BT Dot.com: Why Gattu Got Wired [Pg.3]

WHAT WORKS
Why Gattu Got Wired

Making paint isn't rocket science. And distribution is done by dealers who've done the job for decades. So why has India's oldest paint company strung together 1,500 workstations, 67 satellite terminals and specialised software?

All that hardware for a company of just 3,000 employees? But then this is a story of paradoxes.

Asian Paints is India's oldest paint company, but over a quarter century of existence, it has woven the latest tech into its corporate fabric. It is a family-owned enterprise, which has developed professional managers who are routinely poached by other customer-goods firms. It has a turnover of Rs 1,300 crore and pays among the best salaries in the business.

Here's How It Works

ť With each of the 72 branches evolving a supply plan independent of the others, the entire monthly planning process at Asian Paints took 10 days. A special demand-planner module accessible by all branches has cut the planning cycle to just three days.
ť Forecasting stock requirements is a tricky process, but it's needed to keep inventories low. Manual forecasts used to be half-accurate. Now a statistical engine has made forecasts three-fourths accurate. Asian Paints' next target: 90 per cent accuracy.
ť Asian Paints' computer system reaches into the factory where shop-floor planning is updated every hour. Each of the 3,000 employees are becoming It savvy. The result is a tight control on raw-material purchases, cash flows and logistics.
ť The 8,000 sales invoices generated daily were a mass of paperwork between branches and the head office. Today every transaction-revenues, costs, margins, taxes-is recorded within two minutes at the central server in Bhandup and automatically updated.

Yet its employee costs as a percentage of turnover are the lowest in the business. There is, say its executives, one factor that balances these paradoxes: its wired structure.

Supplying paint to the Indian customer was once all chalta hai. Managing the supply chain from the factories to the maze of branch offices and dealers wasn't done to anybody's satisfaction-not the company's, certainly not the customer's. The dealer didn't have maroon? Chalta hai, give him red.

In the paint business, it's imperative to get the right shade of paint out of the factory and to customers wherever they want it, without locking up money in killing inventories. Asian Paints has set up a storefront-India's first paint helpline-on-the-phone system, and behind the scenes, a seamless amalgam of software, computers and satellite links keeps the paint coming in myriad shades.

The company launches four new products every year. With each coming in 100 shades, it is critical not just to supply and restock dealers, but to stay in touch with the customer.

So, there are two critical hurdles in reaching these paths.

First, the lost sale. A customer who walks into a dealer's shop and does not find the colour or shade he wants, will not wait. Even the dealer is likely to recommend a competing product and clinch the sale. This is very, very common.

Second, the stockout. Customers need specific kind or kinds of paints, but the factory can't make them on time. Solve the stockout and the lost sale conundrum and you will be the god of all paint sales. ''The whole it initiative at Asian Paints is geared to manage these important elements,'' says P. Rambabu, General Manager, Systems.

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