Asian Paints: Supply Chain Efficiency Introduction: Asian Paints is India’s largest paint company and ranked among the top ten Decorative coatings companies in the world with a turnover of INR 66. 80 billion. Asian Paints along with its subsidiaries have operations in 17 countries across the world with 23 paint manufacturing facilities, servicing consumers in 65 countries through Berger International, SCIB Paints – Egypt, Asian Paints, Apco Coatings and Taubmans. Asian Paints sells through some 25,000 local retailers, who resell its products to home users, contractors and painters.
The company also sells paints and colours to original equipment manufacturers (OEM) and to large contractors serving the OEM marketplace. To serve those demanding market segments, Asian Paints produces more than 1,200 standard paint product SKUs and many made-to-order formulations, and operates about 80 sales offices to support its marketing and distribution efforts. Challenges: This dynamic marketing and production environment requires a sophisticated and robust supply chain. In its search for a true competitive edge, Asian Paints’ executives set two key objectives for its supply chain. 1.
They sought to deliver product efficiently to customers without holding a large amount of inventory. 2. They wanted to manage their cash cycle to free up funding for an aggressive growth-by-acquisition strategy. Solution: Asian Paints applied advanced master planning technique to decide which products should be produced at which manufacturing plants, incorporating variables such as cost and demand volume, capacity, current inventory levels, environmental requirements and other factors, optimizing across multiple objective levels like capacity, demand satisfaction, safety stock requirements, inventory optimization and transportation costs.
Asian Paints sources raw materials from both domestic suppliers and a set of international vendors from various parts of the world, and the company uses a sophisticated materials planning system to manage those crucial supplies. Given that raw materials comprise 60 percent of its value chain, Asian Paints constantly improvises its bill of materials, routings and alternate parts. This leads to a very complex alternate materials scenario during the procurement planning process.
To ensure optimum raw materials selection across its complex, multi-site manufacturing operations, Asian Paints uses factory planning to manage a wide range of variables, such as the inflow and use of raw materials among multiple possible alternates across multiple alternate vendors and possible production routes. The company typically experiences a “hockey stick” variation in monthly demand for its products, and also sees an annual upsurge in demand during festival seasons in various parts of India.
Asian Paints utilizes a sophisticated distribution planning to address this variable demand and to move product smoothly to this complicated and dynamic marketplace. To ensure a smooth evolution to this re-engineered solution, the company enlisted i2 to support deployment, change management and continuous improvement. Asian Paints began leveraging advanced i2 solutions for supply chain master planning, materials and distribution planning, production scheduling, and change management.
Asian Paints implemented key solutions from i2’s advanced planning solutions to cover the processes from sales forecasting, master production planning, raw material planning, distribution planning and shop floor scheduling. Savings, service and growth: A decade after the i2 supply chain opportunity assessment demonstrated that i2 solutions would pay for themselves after one full year of use Asian Paints has dramatically improved its debt-to-asset ratio. The company has become essentially debt free, and has leveraged its supply chain efficiencies to pursue an aggressive growth strategy based on fully-funded international acquisitions.
In 1999, the company operated with an average of 56 days of finished goods inventory. During the initial implementation phase, the company reduced that to an average of 40 days of finished goods inventory on hand, and in recent years has further reduced that figure to 30 days of finished inventory. This leaner inventory stance was a key factor in the company’s improved cash flow position and its ability to invest in growth-oriented acquisitions. After fully implementing various i2 solutions, Asian Paints now achieves an 87-90 percent service evels for SKU sales at the location level, which puts the company well ahead of competing firms in the marketplace. The company’s enhanced master planning system enables Asian Paints to optimize the kinds and size of inventory it holds, and to deal more effectively with fluctuations in the volatile paints marketplace. A better material planning system allows the company to create more complex paint formulas, and to select the best vendor and manufacturing method for any given situation.
Modern distribution planning enables Asian Paints to plan deployment on a weekly basis, and to quickly and easily adjust those distribution plans as needed. By adopting a robust approach to change management, the company can now adapt more nimbly to shifts in market demand, to new manufacturing processes, and to changing regulatory pressures or business requirements. In terms of market performance, improved supply chain planning and execution systems have allowed the company to grow—it is now is four times the size it was 10 years ago—while dramatically reducing the on-hand inventory needed to serve its customers.
To further optimize the execution of the supply chain processes in conjunction with the planning solution and to provide a seamless Plan-Do-Check-Action framework to the supply chain executives, Asian Paints deployed the i2 platform. This has provided Asian Paints the ability to build highly customized planning and execution workflows to further improve supply chain efficiencies. References: 1. www. asianpaints. com 2. http://whitepapers. techrepublic. com. com 3. http://www. scribd. com/doc/14156278/Asian-Paints-SCM ——————————