. INTRODUCTION
Dulux is an international level paint brand produced and owned by AkzoNobel. It was the first alkyd based paint producing company. The name Dulux was derived from Dupont and Luxury. Founded in 1904, it has grown to all over the world including largest manufacturer in Australia. Brand has witnessed expansion, transformation and growth over the years. AkzoNobel manufactures as well as markets the brand coatings, paints and chemicals. Dulux is most popular of its paints’ decorative category while other categories provides solutions to many sectors and industries including automotive, oil & gas, food, aviation and electronics. Its chemical business has more than thirty product categories. Every year it introduces new products to strengthen its position in decorative chemicals’ category. All the manufacturing sites follow ISO 14001 certification for clean environmental system. It has invested huge amount in its distribution channel to increase its visibility and reach across the areas. Its commitment towards environment has been best in class across the globe.
2. SWOT ANALYSIS OF DULUX PAINT COMPANY
Figure 1 SWOT Analysis
3. LOGISTICS STRUCTURE
The distribution channel of Dulux Paints is a bit different from that of other paint companies. They do not have concept of distributors, wholesalers and retailers does not exist in their chain.
FACTORY: The raw materials are fetched from different sources through the vendor service. These are then converted into paints, varnishes, putties etc. Then these products go to the Depots.
DEPOTS: The depots deal with dealers or other big construction sites managers and engineers (project networks). The company compete with the competitors based on product quality and excellent distribution channel. Continue and on time supply from company side is the best part of it. Dealers do not want to keep inventory in stock, so they supply the products on everyday basis. (Al Khateeb, 2010).
Figure 2 Distribution channel of Dulux paint company
4. LOGISTICS STRATEGY OF DULUX
These depots get yearly targets from the company which then they distribute to monthly targets. At the end of a financial year company allocate the targets to individual depots. The unmet targets are then added onto the subsequent year targets. These depots push the dealers for Dulux Paint products by giving good margins, on time delivery, good incentives etc. If any dealer drop out, new dealers are selected by following a proper approach. They are asked to fill the form. Background and capacity is checked against the business standards. So a blank check is signed by dealer on joining the network. It is used in case of any default of payments.
Figure 3 Processes in Dulux company (Hallajian, 2011)
5. LOGISTICS PERFORMANCE PRIORITIES:
Depots transport goods to the dealers on daily basis. The transport charges for them are minimal. Dealers place daily orders which they service. Even if the dealers do not put their requests for order, Depots make sure that they send minimal inventory. This is done to ensure that dealers do not run out of stock because if they do so, then they will sell competitors’ products. Every depot has a set territory where they have to sell. Depots never go beyond their territory as it leads to immediate termination of agreement. Thus there is no problem of infiltration. The depots are given a margin of about 15-20% depending on the product. Dealers deal with many paints at a time ranging from premium products to local paints. They usually push for products that have high margin and better delivery. Dealers prefer products of Dulux Paints mainly because of the two reasons:
¬ Better quality
¬ On-time delivery
6. LOGISTICS ISSUES
The supply chain from the company to the depot and the product quality seems to have worked well for the company. The supply is done on daily basis depending on the quantity required (Jedliński, 2015). But delays cause transportation problems. This leads to too much dependence on the transportation system and also increases the overall cost. Issues are:
¬ Company works on very old organizational structure. There is a long vertical hierarchy which is followed to communicate with higher authorities.
¬ Transportation is on daily basis. Depots have to deal daily with transport workers. Sometimes because of problems it creates delays in delivery and incurs extra cost.
¬ Sales on credit also creates problem. It takes a lot of time to deal with credit sales. It is not a simple task to recover money from those dealers. It is wastage of time and cost. But because of local contacts with dealers and competitiveness in the market, this cannot be avoided.
7. VALUE CHAIN ANALYSIS
Figure 4 Dulux paints as Value Chain
Primary Activities
¬ Research & Development
Research & Development has played a significant role in the growth of the organization. The company has invested 360m globally in R&D in 2014.
¬ Production
Dulux paints have world class production plants across the world. The company has more than fifty production plants across the world.
¬ Marketing & Sales
Dulux paints puts forward a unique selling proposition. Distribution is one of the main strategy of them. They are number one in paint and coatings technology and innovation and they hold leadership position in many markets.
¬ Customer Service
Customers are the core of all the business. Dulux paints must focus more on their customer service. Dulux paints must come up with a strategy like Asian paints. They have introduced the service in which sample will sent to the customer home within the certain amount of time on the request of customer which will ensure reachability and increase the brand loyalty.
Support Activities
¬ Information System
Information Technology (IT) plays a key role in the growth of an organization. Dulux paint company has been using Enterprise Resource Planning (ERP) solution from SAP. They are very well updated with the technology.
¬ Logistics
They don’t have their own distribution channels. They rely on their dealers to sell their products around the globe.
¬ Human Resource
They believe that people are their strongest assets, a company can only go as high as its people’s aim. It is the people who innovate and invent, and who engineer the efficiencies that make a business succeed. The company provide good incentive schemes for the people, a talent pool of over 7000 employees across 20 countries bring in a unique blend of mindsets and skills..
8. PROPOSED RECCOMENDATIONS
Some of the suggestion which Dulux paints can undertake to ensure efficient operations, usability, affordability, reachability and access :
¬ Instead of relying completely on the depots for the supply on daily basis, the company should set up a channel where the other distributors of the nearby area can supply the product in case the product is unavailable with the original distributor. The coverage of each depot ranges from 400500 KM. The too much dependency on transportation system leads to several issues (Krajnc, Logožar, and Korošec, 2012). This solution will reduce dependence on the whole system and provide a better distribution. The dealer helping the other dealer should be incentivized appropriately.
¬ As there is no trustworthy transportation channel, so we refer them to partner with third party logistics companies which will enhance service capabilities of the depot and won’t result in hiccups during emergency The process of partnering will be as follows:
o Incentivise the partner by featuring them on Dulux paint communication channels as “ The Trusted Partners” which will give the transportation channel also visibility and assure its full loyalty towards Dulux paints.
Figure 3 Distribution recommendation (Krajnc, Logožar, and Korošec, 2012)
¬ Leveraging efficient digital channel to reach directly to the customers and increase access market and reachability.
9. KEY PERFORMANCE MEASURES
Any company’s ROI depends on its efficiency of its distribution system. Dulux is trying hard to keep availability of its products in the market. It is continuously supplying the products to dealers and retailers. Some KPIs can be set to measure the performance of its distribution system.
¬ Inventory Value: Keeping the inventory value is important. Dulux can do this by accurately forecasting the demand and anticipating product needs.
¬ Sales order filling rate: Delivery time of the product should be tracked. It can help in minimizing the delivery time and providing the products at the promised time.
¬ Vendor performance: Scoring and reporting vendor’s performance is crucial. Set standards can be followed for this.
¬ Lost sales: With the help of CRM and distribution tracking reasons of lost customers can be identified and avoided.
¬ Number of returns: Number of returns due to defects and shipping mistakes should be avoide
10. CONCLUSION
Dulux logistics strategies are discussed in the report. Dulux continuously supplies the products to its dealers, so that they never fall of shortage if demand is there in the market. This continuous supply leads to some issues in the company which includes increased cost of transportation. Value chain analysis is suggested to improve the processes for cost reduction. Sellers of the paint keep products of every country, therefore timely supply at better prices is necessary to keep the company in the competition. Report discussed some of the possible solution which also includes collaboration among dealers. At last, report talked about performance measures of the company.