supply chain management

5/21/2018 Supply Chain Management

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Supply Chain Management in the

Paint Industry

A PROJECT REPORT

Under the guidance Of

MR. AMIT ZUTSHI

Submitted by

SEEMA SHARMA

in partial fulfillment of the requirement

for the award of the degree

Of

MBA

IN

Marketing


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Advance Learning Systems, 02882

A!"8 Sect#r $%

N#ida, U.&. 20!%0'

A Project Reporton

Supply Chain Management in the

Paint Industry

BY

SEEMA SHARMA

Executive Summary submitted in partial fulfillment of the requirements for thedegree of

Master of Business Administrationof Sikkim Manipal niversity! "#$"A


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Project Title:

Supply Chain Management in the Paint Industry

Organizations identified for the study:

(Berger Paints India Ltd)

(Asian paints India Ltd)


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EXECUTIVE SUMMARY

Supply Chain Management is an area that is used as a

differentiating factor for a lot of companies. Every company in the

world have either improved the Supply Chain Management or are

looking forward to give proper concentration to it. This project will

take a look at the supply chain management of the Paint Industry.

In view of the same the companies which are been covered are

primarily the biggest 2 companies in India. As being No.1 in Delhi,Berger Paints India Ltd and the follower Asian Paints India Ltd.

The study has only been focused towards the working of these

companies in the National capital region of Delhi. The research has

mainly covered information sourced from some company officials;

covering at least 3 levels of officials, and covered 24 sales officers

of 3 companies (Berger Paints, Asian Paints and ICI paints also for

a better idea of the industry), then onwards there are ASMs of allthe three companies and RSMs of only the two focal companies.

After covering the company persons, the next step was to cover, as

many dealers as I can, but due to the time constrain the number

of dealers, which were been covered, were restricted to only 38.

With the discussions to the company persons and the dealers I

was able to gain knowledge that the paint trade in Delhi isprimarily working on 2 things. One is rebates and the other is

credit period. On the basis of both the things the market runs.


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In the Project Report I have first explained about the basic concept

of supply chain management. After the same I have explained

about the Indian Paint Industry. Paint trade in India is organized

only to the level of 60% and rest is all un-organized. The

unorganized sector in the Paint Industry is very scattered; Delhi in

all has almost 550 Local vendors. Thus the competition and

usefulness of SCM goes deeper.

After understanding the need then the Report moves to various

areas of the SCM and see how are all these things managed in

Paint Industry as a whole and wherever possible about the two

companies differently.

The second chapter covers the areas of Logistics; logistics, which is

the backbone of any SCM, is covered with various areas. It has

areas like inventory management, order processing, network

planning and many more. In this chapter all the functions are

explained individually and also been accompanied with the painttrade for that particular segment only.

Moving further to the areas where the heart of any company exists,

the financial aspects, this chapter explains about the relevance of

finance to SCM and SCM to finance. How well the combination of

the two is working together for the Paint Industry.

The further chapter moves towards the forecasting methods andthe importance of forecasting. It shows that how difficult is it to

forecast in the paint industry.


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This is followed by the relationship chapter, this chapter talks

about the customer satisfaction and the inter firm relations. This

chapter explains both the things differently and explains how

Asian is trying to take an additional advantage by giving special

kind of services and trying to gain customers goodwill.

Role of sales and marketing in the working of SCM is the next

chapter. This chapter tells us about the importance of human

touch in the technical process. This chapter shows that if there is

no proper human involvement then the whole process might go for

a toss. Thus to have a perfect person at perfect place is as

importance as to have the right market share.

In the next chapter there is discussion about the machine which

has changed the working of the Paint industry. This machine has

made the SCM in the Paint Industry some effective.

Further moving to the final chapter we will talk about the future ofthe paint industry and what all changes are going to hit the paint

market and what all effect will be there from the changes.


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TABLE OF CONTENTS

1.BERGER PAINT INDUSTRYS PROFILE

-ABOUT BERGER PAINTS INDIA

-ABOUT BERGER PAINTS PAKISTAN

-BERGER'S MISSION STATEMENT

-BERGER'S PRODUCTS

-COMPANYS PLAN


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-DEMAND TREND OF BERGER PAINT INDUSTRY

-MANUFACTURING PROCESS

2.ASIAN PAINT INDUSTRYS PROFILE

-HISTORY OF ASIAN PAINT INDUSTRY

-INTERNATIONAL OPERATIONS

-ASIAN PAINTS PRODUCTS

4.SUPPLY CHAIN MANAGEMENT

5.SUPPLY CHAIN MANAGEMENT OF THE PAINT INDUSTRY

-EMULSIONS AND ENAMELS OF BERGER PAINTS.

6. A GLIMPS ON THE INPUT SIDE OF THE PAINT INDUSTRY (RAW

MATERIALS)

- LOGISTICS MANAGEMENT

-ORDER PROCESSING

-INVENTORY MANAGEMENT

-TRANSPORTATION

-LOCATION MANAGEMENT AND NETWORK PLANNING


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7.CUSTOMER SATISFACTION

8. ROLE OF SALES IN SUPPLY CHAIN MANAGEMENT

9. ROLE OF MARKETING IN SUPPLY CHAIN MANAGEMENT

10.FUTURE TRENDS IN THE INDIAN PAINT MARKET

11.CONCLUSION

12.BIBLIOGRAPHY

THE TITLE OF THE Project Report


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Study of Supply Chain Management in the Paint Industry

OBJECTIVES OF THE STUDY

The objective here is to get an overview of Supply Chain

Management and to know how this concept works in the Paints

Industry, The various steps the companies take to improve the

supply chain management and how successful are they.

Primary objective:

To understand the Supply Chain Management followed at PaintIndustry. To find out the gaps left while implementing Supply

Chain Management in various companies under the paint

industry. Finally to find out the solutions for those Gaps.

Secondary objective:

To study the various areas of Supply Chain Management in

Paint Industry.

How they manage Supply Chain.

Whether they are able to get the maximum out of the Supply

Chain Management and make the highest benefit of it.


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RESEARCH METHODOLOGY:

Methodology of the study will be an exploratory research. The

nature of the study is such that it needs to have both the

secondary research as well as the primary one. The Secondary

research will help to gain more and more information about the

companies and the usage of Supply Chain Management in them.

The primary research will make me understand the realities of the

market.

I.INFORMATION SOURCES:

Primary Sources:

The following sources have been identified to provide primary

information regarding the supply chain management of the

organizations under study:

Employees of the organization in the concerned departments

through

o General Discussions

Business Associates/ Wholesalers/ Stockiest/ Dealers/ Sub-

Stockiest/ Other intermediaries of the Organizations Sales

and Distribution network

Any other individual having association with the organization.

The focus during the research would be towards meeting more and

more channel members of the company not only facilitate our


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primary research but in the process collecting authentic data and

verifying the same.

Secondary Sources:

The following sources have been identified to provide

secondary information about the organizations under study:

Literature on sales and marketing

o Research publications

o Books by Renowned authors

o Business magazines and journals

The Internet

II.DATA COLLECTION TOOLS:

Though there are numerous tools available for Data Collection, we

have identified the following tools to be used for the purpose

during the course of the project:

Group discussions

Personal Interviews


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BERGER PAINT INDUSTRYS PROFILE:

Berger Paints India Limited (Berger Paints) has selected Oracle

Applications to manage its operations across nine manufacturing

units and its 10,000strong dealer network across India. Berger


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Paints will also use Oracle Applications to support its future

growth. With the help of Oracle Applications, Berger Paints expects

to reduce product development cycle time and introduce new

products faster into the market, in line with the companys goal to

keep pace with changing customer preferences.

