Your SlideShare is downloading. ×
0
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Logistics, retail and regions
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Logistics, retail and regions

2,869

Published on

Presentation held at several occasions in Russia : …

Presentation held at several occasions in Russia :

2006, December 4th, Holiday Inn
Lesnaya Hotel, Moscow
Conference : ECR – Rusbrand

2007, October 11, Novosibirsk
Conference : “Logistics, warehouse,
distribution center” / Regional business
forum, organized by POS and Khod
Konem

2007, June 7th, Moscow
Conference : “FREIGHT-2007: Logistics
and Supply Chain Conference”,
organized by Seanews

Published in: Business, News & Politics
0 Comments
8 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
2,869
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
49
Comments
0
Likes
8
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. 1
  • 2. Summary 2
  • 3. Introduction Serge Rivet Conseo  10+ years of experience in logistics in CIS : - 3PL, Supplier logistics, Retail logistics, Logistics Consulting  A work with major companies , among them : - FM Logistic, Kuehne + Nagel, Mosmart -  Logistics Projects Management  Key projects led : - Warehouse management , Warehouse transfers , Co Manufacturing, Cross Docking, Activity Based -  Consulting & Strategic support Costing, investment projects, Productivity Management, WMS, Transport Management, Logistics planning -  4PL  Involvement in several initiatives : • Founder of the Eastern Europe Logistics Community • Co-creation and active participation to the ECR logistics working group 3
  • 4. Introduction 16,995,800 sq km 4
  • 5. A. State of Retail In Russia a quick overview …
  • 6. History of Retail in Russia 1994 : 1998 : 2001 : 2004 : First retail Russia’s coming of 1st Visible Soviet Style chains Default big foreign Regional Retail appearing Retailers Retail in Moscow Expansion • State Monopoly • 1% Of the Moscow Retail Great impact onto retail market • The Relationship between • Retails becomes a real economic • Recurrent deficit • 0% of Russian Retail • Re-orientation towards the retailers and suppliers sector, with its rules, trends and players • Small • Great part of imported discounter format turn to retailers advantage • Retail becomes a consumption habit on assortment products • Re-orientation towards • Did not accelerate the coming federal level • No import • Expensive Prices National Products of foreign retailers • Small Formats • Sadko Arkada ‘s (development of foods • Metro, Auchan, Remarks : • Specialized margins = 100 – 200 % product industry) Ramstore, Ikea, • The entry ticket to the retail market Formats • As a result, in 2000, most of the • No Tesco, No gets more and more expensive for new • Almost no Self Service • Foreign companies take today’s big players and formats Carrefour, No Casino, retailers, as big players has already come over Eastern Europe Retail are already created No Ahold, No WalMart and developed infrastructure (Specialists, Market but do not touch • Moscow shows mainly • Appearing of local regional Logistics, Regional Network, etc..) Russia super and hypermarket operators (magnit, MDM, • The next solutions to enter are mainly : development Edelweiss, …) • Development of new formats, • ST Petersburg shows underdeveloped in Russia mainly discounters • Acquisition of existing networks (Federal or Regional) • Franchising Source : Renaissance Capital 6
  • 7. Main trends in Retail / The expansion time has come Windows of opportunity Analysis (Based on GRDI ranking for 1995 – 2006) 7
  • 8. Main trends in Retail / Evolution of formats Others Convenience Store Discounters Supermarket Hypermarket Differentiation of formats Net increase of Federal Networks through Net increase of Hypermarkets to expects • Regional Expansion Convenience Stores to grow • Merger & Acquisitions • Alliances Source : Renaissance Capital 8
  • 9. Main trends in Retail / Globalizing Market In developing market In maturing market What is in the distribution pipe line ? What is in the distribution pipe line ? •  Consumer focuses onto basic products : •  consumers begin to spend more on non-food enhancing the bottom of the Maslow Pyramid items •  FMCG •  larger product variety with more outsourcing •  mainly foods oriented business from overseas The development of overseas flows is of great importance for the future of Logistics as : • Russia is a transit zone between Asia and Europe • Russia is to enter the WTO 9
