Supply Chain Management of Asian Paints

Bhavesh Luhana (10MBA) Ashish Parekh (10MBA) Abhishek Shah (10MBA0 !) "in#al Shah (10MBA0 ) Chintan $yas (10MBA11%)

&lo' of Presentation
(ntro)u*tion to the *ompany Asian Paints +o)ay Pro)u*t Categories ,lements of Supply Chain of Asian Paints -a' Material -e.uirements Ba*k'ar) (ntegration /utboun) Logisti*s 0 1istribution 2et'ork Certain (ssues 1istribution Channel 1istribution Strategy (mpli*ations of 1istributing Strategy (nventory Management Supply Chain -e3engineering Supply Chain Pro*ess ,nabling (+ a*ross the )e*orative paints (mprove) Pro*esses -esults of -e3engineering ,ffe*ts on Profitability

(ntro)u*tion
Starte) in 1 45 by four entrepreneurs6
Champaklal *hoksey7 Chimanlal *hoksey7 Suryakant 1ani Arvin) $akil as

ASIAN OIL & PAINTS COMPANY 8ithin three years7 their turnover rea*he) -s9 :9; lakhs (n 1 !%7 Asian paints be*ame the 10th largest paint *ompany in the 'orl)

 VISION: <Asian Paints aims to be*ome one of the top ; 1e*orative Coatings *ompanies 'orl)'i)e by leveraging its e=pertise in the higher gro'th emerging markets9 Simultaneously7 the *ompany inten)s to buil) long term value in the (n)ustrial *oatings business through allian*es 'ith establishe) global partners9> MISSION: +o be the largest )e*orative paint *ompany 'orl)'i)e an) to be the ;th largest paint manufa*turing *ompany 'orl)'i)e9

Asian Paints +o)ay

(n)ia?s largest paint *ompany for nearly four )e*a)es /perates in 1% *ountries 'ith 54 paint manufa*turing fa*ilities in the 'orl) servi*ing *onsumers in over !; *ountries9 Asia?s thir) largest paint *ompany an) lea)er in 11 *ountries

Pro)u*t Categories

,lements of Supply Chain of Asian Paints

:; E/B 8/-" C,2+-,S 4 PLA2+S
! -,@(/2AL 1(S+-(BA+/C,2+-,S

:000 S+/C" ",,P(2@ A2(+S B00 -A8 MA+,-(ALS (:;0 Material suppliers) :00 PAC"(2@ MA+,-(AL (140 Material $en)ors)

",C SACC,SS &AC+/-S

&L,D(BL, /P,-A+(/2S L/8,/A+PA+ +(M, L/8 1,L($,-C C/S+

%5 1,P/+S

1;000 1,AL,-S

;00 (21AS+-(AL C/2SAM,-S

-a' material -e.uirements

Paint (n)ustry is ra' material intensive 'ith -M being %0F of pro)u*tion *osts9 :00 types of ra' materials use) in manufa*turing pro*ess +he most *riti*al ones are
+itanium 1io=i)e (+i/5) Phthali* Anhy)ri)e (PA2) Pentaerythritol3 (P,2+A) :0 F 50 F 1; F

Ba*k'ar) (ntegration
Asian Pain pro)u*es PA2 an) P,2+A (:; F of pro)u*tion *osts)

Competitors are importing these parts till no'

Benefits 6Ba*k'ar) integrations

(mmuniGes Asian Paints to the flu*tuation in the pri*es Material is transferre) at lo' *ost to Asian Paints ,.uips the *ompany 'ith the ability to meet su))en surges in )eman) 1H:r) pro)u*tion is sol) to other *ompanies9 +his gives strategi* e)ge to Asian paints

/utboun) Logisti*s 0 1istribution 2et'ork

&our manufa*turing fa*ilities are supporte) by Si= -egional 1istribution Centers (-1C) an) Seventy3t'o )epots ,a*h -1C an) )epot is taken by Asian Paints on lease an) then further assigne) to a CI& (Customs Clearing I &or'ar)ing) Agent 1istributing the Asian Paints pro)u*ts to the 1;7000 )ealers all over the *ountry9

Certain (ssues
Movement of paints an) haGar)ous goo)s in*lu)ing ra' materials have a series of safety *he*ks to be a)here) to7 starting 'ith a material safety data sheet All materials transport from fa*tories to the )epots is insure) through a blanket insuran*e poli*y7 'hi*h fi=es a minimum liability for loss7 )amage7 pilferage or leakage up'ar)s

1istribution Channel
Fast Mo i!" #oods Slo$ Mo i!" #oods
&a*tory (4)

&a*tory (4)
-egional 1istribution Center (!)