Oracle has proven itself to be a single vendor with a complete

stack of products to address the applications, middleware and

database requirements of Berger Paints India, said

Mr.Subir Bose,Managing director, Berger Paints. We chose

Oracle Applications as it fit our IT needs to support the companys

growth plan and vision.

Oracles expertise in process manufacturing and business

analytics was another deciding factor for us to choose Oracle

Applications. It will help us identify trends in customer preferences

and design products to meet changing customer taste, Mr. Bose

added.

With Oracle Applications, Berger Paints can track market

dynamics and meet market and customer requirements faster and

more efficiently, said Subhomoy Sengupta, senior director,

Applications Sales, Oracle India.


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Berger Paints will use Oracle Applications modules including

Advanced Supply Chain Planning, Trade Management, Process

Manufacturing, Procurement, Financials, Order Management,

Logistics and Human Resources Management. With Oracle

Applications, Berger Paint aims to streamline its supply chain,

optimize inventory utilization, track effectiveness of sales

promotions and enhance customer service by using Oracle

Applications.

About Berger Paints India:

Berger Paints India Limited was established in the year 1923 and

is one of the largest paint companies in India, offering paints for all

purposes decorative, automotive and industrial and protective.

Apart from that it offers painting solutions such as Lewis Berger

Home Painting making wall painting a delightful experience for

consumers and Prolinks for paints professionals. The Company,

its associates and subsidiaries have 9 factories in India and

facilities abroad. It operates more than 80 depots in India in


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almost all the States and its trade name Lewis Berger carries the

hallmark of its colorful lineage, tradition and signature quality.

About Berger Paints Pakistan:

The name of Berger has been associated with paints

manufacturing for more than two centuries. in Pakistan, Berger

has been the pioneer in organized paint manufacturing and was

the first company to introduce premium quality paints in Pakistan,

Berger stated its operation in Pakistan in 1950.

Berger paints Pakistan becomes a public limited company in 1974,

when 49.38% of its share was acquired by Pakistani investors,

while the remaining 50.62% were held by the U.K parent company,

Jenson & Nicholson limited. Soon afterwards, Jenson & Nicholson

limited was taken over by Hoechst, one of the worlds major

manufacturers of chemicals and allied products.

Slotrapid limited, a U.K based company with diversified business

interests, acquired the control of Berger paints Pakistan limited in

1991.

Berger paints launched its second paint manufacturing facility in

2006 located in Lahore, this is a state-of-the-art plant geared to

incorporate the latest technologies to produce paints and coatings

for a variety of applications.

BERGER'S MISSION STATEMENT:


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1. We will vigorously promote and safeguard the interests of our

employees, our shareholders, our suppliers and all our others

business associates.

2. We will achieve corporate success through an unwavering

commitment to provide our customers high quality products to

their ultimate satisfaction.

BERGER'S PRODUCTS:


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1.Acid Catalysed Wood Coatings:

Bergers acid catalyzed coatings are suitable for a wide variety of applications

and are available in a range of solid contents, allowing flexibility to achieve the

solvent emissions directive legislation.

For advice on meeting

2.Hydroshield Exterior Wood Coatings:

:

Developed in Europe by our team of specialist chemists to withstand one of

the worlds harshest climates, Becker Acromas HydroShield range of high

performance water-based exterior joinery coatings offers long-lasting, high

quality results every time.


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3.Nitro-Cellulose Pre-Cat !ood Coatings"

Bergers nitro-cellulose and precatalysed products offer a range of solutions

for your end use applications.

For advice on meeting VOC legislation or further guidance on products and

application, talk to Becker Acroma or your local distributor.

#$ Pol%urethane !ood Coatings"

Bergers polyurethane products meet the latest regulations .

&$U'-Curing !ood Coatings"


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UV curing products cure almost instantly, produce exceptionally durable

surfaces and have excellent stacking qualities. They are also safer to handle

than conventional solutions when handled correctly.

$.(ater)ased (##d *#atings+

For years Becker Acroma has been leading research and

development in the area of waterborne lacquers and paints - driven

by our concern for the environment.

Companys Plan:

Firstly the companys plan includes sales forecast followed by the

planning of material

Procurement and planning for other processes.

Basically Forecasting is done for different products based on two

bases as follow:

a. Quarterly basis:On quarterly basis the sales forecast is done

one quarter earlier. Suppose if they need the required target in

August they do the sales forecast two quarters earlier in between

January and March.

b. Monthly basis:On monthly basis the sales forecast is done

one month before, they check the inventory if there is sufficient


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amount of stock available in that than they are meeting with the

forecast requirements, but in case if there is a shortage in

inventory they increased their production till the time they meet to

their required target.

Demand Trend of Berger paint industry:

High Demand

Months:

-October, November, December, January , June, July.

Reason:

-Due to marriage Season, E-id season and Diwali and other festival

season.

Low Demand

Months:

February, March, April, August, September

Manufacturing process:

1 Acquisition of material:

The procurement department controls store and it is issued as per the

production schedule.


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2 Charging:

In this process the raw material is put in to machines in different batch sizes.

Minimum of two hundred and onwards.

3 Grinding:

Here the solid raw material is put in to grinder in order to make a paste of

that to mix it in liquid raw material.

4 Mixing:

This is the last process of manufacturing, theyre liquid and paste and other

material like bonging, gloss, and base is added.

5 Quality check:

Quality of the product is checked in all terms it include color, shine , base ,

drying time.

6 Filing:

After the paint is cleared by the quality control then it is filled. Order of tins

provide at the same time when production schedule is made.

7 Storage:

In last the tins of the paint is stored in the warehouse located in the factory.


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ASIAN PAINT INDUSTRYS PROFILE:

Type PublicBSE:500820

Industry Paint

Headquarters Mumbai,India

Revene Rs6,680.94 Crore (US!.4"

#illion$
http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=500820http://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/File:Asian_Paints_Logo.svghttp://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=500820http://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/United_States_dollar


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&r#-it Rs.!,"%6.09 Crore (US"6&.%%

million$

(esite '''.asianpaints.com

Asian PaintsBSE:500820is India's largest paint company based

inMumbai.It operates in 21 countries and has 29 paint

manufacturing facilities in the world servicing consumers in over

65 countries. Besides Asian Paints, the group operates around the

world through its subsidiaries Berger International Limited, Apco

Coatings, SCIB Paints and Taubmans..

History of Asian Paint Industry:

The company has come a long way since its small beginnings in

1942. Four friends who were willing to take on the world's biggest,

most famous paint companies operating in India

at that time set it up as a partnership firm. Its started in

Kapadwanj in the Kheda district in the state of Gujarat as a

collection of small plants. Over the course of 25 years Asian Paints

has became a corporate force and India's leading paints company.

Driven by its strong consumer-focus and innovative spirit, the

company has been the market leader in paints since 1968. Today it

is double the size of any other paint company in India. Asian

Paints manufactures a wide range of paints for Decorative and

Industrial use.

