Distribution Model at Asian Paints
Asian Paints has harnessed the powers of state-of-the-art supply chain system using cutting edge technology 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 distribution centres, 74 depots are integrated. Asian Paints always make sure the technology it implements is cost effective and increases employee productivity. It has deployed SAP R3, i2 supply chain planning suite, ERM employee platform formula management, product lifestyle platform, and so on. It’s very essential to adopt new technologies, since IT is an enabler to service retailers. Also, the supply chain effectiveness has helped to capture 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. 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 %.
Asian Pain produces PAN and PENTA (35 % of production costs). Competitors are importing these parts till now. Benefits of 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.
Asian Paints Distribution Strategy
• AP bypassed the bulk buyer segment and went to individual consumers of paints.
• then went slow on urban areas and concentrated on semi-urban and rural areas.
• then went retail.
• finally went in for an open-door...