From Russia With Logistics

Jan. 14, 2010
Russia is shaping up to be a land of opportunity for those willing to take a look and seize the opportunity. But make sure you are educated regarding your options, informed about how to leverage your investment, prepared to achieve competitive advantage and strategically partnered with the proper players

The supply chain is expanding and providing companies with global reach - a global reach that is now required, not merely optional, in order to sustain sales projections once focused primarily on target rich major markets in the United States, EMEA, and APAC. Russia, for instance, is emerging as a ripe market, ready for technology, creating a massive financial opportunity for savvy executives, requiring sophisticated supply chain service solutions, who are attentive to the progress of this once impenetrable region.

The opportunity for companies and executive decision makers to expand their horizons and strongly consider this once frozen (both literally and figuratively) land mass is now. Typically not recognized as an early adopter of western business, technology or practices, let alone international commerce, the Russian corridor is quickly becoming a viable and lucrative region for global companies seeking to sustain and grow their operations if they can evaluate, navigate and educate themselves regarding supply chain solutions and strategies to move product and service components into this market.

Some supply chain experts say that Russia will be the major market to consider in the coming years, as the region is evolving more quickly compared with the parallel changes that have occurred in North America and Western Europe. With rapid corporate growth of 20-50% in 2008, and continued demand for material movement due to technological expansion in the area, who can argue with them? Companies looking to not only keep pace, but potentially extend their leadership position, should take note, consider and implement a strong after-sales strategy and begin reaping the rewards of a strategic mission-critical logistics program across Russia.

To satisfy significant growth and technological demand in the emerging Russian market, key components of any mission-critical strategy should include evaluating your options for supply chain, along with the drivers of best service reputation including technical support and customer service. Supply chain solutions include an understanding of the realities of navigating a complicated market like Russia, which crosses 11 time zones with complex legislation, limited infrastructure and obvious language challenges, and weighing long-term opportunities flexible enough to accommodate end users in a changing operational environment.

Sorting out the complexities of cross-border operations, customs value, entry points and distributor locations, industry particularities dictating import licenses and fiscal presence can be simplified with the help of a third-party logistics provider (3PL) who can provide consultation and service applications according to global needs. Economies of scale and proven solutions make working with a 3PL, inclusive of local professional relationships to enable correct and transparent cross-border operations, a valuable asset to clients—helping clients ensure compliance to in-country requirements, as well as an extensive infrastructure of stocking location opportunities and established Importer and Exporter of Record (IOR/EOR) expertise.

If companies are savvy enough to strategically partner with the right service logistics provider, they can expect to receive the same 99.9% service levels to which they’ve hopefully become accustomed elsewhere around the world.

Ultimately, companies looking to set goals for Russian logistics programs in 2010 and beyond should seek to support their logistics strategy and solutions with a provider already established and doing business in Russia. The ultimate goal should be to tap a solution provider with an established network and strong experience in global logistics processes, thereby providing the required expertise, infrastructure and services to effectively manage the market’s demands.

Why is finding an experienced partner so important? Foreign companies often face unexpected risks, cost-prohibitive scenarios and difficulties in Russia when they work outside, and sometimes inside, Moscow or St. Petersburg. Engaging with an established and experienced global provider with the regional knowledge and relationships to manage your project will mitigate some of those risks and ensure smoother operations from the onset of your entrance into the growing and challenging market.

But beware: In Russia there are numerous “actors” working in logistic services. And these “actors” most often don’t work in a transparent, long-term and cost-effective way. The most efficient way to minimize these problems is to secure a relationship with an established player to help you conceive, plan and manage your logistics project and/or long-term strategy.

The bottom line is that, as is the case with other developing economies and emerging markets, sales strategies are being redirected and opportunities are opening up; for Russia in particular, modernization and advancements in telecom, medical technology and research and development are vitally contributing to global and local economy. Yet along with advancements and opportunity are controls and challenges.

Russia is shaping up to be a land of opportunity for those willing to take a look and seize the opportunity. But if and when you do, make sure you are educated regarding your options, informed about how to leverage your investment, prepared to achieve competitive advantage and strategically partnered with the proper players.

John Miller is senior vice president, global business development for Flash Global Logistics Inc.

This article originally appeared in the Logistics Today digital magazine. To read other articles from that issue, click here: