final logistics project

8/14/2019 Final Logistics Project

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S.K.SOMAIYA COLLEGE OFSCIENCE, ARTS AND COMMERCE

PROJECT ON:-

LOGISTICAL FUNCTIONS OF ASIAN PAINTS

NAME ROLL NO

SONAM GUPTA 56

(GROUP LEADER)

DEEPA BALWANI 12

PRITI HATTE 61

SHRUTIKA BORHADE 19

UJWALA BADHE 11ROHAN BHAT 16

RITESH NAGDA 98

ROHIT KAMBLE 78

MAHENDRA DAWKHAR 29

SHARAD DAWKHAR 30

TYBMS

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ACKNOWLEDGEMENT

Every work accomplished is in a sense, a feeling ofsatisfaction. We are thankful to ARVIND SIR AND DINESHSIR for giving us such an interesting topic through which we hadacquired such valuable information on the Logistical functions ofAsian Paints.

I would like to thank my seniors without whose support the taskcannot be accomplished and to the group members for theirsupport and co-operation . We are now aware of the variouslogistical functions of Asian Paints and is all because of ARVIND

SIR AND DINESH SIR .

We had tried to deliver our best and hope we have done so.

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LOGISTICS

As demand in India is dispersed and spread over a wide geographical area, Asian Paints strategy to focuson building an extensive distribution (nearly 15,000 retail outlets) and logistics management network has

paid it rich dividends. As a result of its wider reach and better logistics management, it has been able tomarket brands aggressively, thereby outperforming the industry year after year

In this rapidly changing Business Environment, what gives companies like Asian Paints the CompetitiveAdvantage...The answer is LOGISTICS. We can actually compare logistics to the most precious elementon this planet WATER. Its the ability of water to reach and occupy all available space and quench thirst,similarly its the ability of logistics to reach wherever the consumer demand exists.

Logistics is a process of planning, implementing and controlling efficient and cost-effective flow of materials and information from point of origin to point of consumption. Hence, Logistics is nothing butthe process of strategically managing the movement and storage of materials, parts, and finishedinventory from suppliers, between enterprise facilities and customers.

Typically 10-15% of a companys turnover is spent on logistics, depending on the nature of product andthe distribution pattern adopted.

Having exhausted all options in the areas of product differentiation, pricing, promotional strategies andadvertising warfare, corporations are increasingly turning to logistics. Hence efficient management of logistics is critical for the profitability of any company. To gain a competitive advantage over itscompetitors, a company needs to be flexible and adaptable to the market demand. In this changingscenario the following are the needs of the hour:

The company needs to reach the customer at the right time ensuring the availability of the product onshop shelves

This calls for reduction in lead time, operating costs and inventory levels

And Improved asset productivity to leverage core competency

Modern business concepts advocate "let experts do the job". A paradigm shift could be towards partneringwith the professional in the field, which will positively impact the bottom-line. This can definitely beachieved through Outsourcing.

Outsourcing logistics is the new weapon in the corporate arsenal. It is an easy access to World-ClassLogistics capabilities and better control over the distribution system through an external agency offeringspecified services, which could be constantly improved upon.

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PAINT INDUSTRY

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INTRO DUCTION

Asian Paints is India's largest paint company and ranks among the top ten decorative coatings companiesin the world today, with a turnover of Rs.30.2 billion (USD 680 million). It was formed as a partnershipfirm by four friends in 1942. The company has an enviable reputation in the corporate world for

professionalism, fast track growth, and building shareholder equity. Asian Paints is headed by Mr. AshwinDani, Vice President and Managing Director.

Following are few of the famous products of Asian Paints

Apex Weatherproof Exterior Emulsion Premium Emulsion Apcolite Premium Satin Enamel Utsav Royal Tractor emulsion

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INTERNATIONAL OPERATIONS

Asian Paints operates in 22 countries across the world and has 30 paint manufacturing facilities that serve

consumers in more than 65 countries with a combined total manufacturing capacity of around 370 million

liters per annum and 2,700 employees. It has manufacturing facilities in each of these countries and is the

largest paint company in ten overseas markets. Asian Paints operates in five regions across the world viz.

