Volvo Penta establishes new distribution of spare parts in Russia

Volvo Penta has started an entirely new distribution system for spare parts in Russia. The system is strategically important on a growing market in which Volvo Penta’s engine sales are rising sharply.
The new distribution system is a cooperation between a number of business units within the Volvo Group: Volvo Construction Equipment, Volvo Trucks, Volvo Buses and Volvo Penta.

The system includes everything from a new regional warehouse and new distribution to an IT system designed for the Russian market and its demands. The challenges are numerous.

From weeks to days
“Previously, Volvo Penta’s dealers in Russia had to store spare parts locally. Deliveries on a new spare parts order from C1 in Ghent could take several weeks. Now the dealers order directly from a regional warehouse in Moscow that deliveries within one to two days to the western region of Russia,” says Hans Sagvall, who is responsible for global spare parts logistics within Volvo Penta.

Volvo Penta’s central warehouse in Ghent delivers so-called refill orders twice weekly to Moscow. In the event of high order bookings and when inventory levels approach zero, express refills are made for particularly urgent deliveries.

“Initially, the warehouse inventory comprises slightly more than 2,000 items. However, an internally developed inventory control system analyzes sales each week and controls which items and the number that should be held in inventory. At the end of 2007, it is anticipated that the local warehouse will hold more than 3,000 line items, since business volumes are developing positively,” continues Hans Sagvall.

A project filled with challenges
The project has involved challenges at several levels. Regional laws, property contracts, bureaucracy, customs and freight systems put the Volvo organization to a hard test.

“The adjustments have been many and difficult,” says Lennart Strand from Volvo Parts IT, who was responsible for the local system adaptations. “The new Russian Annual Accounts Act differs widely from the rest of the world. To complete the reporting without any rounding-off errors, all expenses and invoiced volumes are counted with up to 15 decimal places (one ruble is worth about SEK 0.30). Crediting is not allowed. All products down to the smallest oil filter must be traceable with individual customs numbers. Moreover, all IT systems and documents must work using the Cyrillic alphabet.”

Welcome around the clock in ten time zones
The next step in development will be local installation of VPPN (Volvo Penta Partner Network), which is a web portal for Volvo Penta’s dealers who will be able to register orders and submit inquiries via the net, 24 hours a day. This is an important service in a country with ten time zones.