Vertical integration has seen it diversify into products such

asPhthalic Anhydrideand Pentaerythritol, which are used in the

paint manufacturing process. Asian Paints along with PPG Inc,
http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Websitehttp://www.asianpaints.com/http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=500820http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Phthalic_anhydridehttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Indian_rupeehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/Websitehttp://www.asianpaints.com/http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=500820http://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Phthalic_anhydride


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USA, one of the largest automotive coatings manufacturer in the

world has begun a 50:50 joint venture, Asian PPG Industries to

service the increasing requirements of the Indian automotive

coatings market. Another wholly owned subsidiary, Asian Paints

Industrial Coatings Limited has been set up to cater to the powder

coatings market which is one of the fastest growing segments in

the industrial coatings market. This wholly owned subsidiary of

Asian Paints has entered into a tie-up with Canada-basedProtech

Chemicalswhich is one of the top ten powder coatings companies

in the world for technological know-how in the area of powder

coatings.

International Operations:

Asian Paints operates in 22 countries across the world. 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,Southeast

Asia,South Pacific,Middle Eastand Caribbean region through thefive corporate brands viz. Asian Paints, Berger International, SCIB

Paints, Apco Coatings and Taubmans. In ten markets, it operates

through its subsidiary, Berger International Limited;

inEgyptthrough 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, andSri Lanka

South East Asia :China,Malaysia,SingaporeandThailand

Caribbean Islands :Barbados,Jamaica,Trinidad and Tobago
http://en.wikipedia.org/w/index.php?title=Protech_Chemicals&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Protech_Chemicals&action=edit&redlink=1http://en.wikipedia.org/wiki/South_Asiahttp://en.wikipedia.org/wiki/Southeast_Asiahttp://en.wikipedia.org/wiki/Southeast_Asiahttp://en.wikipedia.org/wiki/Oceaniahttp://en.wikipedia.org/wiki/Middle_Easthttp://en.wikipedia.org/wiki/Egypthttp://en.wikipedia.org/wiki/Bangladeshhttp://en.wikipedia.org/wiki/Nepalhttp://en.wikipedia.org/wiki/Sri_Lankahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Malaysiahttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Thailandhttp://en.wikipedia.org/wiki/Barbadoshttp://en.wikipedia.org/wiki/Jamaicahttp://en.wikipedia.org/wiki/Trinidad_and_Tobagohttp://en.wikipedia.org/w/index.php?title=Protech_Chemicals&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Protech_Chemicals&action=edit&redlink=1http://en.wikipedia.org/wiki/South_Asiahttp://en.wikipedia.org/wiki/Southeast_Asiahttp://en.wikipedia.org/wiki/Southeast_Asiahttp://en.wikipedia.org/wiki/Oceaniahttp://en.wikipedia.org/wiki/Middle_Easthttp://en.wikipedia.org/wiki/Egypthttp://en.wikipedia.org/wiki/Bangladeshhttp://en.wikipedia.org/wiki/Nepalhttp://en.wikipedia.org/wiki/Sri_Lankahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Malaysiahttp://en.wikipedia.org/wiki/Singaporehttp://en.wikipedia.org/wiki/Thailandhttp://en.wikipedia.org/wiki/Barbadoshttp://en.wikipedia.org/wiki/Jamaicahttp://en.wikipedia.org/wiki/Trinidad_and_Tobago


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Middle East :Bahrain,Egypt,OmanandUnited Arab Emirates

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

Vanuatu

Asian Paints increased cash flow to help fund capacity expansion:

A look at the annual report of Asian Paints Ltd shows that fiscal

2010 was an extraordinary year for the company, not just because

its consolidated net profit doubled, but because its cash generated

from operations rose by 2.4 times to Rs1,063 crore.
http://en.wikipedia.org/wiki/Bahrainhttp://en.wikipedia.org/wiki/Egypthttp://en.wikipedia.org/wiki/Omanhttp://en.wikipedia.org/wiki/United_Arab_Emirateshttp://mintmoney.livemint.com/mark-to-market/2010/06/asian-paints%E2%80%99-increased-cash-flow-to-help-fund-capacity-expansion/http://en.wikipedia.org/wiki/Bahrainhttp://en.wikipedia.org/wiki/Egypthttp://en.wikipedia.org/wiki/Omanhttp://en.wikipedia.org/wiki/United_Arab_Emirateshttp://mintmoney.livemint.com/mark-to-market/2010/06/asian-paints%E2%80%99-increased-cash-flow-to-help-fund-capacity-expansion/


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Asian Paints inventory and debtors both increased during fiscal

2010, but creditors increased much more. The rise in cash flows

came in handy to fund its expansion projects. After around Rs350

crore of capital expenditure in fiscal 2010, it has enough money

left, with around Rs624 crore in investments (mostly liquid) and

Rs105 crore in the bank. Its loans actually declined in a year when

it stepped up capital investments. It also recently announced a

Rs735 crore paints and intermediates project in Maharashtra.

During fiscal 2011, its capex outlay is estimated at Rs250 croreand will remain high for the next few years as the Maharashtra

project is due to start production in fiscal 2013.
http://mintmoney.livemint.com/wp-content/uploads/2010/06/asianpaint.jpg


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sian Paints) e*pansion plans 'ill allo' it to meet gro'ing demand for paints in+house. uring

fiscal "0!0, nearl- one+third of its production 'as outsourced. ased on stand+alone results, its

total paint sales rose #- !6/ in olume terms, 'hile in alue terms, sales rose #- a lo'er rate

of around !%/. 1his ma- #e partl- e*plained #- the compan- passing on e*cise dut- cuts (as

part of the goernment fiscal stimulus pac2age$ and lo'er ra' material prices to customers oreen a shift in product mi*. 1hus, net sales rose #- "0/ due to a lo'er e*cise #urden,

compared 'ith the !%/ increase in gross sales.

Asian &aint/s &r#dcts+

1.Acrylic Wall Putty: 2.Apcolite Premium Gloss Enamel:

3. Apcolite Premium Satin Enamel: 4.Apex Ultima:

5.Asian Paints Apex: 6. Asian Paints Apex Dholpur

Tex:


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7.Asian Paints Pu Exterior Matt: 8. Decoprime Wall Primer:

9.Knifing Paste Filler: 10.Melamyne Glossy:

11.Melamyne Palette Glossy: 12.Premium Semi Gloss

Enamel:


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13.Pu Exterior Glossy: 14.Pu nterior Glossy:

15.Royale Glitter: 16. Royale Play:

17. Royale Play Dune: 18. Utsav Enamel:

19.Wood Primer: 20. Exterior Sealer:


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SUPPLY CHAIN MANAGEMENT

When we think of Supply Chain Management the first thing which

comes to our mind is logistics and movement of the material. We

all have a misconception that Supply Chain Management only

works from the company end to the consumer; it creates a better

platform for the product to reach the market. Before we start

learning about how the supply chain works in the paints industry

let us first learn about what is Supply Chain Management exactly

is and which all areas it covers.


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Supply chain management is the management of supply chain.

Thus to manage a supply chain properly we must first understand

what supply chain is all about. This effort to cover all the areas in

the market is called Supply Chain. Supply Chain is the one that

starts from purchases of raw material of our raw material supplier

and finishes at making the product available to the end customer.