South Asia, South East Asia, South Pacific, Middle East and Caribbean region through the five corporate

brands viz. Asian Paints, Berger International, SCIB Paints, Apco Coatings and Taubmans. In ten

markets, it operates through its subsidiary, Berger International Limited; in Egypt through SCIB Paints; in

five markets in the South Pacific it operates through Apco Coatings and in Fiji and Samoa it also operates

through Taubmans.The countries that Asian Paints has presence are as follows:

South Asia : Bangladesh, Nepal, and Sri Lanka

South East Asia : China, Malaysia, Myanmar, Singapore and Thailand

Caribbean Islands : Barbados, Jamaica, Trinidad and Tobago

Middle East : Bahrain, Egypt, Oman and United Arab Emirates

South Pacific : Australia, Fiji, Solomon Islands, Samoa Islands, Tonga and

Vanuatu

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RAW MATERIAL

The paint industry is raw material intensive. It takes around 300 different raw materials to make paint,

most of which are petroleum based. The raw materials are of a wide variety. On an average, raw materialsaccount for 60% of net sales (industry average). In case of small-scale units it forms up to 70% of the netsales.

These raw materials can be divided into three broad categories as shown in the chart below:

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Asian Paints require two types of raw materials Powder and Liquid. Pigments, Binders and Additives areincluded under the Powder category and Solvents and other Petroleum based products are included in theLiquid category.

The powder raw materials are stored in Jumbo bags of 25 kg/ 50 kg/ 500 kg; whereas liquid raw materialsare stored in big containers and can be stored for 7 days.

Around 300 raw materials are required by the industry and all raw materials are not directly related to

crude oil. The basket of raw materials is quite exhaustive. Raw materials, which constitutes around 60 per cent of total cost for the paints industry is an important factor for maintaining operating margins. Theindustry imports around 25 per cent of raw materials. But the most important raw material is titaniumdioxide, which accounts for around 30% of total manufacturing costs.

Besides TiO 2, there are other petroleum based raw materials which constitute around 40-50% of total rawmaterial consumed. Hence any movement in crude oil prices will impact the profitability of the company.

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SOME LOGISTIC FUNCTION OF ASIAN PAINTS(a) Order processing:

Most paint companies are hit by the fact that they do not make the raw materials themselves. For example, phthalic anhydride (PAN) is manufactured from orthoxylene and which goes into the productionof paints along with titanium dioxide. Asian Paints is the only paint company that manufactures PAN. Theother paint companies have to import their stock. Since PAN prices generally outpace internationalorthoxylene prices by almost 50% paint companies end up paying a fortune when prices rise. In such asituation Asian Paints benefits by selling PAN in the open market.

(b) Transportation Management

The company has outsourced its transport management to Dynamic Logistic Pvt. Ltd .

(c) Inventory Management

The company prefers to maintain low inventory levels due to having large no. of suppliers at bay. APsaverage inventory level equals only 14 days sales, while the industry average is 51 days sales. This rightaway provides a 45% edge in inventory costs to AP compared to its competitors. The company has 350raw material and intermediate and goods suppliers.

(d) Warehousing

The company does not own warehouses instead they have 90 depots scattered all over the India which areon lease basis.

(f) Packaging

The company has 140 packing material vendors.

(g) Plants

The company currently has 5 paint manufacturing plants in India. It manufactures and markets more than

2,800 items of paints (SKU). The current paint plants of the company in the country are located atBhandup (Maharashtra) established in 1955, Ankleshwar (Gujarat) established in 1981, Patancheru(Andhra Pradesh) established in 1985, Kasna (Uttar Pradesh), and Sriperumbudur (Tamil Nadu) with acombined annual production capacity of 3.90 lakh KL.

