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29 July 2020
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Czechs in Russian auto industry — how was the overhaul of the logistics performed? Logio case study
Within the framework of the partnership agreement, the Czech company Logio, a consulting agency specializing in logistics and supply chain management, has been implementing a project to reorganize and support the logistics of one of the leading automotive companies in Russia for two years.
Upon its completion, we found out what the set of works was and what ups and downs the performer faced.
Upon its completion, we found out what the set of works was and what ups and downs the performer faced.
Martin Kment, Logio’s owner
What stages were included in the project that you led in work process?
This was one of the most difficult projects in our practice. In two years, we have carried out a comprehensive reorganization of the entire logistics system, and, as you can imagine, it was not an easy task considering the geographical and organizational scale of the client company. We have completely changed the infrastructure so that it meets modern global trends - for example, we transferred all tasks from the purchasing department to the logistics department, introduced pre-production logistics, organized logistics control from the very beginning of the process and redesigned the production planning system. Well objectively much more has been implemented.
What was the main advantage gained by the client?
It did not take long to see the result. We have reduced the number of warehouses and equipment, the warehouse stock and personnel. In total, we have saved over 21% of all costs in the multibillion-dollar supply chain budget. I honestly believe that this was a huge benefit for the client.
What did Logio and the staff gain from this project?
This project was an incredible experience for us. We had the opportunity to fully implement our proposals in practice. I mean, we actually took over the entire project management and I think this is the first time a customer has allowed Logio to go this far. Of course, we also bore full responsibility for our actions - if, for example, as a result of our intervention, production stopped or logistics stopped working, all responsibility would fall on us.
Previously, we did not have to deal with a situation where more than 20,000 incomplete cars were parked on the territory of the enterprise, and few people in the automotive industry can imagine this. Accordingly, to solve the problem, it was necessary to start working with critical suppliers, carefully study all processes and begin to manage production and logistics. It was really challenging.
What were the difficulties of the project? The greatest challenge?
This project was huge, so it's difficult to give a definite answer. Implementing a completely new organizational structure was a very labor-intensive task. It was almost impossible to change old habits and explain to people why we were doing this. The overhaul resulted in a rapid reduction in staff, and motivating people in such a situation is very difficult.
The change in the production system, i.e. moving from a production system to a warehouse system in accordance with the orders of dealers, and the adherence to the production plan with minimal changes within a week — those were challenging tasks as well.
It took a lot of effort to support new automobile model launches. At that time, internal logistics processes were not ready for something like this at all. The same can be said about the opening of assembly shops in certain regions of Russia and other countries - for example, Egypt, but we coped with it, knowing what profit these models bring today. We did it - but many things happened that I, fortunately, almost forgot.
What made this work special? In particular, in Russia?
All operations were carried out far from the Prague office and the usual environment. Our team of about 20 experts worked with great dedication away from their families and had to rely only on themselves. It was not easy, especially in the early days when the changes we were implementing were not received with enthusiasm. But after a while, everything got better. The team understood what we wanted to achieve, and almost everyone started working together. The last year of cooperation brought a lot of joy, and the results achieved clearly confirm this. It was a grandiose project, but without the support of the entire team, we would not have been successful in the end. I remain a big fan of this team. I follow them and I am very pleased with the way this automaker operates.
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