Case Study 1

M/s Britecolor Paints Ltd. (BPL) is a manufacturer of decorative paints for households, commercial premises and industrial applications.

a) M/s BPL has embarked on a policy of satisfying every possible customer in respect of shades, delivery and durability. Thus, it went ahead and created twenty-five depots, one in almost every city. The manufacturing base was, however, maintained in Pune. The factory received information in connection with stocks from depots once a week and there was no intercommunication between the depots. Since they were in the competitive market, price was pre-determined, i.e., the manufacturer had no liberty to price the product as per his own choice.

b) In their enthusiasm and effort to satisfy their customers, M/s BPL strived to manufacture every possible shade by combining various primary shades and would await the prospective customer to carry out the purchase. It ensured that these shades were available at each and every depot even at the cost of transportation incurred in sending goods in less than full truck load lots. This certainly provided a very high service level and the customers would get their shades as per their desires and thus they were fully satisfied.

c) While on one hand M/s BPL had a population of very highly satisfied, they had almost 50% of their total domestic sales lying as finished goods inventory at various depots, on the other hand.

d) Industrial paints, though not very customized, the respective industrial customer was quite satisfied. Consequently, the inventory of finished goods was very low in this segment. But, at the same time, realization was also lower due to stiff competition from other industrial paint manufacturers than the domestic market.

e) Nevertheless, the economic runs of industrial paints were always assured due to high off-take by the industrial customers

f) The objective of the manufacturer was to increase the realization taking into account economic runs, inventory, seasonality, and individual choices of domestic/industrial customers.

If M/s BPL appoints you as their Logistics Consultant, how would you advise them in respect of the following:

Questions:

1) How can the company achieve economy in transportation, by maintaining almost the same service level?

2) Demand forecasting technique to take care of seasonality as well as reduction in inventory?

3) Information technology to substitute maintenance of high inventory without affecting customer service level?

4) Connectivity between factory and depots (networking diagram)?