Sriperumbudur PlantThe capacity of the Sriperumbudur Plant is 100,000 KL per annum spread across 25-30 acres of land. The plant is located in the Sriperumbudur industrial park of the State Industries PromotionCorporation of Tamil Nadu (SIPCOT) on the outskirts of Chennai.

Kasna Plant and Ankleshwar PlantThe Distribution Centres at Kasna Plant and Ankleshwar Plant have been commissioned. The

Kasna Plant is spread across 25 acres of land.

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(h) Acquisition

The acquisition gives Asian Paints a foothold in an emerging market and also opens the possibility of exporting to neighbouring countries. Asian Paints has already made its presence felt in the emergingmarkets after its acquisitions in Singapore (Berger International) and Egypt (SCIB Chemicals SAE).

These acquisitions immediately give access to both emerging markets and those in which Berger International has a strong presence. In the industrial coating segment, the company acquired HawcoplastChemicals in November 2001 for Rs 22 crore, which provided it with a presence in the growing powder coating segment.

(i) SubcontractingThe company has around 28 subcontractors that manufacture various product lines.

(j) VendorsAsian Paints manages more than 800 vendors that supply around 15,000 materials that are used tomanufacture around 17,000 SKUs in various categories.

(k) Research and Development

The company has 140 R & D teams around the world, 7 decorators, 115 scientists

(l) Retail Outlets or Dealers

The company supplies to more than 22,000 retail outlets or dealers and 65 sales offices in India through90 depots as opposed to 12000 to their nearest competitor. Over 35% of the dealers do business only withAPIL. It has 90 offices in India and 30 situated all across the country.

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SOME OF THE DEALERS OF ASIAN PAINTSAlwell and company authorized dealers of Nerolac Paints in Pune.Maharashtra Pune

Kamal Hardware : Authorised Dealer Asian PaintsUttaranchal Dehradun

Dharmaraj hardwareTamil Nadu Coimbatore

Annai Hardwares & Paints - Whole Sale MerchantTamil Nadu Tuticorin

Mayur Paints & Hardware Shop in MalakpetAndhra Pradesh Hyderabad

Suman Hardware & Paints in Deals in home furnishing, BangaloreKarnataka Bangalore

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THIRD PARTY LOGISTICS

MJ Logistic Services Limited

It provides warehousing facility of 5,00,000 square feet to Asian Paints.

LALIJI MULJI TRANSPORT CO CLIENTS

It has 180 branches within India and provides over 3 lakh sq.ft Warehousing &Storage facility and Handling of over 4 lac tonnes of cargo p.a. to Asian Paints.

T AMBOUR LTD

Tambour Ltd. is an Israel-based paint manufacturer. The Company operates fivefactories throughout Israel. It manages the production, imports and marketing of decorative paints, industrial paints and marine paints. In addition, the Companyoffers accompanying products, such as coating materials, filling materials, diluters,adherents and decorative tiles. The Company's Acco warehouse covers an area of 12,000 square meters, contains around 3,000 different kinds of paint and distributesover 85 million litters of paint per year.

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Waste Minimisation, Recycling and Reuse

APIL has identified a total of 78 types of wastes from paint manufacturing facilities, out of which 18 arehazardous as per HW Amendment Rules, 2000.

Given below is the approach to waste minimisation adopted by APIL. (Options are not given in order of preference)

a. Recycling a potential waste or portion of it 'on site' where it is generated

b. Improving process technology and equipment that alter the primary sources of wastegeneration

c. Improving plant operations, such as housekeeping, materials handling, equipmentmaintenance, automating process and packing equipment

d. Redesigning or reformulating products

e. Conducting waste audits and monitoring and tracking of waste generation

The companys efforts have resulted into almost no wastage during production. There is almost nodamages during transportation also.

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THE SUPPLY CHAINAsian Paints has harnessed the powers of state-of-the-art supply chain system using cutting edgetechnology to integrate all its plants, regional distribution centres, outside processing centres and

branches in India. Eight of the company's paints plants in India, 2 chemical plants, 18 processing centres,

350 raw material and intermediate goods suppliers, 140 packing material vendors, 6 regional distributioncentres, 72 depots are integrated.

