Académique Documents
Professionnel Documents
Culture Documents
Feroze Ahmed (415) Samir Sethi (419) Harsh Mehta (431) Vibhav Upadhyay (453) Yogeshwar Kumar (456) Vishal Arora (461) Hitesh Thapar (464)
Agenda
Introduction to Asian Paints Paints Industry Elements of supply chain
Manufacturing Distribution Research and Development Forward/Backward Integration
Improvements
Re-engineering supply chain
IT in supply chain
SCM ERP CRM
Improvements
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International Operations
Caribbean Islands
Middle East
South Pacific
Paint Industry
Paint industry estimated at Rs. 135bn Unorganized sector accounts to 35% of paint market Volume growth estimated at 15% Indias share in the world paint market is 0.6% Per capita consumption of paint in India is 1.2kg/annum
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BUYERS 1. Decorative: Fragmented Market. LOW POWER 2. Industrial: Low switching costs. Corporate have HIGH POWER
Existing Rivals
1. Berger 2. GN 3. ICI
4. JNPL
Suppliers
1.Tio2 Imported, 2.Few suppliers, 3.Availability of Substitutes of RM Low HIGH BARGAINING POWER
Product Categories
4 PLANTS
RAW MATERIALS
PACKAGING MATERIAL
15000 DEALERS
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Secondary activities
are non-core activities of a company, which are generally outsourced
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Manufacturing
Currently has 4 manufacturing plants in India Major production is done in its plant and part of it is done by sub contractors
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Try minimizing waste at the time of generation and also in recycling Aids Marketing in providing technical tools/USPs to demonstrate and push new products
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Secondary Activities
Transportation Management
The company has outsourced its transport management to Dynamic Logistic Pvt. Ltd.
Warehousing
does not own warehouses instead they have 90 depots scattered all over the India which are on lease basis
Packaging
The company has 140 packing material vendors
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Inventory Management
Demand seasonal in nature, possibility of stock outs
monsoon is a slack season Diwali is peak season high during Pola festival in Maharashtra
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Inventory Management
Mar '11 Mar '10 Mar '09 Mar '08 Mar '07 Inventory ratios Inventory Turnover Ratio 7.08 7.95 9.8 8.03 6.88 Average Raw Material Holding 48.61 42.69 33.13 43.11 32.72 Average Finished Goods Held 44.6 42.38 31.72 42.67 45.08 Number of Days In Working Capital* -6.53 -11.29 10.97 1.8 20.24
Source: http://www.moneycontrol.com/financials/asianpaints/ratios/AP31
*Asian Paints has managed a negative working capital due to the following reasons: - It gets immediate payment from its dealers (through its customers) and it does not need to pay its suppliers immediately. Thus, it can manage with negative working capital (in days) and hence can be called as very efficient in working capital management. Days in working capital = DIO+DSO-DPO
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Inventory Management
Asian Paints allowed
15-21 days credit for dealers in major towns 22-30 days credit dealers in upcountry regions
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Distribution Network
Secunderabad based location
ANKLESHWAR PLANT
KASNA PLANT
PATANCHERU
77 DEPOT CENTRES
BHANDUP PLANT
Distribution Channels
Fast Moving Goods Slow Moving Goods
Factories/
Manufacturing Plants (4) Depots (77)
Factories (4)
Regional Distribution Centres (6)
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
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Backward Integration
Asian Pain produces PAN and PENTA
(accounting for 35 % of production costs)
Concerns
Increasing price of raw materials ; inability to pass on the price increase to customers Competitive pressure 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
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Distribution
Had to maintain inventory levels for all 3000 SKUs Customer choice limited to number of SKUs
Procurement
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 planning process
Manufacturing
Manufacture d all the shades (3050 depending on a product line) in all the packs (five to eight packs)
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IT in Supply Chain
It helps in
demand forecasting, deriving optimal plant, depot and SKU combinations, streamlining vendor relationships, reducing procurement costs and scheduling production processes for individual factories
Enabling IT in Distribution
Paint dispensing machines
Altered the production pattern from shades to producing bases Reduced inventory and Eliminated redundancy of stocks Approx. 11000 colour 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
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Enabling IT in 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
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Enabling IT in Procurement
i2s 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
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Covers
Sales and Distribution Business Planning Production Planning Shop Floor Control Logistics
CRM System
Supplier Portal
Employee Portal