1epots (%5)
1epots (%5)

1ealers (1;000)
1ealers (1;000)

1istribution Strategy
Asian Paints bypasse) the bulk buyer segment an) 'ent to in)ivi)ual *onsumers of paints (t 'ent slo' on urban areas an) *on*entrate) on semi3 urban an) rural areas (t 'ent retail (t 'ent in for an open3)oor )ealer poli*y (t vote) for nation'i)e marketing H )istribution

(mpli*ations of 1istribution Strategy

@oing to (n)ivi)ual Consumers (mplie) 8i)e Pro)u*t -ange an) Comple= 1istribution

Smaller Pa*ks proliferate) the pro)u*t )epth further

8i)e Pro)u*t range (mplie) ,=pensive )istribution

@oing retail (mplie) 1eep (nvolvement in Channel Management

2ational Marketing ne*essitate) nation'i)e organiGation

(nventory Management
&a*ts6 Lo'est inventory *ost in in)ustry Average inventory level of 5B )ays sales against in)ustry average of ;1 )ays +ranslates into 4; F lo'er inventory *osts Sto*k of finishe) goo)s is only %F of net sales half the in)ustry average

 Asian Paints allo'e)

1;351 )ays *re)it for )ealers in ma#or to'ns 553:0 )ays *re)it for )ealers in up*ountry regions

(n*entive s*hemes to re)u*e inventory

A spe*ial )is*ount of :9; per *ent 3 )is*ount for perfe*tion in payments (t 'as passe) on at the en) of the year7 provi)e) ea*h an) every payment throughout the year 'as ma)e 'ithin the stipulate) time norms A *ash )is*ount of ; per *ent9 +his 'as pai) for all outright *ash pur*hases (t 'as given 'henever payments 'ere re*eive) 'ithin 54 hours of the supplyHinvoi*e (n respe*t of outstation a**ounts7 the payments have been ma)e in a)van*e by )raft in or)er to be eligible for the *ash )is*ount

Supply Chain -e3engineering

/b#e*tive6
+o )eliver pro)u*ts effi*iently to *ustomers 'ithout hol)ing large amount of inventory

+o manage *ash *y*le to free up fun)ing for aggressive gro'th by a*.uisition strategy

Supply Chain Pro*ess

,nabling (+ a*ross the )e*orative paints

1istribution
Paint )ispensing ma*hines
Altere) the pro)u*tion pattern from sha)es to pro)u*ing bases -e)u*e) inventory an) ,liminate) re)un)an*y of sto*ks Appro=9 11000 *olor tinting ma*hines in*lu)ing multiple ma*hines a*ross some *ounters Jas helpe) e=pan) the range of sha)es for ea*h pro)u*t *ategory7 offering a *hoi*e of sha)es to *onsumers in the hun)re)s9 &or the retailers it has eliminate) the sales loss for 'ant of rangeH)esire) sha)e

i5 )istribution planner use) to )evelop )istribution s*he)ules base) on *onstraints

$i)eo

(mprove) Pro*esses
Manufa*turing Asing i5 Master planner to )ei*i)e 'hi*h plant to manufa*ture 'hat pro)u*t )epen)ing on 3 Capa*ity *onstraints 3 ,nvironmental *onstraints 3 "ey ra' materials Jelps optimiGe the pro*ess su*h that least inventory is pro)u*e) to maintain the e=pe*tations of servi*e an) safety sto*k

&a*tory S*he)uler use) for ma*hine by ma*hine an) unit by unit planning of pro)u*tion s*he)ules

Pro*urement
i5?s fa*tory planner use) to i)entify the ra' material an) pa*king materials an) 'ho to sour*e it from Also provi)es the i)eal formulations re.uire) for manufa*turing pro)u*ts A better materials planning system allo's the *ompany to *reate more *omple= paint formulas Jelps sele*t the best ven)or an) manufa*turing metho) for any given situation +he Supply Chain Management is ba*ke) by (+ efforts that help the *ompany in )eman) fore*asting7 )eriving optimal plant7 )epot an) S"A *ombinations7 streamlining ven)or relationships7 re)u*ing pro*urement *osts an) s*he)uling pro)u*tion pro*esses for in)ivi)ual fa*tories

-esults of -e3engineering
-e)u*e) &inishe) (nventory *y*le from %& days to '( days Business is *urrently ) times of that before BP (n*rease in the number of sha)es from %( to *'(( A*hieve) an +,-.( /er0e!t ser i0e le els for S"A sales at the lo*ation level Built a *ompetitive a)vantage in terms of inventory management

,ffe*ts on Profitability

+JA2" C/A