  • 10. B. Impacts onto logitics 10
  • 11. Impact # 1 : Complexity issues Multiplicity of Formats involves •  Complexity of logistics –  Van deliveries vs rail deliveries –  Fresh product chain vs dry product chain –  Different seasonality –  Pallets pick vs unit pick For instance : The hypermarket’s impact: -  Massive consolidation of volumes to expect -  Explosion of the quantity of SKU’s to manage Convenient Stores impact : -  Capilarisation of Logistics »  Small deliveries New technologies will be necessary for »  High mix -  High speed and high quality deliveries managing complexity : expected • Hardware technologies : Radio Scanners, Rfid, Automatization … • Software Technologies : Warehouse Management Systems, TMS, EDI … 11
  • 12. Impact # 2 : Capacity issues Scaling up openings: •  Permanent increase of the logistics capacity The development of a regional Infrastructure is vital for new regional challenges : • Warehouses • Air, Road, Rail, Sea, 12
  • 13. Impact # 3 :. Forecast issues Scaling up openings: •  Companies permanently reevaluting future •  Lack of visibility for future • A New function will be at the heart of Logistics in Russia : Demand Planning, Capacity Planning, "Prediction is very difficult, Distribution Requirement Planning especially if it's about the • New Software Technologies : future." Statistical tools, advanced, demand planning, (Manugistics, I2, …) Nils Bohr, Nobel laureate in Physics 13
  • 14. Impact # 4 :. Strategic Network Management issues Apparition of network problematic 14
  • 15. New scales of retail / From Logistics Points … 15
  • 16. New scales of retail / From Logistics Points … to Chains 16
  • 17. From Points to Chains / New technologies to set up Supplier Store Supplier Store Supplier Store Supplier Store Supplier Store Supplier Store Supplier Store Supplier Store Supplier Cross- Cross- Store Cross Docking and consolidation Docking Docking center Terminal Terminal Supplier Store • greatly decreases the quantity of transactions between Supplier Store suppliers and stores • Allows to ship far small Supplier Store quantities Cross- Cross- Supplier Docking Docking Store These techniques became VITAL in Terminal Terminal the west Supplier Store 17
  • 18. Impact # 5 :. New Creative approaches to supply $$$ 18
  • 19. Impact # 6 :. New Risks : Bullwhip effect safety stock safety stock safety stock 19
  • 20. Impact # 6 : New Risks : Bullwhip effect Consumer Sales at Retailer Retailer's Orders to Wholesaler 1000 1000 900 900 Consumer demand 800 800 Retailer Order 700 700 600 600 500 500 400 400 300 300 200 200 100 100 0 23 0 25 27 29 31 33 35 37 39 41 13 15 17 19 21 1 3 5 7 9 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 1 3 5 7 9 11 11 Wholesaler's Orders to Manufacturer Manufacturer's Orders with Supplier 1000 1000 Manufacturer Order 900 Wholesaler Order 900 800 800 700 700 600 600 500 500 400 400 300 300 200 200 100 100 0 0 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 1 3 5 7 9 11 16 19 22 25 28 31 34 37 40 10 13 1 4 7 20
  • 21. Impact # 6 : New Risks : Bullwhip effect Bullwhip effect customer demand is rarely perfectly stable, –  businesses must forecast demand in order to properly position inventory and other resources. –  Forecasts are based on statistics, and they are rarely perfectly accurate. –  Because forecast errors are a given, companies often carry an inventory buffer called "safety stock". Moving up the supply chain from end-consumer to raw materials supplier, each supply chain participant has greater observed variation in demand and thus greater need for safety stock. • In periods of rising demand, down-stream (See Wikipedia) participants will increase their orders. • In periods of falling demand, orders will fall or stop in order to reduce inventory. The effect is that variations are amplified the farther you get from the end-consumer. 21
  • 22. Impact # 6 : New Risks : Bullwhip effect / The Beer Game The Beer Distribution Game (Beer Game) is a simulation game created by a group of professors at MIT Sloan School of Management in early 1960's • Age range Recommended for graduate students and members of the business management community. • Setup time 10-20 minutes • Playing time 60-90 minutes plus another 60-90 minutes for debriefing • Rules complexity Medium • Strategy depth High The Beer Game • Random chance None 22
