Five Western companies are helping the city of Moscow eradicate two threats to political stability in Russia – stale bread and lousy service. Andersen Consulting is working with four UK bread manufacturers and retailers to introduce bread packaging and Western management techniques in the second phase of a project intended to privatise the Moscow bread […]
Five Western companies are helping the city of Moscow eradicate two threats to political stability in Russia – stale bread and lousy service. Andersen Consulting is working with four UK bread manufacturers and retailers to introduce bread packaging and Western management techniques in the second phase of a project intended to privatise the Moscow bread industry. The team is now performing three demonstration projects, intended to show how Western practices can be transferred to Russia. The projects, undertaken in January and scheduled to end next month, include training some 30 private shop and bakery managers on such fundamentals as accounting, staff management, and customer relations. (The Moscow City Council has already privatised some of the 1,420 bread shops.) This project will involve Andersen Consulting’s Change Management Services practice, which specialises in helping organisations manage change. Introducing packaging to one of the 62 state-owned bread factories. Bread will be manually cooled before being placed in plastic bags imported from the UK. Packaging will extend bread’s shelf life to 48 hours. Rolling out packaging to other Moscow bread factories is also on the agenda. During the first phase, in 1990 and 1991, Andersen Consulting recommended ways of making the supply of bread fresh and reliable for 10m Muscovites. Depending on how receptive the city council is, future phases will include introducing the use of additives, privatising all bakeries and moving most of the baking out of far-away factories and to small bakeries closer to where people live, among many other changes. Working with Andersen Consulting are Ranks Hovis McDougall Plc, J Sainsbury & Co Plc, Mono Equipment Bread Machines Ltd and APV Baker Ltd. The $3.8m project is being funded by the British government’s Know How Fund, which makes funds available to Eastern Europe. The team hopes to tackle several key problems Andersen Consulting identified in an earlier report to the city council. For example, lack of packaging and preservatives means bread in Russia dies 12 hours after it is baked. Bread is often stale before it reaches shops because the delivery system is slowed by excessive paperwork and bureaucracy. Public demand is not matched to supply because manufacturers and shop owners don’t communicate. One of the main obstacles to packaging is retooling the factories, said Mark Aston, an Andersen Consulting partner in charge of the project. He said manufacturing equipment dates back to 1929. One solution Andersen is considering is converting tank factories to baking machinery. Aston said that the Russians tried packaging 10 years ago but abandoned the concept because bread turned green – a problem he said that could have been avoided had the Russians known that bread needs to be cooled before being packaged. He said that identifying the problems with the way bread is prepared and delivered followed months of research involving both Russian consumers and suppliers – a process made challenging by lack of funding, one coup attempt and some curious roadblocks to information gathering that you don’t anticipate in capitalist countries, Aston said. For example, the factory managers really don’t know what their true production capacities are because central planners tell each manufacturer what to produce, said Aston. One factory manager told us his factory’s capacity was 250 metric tons a day because that’s what he was supposed to produce. But then we found out that during World War II he had managed to produce 500 tons a day. Burgess said he hopes the packaging project will also show Western companies the investment opportunities that exist in Russia. All that’s needed is funding to convert military plants to packaging plants and to retool facilities, he said. My advice to Western companies is this: if you have any interest in Russia, invest in packaging. The industry is going to take off. Russian consumers want it. And I know this might sound unlikely to Western ears, but the city of Moscow needs a packaging industry for social stabi
lity. He said consumer research revealed little confidence in the city’s ability to feed Moscow. Uncertainty over the supply of bread and a desire to buy what little fresh bread is available are two major reasons why Russia experiences long queues of Muscovites outside bread shops. Consumers want a quality product and they want choice, he said. But first we have to help Moscow get fresh bread from the bakery to the table.