7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
1/27
Supply chain management inAsian Paints
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
2/27
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
3/27
Introduction
Started in 1942 by four entrepreneurs:
Champaklal choksey,Chimanlal choksey,Suryakant Dani and
Arvind Vakil asASIAN 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 companyin the world.
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
4/27
Asian Paints- Today
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
5/27
International Operations
Caribbean Islands
Barbados, Jamaica,Trinidad & Tobago.
South Pacific
Fiji, Tonga,Vanuatu, Solomon &
Samoa Islands.
South Asia
Bangladesh, Nepal& Sri Lanka.
South East Asia
China, Malaysia,
Singapore &Thailand.
Middle East
Bahrain, Egypt,Oman &
United Arab
Emirates.
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
6/27
Paint Industry
Paint industry estimated at Rs. 135bn.
Unorganized sector accounts to 35% of paintmarket.
Volume growth estimated at 15%.
Indias share in the world paint market is 0.6%.
Per capita consumption of paint in India is1.2kg/annum.
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
7/27
Product Categories
http://www.asianpaints.com/index.aspxhttp://www.asianpaints.com/index.aspx7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
8/27
Supply chain of Asian Paints
Headquarters in Mumbai
4 Factories
18 Processing Centres 350 raw material and intermediate goods suppliers
140 Packing Material Vendors
6 Regional Distribution Centre
72 depots are integrated
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
9/27
Elements of Supply Chain
3000 SKUS
RAW
MATERIALS
PACKAGING
MATERIAL
KEY SUCCESS
FACTORS
FLEXIBLE
OPERATIONS
LOWER
OUTPUT TIME
LOW DELIVERY
COST
4 PLANTS
6 RDC
35 JOB WORK
CENTRES
77 DEPOTS
15000 DEALERS500 INDUSTRIAL
CONSUMERS
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
10/27
Raw material Requirements
Paint Industry is raw material intensive with RW
being 70% of production costs.
300 types of raw materials used in manufacturingprocess
The most critical ones are
Titanium Dioxide (TiO2) 30 %
Phthalic Anhydride (PAN) 20 %
Pentaerythritol (PENTA) 15 %
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
11/27
Backward Integration
Asian Pain produces PAN and PET
(35 % of production costs)
Competitors are importing these parts till now
Benefits :Backward integrations
immunizes 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 indemand
1/3rd production is sold to other companies. This gives strategicedge to Asian paints.
O b d L i i
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
12/27
Outbound Logistics Distribution Network
Four manufacturing facilities are supported by Six
Regional Distribution Centers (RDC) and Seventy-
seven depots.
Each RDC and depot is taken by Asian Paints onlease 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.
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
13/27
ANKLESHWAR
PLANT
KASNA
PLANT
PATANCHERU
PLANT
BHANDUP
Secunderabad
based location
Delhi basedlocation
Bangalore
based
location
Chennai
based
location
Ahmedabad
based
location
Kolkata
based
location
77DEPOT
CENTRES
ASIANPAINTS
HEADQUART
ERS
MUMBAI
Distribution Network
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
14/27
Movement of paints and hazardous goodsincluding raw materials have a series of safetychecks to be adhered to, starting with a materialsafety data sheet.
All materials transport from factories to thedepots is insured through a blanket insurance
policy, which fixes a minimum liability for loss,damage, pilferage or leakage upwards of Rs.10,000.
Certain Issues
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
15/27
FAST MOVING GOOD SLOW MOVING GOODS
Factory (4)
Depots (77)
Dealers (14500)
Factory (4)
Regional Distribution Center (6)
Depots (77)
Dealers (14500)
Distribution Channel
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
16/27
Projected profitability of the proposed location
The standing of the dealer in the local market
The past records of the dealer (banking and
trading history)
The presence of other dealers in the vicinity and
the projected impact on their volumes
The competition scenario at the locationThe distance of the proposed location from the
nearest factory etc.
Conditions
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
17/27
AP 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 / distribution
Distribution Strategy
I li ti f Di t ib ti
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
18/27
Going to Individual Consumers Implied Wide
Product Range and Complex Distribution
Smaller Packs proliferated the product depth
further Wide Product range Implied Expensive
distribution
Going retail Implied Deep Involvement inChannel Management
National Marketing necessitated nationwide
organization
Implications of DistributionStrategy
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
19/27
Inventory Management
Facts:
Lowest inventory cost in industry
Avg inventory level of 28 days sales against
industry avg of 51 days
Translates into 45 % lower inventory costs
Stock of finished goods is only 7% of net saleshalf the industry average
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
20/27
Inventory Management
Asian Paints allowed 15-21 days credit for dealers in major towns
22-30 days credit dealers in upcountry regions
Incentive schemes to reduce inventory
A special discountof 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 theyear was made within the stipulated time norms.
A cash discountof 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. Inrespect of outstation accounts, the payments have been
made in advance by draft in order to be eligible for the cash discount
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
21/27
Supply Chain Re-engineering
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 strategy
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
22/27
Existing Processes
Forecasting
The demand pattern was difficult to predict even with the support of historicaldata/trends as consumer preferences were changing fast
Relied on home grown solutions for planning and implementation
Procurement
Raw materials comprise 60% of the value chain which require accurate forecasts Constant updation of BOM and Routing called for frequent changes in theprocurement planning process
Manufacturing
Manufactured all the shades (30-50 depending on a product line)in all the packs (five to eight packs)
Distribution
Had to maintain inventory levels for all 3000 SKUs Customer choice limited to number of SKUs
E bli IT th S l
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
23/27
Enabling IT across the SupplyChain of Decorative Paints
Distribution Paint dispensing machines
Altered the production pattern from shades to producingbases
Reduced inventory and Eliminated redundancy of stocks
Approx. 11000 color tinting machines including multiplemachines across some counters
Has helped expand the range of shades for each productcategory, offering a choice of shades to consumers in thehundreds.
For the retailers it has eliminated the sales loss for want ofrange/desired shade
i2 distribution planner used to develop distributionschedules based on constraints
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
24/27
Manufacturing Strategy changed to manufacturing bases thus providing
economies of scale
Using i2 Master planner to deicide which plant to manufacture
what product depending on Capacity constraints
Environmental constraints
Key raw materials
Helps optimize the process such that least inventory is producedto 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 unitplanning of production schedules
Improved processes
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
25/27
Procurement
i2s factory planner used to identify the raw material andpacking materials and who to source it from
Also provides the ideal formulations required formanufacturing products
A better materials planning system allows the company tocreate more complex paint formulas
Helps select the best vendor and manufacturing methodfor any given situation
Improved processes
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
26/27
Results of Re engineering
Reduced Finished Inventory cycle from 56 days to 30 days
Business is currently 4 times of that before BPR
Increase in the number of shades from 50 to 1300
Achieved an 87-90 percent service levels for SKU sales at the location level
Built a competitive advantage in terms of inventory management
Procurement
Distribution
Manufacturing
7/31/2019 44782537 Asian Paints Final Ppt 120418005359 Phpapp01 [Repaired]
27/27
Thank You