  • 23. Impact # 7 : New Risks : Bigger exposure to external factors Natural disasters. The 1999 earthquake in Taiwan displaced power lines Just-in-time or lean approaches. to the semiconductor fabrication facilities responsible for more than 50 Because manufacturers have whittled inventory to almost zero, disruptions percent of the worldwide supplies of memory chips, circuit boards, can shut down a factory. Similarly, retailers have become increasingly reliant on flat-panel displays and other computer components. Analysts automatic replenishment and vendor-managed inventory: Even brief delays can lead to empty shelves and lost sales. estimate the quake shaved 5 percent off earnings for hardware manufacturers including HP, Dell, Apple, IBM, Gateway and Compaq. Global sourcing involves longer lead times, increased uncertainty and Political : Opponents of Venezuelan President Hugo Chavez began a heightened security concerns. Although suppliers in developing economies are general strike in December 2002. Businesses closed. The government often the lowest-cost producers, goods can pass through as many as 11 froze foreign currency sales. middlemen in transit, greatly increasing the risk of disruption. Multinationals including Ford, General Motors, Bridgestone/ Firestone, Goodyear and Procter & Gamble were forced to shut down Outsourcing : critical operations are managed outside the company for the duration of the strike. and the number of interfaces and potential points of risk increase. At one point, President Chavez sent the National Guard to seize a plant owned by a Coca- Cola bottler and to redistribute truckloads of drinks. Supply consolidation : increases the potential impact of a disruption. Economic : In September 2002, longshoremen on the U.S. West Coast were locked out in a labor dispute for 11 days, forcing the shutdown of Accidents : On December 14, 2002, a collision between two ships sent one 29 ports. With more than US$300 billion in goods shipped annually of the ships and the 3,000 U.S.-bound BMWs, Saabs and Volvos it was through these ports, the strike caused an estimated US$11 to $22 billion carrying to the bottom of the English Channel. in lost sales, cost of additional air freight, spoiled perishable goods and underutilized capacity. the New United Motor Manufacturing plant (a Toyota-GM joint venture) was forced to close its Fremont truck-making plant because it ran out of parts. IT infrastructure : In January 2003, in just 10 minutes, a computer worm spread to hundreds of thousands of computers. It created so much volume that at the height of the attack, half of all internet signals could not reach their destination. It caused nearly US$1 billion in damage by overloading the network. Bank of America’s ATM system shut down, telephone systems from Korea to Finland were disrupted and Continental Airlines was forced to delay flights. The frequency of natural disasters has increased by a factor of three since the 1960s, but their cost has increased by a factor of 10. 23
  • 24. Impact # 8 :. The New Border in Retail Logistics / Logistics enters the store Retail discovers a lot of logistics process inside the stores Source : Migros Source : Roland Berger Up to 50% of time worked in stores is pure logistics or logistics-like process ! 24
  • 25. Impact # 8 : The New Border in Retail Logistics / Logistics enters the store Retail discovers the impact of Out Of Stores Out of Shelve requires mainly efforts in: –  Replenishment –  Merchandising issues –  Clear Vision of Stock –  Ordering systems Which are mainly Logistics Issues !!! 25
  • 26. Impact # 8 : The New Border in Retail Logistics / Logistics enters the store Buys brand Returns later elsewhere 17% 21% 30 % lost 46% lost opportunities opportunities for Retailer for Manufacturer Doesn't buy Buys different size anything 9% The issue is real for 16% Russian Business Buys a different brand 37% Source: Roland Berger / ECR Europe 26
