Group Assignment on Kansai Paint (Pvt.) Ltd.

Group Member Names: Mehwish Naeem (1358130) & Hassaan

Shaikh (1458369)
Course Name: Operations & Supply Chain Management
Dated: April 21, 2017
 Table of Contents

1. Company Profile: Kansai Paint (Pvt.) Ltd.....................................................3

2. Critical Item on basis of Expense and Risk...................................................4
3. Recommended Supply/Procurement Strategy.............................................7
4. References......................................................................................................... 8

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 1.Company Profile: Kansai Paint (Pvt.) Ltd.
Established in 1918, Kansai Paint Co., Ltd., is the number one paint company in
Japan and one of the top five paint companies in the world. Kansai Paint operates in
North America, Middle East, Europe, East Asia, Middle East and Africa.

Kansai Paints operates 38 production plants overseas including India, Pakistan, UAE,
Japan and South Africa and one manufacturing facility in the Middle East.

Kansai Paints Pakistan is one of the major OEM (Original Equipment Manufacturer)
paint suppliers to the OEM industry in Pakistan. Technology transfer of OEM paint
from Japan has enabled Kansai Paints Pakistan to provide its customers with
excellent quality products which are both economical and readily available.

The company is currently manufacturing and supplying more than 90 percent of

paint and allied materials to major OEM manufacturers like Indus Motor Company
and Pak Suzuki Ltd, Gandhara Nissan, Sigma Motors, Toyota, Nissan, Honda, Hino,
Hyundai, Yamaha and Baluchistan wheels. The Company has been in the Pakistan
automotive market since 1992.

With the establishment of Kansai Paints in Pakistan, they have introduced a whole
range of products including CED (Cathode Electro Deposition), top coats,
automotive, refinish and decorative products, leveraging its cutting-edge
technology. It is the first plant in Pakistan which is manufacturing CED paint for the
OEM sector based on full transfer of technology and back-up support from Kansai
Paint Japan.

Kansai decorative products were launched in April, 2009. They have around three
hundred dealers across eighty-seven cities of Pakistan. There deco products include
emulsions for interior and exterior, enamels, pre-deco products, wood finish and
texture paints.

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 2.Critical Item on basis of Expense and Risk
For Kansai Paints its most Critical items are raw material used for making Paint. One
of these raw materials used for making Paint is Titanium dioxide. Also known as
titanium(IV) oxide or titania, is the naturally occurring oxide of titanium, chemical
formula TiO.

It is one of the top fifty chemicals produced worldwide. It is a white, opaque and
naturally- occurring mineral found in Ilmenite Ore, rutile and anatase. It has a wide
range of applications, from paint to sunscreen to food coloring.

This is classified as a Critical item as per supply positioning model on the basis of
Expense and Risk:

1- Profit Impact, Business Criticality/Expenditure level

a. Titanium Dioxide is a very expensive mineral. As per, MINERAL
COMMODITY SUMMARIES 2016, titanium dioxide (TiO2) pigment, which
was produced by four companies at six facilities in five States, was valued
at about $3.0 billion. The estimated end-use distribution of TiO2 pigment
consumption was paint (includes lacquers and varnishes), 60%; plastic,
20%; paper, 12%; and other, 8%.
b. Titanium dioxides profit impact is high as it adds significant value to the
Kansai Paints output, paint. It has a high impact on the quality of the
paint. It is exceptionally efficient in scattering light (much more so than
other white pigments such as clay, calcium carbonate and zinc oxide), and
maintains its whiteness when made wet (as in a flat wall paint that is
washed) or put into a paint even that has a high level of binder. It replaced
lead compounds as the primary white paint pigment shortly after WW II. It
is used in white, gray and light and medium color paints.
2- Supply Risk
a. Material Unavailability: There is a substantial risk with regards to
material unavailability. Titanium dioxide is a rare commodity. High quality
Titanium dioxide for Kansai Paints Pakistan is exported from Japan. Kansai
Paints Japan acquires raw material from selected domestic suppliers. It
takes around 3 months for shipment to arrive to Kansai Paints Pakistan
plant in Lahore.
b. Political & Economical: Pakistans market is politically unstable and has
many debt and inflation issues. Pakistan's economic growth is quite slow.
Inflation and interest rates are at its highest. Established Policies, Laws
and Government factors may affect the Titanium dioxide being exported
from Japan. Government instability may cause disruption in supply of
Titanium dioxide to Kansai Paints Pakistan.
c. Social: Social factors are related to different cultural aspects, beliefs,
attitudes, that will influence the demand for the products of a company

