How to source from Russia?

What characterise Russia as a supplier market? Which sourcing experiences have been made by other Swedish companies in Russia? How can this knowledge be utilised at Scania?

Lunds universitet / Lunds Tekniska Högskola
Department of Business Administration
Department of Industrial Management and Logistics, Engineering Logistics

Authors: Richard Werthén, Johan Öhlén

Keywords: Russian Industry, Russia, Purchasing, Business Culture, Multiple Case Study, Scania, Foreign Supplier, Inköp, Ryssland, Management of enterprises, Företagsledning, management

Abstract: The purpose of this master thesis is to find out whether it is worthwhile for Scania to look for new suppliers in Russia, based on other Swedish companies’ experiences of purchasing in the country. In order to answer the purpose of our thesis the study of Scania’s purchasing organisation has to be complemented with in-depth studies of other companies’ purchasing organisations. Five Swedish companies from different sectors have been chosen to constitute a reference to Scania and its sourcing attempts in Russia. Their experiences and procedures regarding sourcing from Russia are analysed with the aim to formulate a strategy on how to purchase from Russia. The material necessary are gathered mainly through qualitative interviews. The study has shown that the Russian industry is characterised by low competitiveness and obsolete machinery. The transformation from a communistic production model to market based one is not yet completed and is among other things delayed by negative political interventions and a poor financial system. Furthermore our case studies have shown that Swedish companies are not purchasing from Russia to a great extent and those who do primarily carry out local purchasing. Thus the findings suggest that it is not motivated for Scania to actively search for new suppliers in Russia. The cost of an active search and the risk if they do not find any is higher than the possible rewards. Scania should however keep an eye on Russia if the industry develops.