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Customer Relations Management (CRM) tools are being used in Asian Paints Helpline and Home Solutions initiatives
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Other IT Initiatives
Supplier portal including an automated digital document exchange facility that improves the efficiency and effectiveness of interaction with suppliers Setting up of Employee portal Setting up of a disaster recovery site in South India to ensure 24x7 availability of our IT infrastructure
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Challenges in IT
Controlling all major business processes with a single software architecture in real time Data Migration: Implementation of ERP and transferring legacy data systems into new ERP systems Relative advantage of ERP application has started to diminish as other companies are also implementing and have implemented ERP systems Keeping in tandem with fast changing demands and technology and changing processes
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Market Share
Company
APIL GNPL Berger Paints ICI Jenson & Nicholson Others
Industrial Market
14.50% 42.50% 14.20% 7.80% 8.10% 12.90%
Decorative Market
37.50% 10% 11.20% 7.80% 5.50% 38%
GNPL
Provide paint shop management services to sell solutions rather than product
BPIL Increase
focus on southern markets in India
ICI Increase
capacities to strengthen presence in fast growing architectural segments
JNIL
Leverage on JV for growth in Industrial segments
SPIL
Consolidate position in architectural paints
SNIL
Consolidate position in Repainting exterior paint market
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DEVELOP
Build new competency to Create the Future
MARKET OPPORTUNITIES
DEFEND EXISTING
Defend existing market by strengthening existing competencies
DEEPEN
Build Complementary/new competency to fortify position in Existing Market
EXISTING
Distinctive Competencies
NEW
DEFEND:
Consists of rural and the urban market in which AP is playing. They are a target to many global companies, which are playing in Indian market via Indian arm of their operations like ICI has Berger, Kansai has JN
DEEPEN:
Industrial segment of Indian paint industry where AP has a weak presence. It has a presence in automotive segment but ranks a poor second. It needs to form alliances with foreign players to enter into this segment. It can also look for tie-ups with the company, which have tie-ups with those companies whose daughter arm is operating in India, to lock the account. Its move of taking over Haucoplast is one step in this direction. Their tie-up with PPG has given them a good presence in automotive segment, capturing clients like Santro, GM, Ford etc
DISCOVER:
This forms the basis of fast growth. AP has identified opportunities abroad in developing countries similar to India. To enter into these countries they adopted the process of acquisition.
DEVELOP:
Paint industry is primarily a product-oriented industry up till now. Huge potential exists in the service side also. Introduction of color-world, providing service in painting and interior decoration etc are steps taken to acquire the whole chain and becoming full service provider. Need to Ensure value-adding services are possible. These can be integrated to provide an umbrella service. .Constant reminders to the customers to repaint, or upgrade.
2.
3.
2.
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Other Initiatives
Product innovation helped Asian Paints service the entire area of decorative coatings Has been able to provide products across the price spectrum in each segment Improved manufacturing capability resulted in postponement of capital expenditure thereby improving financial position By investing into tinting machines, it can respond to demand immediately By expanding the dealer base to enhance penetration at same level of inventory Asian paints has at its finger tips information about every dealer including pattern of off takes, orders, payment and growth which helps in responding to specific schemes and improving the sales of the specific SKUs they target
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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
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Environmental Initiatives
The companys plants have the ISO 14001 certifications for environment management standards. Four of its plants received the Sword of Honour by the British Safety Council Have installed effluent treatment and reverse osmosis facilities. Colour World Dealer Tinting Up gradation of Material Handling and Storage Facilities Up gradation of Process Technology Use of Natural Gas as Fuel Solvent Recovery Plants Improved Incinerating Systems Reverse Osmosis Rain Water Harvesting Scheme
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Social Initiatives
The company, through the Ankleshwar Industrial Development Society has helped setting up the school "Shree Gattu Vidyalaya", which has nearly 2500 students Provides basic sanitation facilities like Toilets & Urinals and availability of potable drinking water to villages First corporate in Mumbai to implement at its manufacturing facility a cost-effective model of rain water harvesting Initiated a process of building a Total Water Management Education Centre at its facility Navjyoti Eye Care Camp' was held with the objective of eradicating cataract problem
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