We put faith in technology ages before our competitors had even started to show interest in IT.
The ability to capture precise information faster has ranked Rs 2,560-crore Asian Paints amongst the top-ten decorative coatings companies in the world. Its robust supply chain system automates a wide spectrum of functions and increases demand forecasting accuracy. The Vice Chairman & MD, Asian Paints, feels IT deserves all credit.
Paint is a working capital intensive industry. Our primary focus has always been to cut down on our working capital. The result of our endeavor reflects in our balance sheets. I have always held the opinion that IT is core to our organization. The application of technology ultimately helps us in better ROC (return on capital). Capturing accurate information is key to maintaining our lead in the market and IT helps us do this and enables us to serve our customers much better.
At Asian Paints, technology helps us control inventory anomalies. It allows an enhanced integration of manufacturing operations between multiple plants. If a particular plant faces problems while carrying out a manufacturing task, the production plan is easily migrated to another plant, thereby servicing our customers better. This also means that we don't face a situation where we are out of stock. Our systems help us optimize the consumption of raw materials at our manufacturing units. We can analyze our inventory levels to forecast market demands and reorient our production plan so as to match our output rates with the requirements of the market.
Our association with IT dates back to the 1960s. I still remember when International Computers India Manufacturing (ICIM) first introduced mainframes in the country, one of the only two computers sold was bought by Asian Paints. The other went to Godrej. In the late '60s and early '70s, we wrote applications to meet our internal requirements. We stressed on capturing accurate sales statistics.
We had 15 different products in the market, which constituted about 85 percent of our turnover. We wanted to know how these products were doing per salesman, town, dealer, branch and state. This information was collated and later processed by the applications we created that ran on the mainframe computer. Despite a 25-day lag in generating the reports, we managed to arm ourselves with the sales statistics, which, in turn, helped us focus on problem areas and attack specific issues. We were the only paint company in the country equipped with market information this accurate. I remember our competition being clueless. Our long-standing commitment to technology is evident by the fact that in the late '70s we were the first paint company to install a computerized color matching machine and I was the first trained computerized color matcher in the country. It cost us almost Rs 20 lakh in those days and I remember having to put my neck on the line to get it. The technology gave us an edge over the competition. But the point is that we put faith in technology ages before our competitors had even started to show interest in IT. Even when they did, our organization had maintained a clear advantage because we had kept innovating with technology.
Over the years, and with the phenomenal growth of our market share, we realized our home-built applications had limitations. The algorithms used were not as intricate and as mathematically advanced as some of the fully-dedicated software available in the market. We decided to purchase a supply chain management solution from i2 Technologies; first to optimize our supply chain and then to further decrease
our working capital. We benefited tremendously from the SCM and within 12 months of its deployment, we rolled out a SAP ERP. We decided that we needed to take the risky path of integrating our mammoth applications and bought a SCM first and then backward interfaced it into the ERP.
Behind all this, we always stressed on providing better service to our customers. Our service levels are the highest in the paint industry, giving us a clear advantage over our nearest competitor. The early adoption of SCM and ERP technologies gave us a better head-start on our competition. However, this was true even when we worked on indigenously developed software. In fact I feel we had a greater head start then on our competitors. Now, with the advent of easy-to-deploy and ready-made applications, the competition has been able to gain on us. I have to accept that the relative advantage of our ERP application has started to diminish.
Nevertheless, despite similar software and systems available in the market, I believe it is the superior quality of our people that is deriving us maximum advantage from these technologies. Equipped with better tools,
the productivity of employees at Asian Paints has increased manifold. It has made their approach in meeting the company's objectives more focused. And the biggest advantage we draw is our capability to forecast demand accurately.
Demand forecasting has worked very well for us. Every subsequent forecast is better than the last one because we have better insight from past data. Ultimately, everything is built on previously available information, and as long as we do a good job capturing data precisely, we are able to better forecast requirements.
Accurate demand forecasting helps us tremendously in targeting the kind of markets that have specific needs, and enables us to avoid situations where we are either out-of-stock or we're wasting resources on inventory.
Let me give you an example. In certain pockets of Maharashtra, during a festival known as Pola, when farmers celebrate their bullocks by painting their horns, there is a requirement spike for 50-100ml packs of a particular shade called deep orange. Accurate and precise demand forecasting enables us to develop a relevant manufacturing plan during this specific period to meet the demands of this market. Under, over, or erroneous manufacturing harms sales in those regions.
Similarly, there are fluctuations, around the year, for various products depending upon different factors such as seasonality, festivals, etc. Accurate and robust demand forecasting helps us to further augment our market share by clueing us in on market trends.
With Color World, we provide a large range of colors to our customers. With this initiative, we have been able to derive better insights in the choice customers make-specifically, what kinds of shades they are choosing. Our customer-facing initiatives have helped us capture this sort of information, which aids us in
streamlining our products and optimizing them according to the market. It has brought us closer to the customer.
We have extended this facility to customers, as well, through our website. Customers can learn the costs and volumes associated with personal paint jobs. We also recommend color schemes among customers who take a further interest and provide electronic pictures of their properties. We have deployed the Asian Helpline, our call center, which assists customers in many of these activities, in addition to helping them locate the nearest Colour World dealer. Currently, we are revamping our customer-facing processes using various technologies such as a SAP CRM platform as well as customer extensions such as a sales force automation application, especially in areas like home solutions.
This initiative integrates Asian Paints with our partners such as painters, dealers, interior decorators, and architects in order to offer customers turnkey solutions to undertake their paint jobs.
We are also working on creating a back-end between Colour World units and the organization's systems. In the first phase of this initiative, the online system for dealers is being deployed, which will offer accounting details and will have a provision to have a customer's grievances redressed. The subsequent phases will provide information regarding the availability of our products at stock-keeping units. We extend the SCM to our sales force as well. We have plans to equip our territory sales in-charges with mobile communication devices such as PDAs. They will have access to immediate information regarding stock and payment schedules of dealers.
We are also planning to automate and Web-enable product requests and invoices. We have already IT-enabled the supplier-side of our business and will soon extend these capabilities to our dealers. In short we're attempting better supply chain integration.
By and large, we don't service towns which have a population less than 15,000, unless there are requirements from certain pockets or clusters of villages. Nevertheless, with the improvement in communication infrastructure, dealers in the smaller markets are now able to connect to the nearest stock keeping units. We are planning to extend our supply chain capabilities to these dealers so that they can check their accounts and stock status online and can request more products from the stock keeping units.
We have already moved our acquired companies onto a single SAP ERP platform. This gives uniformity across the organization and helps us to integrate acquired companies with Asian Paints seamlessly. This move helped us manage the shorter and varied deadlines while filing accounts with local authorities at various international locations. With the reduction in import duties, we are planning to reduce our manufacturing locations. We would prefer regional manufacturing units rather than country-specific manufacturing locations. At the same time, distribution will be countrywide.
The better integration of processes piggybacking on technology will help us manage manufacturing locations and the distribution chain much better.
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