  • 27. Impact # 8 : The New Border in Retail Logistics / Logistics enters the store As a consequence, Logistics enters the stores Therefore Logistics is less an executing function, but a strategic function coordinating : – Business Development strategies – Planning strategies – Buying strategies – In-Store Processes concepts Production strategies OOS – 42% + 20% of In 7 months Productivity (Nov 05 – Jun 06) expected Mercury Project 27
  • 28. Impact # 8 : The New Border in Retail Logistics / Logistics goes out from the store cost breakdown in retailer / supplier relationship model Price= 100 Price= 100 Price= 96 Retailer Retailer Retailer Interface costs: 17 Interface costs : 13 Supplier Supplier Supplier Turnover Turnover Turnover 28
  • 29. Impact # 8 : The New Border in Retail Logistics / Logistics goes out from the store Logistics integrates suppliers processes as well / Load Carriers Pooling Pooling Load Carriers with suppliers, can generate high gains • Replenishment time decreased by 75% • Truck filling + 35% Traditional Process This solution is being tested in Russia (Polymer Logistics) One Touch Packaging Pooling can as well apply simply to wooden pallets as well (Chep scheme) 29
  • 30. Impact # 8 : The New Border in Retail Logistics / Logistics goes out from the store Logistics integrates suppliers processes as well / Transport Pooling 30
  • 31. Learning form Retail & Logistics review The new shape of Logistics The Russian Logistics is no more only : •  Storing products •  ensuring the delivery of products. Logistics become a competitiveness and profitability driver The terrific development of Retail impacts Logistics will become more and more logistics in the following way : technological, –  Developing new technologies The shape of logistics change –  Developing new principles –  from points to networks New Logistics Scheme exposes the company Logistics goes deeper into store, to new risks –  touching every process –  Stretched flows and low stocks maybe a weakness Logistics goes far away from stores, –  Outsourcing may be risky –  integrating suppliers strategy (planning, –  The exposure is global pooling) –  Sourcing and shipping globally Logistics becomes flexible and creative –  It has to move with the market 31
  • 32. Learning form Retail & Logistics review (2/2) Logistics will be flexible Changing but unstable •  Supply chains become more dynamic, -  reflecting the unstable but highly promising market. -  fulfilling increasing customer requirements, -  Companies supply chain will develop only over time in Russia •  Supply chains become “local” -  as different distribution strategies are chosen for different regions. The market has till 10 years of maturation at least 32
  • 33. 33
  • 34. C. State of Logistics in Russia 34
  • 35. History of Logistics IT Revolution Modern Military Retail WW II Industry Globalization Logistics Operational Revolution Revolution Researches Caesar -> 1939 1939 -> 1945 1945 -> 1970 1960 -> 1980 1980 - 2000 Future • MRP • Managing • Distribution • Global • Planning thousands of center Networks SKUs • Outsourcing • Supply Chain • Supply lines • Just in Time • Globalization of Management • Speed of supply • Warehouses • TQM flows • Reverse (transport, cross positioning • Cross Docking Logistics docking)) • First • E-commerce • Logistics Preparation Logisticians • Role of IT • Standardization (pallets, jerrycans) See : See : See : See : See : • Van Creveld • Overlord • Forrester (MIT) : • M. Ohno works • ECR Industrial Dynamics (1962) 35
  • 36. History of Logistics in Russia IT Revolution Modern Industry Operational Revolution Researches 60 years “erased” Military Retail ? WW II Globalization Logistics Revolution Caesar -> 1939 1939 -> 1945 2000 - Future 36
  • 37. executives expressed that within the next 10 years, they expect a shift of the center of logistics activity towards Nizhny Novgorod and Ekaterinburg Source : Dynamic Supply Chains ion Russia Christopher Jahns - Inga-Lena Darkow - Tobias Weigi German Logistics Association - 2006 37
  • 38. Selection Criteria for Logistics Service Providers 38
  • 39. number of logistics services providers per company 2004 2006 2008 1-2 8 0 12 3-4 4 8 8 5-6 0 19 50 7-8 23 58 19 9-10 27 12 8 11-12 27 0 0 >13 12 4 4 in %of respondents Average quantity if suppliers 39
