Asian Paints - Enhancing Supply Chain with I2's Technology

Asian Paints - Enhancing Supply Chain with i2's Technology

In 2004, Asian Paints (AP) is the market leader in the Indian paint industry with a 46% value share in the branded paint segment. It has a turnover of Rs. 22. 7 bn. APs vision is to become one of the top five decorative coatings companies worldwide. As a pail of its efforts to achieve this goal, AP extensively computerized its operations. In addition to this, computers are also used in the areas of distribution and inventory control. AP is the first Indian company in the paints segment to implement SCMS from i2 Technologies. The case study shows how i2's solutions enabled AP to have a fall Return on Investment (ROI) within a year.

In 2004, Asian Paints (AP) is the market leader in the Indian paint industry with a 46% value share in the branded paint segment. It has a turnover of Rs.22.7 bn. Over the course of 25 years, driven by its strong consumer-focus and innovative spirit, AP has become the market leader. It is double the size of any other paint company 'in India.

AP manufactures a large range of decorative coatings, industrial coatings, resins and emulsions. Its product range includes interior and exterior wall paints, door and window paints, furniture paints, metal paints, and ancillaries. AP's paints have a range of over 1200 colors. The company has online facilities to help customers to choose a shade.

AP has six manufacturing plants around India (Table 1). All Its paint manufacturing facilities have the ISO 9001 certification for Quality Standards and the ISO 14001 certification for Environment Management Standard. AP acts as a holding company for four subsidiaries-AP, Apco Coatings, Berger International and SCIB Chemicals (Egypt).

AP's vision is to become one of the top five Decorative coatings companies worldwide. As a part of its efforts to achieve it, AP extensively computerized its operations. In addition to computerizing its manufacturing operations, computers are also used in the areas of distribution and inventory control. A sophisticated Management Information System is used to derive benefits of faster market analysis resulting In better decision-making. All the plants are integrated through the Information Technology (IT) systems.

Until the mid-1990s, AP had relied on a manually controlled supply chain. But the home-grown supply chain systems employed by AP, could not take the company to the next level in terms of customer service.

In 2003, AP set up an efficient supply chain system with the help of 'i2 Technologies' which integrated four plants, six regional distribution centres, 38 outside processing centres and 74 branches catering to around 15,000 dealers and 500 industrial customers. The tools bought from i2 Technologies (i2 tools) enhanced the flexibility of operations, lowered throughput time and reduced delivery costs while improving customer-servicing levels. AP was awarded the Cheminor award for 2002 for its "contribution and promotion of excellence in Supply Chain Management" by the Indian Institute of Materials Management.

Background Note

AP was founded in 1942 as the Asian Oil & Paint Company. Four associates (Champaklal N Choksey, Chimanlal H Choksi, Suryakant C Dani and Arvind RR Vakil) formed the company to manufacture paint from a garage on Foras Road, Bombay. AP hit on the innovative marketing strategy of "going where the consumer is", thereby reaching out to the remotest corners of the country to give consumers products the way they wanted them in conveniently-sized packs. It was also around this time that the company created its mascot, "Gattu", which grew into one of India's most recognizable advertising symbols and representative of APs strong Indian identity.

The year 1957 was the beginning of a decade of dramatic growth. The company's R&D department figured out a way to produce international quality Phenolic and Maleic resins on its simple coal-furnace, with a hand-stirring process at a low cost. This led Balmer Lawrie an Indian public sector company, which concentrated on infrastructure development, to reject the products offered by a leading UK-based paint giant and switch to AP products.

Simultaneously, AP embarked on an ambitious marketing campaign, forming close bonds with thousands of dealers in small -owns all over India and emerged as India's biggest paint company in 1967.

By the 1990s, AP had grown to become more than twice the size of its nearest competitor, Goodlass Nerolac. In 1998, the company embarked on a major restructuring strategy under the guidance of management consultants, Booz Allen and Hamilton, to bring greater focus in its business improve efficiencies, control cost and strengthen its leadership position.

After the completion of the restructuring, AP stated, "Asian Paints aims to become one of the top five decorative coatings companies world-wide by leveraging its expertise in the high growth emerging markets. Simultaneously, the company intends to build long term value in the Industrial coatings business through alliances with established global partners".

AP entered the Middle East in 2000, formally beginning manufacturing operations in Oman, under the name AP (Middle East). The same year, AP also expanded its geographical operations with the purchase of Pacific Paints, a paint business in Australia. In 2001, it acquired the powder coatings business of Hawcoplast Chemicals, a Mumbai-based powder coatings business, for Rs.160 mn.

The year 2002 saw further international expansion by AP. It entered the Egyptian market with the acquisition of a controlling stake in SCIB Chemical, Egypt. AP began operations in Bangladesh, marking its eleventh joint venture in international markets and its largest green-field venture in overseas mark. It acquired a controlling stake in Berger International, a holding company based in Singapore. In 2003, the acquisition of Berger International formed the basis of a new international expansion strategy to transform the company 'into a major global player.

Now AP, along with its subsidiaries, have 23 manufacturing facilities In 22 foreign countries spread across, and marketed in over 50 overseas markets. It is the largest paint company in nine overseas markets. It is also India's largest exporter of paints, exporting to over 15 markets in the Asia-Pacific region, the Middle East and Africa. It operates through its subsidiary, Berger International Limited in 12 markets and through SCIB Chemical in Egypt. Its International business contributes over