Supply Chain Management in Paints and Coatings

By Cynthia Challener

Effective supply chain management (SCM) solutions can provide paint and coatings companies with a means to control and minimize costs while improving customer service. Development of a responsive business strategy underscores all successful SCM implementations. In the face of uncertain demand, balancing the need for cost reductions with the flexibility critical to productive operation of extended supply chains and the desire for increased risk management confronts most companies today.

Formulators also face the challenge of managing supply networks to consumer-oriented markets and industrial customers through a number of different channels of distribution. Careful selection of software, business practices, and data collection can result in dramatic improvements in an organization’s bottom line. Most major chemical companies, including suppliers of raw materials, additives, and resins to the paint and coatings sector, as well as leading paint and coatings manufacturers themselves, have implemented enterprise resource planning (ERP) and supply chain management systems in some form or another.

However, many have not gained the maximum level of benefits possible from their initiatives, and some have even taken actions that have inhibited their ability to reap the greatest possible rewards for their efforts. Supply chain management systems are designed to assist in the gathering and analysis of data to enable accurate demand forecasting, which is then coupled with internal knowledge of production and delivery capability and the desired level of profitability to design and implement an effective and efficient supply chain process that extends from the supplier through to final delivery of product to the customer.

There are four aspects of SCM that paint and coatings companies are particularly interested in, according to Kevin Reid, a partner with consulting firm Orr & Boss. These areas include forecasting, order processing and execution, warehouse management, and distribution resource planning. Simon Bragg, European research director with ARC Advisory Group, adds that production planning and scheduling, which reflects a company’s unique production processes, is another critical issue.