  • 40. The criteria for selecting a logistics service provider are changing. There is a shift from a price focus to quality focus. The demand for professional services will grow in the future. Nevertheless, the next years will be characterized by a pressure on prices. In the long-term, centers of logistics activity will shift eastwards from Moscow to Nizhniy Novgorod and Yekaterinburg. This, however, depends on the further development and growth in the regions. 40
  • 41. But who can we work with ? 41
  • 42. Warehousing significant growth of the Russian economy caused the warehousing prices in Moscow to increase dramatically. The price per square meter in 2005 was just below the level in London: up to USS 135 per square meter (JonesLangLassalle 2006). demand exceeds supply, storage, cross-docking areas for commissioning. Logistics can not be assured, in particular for perishable or sensible goods. It is expected by specialists that the warehouse market will be growing during the next 10 years Strong fragmentation of LSP - No Market leader in Russia •  Even not the Russian Post •  Only pioneers : FM Logistics and NLK •  The biggest private logistics network is maybe Eldorado (600 stores across Russia) Low level of service •  Lack of experience •  Heavy documentation rules in Russia 42
  • 43. A new factor unlocking the warehousing and 3pl market : Segmentation of the market 43
  • 44. Changes in the Russian Logistics Market Structure Logistics Operator of the 90’s FM Logistic, NLK, Molkom Foreign FMCG Unilever, Eldorado, etc outsourcing of the 90’s Russian Traditional Kuehne + Nagel New Trend on the market Vertical Integration of the 90’s Producers Distributers Owning Clients the Product Operating 3PL – Logistics Operator Logistics Developing Logistics Developers Infrastructure Financing Logistics $$$ Pension Funds Infrastructure 44
  • 45. Changes in the Russian Logistics Market Structure • FM Logistic • NLK • Cat Logistics is a new comer on the market • DHL • DHL and Relogix operating in Pushkino Operating • Relogix Logistics • Excel • FM Logsitcs renting out facilities in the regions • Kuehne + Nagel • Cat Logistics • Schenker • Multinational Logistics Partnership announces the construction of 1 000 • Multinational Logistics Partnership 000 m2 in CIS • Kulon Espro • Rosevrodevelopment announces the construction of warehouses in biggest • Ros Evro Development regional centers • Giffels (Canada) • Giffels (Canada) Preparing about 550,000 square meters of Class A space. Developing • A.M.G. Group (US) Eurasia is planning to bring to the market anywhere between 1.0-1.2 million Logistics • Eurasia square meters of warehousing space within the next 2-3 years. Infrastructure • Ghelamco • Capital Partners preparing 500,000-600,000 square meters to market within • Aig Lincoln the next couple of years. • Belaya Datcha • A.M.G. Group (US), Plans the development of a chain of specialty • Bouygues warehouse facilities throughout Russia for 250,000-350,000 square meters to the market within the next 2-3 years. • Hypo Real Estate International financed MLP for the construction of two • Hypo Real Estate warehouse complexes at a cost of $300 Mln. • International Financing • AIG European Real • The AIG European Real Estate Fund has acquired the FM Logistics Logistics Infrastructure • Estate Fund complex, located in the town of Khimki and offering approximately 65,000 sq m of warehouse space, for over $60 million. First sale and leaseback investment • Raven Russia Limited transaction between foreign companies in the warehouse sector of the Moscow market. 45
  • 46. Changes in the Russian Logistics Market Structure Reality on the market Owning the Product Clients Client Z Operating 3PL Logistics Developing Logistics Developers Infrastructure Financing $$$ Logistics Pension Funds Infrastructure
  • 47. Changes in the Russian Logistics Market Structure Client A Client B Client C Client D Client E Client F $$$ 47
  • 48. Changes in the Russian Logistics Market Structure Client A Client B Client C Client D Client E Client F 4PL $$$ 48
  • 49. Learnings from the 3PL Review A new era has started for 3PL •  The massive coming of investments onto this market creates the necessary conditions for a 3PL regional expansion •  Good news : –  The time when logistics supplier dictate their price is going –  The time of Class B, C, …. Z warehouse is going •  The question is : –  Will foreign 3PL massively come onto the market –  Or stay cautious as are foreign retailers ? Logistics Lemming effect generating risk –  Too Severe price decrease –  Too unskilled operators appearing, not adequate for the demand –  Construction services & materials overheat (as for residential construction) 49
