Improving Demand Reliability of Supply chain By focusing on Factory Responsiveness

Authors Avatar

Group – 13                                                                                                         ICI Paints

 Improving Demand Reliability of Supply chain

 By focusing on

Factory Responsiveness

(ICI Paints)

Final Project Report

in

Supply Chain Management

Under the guidance of

Prof. B.S. Sahay

By

Group 13

Apurva Sharma        03P011

Dinesh Kumar Gupta        03P087

Kaushik Bose                03P027

Anant Swamy                03P007

Lavish Talegaonkar        03P098

Management Development Institute

Gurgaon 122 001

November 25th , 2004

EXECUTIVE SUMMARY

ICI PAINTS is keen to establish a dominant position in the paint industry. It has decided to focus on demand reliability to improve its performance & customer satisfaction.

One of the important factors to improve demand reliability is by focusing on factory operations & improving its responsiveness. The report discussing in detail a responsive production system, the various metrics & how it can be achieved. As markets become more volatile, lean supply chains are under pressure to become agile. Whilst lean and agile are often seen as opposites, much of the lean philosophy and practices are foundational for an effective agile company, and indeed as the research results show, most companies require a combination of the two approaches.

The report suggests a Leagile production system to achieve a responsive factory. The mix of appropriate techniques to achieve this combination will differ depending on the products and processes within a given supply chain, and there is certainly no ‘one size fits all’ system. The final recommendations illustrate the various means to achieve agile paradigm.

ACKNOWLEDGEMENT

We would like to thank Mr.Amarpreet Singh (Manager- Supply chain) from ICI Paints for giving us an opportunity to work on this problem in the company. We also take this opportunity to thank other company officials for their valuable inputs. We would also like to thank Prof.B.S.Sahay for his continued help & guidance throughout the duration of the project.

Further we would like to thank everyone who have helped us in the completion of this project

TABLE OF CONTENTS

COMPANY BACKGROUND        

RATIONALE FOR TAKING PROJECT        

OBJECTIVE OF THE STUDY        

SCOPE OF THE PROJECT        

METHODOLOGY        

EXISTING SYSTEM        

LITERATURE REVIEW        

DATA COLLECTION AND ANALYSIS        

PROPOSED SYSTEM TO ACHIEVE FACTORY RESPONSIVENESS        

RECOMMENDATIONS        

REFERENCES        


COMPANY BACKGROUND

ICI India is a subsidiary of ICI paints based in U.K. It is headquartered in Slough in the UK. It manufactures and markets paints, specialty chemicals, rubber chemicals, adhesives & starch. The company is also into the manufacturing and marketing of fragrances and flavors through joint venture efforts.

The business portfolio of the company is as follows:

  1. Paints
  2. Uniqema
  3. National Starch
  4. Quest (JV with Hindustan Lever Ltd.)
  5. Rubber Chemicals

The paints business of ICI can be broadly classified into two categories:

  1. Decorative Paints
  2. Refinish Paints

As far as Refinish market is concerned ICI paints is a leader in this category while in the Decorative Paints ICI stands a distant fourth after Asian Paints, Nerolac Paints, Berger Paints.

In the Decorative Paints market ICI has established a premium segment brand with the name of Dulux while it also operates in the mass category segments.

It has total employee strength of about 1200 (including its JVs), ICI India's manufacturing sites, business and sales offices and distribution network spans the length and breadth of the country.

The company has won several laurels for its performance in the fields of health, safety & environmental issues. The vision of the company is to be the industry leader in creating value for customers and shareholders and to be the most admired specialty Products Company in India.

It has one of the widest geographic spreads of any international paint business, concentrating on decorative paint and coatings for food and beverage cans. It manufactures in 26 countries in Europe, North America, Latin America and Asia.

ICI's Paints business in India believes in innovation through technology and has developed strong brands such as

  • Dulux
  • Duco
  • 2K
  • Alabastine
  • Polycell
  • Polyfilla

ICI has three manufacturing units in India located in different regions. Different varieties of paints or other products are produced at the three manufacturing locations and then supplied to entire country. These different products are supplied to the depots of ICI in various towns. The number of depots in a town varies according to the population and geographic spread of the town. This primary distribution from factory to depots is governed by “Push Replenishment”. The methodology followed for the replenishment is based on forecasting models adopted by the company. The stocks that are to be delivered to a particular depot in town for a complete month are determined at the beginning of the month at the factory by forecasting and then the supplies are made on a continuous basis throughout the month.

RATIONALE FOR TAKING PROJECT

The paint industry is extremely competitive. Hence, ICI paints is focusing keenly on its supply chains to improve the profitability & customer retention through better operational efficiency & improving customer reliability. But, the replenishment system followed by ICI paints has been ineffective in monitoring and controlling supplies and there have been a large number of cases of stock outs and high inventory throughout the country.

We feel that, variability in supply chain is a key determinant of delivery reliability in the paint industry. The demand reliability can be substantially improved by optimizing the supply chain. One of the key components of the supply chain of ICI paints is the manufacturing establishments. The variability of processes in the manufacturing unit directly & adversely affects the delivery reliability of the system. Hence, it is imperative that ICI paints focuses on the improvement of delivery reliability by focusing on factory operations.  

OBJECTIVE OF THE STUDY

The objective of the study is to improve the demand reliability of supply chain at ICI paints by focusing on the factory operations. Following is the specific objective:

To improve the delivery reliability of supply chain by focusing on factory responsiveness.

SCOPE OF THE PROJECT

The scope of the project is confined to the ICI factory located at Mohali, Punjab producing both decorative & refinish paints.

METHODOLOGY

EXISTING SYSTEM

Manufacturing Facilities

The company has three manufacturing facilities at three locations in India. These locations are strategically placed at-

  • Mohali

             (Northern India)

  • Thane

            (Western India)

  • Hyderabad

           (Southern India)

These plants specialize in the production of different kinds of paints. For example, Mohali plant produces refinish products, Thane plant specializes in the production of emulsions (both exteriors and interiors), and the Hyderabad plant produces both of these products. The various depots located through out the country are serviced by these three manufacturing plants.

Delivery reliability

The various factors that determine delivery reliability are:

  • Factory Responsiveness
  • Forecasting accuracy
  • Effective PPC
  • Depot Level Responsiveness

In the present system, ICI paints has very limited control over forecasting accuracy & hence has decided to concentrate on the other 3 parameters. Research has shown that by improving factory responsiveness significant improvements in delivery reliability can be achieved. Currently Mohali factory measures factory responsiveness by considering stock efficiency at PU warehouse. But, it has been found that the factory responsiveness is also dependent on the variability on off-take from PU warehouse to depots. In fact it is dependent on host of factors.

Join now!

Thus, there is confusion in company regarding understanding of factory responsiveness and how it can be practiced. Hence, we decided to undertake a detailed understanding of their production process & existing system/ operations in mohali factory

LITERATURE REVIEW

According to Fisher, products can be classified as functional and innovative. Accordingly, the supply chains have to be efficient and responsive respectively. Made-to-order and assemble-to-order products are generally of the innovative type whereas made-to-stock products are functional .Functional products are generally made-to-stock whereas innovative products are made-to-stock or assemble-to-order. Functional products need an efficient supply chain whereas innovative ...

This is a preview of the whole essay