A supply chain is a network of facilities and distribution options

that performs the functions of procurement of materials,

transformation of these materials into intermediate and finishedproducts, and the distribution of these finished products to

customers. Supply chains exist in both service and manufacturing

organizations, although the complexity of the chain may vary

greatly from industry to industry and firm to firm.

A very simple supply chain for a single product, where raw

material is procured from one supplier, transformed into finished

goods in a single step, and then transported to the ultimate

customers.

It is really difficult to explain a supply chain without a particular

industry. It does not end here; supply chain even differs within the

Supplier Customer S&*I1I* *M&AN3

Basic Supply Chain


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industry. Different companies in an industry even have different

kinds of supply chains and they may be managing it in different

manner. To give you a generalized view let us see a part of supply

chain that is generally common in all the companies.

This is just a part of the supply chain. Imagine that this figure has

45-50 Initial suppliers, 10-15 Suppliers who are making the raw

material available to the company. On the other hand if there aresome logistics companies, a number of distributors, a huge

number of dealers dealing with them and a un-countable number

of customers. This all can be accompanied with the Institutional

selling, bulk selling which has different pattern and direct

marketing. With having all this in one diagram I feel that it is

almost impossible to build a diagram that can explain all that.

Over the decades, management of the supply chain has moved

through three distinct phases, from decentralized

3nitialSupplier

CustomerS&*I1I* *M&AN3

A part of SupplyChain

Supplier

ULTIMAT

*USTMR

1hird part-logistics supplier


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(functional/departmental), to centralized (corporate planning and

purchasing), and finally to a combination of both.

Phased Evolution of Supply Chain Management

Phase 1:

Decentralized

(Functional or

Departmental)

Phase 2:

Centralized

(Integrated)

Phase 3:Combination of

bothcentralized and

decentralized

Supply

Chain

Planning

Done in

functional areas

Ineffective

due to limited

information.

Difficult to

implement

Standardization

around the

enterprise.

Shift to a

business

process focus

Increase

in effectiveness

due to

standardization

of information

across the

enterprise

Integrate

d supply chain

planning:

demand

forecasting,

Collaborative

planning

Extension of the

planning process beyond

the enterprise to include

contract manufacturers,

key customers and

suppliers


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planning &

scheduling

Supply

Chain

Execution

Execution is

generally in a

reactive mode

Decisions

often made by

functional

managers and key

Associates

Most of

the decisions

made on an

enterprise wide

area.

Limited

collaboration

The

functional

manager might

not be happy

with the

decisions

made.

Decisions taken at

the most appropriate

level in the organization

Greater proportion

of collaborative, pre-

emptive Decisions


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Phase 1Departmentalized or functional supply chain

management:

Organizational structures from the fifties to the late eighties can be

characterized as a series of functional and geographical areas.

Executive managements attempts at centralized supply chain

planning in such an environment were ineffective due to the lack

of standardization of business information, poor data integrity and

analysis support, disparate technology systems, and incentives

that did not promote sharing of information. Supply chain

execution decisions were made by a core set of managers within

each functional area with minimal thought about repercussions in

other areas. Decisions were reactive and based solely on criteria

that were applicable to the particular functional area.

Phase 2Transformation to integrated supply chain

management:

In the late eighties and early nineties, with the advent of BPR,corporate leaders started seeing the benefits of aligning their

organizations, along with the associated business objectives and

performance incentives for executives, to underlying business

processes. Advances in technology and lower cost of computing


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increased the penetration of enterprise-wide transaction systems

such as ERP systems. Standardized business information and a

coherent set of metrics from different businesses, functional and

geographical areas were now readily available to senior managers.

With the introduction of advanced planning and scheduling

systems, supply chain optimization became a feasible option. This

led to an increase in the effectiveness of increasingly centralized

supply chain planning processes. The planning process was more

integrated and driven by cross-functional teams with an objective

to look at the enterprise as a whole. Leading corporations across

all industries started realizing that to reap the full benefits,

demand forecasting, supply chain planning, and production

scheduling ought to be treated as an integrated business process.

Sales and operations planning programs, where cross-functional

teams periodically meet to determine the best course of action,

became popular.

Phase 3Transformation to value networks:

Today, the Internet is unleashing a powerful phenomenon

collaborationthat is affecting the supply chain. Integrated and

centralized supply chain planning will become even more effective

as the majority of inputs to the planning process will flow bottom-

up through the enterprise, and an increasing portion of it will

originate from the end customer. Pertinent information will be

adjusted and reviewed by relevant players based on new

developments. Demand forecasts will be routinely updated by sales

representatives based on the latest customer information and

eventually by the end customers themselves.


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Let us now see that how is the supply chain management

works in the paint industry. In short we can say that how the

paint trade works.

The Indian paint industry has come a long way from the days

when paints were considered a luxury item. Today the awareness

level on benefits of paints is relatively high and people have started

making paint as a part of their life. India is a favorable proposition

for a lot of trades and a lot of world leaders have already or wants

to start operations in India. Paint industry is one of these

industries, where leaders of the world are looking at companieslike ICI has already entered and companies like Sherwin Williams

also are looking for some entry gateway in India. Factors due to

which these companies are interested in coming to India include:-

The awareness level on benefits of paints is relatively high

and people have started making paint as a part of their life

The low per capita consumption of paints (currently 0.5

kilogram and has a huge potential to grow as per the worldaverage),

Growth in construction sector (it is being offered industry

status) and

Growth in the auto/white goods market respectively spurring

demand for decorative and industrial paints.

The industry has also witnessed increased activity in the

industrial variety of paintswith the entry of MNCs in auto,

consumer durables etc., which has been gaining steadily over

decorative paintsin the last one decade, by having such fast

growth the industrial sector has been able to gain a good


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market share. Right now the market share of industrial paint

is close to 30 % of the paint industry.

This paint industry of India comprises of organized as well asunorganized sector, which can also be called small scale sector.

Approximately 60% of the production is contributed by the

organized sector. The unorganized sector in the paint industry is

having a big number of players running nearly 2000 small-scale

units. We can say that one cannot count the number of players

running in a particular market. This trade is so dynamic that after

every few days one can hear a new name in the market.

With having so many competitors in the market one has to be very

accurate in the market, this is because being a high technical

product one cannot judge the quality of the product at the time of

purchasing. The production of Paints is not a very expensive affair,

which is because we have so many players in the market. Thus to

show the differentiation in the product wither one have towait for afew years or he can give a better service and get the perception about the

quality of the product in the customers mind.

In the organized sector, leading from the front is market

leader Asian Paints which leads the market to the market

share of 54%of the organized sector and over 15000 dealer

networks and it is increasing its network by concentrating in the

semi urban and rural areas for more penetration in the market.

Two very close companies with the name ofNerolac and Berger

are followed Asian Paints, these companies have a market share

of 17% and 16% respectively. After all this fourth in the major


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organized sector isICI Dulex, which is gaining control with a very

fast pace.

The Paints Industry mainly consists ofemulsion paints, enamelpaints, pigments, printing inks, synthetic resins and many

more products.

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 andwhich 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 organized sector companies. As we have already

discussed that the product range of a paint company covers

emulsion paints, enamel paints, pigments, printing inks, syntheticresins and many more products.


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Let me explain this with a example of taking Emulsions and

Enamels of Berger Paints.