  • 50. D. The Regions : A Poor Regional infrastructure 50
  • 51. Poor infrastructure Sea In eastern Russia at the Pacific Ocean, the capacity of the seaports has not met the rising demand for years. –  size of the ships has steadily increased over the past decades, but much of the equipment in these ports has remained the same restricting handling capacities. –  scarcity of Russian ships, –  poor integration of ports into the railway system. –  Russia’s neighboring countries profit from Russian capacity problems, »  Finland »  Baltic States »  Ukraine,. most freight needs to be shipped from west to east or vice versa. However, Russian waterways flow mostly from south to north. –  the inland waterways’ share of total transportation fell from 3.6% in 1991 to 1.6 % in 2005 (in ton/km) (Rosstat, 2005). 51
  • 52. Poor infrastructure Air Parallel to the economic growth in Russia, air freight prices are rising and capacity utilization is at its limit due to a poor infrastructure : –  1302 airports in 1992 vs approximately 421 in 2003. –  About 50% of all civil aircrafts are more than 15 years old. –  620 to 820 new aircrafts will be needed in the next few years in Russia, not counting regional airlines (estimates by Russian Ministry of Transport 2003, Economist 2005, Boeing and Airbus) –  Most ground handling equipment is technically outdated and –  56% of all air cargo is handled via the three Moscow airports (Domodedovo, Sheremetievo and Vnukovo). Of these, only Domodedovo has been renovated and fully meets western requirements. 52
  • 53. Poor infrastructure Roadway • 940,000 km of roads in 1995 / 871,000 km today • (France = 891,290 km) • approximately 85% only of the roads are hard surface • weight restriction for about one third of the total network; consequently its use by trucks is limited • Russian roads remain dangerous; approximately 35,000 Russians are killed every year in road traffic • Furthermore, low speed limits in Russia, constant traffic jams in and Moscow, as well as the c’ by the Russian police, hamper transportation.. • prefered transportation up to 1,500 km. This fact contributes to the high importance of road haulage in distribution logistics in Russia. 53
  • 54. Poor infrastructure Railway The Russian railway accounts for 75.4 % (or US$ 29.6 billion) of the entire revenues of the freight industry, –  (importance for the transportation of natural resources) Largest railway network in Europe with 87,000 km (USA = 226,605) in regular use, –  10 % of railways are defective in some way (the Economist) –  half of the system needs urgent modernization (the Economist) . –  Only 50 % of the network used In common carrier service Is electric. The major player on this market is the national railway operator, JSC Russian Railways (RZhD), –  By 2010, the company shall be privatized –  The investments made are marginal, with a growth of just 8.5% in 2006. not enough to reach western standards. –  Due to the railway’s significant importance as the backbone of transportation, the poor condition of the Russian railway network could have a negative impact on economic growth. 54
  • 55. It is urgent to unlock the infrastructure barriers in the Regions 55
  • 56. Unlocking the infrastructure Bottleneck Undertaken Measures from The Government Sea the Russian government ignited several •  The government plans to double the capacity programs among : of the existing 43 seaports by 2010. •  the federal program “Modernization of the Transport System in Russia (2002-2010)” •  the “Transportation Strategy of the Russian Railways Federation” (2005 – 2020) •  By 2010, JSC Russian Railways (RZhD), shall be –  “To create the conditions necessary for a privatized new development model in a global economy, transportation is the instrument for realizing Roadways Russia’s national interests and providing a The Russian government initiated several roadways suitable place for the country in the world projects : economy.” –  an investment fund in 2006 of US$ 2.5 billion –  “stimulate the creation of Russian multi- to improve and extend the roadway network modal transit operators.” by 