Asian Paints has implemented supply chain improvements through IT systems to better forecast demand, optimize manufacturing, and improve inventory management. Key changes include producing paint bases instead of individual shades, using color tinting machines to mix shades on demand, and implementing planning software. This has reduced inventory levels while increasing the number of available shades. Asian Paints' supply chain is now able to support 4 times the business volume with lower inventory carrying costs and higher service levels.

1. Supply chain management in
Asian Paints

3. Introduction
• Started in 1942 by four entrepreneurs:
Champaklal choksey,
Chimanlal choksey,
Suryakant Dani and
Arvind Vakil as
“ASIAN 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 company
in the world.

4. Asian Paints- Today

5. International Operations
Caribbean Islands Middle East
Bahrain, Egypt,
Barbados, Jamaica,
Oman &
Trinidad & Tobago.
United Arab
Emirates.
South Pacific South East Asia
South Asia China, Malaysia,
Fiji, Tonga,
Vanuatu, Solomon & Singapore &
Samoa Islands. Bangladesh, Nepal Thailand.
& Sri Lanka.

6. Paint Industry
 Paint industry estimated at Rs. 135bn.
 Unorganized sector accounts to 35% of paint
market.
 Volume growth estimated at 15%.
 India’s share in the world paint market is 0.6%.
 Per capita consumption of paint in India is
1.2kg/annum.

7. Product Categories

8. 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

9. Elements of Supply Chain
3000 SKU’S KEY SUCCESS 4 PLANTS
FACTORS
FLEXIBLE
OPERATIONS 6 RDC
RAW
MATERIALS LOWER
OUTPUT TIME 35 JOB WORK
LOW DELIVERY CENTRES
PACKAGING COST
MATERIAL 77 DEPOTS
500 INDUSTRIAL
15000 DEALERS
CONSUMERS

10. Raw material Requirements
• Paint Industry is raw material intensive with RW
being 70% of production costs.
• 300 types of raw materials used in manufacturing
process
• The most critical ones are
• Titanium Dioxide (TiO2) 30 %
• Phthalic Anhydride (PAN) 20 %
• Pentaerythritol- (PENTA) 15 %

11. 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 in
demand
– 1/3rd production is sold to other companies. This gives strategic
edge to Asian paints.

12. 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 on
lease 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.

13. Distribution Network
Secunderabad Delhi based ANKLESHWAR
based location location PLANT
KASNA
PLANT
PATANCHERU ASIAN
BHANDUP
77 PLANT PAINTS
DEPOT HEADQUART
CENTRES ERS
MUMBAI
Bangalore Chennai Kolkata Ahmedabad
based based based based
location location location location

14. Certain Issues
 Movement of paints and hazardous goods
including raw materials have a series of safety
checks to be adhered to, starting with a material
safety data sheet.
 All materials transport from factories to the
depots is insured through a blanket insurance
policy, which fixes a minimum liability for loss,
damage, pilferage or leakage upwards of Rs.
10,000.

15. Distribution Channel
FAST MOVING GOOD SLOW MOVING GOODS
Factory (4) Factory (4)
Regional Distribution Center (6)
Depots (77)
Depots (77)
Dealers (14500)
Dealers (14500)

16. Conditions
 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 location
 The distance of the proposed location from the
nearest factory etc.

17. Distribution Strategy
• 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

18. Implications of Distribution
Strategy
• 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 in
Channel Management
• National Marketing necessitated nationwide
organization

19. 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 sales
half the industry average

20. 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 discount of 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 the
year was made within the stipulated time norms.
• A cash discount of 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. In
respect of outstation accounts, the payments have been
made in advance by draft in order to be eligible for the cash discount

21. 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

22. Existing Processes
• The demand pattern was difficult to predict even with the support of historical
data/trends as consumer preferences were changing fast
Forecasting • Relied on home grown solutions for planning and implementation
• Raw materials comprise 60% of the value chain which require accurate forecasts
• Constant updation of BOM and Routing called for frequent changes in the
Procurement procurement planning process
• Manufactured all the shades (30-50 depending on a product line)
Manufacturing
in all the packs (five to eight packs)
• Had to maintain inventory levels for all 3000 SKUs
Distribution • Customer choice limited to number of SKUs

23. Enabling IT across the Supply
Chain of Decorative Paints
• Distribution
– Paint dispensing machines
• Altered the production pattern from shades to producing
bases
• Reduced inventory and Eliminated redundancy of stocks
• Approx. 11000 color tinting machines including multiple
machines across some counters
• Has helped expand the range of shades for each product
category, offering a choice of shades to consumers in the
hundreds.
• For the retailers it has eliminated the sales loss for want of
range/desired shade
– i2 distribution planner used to develop distribution
schedules based on constraints

24. Improved processes
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 produced
to 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 unit
planning of production schedules

25. Improved processes
Procurement
 i2’s factory planner used to identify the raw material and
packing materials and who to source it from
 Also provides the ideal formulations required for
manufacturing products
 A better materials planning system allows the company to
create more complex paint formulas
 Helps select the best vendor and manufacturing method
for any given situation

26. Results of Re engineering
Manufacturing
Distribution
Procurement
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

27. Thank You