INVENTORY MANAGEMENT IN PRACTISE: Inventory management in Dulux paints: Inventory is most important and most critical part of supply

chain management. As we know there are 3 types of inventory via Raw material, work in progress and finished good. To explain inventory management in detail we visited ICI (Dulux) paints to study its inventory management. ICI paints India has 5 plants all over India manufacturing 2 types of paints via water based and solvent based. The company has 1 centralized office which takes decision for all the 5 plants like vendor selection, total demand forecasting, total output for each plant, etc. Its Koperkhairane plant manufacture only water based paint which is used to paint our houses. The company has installed SAP program which helps the management of the company to plan its production. The plant manufactures base color (i.e.) white color and also manufactures two more color i.e. Red and Yellow. Various colors what we get in market is done by dealers. Dealers have tinting machine from which they can come up with various colors. The water based paints require 150 various types of raw material some in powder form and some in liquid form. To get all the raw materials in time, company has maintained a good relationship with 28 vendors. Since the total production planning is done monthly, it is already decided what will be the daily output. Centre head office decides the monthly output and the plant divides the total monthly output by 30 to get daily output. According to daily output plan the optimal raw material is ordered. Special 26 raw material which needs to be imported is ordered in bulk and kept in warehouse where as other raw materials are ordered regularly or once in 2 days depending on the requirement. Just in time management is practiced in case of raw material inventory. Delivery of raw material is done by vendors and vendors cost. Packing is done in plant it self but packaging material is outsourced. Packaging material is delivered regularly by the vendors. Safety stock is always maintained by the company so that production doesnt stop at any time. After installing SAP and planning strategies to reduce inventory company has managed to reduce the inventory from 28 days to 13 days. Total time required to manufacture varies between 7-24hrs depending on the type of goods. At one particular time only one size of product is manufactured. Currently company has 150 kl Work In Progress (WIP). Company has capacity of 200kl WIP. Since demand for paints in Indian market is very seasonal, company has to keep huge finished goods inventory to satisfy festive season demand at the same time company has to keep same production level trough out the year. Keeping huge inventory will increase the cost of final product, therefore company keep all finished good inventory in its own warehouse. Company has a great distribution channel with 180 Depos all over India. All Depos have storage capacity to maintain supply and satisfy the demand. On an average thane plant keeps 3 crore finished goods inventory. Finished goods are transported to depots. Transport is outsourced and paid on per km per kl basis. 60 days credit period is given to transporters and 21 days credit period is given to distributors. At site level company holds 4.35 crore of inventory (both raw material and finished good) per month. 5.5 Crore inventory per month turnover vise. Globally company has reported 90 crore inventory till 2007, now it has been reduced to 48 crore.