Rangoli Super Emulsion

Luxol Silk Emulsion

Paint

EMULTIONS (water-based)

Exterior Wall Finishes

Interior Wall Finishes

ENAMELS (solvent-based)

Synthetic Enamels

for Exteriors & Interiors

Luxol Hi Gloss

Butterfly Enamel

Luxol Luster Finish

Luxol Satin finish

Luxol Rich Mat Enamel

Butterfly Furniture

Enamel

Antisol Roof Enamel

Wood Primer

BPCementPrimer


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BP Cement Primer

Bison Emulsion

Bison Distemper

Jadoo Distemper

Castle Distemper

Weather Coat

WalMasta

Durocem

Jadoocem

Happy Wall Putty

A GLIMPS ON THE INPUT SIDE OF THE PAINT INDUSTRY (Raw

Materials):

The industry is raw-material intensive. Of the 300 odd raw

materials, nearly half of them are imported petroleum products.

Other major raw materials titanium dioxide, phthalic anhydride

and peutarithrithol constitute 50 per cent of the total cost.

Besides, this, there are other raw materials such as castor, linseed

and soybean oils, turpentine and pigments. Majority of the inputs

in paint industry are sourced through big industrial houses and

the raw materials used are standardized across the industry with

limited substitute available and very limited scope for players to

switch suppliers. Materials like titanium dioxide, phthalic

anhydride, peutarithrithol and petroleum products are imported

and they constitute nearly 30 per cent of their raw material

requirements and the raw materials cost sums up to a whopping

70 per cent thus changes in import policies can affect the

industry. For imported petroleum products, any deficit in global oil

reserves affects the bottom-line of the players. Raw materials such


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as castor, linseed and soybean oils, turpentine and pigments are

procured from the local players which are easily available in the

market and thus decreasing the bargaining power of the suppliers.

Further are the expectations of the product in the market which a

company has to fulfill in the market. To be successful in the

market paint should provide number of things. Let us now take

exteriors and study that what all is needed out of an exterior paint.

Qualities of an exterior Paints :

Durability

Finish

Anti-fungal properties

Dirt pick-up resistance

Ease of Application, no curing required

Wide range of shades

Cost


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LOGISTICS MANAGEMENT

Logistics Management is that part of Supply Chain Management

that plans, implements, and controls the efficient, effective forward

and reverse flow and storage of goods, services and related

information between the point of origin and the point of

consumption in order to meet customers' requirements.

Logistics Management activities typically include inbound and

outbound transportation management, fleet management,

warehousing, materials handling, order fulfillment, logistics

network design, inventory management, supply/demand planning,

and management of third party logistics services providers. To

varying degrees, the logistics function also includes sourcing and

procurement, production planning and scheduling, packaging and

assembly, and customer service. It is involved in all levels of

planning and execution strategic, operational and tactical.

Logistics Management is an integrating function, which

coordinates and optimizes all logistics activities, as well as

integrates logistics activities with other functions including

marketing, sales manufacturing, finance and information

technology.

'Logistics' is the process of designing, managing and improving

such supply-chains, which might include purchasing,

manufacturing, storage and, of course, transport. The Modern

business logistics sets out to deliver exactly what the customer


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wants - at the right time, in the right place and at the right price.

Very often transport is a major component of the 'supply-chain'

which delivers to the customer the goods and services needed.

Order Processing

Inventory Management

Transportation

Location management

Network planning

Warehousing

E-commerce

Channel Bonding

All the above areas come together and make the output which is

known as the logistics management.

Order Processing:

As a very old saying is that demand derives the supply of a

product, thus it will not be wrong to say that demand derives the

logistics system, if there is no demand there is no reason of a

logistics system to exist. Time duration that is been used by a

company to complete the order processing is very important for

any company. This time duration is one of the factors to find outthe reaction time for any happenings in the market.

Order processing includes order preparation, order transmittal,

order entry, order filling and order status reporting


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INVENTORY MANAGEMENT:

At the same time where inventory so important to the company it

can even present threat to corporate profitability to the consumer.

The capital that is invested in keeping the inventory can be

invested at any other place and the profits can be made to the

company

Manufacturing entities have inventories for raw products, products

in the production process, and finished products. In addition thereare often warehouses or distribution centers between the different

levels of the supply chain. Inventories are costly. Binding capital in

inventories prevents the company from investing this capital in

projects of higher return. The holing cost inventories are therefore

often set as high as 30 - 40% of the inventory value! In addition it

is desirable to avoid so-calleddead inventory, i.e. inventory that is

left when a product is no longer on the market.

TRANSPORTATION:

Transport remains a major component of most supply-chains.

Certainly limitations of, or restrictions to, transport caused by

congestion, taxation or legislation will drastically affect the design

and operation of supply-chains. Logistics services and other

transport companies need to understand logistics and supply-chain management in order to tailor their services to meet their

customers' needs.


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Transportation is the only area that works at all levels of the

supply chain. It is taken as critical that if a company has good

transportation planning and they can work it out optimally then

the supply chain of the cooperate has a high probability of being

good.

Berger Paintsworks on a format that the factory directly sends

the product to the sales depot, which will sell the products to the

dealers, and it is sold in the market by them.

The structure of Berger can be seen with a diagram:

This is how Berger paints manages to transport the material from

factory to the depot. In this diagram majority of the requirement of

the depot is been fed by factory 1 and factory 2. This is because

the transportation from the factory to the depot is cheapest in

Factory1

Factory 5

Factory 4

Factory2

Factory 3

Factory 7

Factory 6

epot


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comparison to other factories. Thus the cost efficient factory is

providing the material to the depot. Still there are some products

that are not in a very regular demand, thus these products are not

been manufactured in all the factories and is been transported

from the factory that is manufacturing it. This is done to keep the

production cost down.

Asian on the other hand is working the pattern of having Regional

distribution center (RDC) and further having carrying and

forwarding agents (C&F).

Their structure will be

LOCATION MANAGEMENT AND NETWORK PLANNING:

For any company to be good in logistics management it is very

important to have a proper location of their depot and to have

proper location of the dealers they are associated with.

Factory 1

Factory 2Factory 3

C5 gent

R4*

C5 gentC5 gent


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To be located close to the market as a depot and to have dealers in

the proper market is the dream of any company. Every company is

trying hard on working with dealers, who have highest footfall in

their shops. Thus this is one of the most critical areas for any

company. If a company is working with these kinds of dealers then

they can promote their sales in a better manner.

Both the companies have placed their depots very close to the

markets; in a city like Delhi both the companies have 5 depots in

all the areas of Delhi.

As on date Asian is leading in the two, Asian is known for having

most of the retailers working with them and Berger is known for

having most of the distributors in their hands.

The major advantage that Asian is getting out of it is that the

product gets consumed quickly and they again have space in the

market to sell. The turnover rate of Asian is better than Berger in

the market. As Berger paints products goes from the distributorsto the dealers and then to the final customer. Thus the logistics of

Asian Paints is better in the manner that one of the most

important area.

Let us first move to Berger Paints, which have to take care of

all the areas at a depot level. Let us first see that what allrestrictions are there to which a depot manager has to take

care of:


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Credit Limit to a dealer:


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Credit limit are of two kinds one is the credit limit in

term of money or can be said as in Rupees. And

another can be the case as credit limit in days. Both

are very different but have a very close relevance. On

one side credit limit in Rupees. is the amount of

product given to a dealer without paying the amount

for the same. On other hand the limit in days is that

the dealer can pay the amount in x number of days.

