Case presentation for the course Sales and Distribution Management

1. SOLVING THE
SUPPLY
SHORTAGE AT
ICC INDIA

2. Building the Context
⊸ Headquarted in Calcutta
⊸ Has 3 manufacturing plants
⊸ Distribution Network is 12K retail outlets strong
⊸ Business segregated primarily into Decorative and
Refinish Paints Business
⊸ ICC India had launched its top-of-the-line 2-pack
refinish product range
⊸ A shortage of certain SKUs was found out
⊸ Despite the efficiency of ICC’s logistics chain, it was
not capable to handle small quantity products like 2-
pack paints

3. Paints Market in India
⊸ Pegged at INR 21,000 million per annum in 2012
⊸ Annual turnover of ICC in 2011-12 is stagnant at INR
5,000 million
⊸ Unorganized sector accounts for about 40% of the overall
market turnover
⊸ This comprises of 1000 small players with annual
turnover less than INR 300 million
⊸ Major usage of the refinish paint was by the automobile
dealerships to repair chip offs that occurred in transit
⊸ Main customers to the refinish paints market were auto
dealers, mid-sized garages and roadside painters

4. Key Problems in the Case
Shortage of
certain SKUs
In certain markets
there was a
shortage of specific
SKUs of the 2-pack
finish paint
Issues in
Warehouse Stock
There was a
mismatch between
book stock and
actual stock in
warehouses
Legacy SCM and
IT Systems
The existing supply
chain and structure
could only to the
existing suite of
products and was
not adaptable to
new additions

5. Products at ICC India
Decorative Refinish
Share in Annual Turnover 65% 35%
Weighted Average Price per
Kg / Litre INR 90 INR 110
Contribution to Annual
Profits 30% 70%
Average gross margin per
Kg / Litre INR 30 INR 50

6. Organizational Sales Structure
Business Manager
(Decorative Paints)
Business Manager
(Refinish Paints)
Manager (Automobile
Manufacturer
Relations)
Regional Manager
(North)
Regional Manager
(West)
Regional Manager
(East)
Regional Manager
(South)
2 Separate
ASMs
4 Separate
ASMs
1 ASM1 ASM
Common Sales Force

7. Distribution Set-up for Refinish
Business
ICC
Warehouse
Dealer
Automobile
service
dealerships &
big garages that
order in full
packs and enjoy
free delivery
Net Margin – INR 3-
4 per Litre, Max
INR 15 per Litre
Average Stock T/O –
40 Days
Credit Period
Enjoyed – 45 Days
Customers
Roadside
garages,
Painters took
advantage of
bulk breaking.
Enjoyed Credit
facilities
Credit Period Enjoyed – 15
Days

8. Distribution Set-up for Advanced
Refinish Business (2-Pack Paints)
Company Dealer Garages
Invested in
Paint Booths
and Training of
manpower –
INR 0.1 Million• Investment
warranted : INR
0.3 Million (for
Stirrer Machine)
+ INR 0.3 Million
(for set of
tinters)
• Collected orders
from Garage and
supplied forward
Customers
Customers used to pay 2-
3x than the price of a
normal paint job
• Imported and Supplied to
dealers all the required 2-
pack painting materials
• recruited and trained
paint technologists
(Technical Sales
Executives)
• Provided colour
matching training to
dealers and garages

9. Changes in the Market
⊸ Preference of the automobile customer changed
⊸ New entrants in the Indian automobile industry
introducing new colours every few months
⊸Refinishing had 2 parameters
▫ Colour matching
▫ Gloss matching
⊸Above mentioned changes induced increase in colour of
gloss and other exotic finishes (metallic and bold colours)
⊸ Inability of Ready-mix paint technology to meet the
market requirements
⊸Technical solution was 2-pack paints
⊸ The entire painting workforce needed to be trained

10. ICC’s Decision on Refinish
Business
In the year 2012 ICC took some major decisions
⊸ Over the next five years the automotive paint market is
expected to shift from conventional paints to 2 pack paints
⊸ Changes demanded ICC to import from ICC’s
international base in England
⊸ 2 managers in Kolkata Head Office (business
development and product management)
⊸ Recruitment of special sales force to supervise refinish
business
⊸ No change logistics, Import, IT and branch operations

11. Reason to Problems
⊸ IT systems were not calibrated to read alpha numeric
product codes
⊸ High lead time: 3 months by ship
⊸ SKU count- 1000 nos. of finish products and 300 nos. of raw
material apart from 108 SKU’s of AR
⊸ Complexity in the logistics after introduction of AR
(warehouses to Vashi)
⊸ Mismatch in forecast and the actual demand
⊸ AR material last in priority for the logistics team
⊸ Air Courier not a feasible option for AR materials

12. Proposed Action Plan
IT
Upgrade the
information system-MIS
to avoid any confusion
with regard to scanning
and recording of SKU
codes
Demand
Better coordination
with the dealers to
overcome the forecast
and actual demand
mismatch
Balance
Strike a balance
between legacy and new
products in tune of how
the supply chain
services them
SCM
Recalibrate the supply
chain in such a manner
that it introduces new
products to the market
while clearing the
existing backlogs
Switching Costs
Sensitizing dealers
about the benefits of
investing in the new
system of Advanced
Refinish
Training
Educating the sales
personnel at ground and
middle level on the new
system so as to make
the transition a smooth
one

13. Thanks!
Any questions?
Sampad Acharya UR15037
Shashank Guwalani UR15041
Swati Mohanty UR15045
Ranjana J UR15066
Samarjit Pattanaik UR15070
Satyajit Chatterjee UR15075
Tridib Mondal UR15088