Complex and high cost layered distribution network
The company manufactures and supplies paints used in homes, electrical components, automotive, material handling, vehicle containers and furniture. Like other players in the industrial and consumer paint industry, it was also operating through complex and layered distribution network of over 100 C&F agents across the country. These C&F agents were appointed at every 300 - 400 kms. The company use to ship the paint in open body full trucks to C&F who in-turn were distributing it to distributors and dealers in their respective territories. Due to lack of reliablility in service of logistics partners, the company had setup a network of warehouses with stock level as high as 60 days to support secondary distribution. However, this layered structure was severely impeding the growth potential of the company. Specifically,
Logistics partner with reliable and faster delivery TAT, zero defect service and technology integrations
Company with its experience of working with a reliable logistics partner with faster TAT, secured movement of its material, decided to reimagine its supply chain by fundamentally questioning the need of high inventory at various touch points and the large number of C&Fs. It also saw the opportunity to reduce theft and damages by shifting the material movement from open to closed body containers which would result in lower returns/rejects and higher profitability.
Redesigning the distribution system and inventory planning
The company decided to half its inventory in the channel and reduce quarter of its C&Fs by building ‘direct to dealer’ model in its key markets, serving them directly through its single logistics partner. The logistics partner also provided the technology to better manage the inventory through transparent tracking and control over movement of consignments Right material handling processes of logistic partner resulted in minimizing damage and eliminated risk of pilferages.
Lasting business impact
The company with its culture of continuous innovation and a forward-looking mindset reimagined its supply chain by challenging the need high level of inventory. The company now runs a more efficient supply chain with much lesser working capital and a deeper product penetration. Their spends on damages also reduced due to better handling of material and secured containers. The business impact that the supply chain team was able to deliver was:
As a result, company was able to unlock 30% cash from their supply chain through reduction in working capital.