About Asian Paints

Since its humble beginnings back in 1942, Asian Paints has come a long way where it is not just the number
one paint company in India but also the 9th largest paint (decorative + industrial) company globally with
its footprint in 60+ countries across the globe. It is the most preferred brand in India for paint for over 50+
years and has a strong footprint in India with a network of 70,000+ dealers.

At Asian Paints, we partner with our consumers in their journey of creating beautiful spaces and helping
them give expression to their creativity. Driven by a vision to beautify, preserve and transform all spaces
and objects, Asian Paints has also forayed into the home improvement and décor segment offering bath
and modular kitchen products.

The company also introduced lightings, furnishings, and furniture in its portfolio. In the Health and
Hygiene segment, Asian Paints offers a range of Sanitizers and Surface Disinfectants. It also offers
‘beautiful home services’ – an exclusive end-to-end solution that provides consumers a personalized
interior design service with professional execution to create their dream homes.

Asian Paints Product Overview

Asian Paints manufactures a wide range of paints for decorative and industrial use. In the decorative paint
domain, it has products to offer for all kinds of surfaces – exterior wall, interior wall, wood metal, etc. It
also offers waterproofing products, wall coverings, and adhesives for various applications.

Asian Paints entered the water-proofing segment in the year 2012. Started with just six products back
then, the category now has a range of 180+ products.

Asian Paints waterproofing products come under the umbrella brand of SmartCare and offer hi-tech
products to address the basic problem of dampness, water leakage, wall seepage, ugly stains, paint
peeling, and crack-bridging. Key products are Damp Proof, Damp Sheath, Damp Block, Crack Seal, Vitalia
Neo, Tile Adhesive, etc.
Tile Adhesive, launched in 2015, is one of the key growth drivers in the SmartCare segment. Tile Adhesive
is a powder-based cementitious product that helps consumers with laying tiles using the right method
and avoiding problems like wall dampness, cracking, hollow sounds, and leakage dampness issues due to
water ingress through tile joints.

There are currently four products in the Tile Adhesive category based on different applications

a. For Regular Application: Cementitious tile adhesive for application of tiles on floors and walls
b. For tile-on-tile application: For replacement tiles on old tiles
c. White multipurpose tile adhesive: Ready to mix white adhesive for Glass mosaic tiles
d. For stone and heavy tile application: For fixing natural stones, large ceramics

Challenges with Tile Adhesives: The need for a segmented supply chain

Tile adhesives is an economically priced product in a highly competitive market with multiple domestic
and international players. The challenge at hand is how best can we leverage the existing strengths of our
supply chain, yet remain flexible, dynamic & agile to cater to the diverse needs of new different customer
segments at the right costs.

Some of the Unique challenges for the Tile Adhesives Category are as follows

A. Increased Customer Segmentation & Service Requirements:

The tile adhesive category is sold through multiple channels to end customers
Following are the 3 channels used to service the customer
 1. Traditional depot and dealer model – The traditional distribution channel that Asian Paints uses
for its paints products. Here the material is delivered from the factory to the depot and from there
to the dealer.
2. Distributor Model – Tile adhesive is the first product within the smart care range for which the
distributor model was utilized. Servicing through the distributor enabled higher cost optimality
due to increased truck loads and MOQs. Since freight cost forms a significant component of
product costing, increased MOQs and reduced touchpoints makes the product viable
3. Direct Dispatches to Construction Site – For large projects/construction sites, the material is
directly sent to project sites from the manufacturing units.

Channel Service Requirements

For each channel, there are different expectations on the service level required. Distributors tend to
stock minimally, hence there is a need to immediately service material once a sale order is placed.
Similarly, for project sites, the servicing needs to immediate post the sale order. For the traditional
depot-based servicing, a push-based system is followed based on the forecast at each depot.
Considering the rapidly expanding network of distributors in new towns, there needs to be flexibility
and agility to tie up with logistics providers to ensure that the newer towns are serviced optimally.

B. Demand Forecasting

For the regular Asian Paints products, Asian Paints follows the Sales and Operations Planning process to
collaborate with the sales and marketing function. The statistical forecast is generated using one of the
industries’ best SAS engines based on time series methodology. This number then flows through fourlevels
in the Sales and Marketing function and three levels in the supply-chain function before the consensus
numbers are derived. There are more than three decades of data available for traditional paint products
which are used to develop accurate sales forecasts.

SmartCare being a nascent category, doesn’t have the vast levels of history for accurate demand
forecasting. With multiple channels of sales, demand planning for the product becomes much more
complex. On top of that, a significant number of new distributors are getting added every month. Any
new distributor added during the month, adds a significant quantity of volumes to the earlier planned
numbers. Hence, any new distributors getting added beyond what has been estimated, servicing of
additional volumes becomes even more challenging.

C. The Manufacturing Conundrum

The base raw material used for manufacturing tile adhesive is naturally sourced material available in only
few states. Also, different state-level legislations govern the mining and utilization of these materials.
Considering that the base raw material is of low value, its transportation to manufacturing units forms a
significant component of product costing. Considering the rapid growth of the category, a firm
manufacturing strategy needs to be put in place at optimal locations to ensure that demand is met
adequately.

D. Ancillary Products Servicing

There are key ancillary products that are accompanied by the tile adhesive category which is the Tile grout
segment. Tile grouts are used as fillers for joints between tiles once the tiles installed are set. There are
different kinds of tiles grout – Cement-based Tile grout and Epoxy tile grout. Normally distributors/dealers
place orders for tile grouts along with that for the tile adhesive category. However, since the tile grout
volumes are significantly lower than of tile adhesive, tile grouts are currently manufactured in fewer
locations and serviced only through the traditional depot route even for distributors. Also, several new
product shades are lined up for the tile grout category leading to a burgeoning of SKUs in the future.

Challenge

1. What should be the optimal fulfillment strategy for the tile adhesive category considering the
complexities discussed above? Define the network structure for Tile Adhesive category. What would
be the channel inventory strategy to achieve this at optimal costs. Also decide on how to service the
ancillary product category.
2. What should be demand forecasting process for the Tile Adhesive category?
3. What should be manufacturing strategy for the Tile adhesive category? What are the key parameters
to be considered before deciding on a new manufacturing unit?

Annexure1: List of Products

Product Number of SKUs of

Category Product List Product
Tile Adhesive AP SC Tile Adhesive Normal 2
Tile Adhesive AP SC Tile Adhesive Tile on Tile 2
Tile Adhesive AP SC Tile Adhesive Glass Mosaic 1
Tile Adhesive AP SC Tile Adhesive Stone 2
Tile Grout AP SC Epoxy Tile Grout 24
Tile Grout AP SC Cement Tile Grout 18

Annexure 2: Sale distribution across geography

Division Percentage of overall sale

East 18
West 24
North 33
South 25

Annexure 3: Sale in different channels

Channel Percentage of overall sale

Traditional channel 50
Distributor 35
Direct to site 15
Annexure 4: Availability of the key raw material

Country part Available Comments

West Yes
North Yes Formulation cost is 5%
expensive due to lower
quality of key raw material
Central No
East Yes
South No

Annexure 5: Sale break-up within the category (Category Sale Volume: 25000 mT/annum)

Percentage contribution in
Product Category Product List category
Tile Adhesive AP SC Tile Adhesive Normal 41
Tile Adhesive AP SC Tile Adhesive Tile on Tile 30
Tile Adhesive AP SC Tile Adhesive Glass Mosaic 18
Tile Adhesive AP SC Tile Adhesive Stone 7
Tile Grout AP SC Epoxy Tile Grout 1
Tile Grout AP SC Cement Tile Grout 3