How's my Luck now?

Reflections, views and descriptions during my stay at IIM Lucknow from July 2004 to March 2006

Location: India

Thursday, November 10, 2005

'SCM & IT - the Asian Paints Story'

This was the topic of the talk delivered yesterday by Mr. Soren Malekar - General Manager, Materials for Asian Paints. The talk was to cover Asian Paints' experience with successful IT-enablement of their own supply chain. Unfortunately, I could not attend the full talk because I was participating in an online contest. Still, I was there for an hour or so.

The talk was delivered very informally, encouraging participation from the audience. In fact, it was as entertaining (perhaps more so) as it was informative. Most people from industry bring this slightly cynical, slightly sarcastic attitude with them, particularly towards theory and towards consultants and their practices. Mr. Malekar has been with Asian Paints for 14 years now in various capacities, and so had a very good overall picture of the business to offer.

The session opened with an introduction to Asian Paints' complex, 5-layer supply chain. The lesson was that while designing a supply chain and while IT-enabling it, the emphasis should be on how the firm can gain competitive advantage from it. AP decided to make quick and reliable delivery for their fast-moving paints products through an integrated supply chain their competitive advantage. This competitive advantage also included an extensive and motivated sales force. AP owns three layers of the supply chain - the paint factories, the regional distribution centres and the sales depots. The final layer - the dealers (hardware stores and the like) were not fully IT-enabled as yet, because of various reasons: the prohibitive cost of IT-enabling 18000+ dealers; space constraints in most dealer stores; low immediate value from point-of-sales data for a product with predictable demand (note: not stable demand, as paints demand shows seasonality, especially on festivals like Diwali). Certain other areas explored in SCM theory, like trans-shipment, were shown to be difficult to implement in practice.

Mr. Malekar then went back to the period of 1997-98 when the IT initiative began at AP. Earlier, they had an in-house SCM solution and a long-term relationship with the consultants Booz-Allen & Hamilton. But this solution was proving to be too difficult to scale. Indeed, several attempts were made by independent entrepreneurs to 'optimize' AP's supply chain, to no avail. Certain key decisions were taken at this stage, including: deciding that it would be best to go for state-of-the-art IT infrastructure despite having a commanding market share of the Indian market; zeroing in on i2 Technologies' as their implementation partner, etc. They implemented the IT system in three layers: the Execution layer at the lowest level; the Transaction layer in the middle (consisting of SAP R/3 ERP); and the Decision Support layer at the top, which included i2's SCM modules like Demand Planner, Master Planner, Production Scheduler, etc.

The next part of the talk was to deal with each of these modules, but I couldn't attend it.


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