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Table of contents
Introduction.............................................................................................. 3 Characteristics of paint industry................................................................4 Role of ICT in supply chain management.................................................5 Supply chain of Asian Paints.....................................................................6 Supply chain issues before implementation of ICT...................................7 Implementation of ICT to improve ISCM.................................................8 Benefits of ICT implementation in Supply chain.......................................9 Challenges in CRM and SRM...................................................................12 Evaluation of ICT implementation in Asian Paints..................................13 References.................................................................................................14
1.Introduction
The paint trade in India is divided in two segments Industrial paints and Decorative paints. Automobile manufacturers are the biggest targets of the Industrial paints segment as they are the one who has the maximum demand in this segment of market. It is very difficult to study the supply chain of the paint industry in the industrial segment, as there is a different set of works for every customer or every set of customers. Every customer in this segment is such big that the company has to change the working style as per the customer. Decorative is market which leads the Indian paint industry and which needs all the efforts on all the sides. This is one segment of the market that needs all the efforts of all the functions of the market as in this segment the market covers whole India. The product range which one company covers in the market is also huge in the organised sector companies. . The selection of the paint needs to be approved by both the end client as well as the recommending authority the contractor, the architect, the painter or in some cases the shop keeper as well
Paint
Solvents
Binders
Pigments
Additives
Solvents give the paint a liquid flow while the binder binds it to the surface. Pigments impart colour and opacity to the paint and the additives give it special resistance properties.
2. Seasonal nature of demand: The demand peaks during festival season while is very lean during monsoons. Thus, a major part of the sales are achieved in the second half of the fiscal year.
3. Inventory Management at the dealer level: The product differentiation is minimal and the substitutes are readily available, hence it is necessary to have inventory management at the dealer level. This enhances brand visibility and occupying strategic shelf spaces.
4. Low Distribution Costs: For a product like Distemper, it is necessary to have low distribution costs, since it is the most widely used product in the paint industry.
of the related information flows. For this reason, information and communications technology (ICT) is becoming an increasingly indispensible tool for supply chain management
Forecasting
Procurement
Manufactured all the shades(30-50 depending on product line) in all the packs(58 packs)
Manufacturing
Distribution
Had to maintain inventory levels for all 300 SKUs Wide product range implied expensive distribution
Master Planning: The i2 solution generates a supply chain plan for Asian Paints that synchronizes procurement, production and distribution. This plan is optimized and constrained by resin/emulsion and critical material availability, shade-stream manufacturing capacity, target inventory requirements and demand forecast. It also makes pre-season, pre-build planning process repeatable, consistent and logical while eliminating non-value added activities.
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Material Planning: Given the high number of raw materials and vendors, optimized material planning is a key requirement for Asian Paints. i2 Supply Chain Planner connects across multiple factory planning instances provides visibility for resolving shortages/lateness across plants and maintains an audit trail of the actions taken. i2 solutions have significantly reduced planning cycle time and improved consistency of the decision making process.
Distribution Planning: The demand patterns experienced by Asian Paints are typically highly skewed towards the last week of a month. This requires flexible distribution planning to cater to frequent changes to demand and supply positions in the supply chain. The i2 Supply Chain Planner solution allows planners to quickly re-plan, thus optimizing distribution costs and reducing inventory stock-outs simultaneously.
The i2 SCM engine links all the vendors and suppliers, thus helping the company in assessing the stock of their vendors and suppliers at any given time.
Additionally, Microsoft Dynamics NAV 4.0, formerly Microsoft Business SolutionsNavison, offered a hub-and-spoke model which was ideal for Asian Paints. The hub-and-spoke concept refers to a parent or holding company that uses one business software system (the hub), which is integrated with the systems.
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 companys improved cash flow position and its ability to invest in growth-oriented acquisitions.