There is a limit for every dealer in the companies as

per the working pattern of the company. This is been

decided on the size of the work that a dealer is doing

with the company and the relation that the company

has with the dealer. At both the sides there is a

amount of capital involved in it. Let us understand

this with a example. Let us assume that at a

particular depot there are 200 Dealers working with

the company and every dealer is on an average

working for around 2 Lacks with the company. Thusif the company is giving even one day as credit limit

to all the dealers then the company has to go for an

additional investment for around 4 Cr. So this

explains the importance of having the credit limit in

hand and in control.

Damage Stock:


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Damaged stocks has always been a big problem for

the paint industry as the products are such that the

damages are very common in transit thus one has to

take care that it is been reduced to the minimum

level

Non-moving Stock:

These are those stocks that have not moved from a

long time and are lying at the depot only. As these

stocks are consuming a lot of money in them in the

face of inventory cost, capital, a part of profit which

will be there after sales and many other minor areas.

Material Returns:

Material returns are even more dangerous than

material not sold as this material is also carrying thecost of transportation from the depot to the

customer and return. This material is also needed to

be controlled because these returns generally are

harming the relations with the customers also.

Cheque Returns:


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A stock is consider sold only at that time when the

payment of that stock is received. As with the view to

this line a cheque return is considered to be product

not sold but still is lying at somebody elses place or

even is sold further in the market.

Invoice cancellation:

This is one area which is reducing the credibility in

the market as either the customer doesnt want the

product now are it is because of some fault of the

company. In both the cases the company is losingrelation as well as the sale, which always harms.

Delay in depositing cheques:

A delay in depositing cheques will result to a delay

in clearance. It can be treated as an additional

capital is been delayed to get cleared and is further

not available for investments.

Transportation cost:


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The transportation cost from the depot to the dealers

end is a very crucial part as the order of a dealer

varies from 1 Lts to 10,000 Lts, thus when the

order is less then the transportation also has to be

paid as per the expenses he is bound to get. Thus we

need to take care of the transportation expenses in a

proper manner.

These are some of the most important areas that have to be given a

proper priority so that company doesnt loose some money, which

can be used for further growth of the company. If these areas are

handled in a proper manned then the company can grow at a very

faster rate in comparison to otherwise.

Now when the discussion moves to the market leader, Asian

Paints, then we can see that they dont have to take care of all the

issues they only have to deal with few of them as all other

processes are been outsourced by Asian paints to a local vendor or

to a centralized one. A few of the areas where even Asian has toworry about are

Credit Limit to a dealer

Material Returns

Cheque Returns

Invoice cancellation

Thus from this discussion one thing which is understood is that

with the market leader Asian Paints is making more expenses for


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the processes but still feels that the payment is justified so that

various areas can be controlled in a better manner.

FORECASTING:

Predicting current and future market trends using existing data

and facts. Analysts rely on technical and fundamental statistics to

predict the directions of the economy, stock market and individual

securities.

Sales forecasting is a difficult area of management. Most managers

believe they are good at forecasting. However, forecasts made

usually turn out to be wrong! Even after having such results the

managers are forced to look well ahead in order to plan their

investments, launch new products, and decide when to close or

withdraw products and so on. The sales forecasting process is

critical for most businesses.

Supply chain initiative such as quick response, effective customerresponse, collaborative planning forecasting and replenishment

and vendor managed inventory all of these rely on the forecasting

to help plan and manage operations more effectively.

Let us now move to the Paint industry and understand how is

the forecasting in the particular trade.

As it was been discussed in the first chapter that there are many

products, which are been covered by a company in the paint, trade


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thus it is very important to have an accurate amount of forecast. If

at any level the forecast goes wrong then he might lose either sales

or he has to bear an additional cost for having the stuff available at

the time it is needed. To make all the products available at all the

time for the customers is a very costly affair as to do so one has to

carry huge amount of inventory, which will charge carrying cost,

capital, which is been blocked in the inventory, and also the

products are getting older in the Godown.

The planning inBergeris done twice a year, once it is done for the

first 3 months of the year which is January, February and March.The other planning is done for the rest of 9 months. The planning

is then been divided in month wise and then unto the territory

wise level. This exercise is called phasing. In this phasing exercise

one has to forecast for all the SKUs (Stock keeping units) that can

be divided in product name, color and pack size.

The planning is also done at a dealer wise level and is been

communicated to the dealer at the beginning of every month.

There are many schemes run for various fast running products,

these schemes are generally a cash discount through credit notes

or given in the system of some gift. For every dealer to achieve the

discounts or gift they have to qualify the criteria, which is

generally based on the forecast made for the particular dealer. if a

dealer is not able to qualify for the scheme, then he will not be able

to enjoy the benefits of the scheme and thus at times he is not able

to make himself competent in the market.


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In the case of forecastingAsian Paintshas a upper hand as they

have a better technology in their hands. Asian paints have

implemented ERP in their working from i2. They are able to get the

market data very accurately and so do they can plan things in a

better manner but at the same time as been discussed that the

forecasting now a days is more of a human factor than the

technical factor. To forecast a market in a better manner one has to

have good knowledge of the market and also to have a insight

about what the competitor is doing, one who has the better idea of

all this is able to do things in a better manner and is able to get

better results. In the present days Asian has a bigger problem in

having fight with ICI as their rivals as they both are having a

strong presence in the same segment, they both are more

aggressive in theemulsion market as they both feels that

emulsions are the future of the paint industry. Thus it is very

difficult to forecast in a better manner. Asian most of the time

works on the targets of the dealers, they have targets or all the

dealers, these targets are based upon the performance on the last

year sales. As also in Berger, Asian also gives additional benefits on

achievements of these targets. One thing that is different in Asian

is that they have a very keen eye on what the market is going

towards, as they dont prefer having surprises. Asian always keeps

a check on the product lifting of every dealer, through which they

can come to know about the dealer in a better manner as to is the

dealer selling as in the retail market or he is selling the stuff toother dealers also. This can be seen as if one dealer who is lifting

300 liters of Paint in a week and another is lifting 20 liters.

Suddenly if 300 liters person stops buying and the person having


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20 liters shoot his order then they come to know that the stock is

been transferred by the second dealer to the first dealer. They at

Asian Paints does not stops at the point by thinking that the lifting

is still the same but they work on the reasons of having such kind

of activity, they prefer to check the reasons and try to get the

things back to their own control. Asian Paints prefer that their

products in the market should not be wholesaled but should only

be retailed. This helps them to keep the control in their hands only

so that one dealer will not be able to harm them to a high volume.

CUSTOMER SATISFACTION

CUSTOMER SATISFACTION inThe paint industry and its

analysis:-

In the paint industry the involvement is very less to the product

as it is not the product which is in direct contact to the end

customer, the product is used by a applicator who is generally a

painter. It is in hand of a painter to give a product a desired

output, if a painter is will to work on the product from his heart

then he can give the product a better output than the company

claims to have as he knows that what is the right move and what

is not appropriate to be done. Thus in this case it is very important

to keep a painter knowledgeable on how to use the product in a

proper manner and also to keep him happy with the products.

Thus in the paint industry the painter is equally important that to

a customer.


