Two adjectives that often describe the most successful supply chains are adaptive and resilient. An adaptive supply chain is one that is able to respond quickly to changes and disruption, and the ensuing changes to demand. A resilient supply chain is able to recover quickly from these disruptions. These terms perfectly describe the Asian Paints supply chain.
At last month’s Blue Yonder Icon virtual summit, Harish Lade, Vice President of Supply Chain at Asian Paints participated in a discussion with Vinod Mathur, Senior Director Strategic Services at Blue Yonder, and Shri Hariharan, Vice President, Industry Strategies at Blue Yonder. In the session, Mr. Lade detailed how the Asian Paints supply chain remained adaptive and resilient in the face of the Covid-19 pandemic. He also outlined new opportunities that arose because of the pandemic, and how Asian Paints was able to retool the business model to remain profitable.
Asian Paints Business Model
Asian Paints was founded in 1942 as a decorative coatings business. The company is India’s leading paint company and a top-five global decorative coating business. The business model is to supply paint directly to close to 75,000 mom and pop hardware stores in India. The reason the company sells to mom and pop stores is because in India there are not big box stores that sell hardware; instead, everything is sold through these roadside mom and pop stores. Asian Paints has 8 factories and 143 company warehouses, which directly ship paint to hardware stores.
Mr. Lade pointed out that Asian paints needs a strong demand and Sales & Operations Planning (S&OP) process because they are not operating through a large distributor. When working directly with dealers, they need a sense of the demand, and use a collaborative approach between the sales and supply chain teams to forecast demand as accurately as possible.
While most businesses have to deal with the complexities of seasonality, selling paint in India complicates things. Mr. Lade said that paint is more associated with festivities and celebrations. As a culturally diverse country, there are different festivals in different regions at different times. For example, in October / November, Diwali is celebrated in the North and West of the country. In February and March, other regions are celebrating the harvesting seasons. No matter what, though, the product has to be available on the shelf of the dealer.
According to Mr. Lade, consumers only tell painters / contractors what color they want; then it is up to them to get it. Mom and pop shops have limited working capital and they keep low inventory on hand. As a result, they rely on the Asian Paints supply chain to make products available that they will need. The Asian Paints fulfillment network ensures that in larger cities and towns, if a dealer orders items in the morning, they will get a delivery the same day. In the largest cities, they can make two deliveries a day. Asian Paints was able to successfully launch a direct to dealer model, and over the last decade, technology has simplified a unified ordering experience. Since 1999, Asian Paints has run a very integrated planning system with forecasts, production, and fulfillment.
Asian Paints Supply Chain Adaptability and Resiliency
The Covid-19 pandemic brought the global economy to a grinding halt in the early part of 2020. And Asian Paints was no exception. The approach in India was a full lockdown for a few months. When the economy started to open, Mr. Lade said that the first question people would ask was “why would someone want to paint in this situation?”
In India, painters usually come from certain towns, and during the lockdown, there was a huge reverse migration of these painters. After lockdown, demand opened up in Tier 2 and Tier 3 cities and resulted in a huge recovery. A big reason for this recovery was the remote workforce. Mr. Lade said a lot of people really altered their relationship with their homes; people that used to go into the big cities for work were now working from home. They wanted to make that space more appealing, and this launched demand. Asian Paints had to ramp up production requirements and plan out a way that the factory workers were safe while meeting increase demand.
However, this still created a tricky situation. Even though the lockdown had been partially lifted, there were still micro containment zones. In some cases, dealer shops were open but the warehouses that supplied them were in a containment zone. So, Asian paints shifted to a different model, where they were trying to supply direct from a factory. This was a major shift, as the stores were used to receiving small order from a warehouse. Now, they were now receiving up to half a truckload of paint rather than the usual custom orders. A large number of the dealers latched on to this newmodel and the company was able to scale and expand.
The whole idea of the post-pandemic business model was to make sure all options and channels were open. This resulted in the company moving in a few new directions. Four years ago, Asian Paints had launched a product that gave a soothing smell when it was applied. Mr. Lade said this was in response to the normal scenario where “new paint smell” lingers and people don’t want to be in a freshly painted room or house. What started out as an initiative to provide a paint that left a pleasant and soothing smell soon transformed into creating a paint that could have some health and hygiene properties.
With that, the Royale Health Shield paint was created. Asian Paints modified the formula to make it antiviral and antibacterial for high contact surfaces. It is equipped with Silver Ion Technology which kills 99 percent of infection-causing bacteria on the painted surfaces. Asian Paints packaged it as a do-it-yourself (DIY) paint and tried to get it into e-commerce markets. The new product was launched six weeks later after getting laboratory certification.
The success of the DIY approach to Royale Health Shield made Asian Paints rethink some other DIY markets. Specifically, the company decided to launch a new series of products that were geared towards touch-up jobs. The new kit came with a tray, brush, and spray adaptor.
New product lines were not just limited to paint. There was a shortage of sanitizer in India. Asian Paints already had some of the raw materials, so it jumped into the health and hygiene space and started making sanitizer. This product line started as sanitizer that painters needed anyway. With demand building, Asian Paints then launched painter handwash and other related products.
These products were part of a concerted effort around sanitation. The company also launched what it called a “safe painting service.” Asian Paints has already offered a “paint-as-a-service” offering, the new service used the sanitizers and hand wash to make sure that painters and contractors could safely enter a home to paint it. This service soon expanded to full sanitation service geared at office spaces. What started as a service to clean their own dealer shops quickly expanded to customers who wanted homes and offices sanitized. Those painters that couldn’t find work painting were now able to offer this service instead.
The Covid-19 pandemic has been challenging for supply chain around the globe. The Asian Paints supply chain was able to remain adaptive and resilient, turning the pandemic into new opportunities for expanded services and new products. As Mr. Lade wisely said, adaptability is the key to transforming your business.