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Achieving the Cutting Edge with Supply Chain Presented by:-Hamsika karthikPrasanna DesikanVikram SanthanamPaint Industry

Paint industry estimated at Rs. 135bn.

Unorganized sector accounts to 35% of paint market.

Volume growth estimated at 15%.

Indias share in the world paint market is 0.6%.

Per capita consumption of paint in India is 1.2kg/annum.IntroductionStarted in 1942 by four entrepreneurs: Champaklal choksey, Chimanlal choksey, Suryakant Dani and Arvind Vakil as ASIAN OIL & PAINTS COMPANY.

Within three years, their turnover reached 3.5 lacs.

Started with a strategy Going to where Consumer is.

In 1967, Asian paints became the 10th largest paint company in the world and leader in India.

Asian Paints- TodayInternational Operations

Caribbean IslandsBarbados, Jamaica, Trinidad & Tobago.South PacificFiji, Tonga, Vanuatu, Solomon & Samoa Islands.South AsiaBangladesh, Nepal & Sri Lanka.South East AsiaChina, Malaysia, Singapore & Thailand.Middle EastBahrain, Egypt,Oman & United Arab Emirates.Product Categories

Decorative:- tractor emulsio, distemper6Supply chain of Asian PaintsHeadquarters in Mumbai4 Factories 18 Processing Centres350 raw material and intermediate goods suppliers140 Packing Material Vendors 6 Regional Distribution Centre 72 depots are integrated

Elements of Supply Chain3000 SKUSRAW MATERIALSPACKAGING MATERIALKEY SUCCESS FACTORSFLEXIBLE OPERATIONSLOWER OUTPUT TIMELOW DELIVERY COST4 PLANTS6 RDC35 JOB WORK CENTRES77 DEPOTS15000 DEALERS500 INDUSTRIAL CONSUMERSBackward Integrationimmunizes Asian Paints to the fluctuation in the prices

Material is transferred at low cost to Asian Paints

equips the company with the ability to meet sudden surges in demand

1/3rd production is sold to other companies. This gives strategic edge to Asian paints.Outbound LogisticsFour manufacturing facilities are supported by Six Regional Distribution Centers (RDC) and Seventy-seven depots. Each RDC and depot is taken by Asian Paints on lease and then further assigned to a C&F Agent.Distributing the Asian Paints products to the 14,500 dealers all over the country. There are 4 depots of Asian Paints in Mumbai and 73 outside Mumbai.ANKLESHWARPLANTKASNA PLANT

PATANCHERUPLANTBHANDUP

Secunderabad based locationDelhi based locationBangalore based locationChennaibasedlocationAhmedabadbasedlocationKolkatabasedlocation

77DEPOT CENTRESASIAN PAINTSHEADQUARTERSMUMBAIDistribution NetworkMovement of paints and hazardous goods including raw materials have a series of safety checks to be adhered to, starting with a material safety data sheet.All materials transport from factories to the depots is insured through a blanket insurance policy, which fixes a minimum liability for loss, damage, pilferage or leakage upwards of Rs. 10,000. Projected profitability of the proposed location The standing of the dealer in the local marketThe past records of the dealer (banking and trading history)The presence of other dealers in the vicinity and the projected impact on their volumesThe competition scenario at the locationThe distance of the proposed location from the nearest factory etc.

Certain IssuesAP bypassed the bulk buyer segment and went to individual consumers of paints.AP went slow on urban areas and concentrated on semi-urban and rural areas.AP went retail.AP went in for an open-door dealer policy.AP voted for nationwide marketing / distributionDistribution StrategyGoing to Individual Consumers Implied Wide Product Range and Complex DistributionSmaller Packs proliferated the product depth furtherWide Product range Implied Expensive distributionGoing retail Implied Deep Involvement in Channel ManagementNational Marketing necessitated nationwide organizationImplications of Distribution StrategyInventory ManagementFacts:Lowest inventory cost in industryAvg inventory level of 28 days sales against industry avg of 51 daysTranslates into 45 % lower inventory costsStock of finished goods is only 7% of net sales half the industry average

Inventory ManagementAsian Paints allowed15-21 days credit for dealers in major towns22-30 days credit dealers in upcountry regions

Incentive schemes to reduce inventory

A special discount of 3.5 per cent - discount for perfection in payments. It was passed on at the end of the year, provided each and every payment throughout the year was made within the stipulated time norms.

A cash discount of 5 per cent. This was paid for all outright cash purchases. It was given whenever payments were received within 24 hours of the supply/invoice. In respect of outstation accounts, the payments have been made in advance by draft in order to be eligible for the cash discountSupply Chain Re-engineeringOBJECTIVE:

To deliver products efficiently to customers without holding large amount of inventory

To manage cash cycle to free up funding for aggressive growth by acquisition strategyExisting ProcessesEnabling IT across the Supply Chain of Decorative PaintsDistributionPaint dispensing machinesAltered the production pattern from shades to producing basesReduced inventory and Eliminated redundancy of stocksApprox. 11000 color tinting machines including multiple machines across some countersHas helped expand the range of shades for each product category, offering a choice of shades to consumers in the hundreds. For the retailers it has eliminated the sales loss for want of range/desired shade

i2 distribution planner used to develop distribution schedules based on constraints

ManufacturingStrategy changed to manufacturing bases thus providing economies of scale

Using i2 Master planner to deicide which plant to manufacture what product depending onCapacity constraintsEnvironmental constraintsKey raw materials

Helps optimize the process such that least inventory is produced to maintain the expectations of service and safety stock

Better planning reduces the number of rush orders

Factory Scheduler used for machine by machine and unit by unit planning of production schedules

Improved processesProcurement

i2s factory planner used to identify the raw material and packing materials and who to source it from

Also provides the ideal formulations required for manufacturing products

A better materials planning system allows the company to create more complex paint formulas

Helps select the best vendor and manufacturing method for any given situation

Improved processesResults of Re engineeringThank YouChart1

Indias largest paint company for nearly four decades.Asias third largest paint company and leader in 11 countries.Operates in 21 countries with 29 paint mfg. facilities with capacity of 420 mn. Lts/annum.

Sheet1Sales1st Qtr8.22nd Qtr3.23rd Qtr1.44th Qtr1.2To resize chart data range, drag lower right corner of range.