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Difficulties in the development of integrated logistics and supply chain management in Russia

The paper was presented at the International Logistics Conference “Logistics 2002 – Flexible supply chains – concepts, experiences, challenges”. Poznań, May 14-15, 2002.

The market transformation that took place in our country contributed to the rapid development of new directions in the science and practice of logistics. It is understood as effective materials management and the associated management of information and financial flows, as well as the optimization of costs of all components in order to satisfy customer needs.

In leading enterprises, traditional areas of logistics operations (transport, inventory management, procurement, warehousing, handling, packaging) are currently undergoing integration into a single strategic system built on the basis of a general, highly innovative computer information platform. There are few areas of the economy that can boast such a degree of complexity of internal communication and such a wide geographical reach as modern logistics. Its goal is to deliver goods and services exactly where they are needed, exactly when they are needed, while maintaining the lowest possible costs. Most customers from highly industrialized countries take high-quality logistics for granted. Introducing logistics management methods into business practice allows companies to significantly reduce inventory levels, accelerate capital turnover, lower internal and logistics costs in distribution, and achieve total customer satisfaction with the quality of goods and the accompanying service.

The national economy is currently going through a difficult period, where there is a need for new ways to emerge from the prolonged crisis. As experience from around the world shows, one such way is the creation of logistics systems. The creation and development of logistics systems covering production, trade, transport, and information is of primary importance for Russia, as it allows for the integration of our country into the global economic and information space. Currently, our country is already participating in such international programs as TEDIM, UNCTAD, and TACIS, which should contribute to the creation of regional logistics-transport and telecommunications systems, as well as a network of trade and logistics centers. In some already implemented federal or regional projects, logistics systems have played a significant role (e.g., federal programs: “Reconstruction of the Merchant Fleet”, “Roads of Russia”, “Terminal”, “Russian Network of Regional Analytical and Information Centers”).

Leading companies from all over the world successfully apply logistics concepts, systems, and technologies in their operations, which allows them to optimize resources (material, financial, and human) associated with managing the flow of goods. Among these technologies, one should primarily mention “Just-in-time”, “Requirements/resource planning”, “Demand-driven Logistics”, “Time-based Logistics”, and “Integrated supply chain management”. The aforementioned concepts and technologies are supported today by corporate ERP/SRP class information systems.

Companies that apply the concept of integrated logistics achieve better results in their business activities. It allows for the combination of efforts of management staff and logistics partners in order to achieve total control over the flow of materials and other resources in the complete logistics chain of “supply – production – distribution – sales – service”.

The current state of logistics in Russia can be characterized by several contradictory aspects. On the one hand, despite a significant increase in interest in logistics among companies and individual government institutions, the perception of logistics in society is insufficient. Most educated people consider it some mysterious field of knowledge, just as genetics or cybernetics were once perceived. Unfortunately, many managers and high-level officials do not understand the potential importance of logistics for improving the state of the economy, increasing the competitiveness of Russian companies, and solving social and macroeconomic problems. There is a huge demand for professionally qualified logistics managers and for popular publications that would describe logistics as such and its individual functional aspects. The participation of mass media is also insufficient, although it is widely known that in order to achieve significant results with a completely new concept, it must capture the imagination of many people.

Full article in PDF format.

Ref-11.pdf