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The company has also used i2 solutions to move from an end-service-level metric to a more proactive and precise order-fill method of analysis. After fully implementing various i2 solutions, Asian Paints now achieves 8790 percent service levels for SKU sales at the location level, which puts the company well ahead of competing firms in the marketplace. The companys 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 materials 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 growit is now four times the size it was 10 years agowhile 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-act framework to the supply chain executives, Asian Paints deployed the i2 platform. This has provided Asian Paints with the ability to build highly customized planning and execution workflows to further improve supply chain efficiencies. The companys ability to deliver the right product at the right time and to the right place has become a differentiating factor for Asian Paints. The supply chain has become one of the most crucial functions in taking the company ahead of the competitors. Asian Paints has launched a supplier portal that includes an automated digital document exchange facility that will improve the efficiency and effectiveness of interaction with suppliers. An employee portal has also been set up. Customer Relations Management (CRM) tools are being used in Asian Paints Helpline and Home Solutions initiatives.
The successful deployment of ERP, CRM, Business Intelligence and Portal software from leading solution providers and integrated SCM systems has helped improve efficiency in the business as well as increase the transparency and accuracy of information across the company.
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3.3 Challenges in Customer Relationship Management (CRM) and Supplier Relationship Management(SRM)
Asian paints launched a supplier portal provided by SAP which constitutes an automated digital document exchange facility to improve the efficiency and effectiveness of interaction with suppliers. To manage internal customers an employee portal was also created. Customer relation Management (CRM) tools are used in Asian Paints helpline and Home Solutions initiatives. The home solutions includes a state of the art call centre, an effective lead management system to prioritize and route leads for proper handling and standardizing the sales delivery to ensure the same quality of service every time . This tool enables to view all customer interactions and financial information in real time.
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Source : Information Technology in supply chain(Chopra, Meindl ,Kalra) Chopra, Meindl and Kalra emphasize on the importance of including all processes along the supply chain in ICT implementation. They further categorize all the processes in the supply chain into three main areas: processes focused downstream (CRM); processes focused internally (ISCM) and processes focused upstream (SRM).Another important category is TMF which includes basic ERP systems, infrastructure software and integration software. TMF is necessary for the three macro processes to function and communicate to each other. It is imperative that firms focus on these macro processes, a firm must expand the scope beyond internal processes and look at the entire supply chain to achieve breakthrough performance. Asian paints had implemented its ICT tool for ISCM by using services of i2 Technologies in year 1999 and they upgraded it in 2005. So this is evident that they were proactive in improving internal supply chain activities from the beginning but didnt focus much on SRM and CRM initially. Gradually they took holistic view of the situation and included CRM and SRM .It is essential that ISCM macro process aims to fulfil demand that is generated by CRM processes, there needs to be strong integration between ISCM and CRM macro processes. After implementation of ISCM Asian paints realized that it is of little use for the factory to have production capacity to meet demand if supplier cant supply the parts effectively due to lack of proper co-ordination. ISCM software providers have helped improve decision making within ISCM processes but good integration with CRM and SRM is still largely inadequate at software levels. One of the major causes of failure in IT implementation is companies trying to implement IT systems in a wide variety of processes at the same time which was not quite obvious a decade back when Asian Paints initiated IT implementation they chose to move forward in incremental steps rather than
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Big Bang approach which helped them to learn from mistakes and improve the efficacy of IT implementation. After IT implementation in ISCM and CRM successfully they are now focussing on SRM which is a wise step.
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5. References
1. http://www.octopuse.com/WhitePapers/White%20Paper%20for%20Paint%20Industry.pdf 2. Sweeney, E. Managing the Supply Chain: the Role of Information and Communications Technology (ICT) as a Key Enabler of the Process. Business Ireland, Summer Issue, June 2005, p.105-109. 3. Kemp, J. Asian paints enables growth through improved planning. Website:http://digital.bnpmedia.com/article/Asian_Paints_Enables_Growth_Through_Improved_Planning/51 3049/48366/article.html 4.Elkin,B: The next level of collaboration. Supply Chain Leader : Ideas and Innovations from i2, Issue No. 8,2009 Website:http://laurenbossers.writersresidence.com/system/attachments/files/3629/original/Supply_Chain_Lea der_issue_8.pdf 5. http://www.asianpaints.com/corporate_information/supply_chain.aspx 6. Chopra, Meindl, Kalra .(2010) Supply Chain Management :Strategy, Planning and Operation(4th Edition);Pearson Education ,Inc.
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