Designing FMCG and retail supply chains in Russia

Abstract

Russia is an example of an emerging market, which has experienced fast growth and significant changes in logistics and supply chain development over the last decade. Key trends in the Russian logistics market include: a rising demand for professional logistics services (outsourcing), growth in the number of players in the logistics market, the widening scope of services offered by logistics providers, the development of modern warehouses in Russian regions, and implementation of IT solutions supporting logistics management. Large foreign trade and industrial enterprises that came to the Russian market as well as retail chains expansion were the main factors stimulating the development of warehousing and transport logistics. However, business environment of this market still differs from developed markets in many ways and poses specific challenges for distribution strategy and supply chain design. The main barriers in supply chain design process in Russia are: huge territory, corruption, poor transport infrastructure development, a shortage of warehouse facilities and inadequate professional logistics culture. The transport system is heavily Moscow-centred and rail-based in long-distance countrywide freight transport. Different transport modes as well as distribution strategies need to be chosen for different regions. This chapter describes and examines the Russian retail supply chain development, focusing on the ALIDI Group and its supply chain. For practitioners, the case study provides important insight into designing efficient FMCG supply chains in Russian regions.