The supply chain runs through a wide spectrum of functions right from materials planning to procurementto primary distribution. It has played a pivotal role in improving operational efficiencies and creatingagile procurement, production and delivery systems. It has also enhanced the flexibility of operations,lowered output time and reduced delivery costs, while improving customer-servicing levels and

profitability.

The Supply Chain Management is backed by IT efforts that help the company in demand forecasting,deriving optimal plant, depot and SKU combinations, streamlining vendor relationships, reducing

procurement costs, and scheduling production processes for individual factories.

Upgraded i2 Solutions to Improve its Supply Chain Planning Capabilitiesi2 planning solutions provide Asian Paints improved demand forecasting for approximately 1,600 SKUsand allows the business to simultaneously plan for procurement, production, distribution and inventoryacross its entire supply chain including manufacturing locations, warehouses, distribution centers anddepots. i2 solutions are helping Asian Paints manage the following business processes:

-- 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 anddemand forecast. It also makes pre-season, pre-build planning process repeatable, consistent and logicalwhile eliminating non-value added activities.

-- Material Planning: Given the high number of raw materials and vendors, optimized material planningis a key requirement for Asian Paints. i2 Supply Chain Planner connects across multiple factory planninginstances, 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 consistencyof the decision making process.

-- Distribution Planning: The demand patterns experienced by Asian Paints are typically highly skewedtowards the last week of a month. This requires flexible distribution planning to cater to frequent changesto 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-outssimultaneously.

The i2 SCM engine will link all the vendors and suppliers, thus helping the company in assessing thestock of their vendors and suppliers at any given time.

Additionally, Microsoft Dynamics NAV 4.0, formerly Microsoft Business SolutionsNavison, offereda 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

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used by its individual subsidiaries or divisions (the spokes). It was decided: While the parent companywas running SAP, the subsidiaries would be standardized on Microsoft Dynamics NAV.

Benefits

The hub-and-spoke model has enabled Asian Paints subsidiaries to interact with the parentorganization easily and effectively, removing the need for generating multiple reports.Reduces IT AdministrationNo More Double Reporting

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ASIAN PAINTS : 'We plan to have customized colors for consumers'

Manish Choksi, chief, Corporate Strategy, and CIO, Asian Paints joined the paints major in 1992. He is amember of the Management Board of the Asian Paints Group responsible for new business, corporate

planning, and information technology across the Group. He has seen his company through successfulERP and SCM initiatives, and spearheaded adoption of new information technology solutions across the

extended enterprise. In a chat with VOICE&DATA, he talks about his company's foray into services suchas painting, dcor, home improvement solutions as well as new initiatives. Excerpts

Which new technologies will be deployed by Asian Paints to reduce cost and increaseemployee productivity?At Asian Paints, we always make sure the technology that we implement is cost effective and increasesemployee productivity. We have deployed SAP R3, i2 supply chain planning suite, ERM employee

platform formula management, product lifestyle platform, and so on. It is very essential for adopting newtechnologies, since IT is an enabler to service retailers. Also, the supply chain effectiveness has helped tocapture more of the enterprise platform. The i2 software, which was deployed nearly in 2001, has helped

to increase productivity from 3 tons to 8 tons.How is telecom making business more competitive?Considering today's competitive scenario, it is essential that organizations have the best technology in

place to ensure good results. We at Asian Paints deploy technology that connects the entire field-forceacross all our branches in the country as well as globally. To ensure connectivity we have providedlaptops and PDAs in the retail sales force areas. Laptops with data cards are a key driver for enterprises.We have implemented VSAT, which is an early adopter in far-flung locations.

ManishChoksichief,Corporat

eStrategy,and CIO,AsianPaints

Asian Paints has about ninety offices in India and thirty globally. How are they connected?Typically, all the offices are connected through MPLS, VSAT, and radio, but the preferred medium islandline. Ninety percent of our offices have MPLS and we use radio strategically where last mile

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connectivity is required. We have VSATs for our operations in rural areas and there is a back up of twoVSATs in every location of operations.

