Issues:

Issues in Quality
 The prices of paints largely depend on the cost of raw material. There are around 300 odd raw
materials required for the manufacturing of paints. The major raw-materials are titanium dioxide,
phthalic anhydride and peutarithrithol. These constitute around 50 percent to total cost. Titanium
dioxide alone contributes 30 percent to the cost. The other raw materials like linseed, castor,
soyabean oils, etc. add up to the whole raw material cost of 70 percent of total cost. So, the prices
of paints are very much dependent on raw materials and any fluctuations in the price of raw
materials will eat up the margin of the company.
 Nearly 30% of the 300 raw materials are petroleum based derivatives. So, any change in crude oil
prices will lead to change in the prices of raw materials. From last 2-3 years, there were lot of
fluctuations in crude oil prices because of which margins of the paint companies got hit. The
pressure further increased due to recession and there after decrease in consumption.
 The majority of paints manufactured in India contain a large amount of lead, mercury and
chromium. These elements are very hazardous in nature and can pose a threat to health of human
beings. Now the policies are becoming very strict and thus companies are required to come up
with newer manufacturing processes so as to produce paints with a low amount of VOC (volatile
organic compound) and minimal aromatic content. Also, the content of lead, chromium and
mercury should be very less thereby making the paint eco safe.

Issues in overall Operation Systems

 Import policies – The import policies plays a very significant role in determining the
prices of paints because around 30% of the raw materials has to be imported from foreign
countries. So, any change in import tax regime will have an impact on the costing.

 Exchange rate – Since the major raw materials are imported, any movement in rupee-
dollar prices is very critical and hence need to be closely looked. For example, whenever
rupee depreciates against dollar, the buyer has to shelve out more money.

 Supply chain – The paint industry requires a lot of working capital because the
manufacturer has to buy 300 raw materials and from different vendors. So, the company
which has a very robust vendor and distribution network will largely benefit from it.

 Technology advancements – the paint industry is highly technology intensive due to

which small players find it very difficult to invest in newer technologies and thus
succumb to competition from foreign companies. Large players have tied up with foreign
companies and they are still dominant in the market.

 Reducing energy consumption in operations, while improving efficiency and quality in

production
Analysis
Quality Analysis

 Focused push of the quality Paint Total service also ensured strong and continued engagement
with Ezycolour and Colour Ideas dealers in the overall network. The improvements were enabled
on the back of automation in various stages of the production and assembly process. These have
enabled consistent quality output and also reduced dependency on imports. During the year, the
Company has also taken steps in upgrading the manufacturing facilities to enhance its capabilities
to service its customers with better product quality and delivery.
 For Decorative Paints, in an overall tough operating environment, the Company would be one of
the fastest growing companies in the sector and delivered good growth across product segments
and geographies. The growth in volumes would be much higher than the value growth, given the
Company’s increased focus on the upgradation emulsions, waterproofing and putty segment
where the gains were significant. The growth has been driven not only by the mainstream product
categories but also in the newer product categories of waterproofing, adhesives and tools.
 Asian Paints has constantly tried to meet their objectives which are Quality, Time and Cost.
Asian Paints has never negotiated with good quality. It has made products of the best design with
reasonable prices range for its customers. They always dealt in large numbers with better-quality
products which made them the market leaders. Asian paints have learned that by developing new
products on time they could maximise their sales and profit.
 They order raw material in bulk to get discount from dealers, design products to cut cost but not
affect the quality and avoid wastage during production. These were some cost cutting techniques
used by APL and also by doing this they even achieved economies of scales.
 Asian Paints Management team has put in a lot of efforts in order to improve coordination
between the different departments. TQM also helped in creating better coordination between
staffs and management. Thus coordination in Asian Paints is used as an example by many
companies for benchmarking.
 The control methods and systems which are adapted by Asian Paints are Quality of conformance,
Quality Assurance, Quality control, TQM, Quality circles, ISO 9000 and 14000 certification and
supply chain management. Asian Paints adopts
 Asian Paints‟ Quality Control is concerned with maintaining quality standards. Asian Paints uses
this system to detect and eliminate goods that fall below the standards. The quality control
department‟s heads carries out a range of inspections and test before the products reach the
customers. The 3 stages that are involved in effective quality control techniques at Asian Paints
are Prevention, Inspection, Correction and improvement. Asian Paints doesn‟t mind investing in
such quite expensive- qualified engineers to inspect, because they want their products to be
highly valued by customers and would like to create a benchmark by saying, no other paint
industry is better than Asian Paints
 Would like to recommend Asian paints to adopt Six Sigma theory because Six Sigma is a method
that use to improve the output quality of a process. It instigate towards reaching the goals and
 objective, performance measuring, process improvement. It integrates all the business processes
makes the organisation work towards the zero defects. If Asian paints implements this tool
quality improvement it will align the organisation‟s objective and goals.

Evaluation of Operation System-

 Asian Paints the state of art, supply chain system to edge technology to amalgamate all its plants.
The supply chain runs through a broad spectrum of functions right from planning to procurement
to initial distribution. By having this system enrolled in the organisation it has improved
operational efficiencies and has generated agile procurement, production and delivery systems.

Fig: Current SCM Policy at Asian Paints (www.asianpaints.com/ quality policy section)
https://www.xub.edu.in/jcr/cases/Case01-Dec2018.pdf