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 and the overall operation of the business. Kansai Paints targets middle
and upper class home-owners, automotive industry and engineering
industry which at present is a booming industry.
d. Technological: The aspect of technology includes innovation, barriers,
R&D activity, and incentives and to what degree it impacts the business.
Kansai Paints invest heavily in technology and R&D. It is constantly
looking to modernize Paint, for example, waterproof paints, Teflon coating,
creating color shops etc.
e. Environmental: Environmental factors relate to the ecological and
environmental aspects that will affect the demand for a companys
products and how that business operates. These may include
Environmental regulations, Ecological regulations, impact of adverse
weather etc.
Kansai Paints has established Corporate Policies on Environmental
Conservation and established a ALES ECO PLAN. As per which a
committee has been assigned to report on environmental regulations in
Japan and overseas, safety and health initiatives have been taken, and
activities to reduce harmful substances employed. Kansai Paints also
employs Green Procurement, Green Purchasing and Environmental
Conservation activities.
Kansai Paints Pakistan supply of Titanium dioxide may be affected by
natural disasters such as earthquakes, tsunami etc. disrupting supply from
Japan.
f. Legal: Kansai Paints is affected by legal issues related to Pollution Control
Laws, Health and Safety Laws, Environmental Laws, WTO Laws and
regulations etc.

3- Supply Risk Level in terms of risks identified above:

S.
Supply Risk Risk Level
No.
1 Material Unavailability High
2 Political & Economical Medium
4 Social Nil
5 Technological Medium
6 Environmental High
7 Legal Medium

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 3.Recommended Supply/Procurement Strategy

With reference to above, we would like to recommended the following to Kansai

Paints Pakistan:

1- Kansai Paints operates in the global market. It can acquire Titanium Dioxide
from other market segments such as Australia, China, South Africa, United
States, to name a few.
2- Titanium dioxide is a critical item for Kansai Paints Pakistan. Ideally for critical
items a few suppliers should be contracted. A contingency plan must be set
in place in case supply of item from Japan is hindered due to law and order
situation or natural disasters. High quality Titanium dioxide can be imported
from Australia, South Africa, China, and United States, as mentioned above.
3- Furthermore, it takes 3 months for shipment from Japan to Pakistan. Proper
planning should be performed and maximum supply level calculated after
thorough planning to avoid excess or shortage of supply.
4- In case of urgency other modes of transportation should be set in place and
relationship with suppliers established for smooth operations. For example, if
main mode of transportation is by ship. Suppliers who can supply items via
air in case of urgency should be available.
5- Kansai Paints Pakistan should make sure that Kansai Paints Japan have
collaborative relationship, Fixed or long term contract and in-depth
operational procurement strategies set in place with Japanese domestic
suppliers.

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 4.References

https://www.rozee.pk/company/kansai-paint-pvt-ltd

http://www.kansaipaint.com.pk/aboutus-kpp-home

https://en.wikipedia.org/wiki/Titanium_dioxide

http://www.paintquality.com/en/advice-and-tips/faq/exterior/titanium

http://kansaipaint.ae/documents/catalogues/Kansai%20-%20Company%20Profile
%202015.pdf

https://minerals.usgs.gov/minerals/pubs/mcs/2016/mcs2016.pdf

http://www.mbaskool.com/brandguide/industrial-products-and-chemicals/1406-
kansai-nerolac-paints.html

https://www.slideshare.net/rarichanm/paint-industry-porters-five-force-pestel-
analysis

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