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As when we compare the companies likeBerger and Asianwhich

are two market leaders then we look at a very opposite story as

they both are very opposite in their working. At one side is Berger

Paints who is mainly concentrating on the dealers network and

likes to give heavy discounts or supports to the dealer network

they have as they feels that if the dealer is happy with them then

he will stock only the products they are providing. The further

result will be that the dealer will be working on the painters he

have and convince him to apply that product. This will finally help

them making their product reach maximum number of houses. As

the result they are able to take lead in a number of markets, one of

them is Delhi, which is the biggest market in India as far as the

paint industry in India is concerned. The company even after

having services like Home Dcor, which is a service provider for all

the solutions for a home in the paint concern, the perception in

the mind of consumer is that the product is more of value for

money product. Now keeping this picture in mind the company is

trying to change the perception in the mind of consumers with a

initiative to change the branding and the services which they are

providing. The company is now changing the brand name from the

previous name generally used as Berger Paints Colors of Joy they

are now moving to something like Lewis Berger Paint your

imagination. Thus with having all the initiative and also are

starting the products like illusions which is a paint that looks like

a wallpaper they might be able to change the perception in themind of a customer. By this work they are also hoping that they

will improve the market share of Berger paints in the next few

years.


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On the other hand is Asian Paints who is the market leader for

India as a whole. They are more of customer centric and they

prefer to work more on the promotions for the products. With the

heavy spending on promotions they want that on the name of

paints every customer should remember only one name Asian

Paints. They have even kept their advertisements in the T.V.

keeping that thing in mind and always kept the tagline the same

Har rang kuch kehta hai. In fact they are the only company that

is promoting the Brand Asian as a whole, other companies like

Berger and ICI are always willing to promote one of the product

that is been provided by their bucket. With having so much

interest in the customer centric they even go for demonstrations

whenever a customer is not satisfied or is confused to choose the

products.

The role of sales in Supply Chain Management:

Given that the role of the contemporary salesperson is changing

dramatically and that in many situations, the old models of selling

are simply outdated, ineffective, and counterproductive to supply

chain management goals and objectives

While most sales organizations focus on pre purchase activities,

supply chain partners focus on managing relationships and

conducting post purchase activities to enhance supply chain

performance. The sales force is well positioned to implement,

facilitate, and coordinate many supply chain management


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activities. In short, the supply chain sales force should be involved

with any supply chain activity that goes beyond organizational

boundaries. More specifically, the sales force should be an integral

part of implementing cooperative behaviors (i.e., joint planning,

evaluating, and forecasting), mutually sharing information, and

nurturing supply chain relationships to be effective at their new

role, the supply chain sales force must gain new expertise in

logistics and supply chain management. Salesperson logistics

expertise is defined as a customers perception of a salespersons

knowledge, experience, or skills relevant to logistics issues.

Salesperson logistics expertise concern the sellers and supply

chain partners logistics operations, systems, and processes at

both tactical and strategic levels. Thus, salesperson logistics

expertise includes internal (company) logistics expertise, external

(supply chain partner) logistics expertise, tactical logistics

expertise, and strategic logistics expertise. While the logistics

manager may be the primary person designing logistics solutions,

the salesperson is likely to be the primary person representing thesupply chain partners needs and requirements. For effective

teamwork and innovative solutions, salespeople and logistics

managers need to be able to communicate effectively and work

together on supply chain management issues.

Role of marketing in supply chain management:

Choosing which marketing channel, or channel of distribution, to

use is a major decision in the development of a marketing strategy.

The major role of marketing channels is to make products available

at the right time at the right place in the right amounts. In most


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channels of distribution, producers and consumers are linked to

each other through a marketing intermediary. Of the two major

types of intermediaries, retailers purchase products and resell

them to ultimate consumers, and wholesalers buy and resell

products to other wholesalers, retailers, and/or organizational

customers.

Marketing channels serve many functions.They create time,

place, and possession utility by making products available

when and where customers want them and by providing

customers with access to product use through sale or rental.

Marketing intermediaries facilitate exchange efficiencies, often

reducing the costs of exchanges by performing certain services and

functions.

Marketing channels also form a supply chain, a total distribution

system that serves customers and creates a competitive advantage.

Supply chain management involves manufacturing, research,

sales, advertising, shipping and most of all, cooperation and

understanding of tradeoffs throughout the whole channel to

achieve the optimal level of efficiency and service.

Channels of distribution are broadly classified as channels for

consumer products and channels for business products. Within

these two broad categories, different marketing channels are used

for different products. Although consumer goods can move directly

from producer to consumers, consumer product channels that

include wholesalers and retailers are usually more economical and

efficient. Distribution of business products differs from that of


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consumer products in the types of channels used. An example of a

direct distribution channel, which is common in organizational

marketing today, is the use of industrial distributors. Most

producers have multiple channels so that the distribution system

can be adjusted for various targetmarkets. Two types of multiple

channels are dual distribution and strategic channel alliances.

A marketing channel is managed so that products receive

appropriate market coverage. Marketers can choose the type of

coverage, intensive distribution, selective distribution, or exclusive

distribution.

Although many marketing channels are determined by consensus,some are organized and controlled by a channel captain. To attain

desired objectives, the channel captain must possess channel

power. Channels function most effectively when members

cooperate. When they deviate from their roles, channel conflict can

arise.

Integration of marketing channels brings various activities under

one channel member's management. The two types of integrationare vertical channel integration and horizontal channel integration.

Integration has been successfully institutionalized in marketing

channels called vertical marketing systems (VMS), which may be

corporate, administered, or contractual.


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FUTURE TRENDS IN THE INDIAN PAINT MARKET:

THE ROAD AHEAD.

The future of any trade is Environmental Changes has been

divided into two parts one is the Macro level and other is the

Micro level. Let us now understand both of them separately.

Macro Level Changes

Environmental changes happening in our country7 GDP growth at around 6-7%

7 Increasing prosperity of rural segments

7 Lowering of customs duties

7 Entry barriers dropping: New MNCs entering the

market

7 Increased spending on Infrastructure projects

7 Fragmentation of television audiences

7Automobile explosion

7 Increasing consciousness of environment and health

7 Low Interest rates

7 New Technology

Micro Environmental Changes

Individual Level

7 Increased disposable incomes

7 Family structure changing to nuclear families


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7 Increasing incidence of double income families /

Increased Inherited wealth

7 Increased awareness: Internet / Television

7 Income tax breaks: On housing

7 Increased expectations from products and services

7 Furter !et is no" see a!! te factors tat are affectin# te economy

as a "o!e of affectin# te paint industry as in specific$

Impact of Changes


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Factors

7 GDP growth at around 6 7 %

7 Family structure changing to nuclear families

7 Income tax breaks: On housing

7 Low Interest rates on loans

Impact

7 Increased demand for new houses -- generic growth of 10

to 12 % for decorative paints for the next 3 to 5 year

period.

