ground there.
“Whether in Singapore, in the United States or in China – our employees are very close to the doctor and the patient. Even during operations in the operating room.”
Where do you see future growth, and what are the plans you are pursuing?
We have a dedicated department that looks at country markets, analyzes exactly how the development and growth strategies are, what market opportunities we have with our products. Based on these findings, we extrapolate our market growth and do so in very different country markets. This is the only way to plan production capacities, sales activities and in the case of new products, training courses. This requires a lot of advance.
A growth market for us now is the United States of America, not surprisingly, because there is a lot of money invested in health care. The question is: Will the U.S. be able to afford it in the future? That’s why we say we’re enjoying the growth, but of course we also have to build up alternative markets. The same applies to the People’s Republic of China, which is also a very strong market for us. Here, too, we have to find alternative markets. De I see at the moment in Southeast Asia, very large markets that are underrepresented, for example Indonesia with a gigantic population and very moderate sales. This is also true for other countries that are developing strongly, for example India. Latin America is developing, and I see growth potential in Brazil. In general, it would do a lot of companies good to spread risks across several large markets in order to remain fit for the future.
You recruit worldwide. How far does the internationalization of your company go?
A good point. Some employees have said, we are already international, we are in 110 country markets at the customer. Do we now want to serve 120 or 140 countries? We are pursuing an internationalization strategy that is not limited to sales. Internationalization applies to all parts of the company. We have started to build logistics hubs to make logistics more international. We have redefined research locations in various subsidiaries in order to be closer to our customers and to the research facilities in the countries. On the skills shortage: If we can’t find engineers in Germany anymore, why not go to India with its very well-educated, motivated people who speak English and are available? Large companies like Daimler-Benz have demonstrated this in Bangalore. We also have to establish something like this, create an exchange between the headquarters and the subsidiaries, set up programs so that people understand each other better, both professionally and emotionally. Then, of course, training is an international task – that of doctors, nurses, hospital technicians as well as our own employees in sales and technical service. That is why the Erbe Academy, which we founded ten years ago and in which we have trained 40,000 people to date, has its headquarters in Tübingen, but we also have other locations. One of them is in Singapore. Another location is in Beirut, Lebanon, for the Middle and Middle East. We will establish more locations.
“It would generally do many companies good to be able to spread risks across several large markets, to remain viable in the future.”
So, as a company, you want to continue to develop internationally in proximity to your customers?
The requirements are different internationally, from market to market, we must take this into account. From the evolution of the company, we were classically a technologically positioned company with products that we then presented to the doctor, who then had to like them. That was successful, otherwise we wouldn’t be where we are today. But we have learned something new. Our approach today means that in marketing we have to engage more in dialog with customers, listen to them, learn from them, and only then start the development process. The key is to identify the customer value, i.e. the added value for the customer, and to implement it in the product itself. Then it’s also easier for the sales department, because the customer recognizes the advantage of the effectiveness of our solutions more clearly. Loyalty and sustainability are achieved through customer loyalty – not through price, where we are usually not the cheapest among the suppliers. We have the best technology, but meanwhile not only that, but also the best customer value. That is our ticket to the future.
“We pursue an internationalization strategy that is not limited to sales. It applies to all parts of the company.”
Presence and production in markets around the world.
As one of the market leaders in the fields of industrial sensor technology and explosion protection, Pepperl+Fuchs has long been one of the most internationalized companies in electrical automation technology. CEO Dr.-Ing. Gunther Kegel is also honorary president of the Association of the German Electrical and Digital Industry (ZVEI).