AEB IT Round Table

1
AEB IT Round Table Manufacturers their
challenge to maintain the high quality of
products through the chain Moscow 18th October
2005 - E. Ruess
2
Nestle Food LLC

• Eberhard Ruess, Director Supply Chain
• Customer Service
• Distribution Operations
• Demand Supply Planning
• Purchasing
• Nestle in Russia
• Coffee
• Confectionary
• Culinary
• Baby food
• Breakfast cereals
• Ice cream
• Water
• Pet food

3
Manufacturers invest a lot of money in the
quality of their products
NQS Nestle Quality System
4
Improper handling generates a lot of wasted money
Claims one way of monitoring quality
5
This is a Nestlé Class A warehouse
6
This is one of many Distributor warehouses
7
Density of population and location of Nestlé DCs
Moscow
Perm
Samara
Novosibirsk
Vladivostok
Transsib 10000km in 23Days
8
The underlying strategy for Nestlés Route to
Market
.
DC
Picked deliveries
outlets
TSP
Sub distr.
DC
Distr. warehouse
Retailer DC
Full truck deliveries
Large wholesaler
Tier I
Tier II
Ev.Tier III
200 - 8000km
500 km
20- 100 km
factory
9
What are the challenges we are still facing?

• Nation wide Retail chains still in the
  development phase
• Business still strongly linked to Moscow
• Current Distributors think and act like Traders
  (margin in )
• Order today - deliver tomorrow mentality (no
  logistical cost drivers)
• Tracability is undesired and costs money
  labels, IT - infrastructure
• 3PL are to either to small or have only regional
  set-up
• Limited know how of proper Distribution
  operations
• Almost no warehouse management software in use
• FIFO is in the head of some babushkas
• Temperature controll often doesnt exist
• Little investments in transport infrastructure
  and lack of modern equipment (e.g. drop trailers)

10
What needs to be done first?

• ECR - Russia works on recommondations for all
  kind of simple FMCG industry standards
• Retailers need to adopt this standards (no
  proprietary standards) and require the suppliers
  to comply
• GS1 has to watch over the standards and to
  educate the industry
• 3PL need to understand their compliance as a
  competitive adventage and sell it to the industry
  to get the critical mass
• Simple and affordable technology has to be
  offered from the IT - community

11
In any case, this challenge will stay for at
least another 10 years !