7 Expanding base of the paint industry -- the new homes

will enter the re-painting cycle in 2 to 3 years

Factors7 Lowering of customs duties

7 Entry Barriers dropping: New MNCs entering the market

Factors

7 Increased disposable incomes

7 Increasing incidence of double income families /

Increased Inherited wealth


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Impact

7 Demand for high end products like interior & exterior

emulsions will continue to grow at a rapid pace

7This trend will be more evident in exterior coatings, with

the category continuing to grow at more than 20% for

the next 3 years

7The trend to experiment with new colors, product

categories and services will increase essentially to elicit

the Wow effect

Factors

7 Increased expectations from products and services and

companies

7 Increasing incidence of double income families

Impact

7 Companies will be forced to introduce new products and

services to satisfy the customers

7 Companies will need to start looking at providing

customers with complete solutions rather than piece

meal options as the customers no longer have the time

co-ordinate the entire process7The tinting machine will become de rigueur for all shops

and this will lead to factories being geared to produce

bases only especially with wall coatings.


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Factors

7 Increasing prosperity of rural consumers

Impact

7This will open up the demand for basic products like

enamels, distempers and primers

7 Lower price points , small pack sizes and pouch packingwill become increasingly popular in these markets

Factors

7 Increasing consciousness of environment and health

7 Increased awareness: Internet / Television

Impact

7 Companies will be forced to become more socially

responsible with respect to production and waste

treatment, etc.

7 Products will have to adopt environmental and health

friendly formulations

7The range of products will have to be diversified to bring

India on par with the developed paint markets

Factors


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7 Fragmentation of television audiences

Impact

7The media spend levels for national companies will

become much larger to cater to a fragmented audience

7 Media planning will become increasingly complex for pan-

Indian players

7 New alternative methods of reaching consumers will have

to be found

7 Fragmented markets will allow Regional players to focus

promotions on a small area to strengthen their presence

compared to the national player in that market :

Advantages of Concentrated resources

Factors

7 Increased spending on Infrastructure projects

Impact

7 Protective coating products will most probably see the

advent of new technology

7 Demand for these products will also go up substantially

Factors

7Automobile explosion / White goods

7 Low Interest rates


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Impact

7 Low loan interest rates and attractive financing schemes

have led to a splurge on purchases of vehicles and white

goods

7 One of the highest growth rates in the automotive

coatings market in the world 1 million plus cars, 18%

growth 26% + growth in two wheeler segment - OEM

market booming

7The organized secondhand market is also gathering pace

demand for refinish segment will perk up.

Factors

7 New Technology

Impact

7 New products are likely to be introduced in the Indian

market. Some such likely products are:

Exterior Coatings with a 10 +year durability

Faux Finishes for interiors

Non-drip paint

Single Coat Finish


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Multichrome paints

UV cured Coatings

Water based specialty coatings in automotive and protective

segments


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CONCLUSION

The next generation of supply chain systems will includesupply

chain process management or event management capabilities.

These capabilities will enable close to real time, event based

escalation of relevant pieces of information through the

organization to appropriate individuals, who will then execute

decisions to minimize organizational impact and/or leverage

opportunities created by this event. As an example, a production

scheduler based on real-time in-transit inventory information will

proactively mitigate (by adjusting production schedules, etc.) the

unintended consequences of a raw material shipment not arriving

on time. However, that same piece of information combined with

the detection of a supply demand imbalance, spotted by detecting

a spike in the price of a related commodity in the spot markets,

can lead senior managers to conclude that the supplier may have

suffered a major outage in one of its units. Resulting strategies,

potentially system-recommended, could involve the following

options: confirmation of the event with the supplier, an

examination of the possibility of replacing the material, or an

assessment of the impact on downstream value chain coupled with

an evaluation of alternate suppliers.

Real-time visibility of the supply chain, combined with a

monitoring and an event-management system, will increase the

proportion of decisions that are taken preemptively to minimize

unintended consequences or exploit unforeseen situations.


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Increasingly, key decisions will be made by cross-functional teams,

chosen explicitly with the right skill set mix, and sometimes

assembled just for the purpose of solving the problem at hand.

The demands for supply chain efficiency will emphasize a

combination of both centralized and decentralized structures

and approachescollaborative and centralized planning with

decentralized executionrequiring real time visibility for

monitoring and rapid response mechanisms for event-driven

management involving close to real-time problem escalation and

remediation. Effective management of supply chains will occurthrough the deployment of integrated organizational team

structures at multiple levelsexecutive through senior and middle

managementexecuted through physical and/or virtual facilities

such as war rooms.

As in one of the previous chapters we have seen that the

controlling of such a huge bunch of products is very difficult and

is not possible to attain a optimal formula to get all the products at

the right time, at the right place and also at the right price, which

is one of the key areas on which the paint company works.

The first area where the industry has to move is that they haveto

make the customer involved in the process of purchasing the

products; in fact the industry should try and make paint as a

product that should be a part of a persons life. This should be

done as a person is spending most of the time in a day in his office

or at his home and he is only able to see the colors of the walls.


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This has also been proved scientifically also that the colors that

are surrounding us have a major effect.

By doing the above they will first be able to create demand in themarket, which will finally force the dealers to stock the product in

the market. This will improve the reach of a company in the market

and will create presence in the market.

By creating the presence in the market a companycan create

fast turnover of the product. i.e. the product will quickly get

cleared from the dealers counter which will finally help the

company to quicken the whole process and this will lead to an

effective supply chain management. A company if have the fast

moving of the products from the counter can even plan things in a

better manger as on the forecasting front. This company can very

well forecast that what will the market be demanding in this

particular period. The existing system of paint industry, which

mainly runs on the rebates base, will also not affect the player;

this is because of the market demand that is been created in the

mind of a customer.

For gettingbest results of the promotionsa company also need

to educate the customer as to how to use the products. This is

needed because of the painter involvement in the final output of

the product. if a painter works well on the paint then only the

paint will give the best result. As also been discussed earlier that ifa painter uses a 3rdgrade paint in a proper manner and a 1stgrade

paint in not a proper manner then he will be able to get a better

result from the 3rdgrade paint. This is the reason that a company


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needs to educate the customer also so that the customer will be

well equipped to supervise the whole process and will be able to

notice about the mistakes made by the painter.

In additionto educating the customera company also needs to

educate the painters in a better manner, a big initiative is to be

taken as to make a better class of painters in the country. This is

needed as that by improving the whole class of painters one is

improving the whole paint industry. Painters are the first point of

interaction for the paint industry, even to many they are the only

level of interaction for getting the work done. To improve this someof the companies have taken the initiative as by introducing Home

Dcor by Berger Paints and Home Solutions By Asian Paints.

These two services that are been provided by these the companies

provides all the painting services to the customer. This service

starts from giving quotation to the customer to shifting the stuff

back to the places where it was before the painting work started.

This all will be take n care by a well-educated executive of thecompany.By providing all these services companies are trying

to improve the customer satisfactionby getting the products

from a company. This is one of the most important focuses of the

supply chain management.


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BIBLIOGRAPHY

Primary knowledge of the subject was been taken from the books

1.Supply Chain Management

By John T. Mentzer

2.Supply Chain & Logistics 2002

From the ET Intelligence Group (Mainly used

the paint industry section)

Further knowledge was been gained from the full site of companies

like

1.i2

www.i2.com

2.The Council of Supply Chain Management Professionals

www.cscmp.org

3.Supply Chain Council

www.supply-chain.org

4.Economic Times Strategic Marketing


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www.etstrategicmarketing.com

supply chain management

Documents

inventory management

companies berger paints

indian paint industry

ici paints

follower asian paints

paint trade

paint industryorganizations

lot of companies