5.2 Business model and strategy
5.2.1 Nedap's business model and value chain
As described in section 1.1 The Nedap Story, Nedap delivers digital twin solutions in key markets Healthcare, Livestock, Retail and Security. With our technology stack, built on IoT, RFID, Vision and SaaS, we help organizations optimize their operations, manage risks and make data-driven decisions. Nedap takes a people-centered approach to technology to distinguish itself in its markets. Our revenue is generated from the sales of products and systems, software subscriptions, and services.
We operate in four key markets:
Our Healthcare business unit develops and markets software solutions that support healthcare institutions in the Netherlands in planning, registering and administering care processes.
Nedap's Livestock business unit develops and markets sensor-based cow monitoring and management solutions globally.
Nedap's Retail business unit develops and markets global RFID solutions for optimized inventory management, simplified shop processes and the prevention of shrinkage.
Nedap's Security business unit develops and markets access management solutions to secure people, buildings and assets globally.
Our solutions aim to drive progress and efficiency in these diverse markets.
Our value creation model shows how we use the available resources to create value for the organization, our stakeholders and society. We consider our solutions to be successful when they create value for people, planet and society, and always in combination with healthy financial results. In this respect, we see market leadership as proof of our relevance in people's day-to-day lives and high added value per employee as an indicator of the success of our value creation process. This indicates the current and expected benefits for customers, investors and stakeholders.
We achieve this as a group of more than 1,000 employees worldwide and 100 non-employees (independent contractors, secondment contractors and temporary employees). More than 90% of employees are located on our campus in Groenlo, the Netherlands, and the other employees are located at the offices of Nedap subsidiaries.
Electronic manufacturing service suppliers represent the main business actors upstream in our value chain, and our business partners and end-customers represent the main actors downstream in our value chain. Based on the revenue generated by our products and services, our revenue of €251.6 million can be broken down into two ESRS sectors, being €138.6 million in Manufacturing – Machinery & Equipment (consisting of the sales of our hardware, which we procure from our suppliers or manufacture ourselves) and €113.0 million in Technology – Software & IT Services (consisting of recurring sales related to licenses and one-time sales of software and services).
The sustainability goals reported in this sustainability statement apply to all our business activities across our global operations. Accordingly, we do not set goals for individual groups of products or services, key markets or geographical regions. In addition, we determined that our sustainability goals are not directly tied to any of these individual categories.
We have mapped the value chain for all Nedap solutions across our four key markets. We distinguish between the software value chain (subscriptions and services) and hardware value chain (products and systems). Depending on the business model for the key market, these value chains are either separate or integrated.
We have identified two main inputs for our operations: employees and raw materials. Both value chains rely on employees, whose knowledge is essential for developing our solutions and creating value for our customers. The hardware chain also relies on securing raw materials in the form of components used in the manufacturing process of our hardware products. In 2024, we worked closely with our supply chain partners to anticipate shortages in the supply chain at an earlier stage.
We considered potential stakeholder groups as outlined in the ESRS in mapping our value chain. These groups include employees and other workers, local communities, government, suppliers, vulnerable groups, (civil) society, consumers and end-users, authorities, analysts and academics, trade unions, investors and shareholders and nature. As part of the process, we identified stakeholders who may be positively or negatively impacted by Nedap's activities and mapped them to the value chains. Each business unit provided additional details specific to their stakeholders.
Stakeholders have been categorized into primary stakeholders (those directly involved with Nedap) and secondary stakeholders (those with indirect contact). The purpose of this classification is to link environmental, social and governance (ESG) issues to stakeholders' positions in the value chain and to identify where sustainability concerns are likely to arise based on the nature of activities, business relationships, geographies or other risk factors.
This analysis served as the foundation for mapping the longlist of material ESG issues to the stakeholders in the value chain, culminating in Nedap's value chain analysis document.
5.2.2 Nedap's engagement with stakeholders
Nedap established a core project team to conduct the double materiality assessment (DMA). This team is comprised of employees who represent relevant departments, such as Finance, Legal, Human Resources, Sustainability, and our supplier and customer-related experts.
The Board of Directors and Supervisory Board participated in validating the process and results of the DMA using the available information on the views and interests of affected stakeholders. Following the internal validation process, the findings were shared and discussed with stakeholders, including employees, investors, shareholders, customers and suppliers. This specific step in the DMA process is elaborated upon in the following sections.
We used the contacts with our internal and external stakeholders to identify and confirm the material sustainability matters for Nedap. We will continue to engage with each stakeholder group for various purposes (e.g., information sharing, consultation, collaboration) and use appropriate engagement methods (e.g., surveys, interviews, focus groups). By engaging with our stakeholders, we aim to incorporate their views and interests regarding our sustainability matters into our strategy and business model.
We prepare materials and tools (e.g., questionnaires, discussion guides, presentation slides) and document the results of these engagements. This enables us to cross-reference any new interests that emerge with internal assessments and external benchmarks and confirm current or identify new sustainability matters relevant to Nedap's business and stakeholders.
As sustainability becomes increasingly important to most stakeholders, we maintain open channels of communication. This allows for continuous feedback and the updating of engagement strategies and materiality assessments based on evolving stakeholder expectations and regulatory requirements.
For the interests and influence of each stakeholder group, we refer to the stakeholder table in section 1.5 Sustainability that we incorporate by reference. Feedback from our stakeholders is taken into account and is used to validate our strategy and business models. The matrix also includes information on our engagement with employees and end-users and consumers specifically.