German business with a Russian accent
How WILO Rus has adapted its production system
Why business schools practice company visits? As they say, it’s better to see something once, then to hear about it a thousand times. Especially when it comes to the organization of production processes.
As a part of the Operational Management course, students of the first year of study EMBA in Russian program RANEPA / Kingston visited Noginsk Industrial Park, as well as the factory of the German company WILO. The visit was supported by the Russian-German Chamber of Commerce, the long-standing partner of the business school.
Noginsk Industrial Park is the most successful private project in Russia in its segment. Olga Mironova, CEO of DEGA, notes that competition is constantly increasing, in Russia there are currently about 700 industrial parks, of which more than 100 are concentrated in the Moscow region alone. "The life cycle of the company and the product is getting shorter," says Olga. DEGA is a Swiss company, the business model of which is to quickly bring the business to the maximum performance with subsequent sale. “We believe that the project of industrial parks with large production areas and autonomous resources has ceased to be relevant.” Now, such solution is provided by the Government of the Moscow Region and other regional authorities. The competitive advantage is erased, and DEGA is working on adapting its business model to industrial parks of the “small box project” type.
The WILO Rus company factory was opened in the industrial park Dega Noginsk 3 years ago at the company's own funds, without attracting loans. WILO is a German company, the production of which is dispersed throughout the world, while respecting certain specialization and localization. So, the most high-tech compressor parts are manufactured at a factory in France. Smart Factory in Dortmund is about to be launched, that is to become the flagship platform for the introduction of the most modern technologies in the concept of "Industry 4.0". In addition, the company’s strategy provides for building up competencies and ensuring access to those segments where its products are not represented, through the acquisition of other companies, as was the case with the purchase of a Korean LG unit.
WILO sales in Russia grow by an average of 7-10 percent per year, in 2018, sales grew by a record 26 percent. The company considers participation in the government program of special contracts for foreign production companies to be one of the reasons for the explosive growth. According to WILO Rus, the program hasn’t yet yielded direct results, but rather worked as a marketing and PR tool, which attracted great attention to the company from previously unreached client groups.
The factory in the industrial park of Noginsk has collected everything that is potentially interesting for consumers in Russia. The product line is quite diversified and, in fact, assembled from 5 business units. “As a result, we are dealing with low-volume production, which means that a huge role is played by the search for reliable local suppliers,” says Pavel Filippenkov, Production Director at WILO Rus. And he adds: “It’s very difficult to work in Russian production using German technology. German philosophy is a distributed production, although my managerial knowledge tells that in Russia it is better to create a vertically integrated company." As a result, WILO Rus has a large number of local suppliers who are carefully and patiently selected. Typically, suppliers are small companies that are monitored by the WILO Rus production system in terms of strict control over product quality. “We were looking for suppliers across the country from the Urals to Belarus. You don’t need to think that there is no motors in Russia, it is very difficult to raise old production from the ruins” says Pavel.
An incredibly useful and holistic visit not only due to the coherence of the organization, but also thanks to a very frank and interested dialogue with the host company.
The Faculty of International MBA Programs (Kingston / RANEPA) thanks Vladimir Nikitenko (Russian-German Chamber of Commerce), Svetlana Bechtold (Russian-German Chamber of Commerce), Olga Mironova (DEGA), Pavel Filippenkov (WILO Rus) and Natalia Lebedeva (WILO Rus) the opportunity to learn how German business is being built in Russia.
Dmitry Shelepnev, Deputy Head of Technical Department, Gazprom Transgaz Nizhny Novgorod, 1st year student of the EMBA in Russian RANEPA / Kingston program
"One of the most remarkable features of the RANEPA / Kingston Executive MBA program is the ability to reinforce theoretical training with invaluable practical experience, real stories, and cases that take place at existing enterprises. It was such a very practical and important element for me in the course "Operational Management" that was a visit to the industrial technopark Noginsk and its resident - the WILO plant.
This was a great opportunity to get acquainted with the real experience of an industrial company in the Russian economy and see with your own eyes the organization of production processes within the framework of its own fork of the TPS system: Wilo Production System (WPS) and the work of the basic principles of the Lean Production concept.
In addition to the most useful and significant tour for us at the production sites of the WILO factory, organized by the production director of Vilo RUS LLC Pavel Filippenkov, we learned:
about the history of the creation of the industrial technopark Noginsk, about the existing technical, organizational and legal issues in the operation of such parks;
- Wilo's experience in building a production system;
- organization of the logistics system;
- work experience to comply with the state policy of import substitution;
- innovative activity at the factory.
The atmosphere of cordiality, hospitality and openness created by the owners made this trip especially vivid and memorable. Many thanks to everyone who was behind the organization of this very interesting and, of course, useful event from the practical side".
Find more information about the School of International Business Education (Kingston/RANEPA) on the website
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