27,000 km by 2010. –  public-private-partnerships to improve the Air network by using. •  Logistics centers already are being created at –  Since Moscow is the major bottleneck for airports in Moscow, Novosibirsk and transport in Russia, the Moscow city government agreed upon one of the largest Krasnoyarsk. projects in June 2005: an orbital motorway •  the government is creating the conditions to with 8 lanes and a total length of 500 km will attract private capital from both Russian and be built around the city. This urgently needed foreign investors. project should be finished by 2015. •  For instance the Krasnoyarsk airport, the Swiss company Swiss Port, 56
  • 57. Unlocking the infrastructure Bottleneck Still Necessary Measure from The Government Financial and capital markets •  shareholder rights program in order to improve the situation of minority shareholders; •  reform of the real estate market; •  reform of the insurance system. Privatization/Liberalization • opening markets and abolishing monopolies, e.g. in the railway and telecommunication sector; • preparation for WTO membership; • introduction of anti- monopoly laws. Customs •  Customs laws in 2004 have simplified customs clearance. •  there are still enormous interpretation problems with the new laws implemented in 2004 by certain customs locations and authorities. 57
  • 58. Learnings from the Infrastructure Review Russia lost its soviet infrastructure that has been perishing since 1990 The scale of necessary investments is huge The Government has the means and the will to unlock the infrastructure bottleneck, for the sake of the National Economy But we can doubt that the 2010 announced term will be achieved Therefore the regional infrastructure lacks will be the major obstacle to retail and logistics regional expansion Some good new : –  It will be only better and better –  The country is politically stable and economically stronger and stronger 58
  • 59. E. Conclusion 59
  • 60. Conclusion / The market is getting unlocked The boom of Retail, and of finances creates the conditions of a world class logistics sector that will integrate Russia in the Globalization The peculiarity of Russian Logistics are that : •  They did not pass yet the production-logistics period (JIT, industrial parks are unknown here) •  They already have to implement the state of the art logistics tool to cope with retail and globalization challenges •  They have to compensate 60 YEARS of “soviet” economical history IN FEW YEARS •  Russia will pass from a Logistics approach to a Supply Chain approach •  The private sector creates the conditions of the development of logistics, finances unlock the warehousing and 3PL sectors, creating “hubs” in new networks •  The efficiency of the links between these hubs will greatly depend on the government investments onto infrastructure Considering the amount of investments necessary in the private and state sector, the market will develop during the next 10 – 15 years minimum. We are only at the begining of a new technique, technological, infrastructural and economical change 60
  • 61. Conclusion / Supply Chain Logistics & Supply Chain Specialists will become closer to customers and suppliers The new problematics are now : • Global & Systemic • Unstable environment requiring flexibility, agility, quick and complex response • Managing a permanently changing network Supply Chain will be the backbone of Federal Organizations, preparing organizations for unprecedented challenges 61
  • 62. Conclusion •  The real issue may be PEOPLE ! 62
  • 63. Conclusion / The real issue may be PEOPLE ! –  real need 1,000+ logistics specialists per annum. –  currently talent pool available 100 logistics specialists per annum 63
  • 64. Thank You for attention! Feel free to contact s_rivet@conseo-cis.com +7 916 453 30 55 www.conseo-cis.com 64
  • 65. Questions ? Feel free to contact : s_rivet@conseo-cis.com +7 916 453 30 55 www.conseo-cis.com 65
  • 66. Credits Dynamic Supply Chains in AmCham News Russia Volume 13, Number 73 Christopher Jahns - Inga- Logistique Lena Darkow - Tobias Weigi Production – Distribution – German Logistics Association Soutien - 2006 Yves Pimor, 2005 Global Retail Executive Development Agenda www.wikipedia.org Index 66
  • 67. Note / A good new A good bier can save your logistics ! 68

×