How does the IT function ensure consistent service across all channels?We have a properly planned process, which ensures accurate execution of sales, marketing, and delivery.We also evaluate how IT can be effective, and our philosophies are far more flexible.

What vendor management strategies do you follow?Our biggest requirement is that we expect our vendors to be competent enough to be able to forge a long-term partnership. We do not look for a vendor for a short period of time. All our partnerships-large

platform applications such as SAP, i2, and so on-have been long-term. While selecting a vendor, we spenda lot of time understanding their roadmap, their fit with our strategies, their fit with our IT architecture,and so on. After a careful selection, we make sure that we implement the technology efficiently. The

process does not stop here, we make sure that the future roadmap is in our interest and it has thecapability to take us forward.

In some cases we have looked at the best-of-breed, especially in areas where we have been laggards, interms of utilization and maturity. In such cases, we tend to partner vendors who have the requiredcapabilities, so that we have some kind of synergy and cost benefits. For that, we have created IT and thesupport infrastructure.

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STRENGTH OF ASIAN PAINTS AS COMPARED TO COMPETITORS

Large sales network Asian Paints have their own sales depotsAsian Paints supply directly to retailers that reduces the cost of paints to itscustomers.They manufacture their raw material named PAN whose price rises often and they

benefit by selling it in open market.Asian Paints average inventory level is 14 days and hence it provides a 45% edge ininventory costs.Over 35% of the dealers do business only with Asian Paints.

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CONCLUSIONIn spite of difficult conditions, Asian Paints has done well. The company currently has a 45 per cent share

of the decorative segment of the organised sector paint industry. They want this to grow to 60 per cent inthe next seven years. Two thirds of this expansion should come organically and a third from acquisitions.That's how they can achieve growth that's higher than the industry average.

In the paint industry, they have to go by alliances as it is observed that domestic companies virtually rulethe roost. For example, Shervin Williams, the largest American company, has no place outside the US.

In house paints, technology does not play a major role. It is governed more by distribution efficienciesand marketing logistics. That is where the core competence of Asian Paints lies.

The paint industry the world over is undergoing consolidation. Change is the operative word here. It is afact that large paint companies are growing at a much faster pace. They are virtually dominating thescene. Nearly three fourths of the American paint market is shared by the 10 largest paint companies. InEurope, the big companies have a 35 per cent share and in Asia the big firms control 26 per cent.

In India too, the scene is much the same. Of the seven major paint companies, one has gone out of business and two are weak. So, the major players like Asian Paints are expected to consolidate their positions and increase their market shares in the coming future.

C OMMENTS

1. The warehousing facilities are well maintained.

2. The company specially looks after the environmental aspects and tries to avoid pollution and pollutants by adapting eco friendly production methods.

3. The company keeps low inventories in off seasons, and high inventory in festival seasons.

4. The company has huge base of raw material suppliers, giving company bargaining power resulting inhigher profit margins than competitors.

5. The company has succeeded in establishing themselves in rural parts of India by large distributionnetwork, retail outlets etc.

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6. Asian Paints has around 1,600 stock-keeping units (SKU; one SKU would mean a product of a particular pack and shade), of which around 300-350 are fast moving with extremely high liquidity at thecounter. This puts great pressure on the demand forecasting and inventory management functions of thecompany.

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S UGGESTIONS

1. As seen above the companys raw material price is directly related to crude oil prices, keeping this in

mind the company should try to keep optimum level of raw material to avoid breakdowns in productionfunction.

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BIBLIOGRAPHY

Primary Data: Asian Paints employee Ms. Divya.

www.google.com

www.asianpaints.com

www.deadpresident.blogspot.com

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http://www.google.com/http://www.asianpaints.com/http://www.deadpresident.blogspot.com/http://www.asianpaints.com/http://www.deadpresident.blogspot.com/http://www.google.com/

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