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

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
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41
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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
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0
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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
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68. Note / A good new
A good bier can save your logistics !
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