PPG Brings Us Vibrant Colors with SAP Inventory Optimization* Solutions

[DKahn]

PPG is the company you never knew touched you so many times every day. From soda cans, auto and airplane paint, passport paper, hot wheels, NFL helmets, and smartphones.

PPG is the world’s largest paint company and generates over $15.4 billion dollar in annual revenues as a global supplier of paints, coatings, optical products, specialty materials, glass and fiber glass.

At the Global SAP Inventory Optimization User Group meeting this week, PPG shared their amazing journey to become a “Best-in-Class” Supply Chain.                                               

*Missing many participants

Scott Sinetar, VP Architectural Coatings (think paint cans for homes) inspired us with his view on the criticality of the Supply Chain function to executing the Corporate Strategy. “It will either enable us to meet our objectives or hold us back.” Peter Ten Hagen, Head of Supply Chain and Global Director, Supply Chain and Operations for Automotive Refinish shared techniques to drive “Best-in-Class” Supply Chain governance and adoption.

Scott also shared the challenges of managing PPG’s Supply Chain and industry business challenges:

• PPG’s Architectural business has expanded 150% through the Akzo Nobel Architectural acquisition.
• PPG Architectural Coatings is now selling through all three major channels:  big box retailers, company owned stores and a network of dealers.
• Architectural paints with all the stores, big box retailers is super competitive and sales are highly impacted by weather (wet and hot).
• PPG has transitioned the company’s profile to focus on Coatings which has meant an aggressive acquisition and divestment strategy, and this has changed their supply chain requirements.
• The business units each run their own P&L and the company is run in a decentralized manner.  There is not a central supply chain organization, but best practices are shared through a Supply Chain Council that includes representatives from each business unit and key functions.

PPG’s Overall Business Scope:

• 11 Strategic Business Units
• ~175,000 SKUs

PPG Architectural has ~1,000 stores in the United States and Canada

The User Group explored how the global enterprise level Supply Chain Council (SCC) improves the supply chain by breaking down the functional silos and eventually enables a more integrated business model.

The approach to driving performance across the entire enterprise involves completing cross business assessments of metrics through a scorecard. The scorecard is reviewed by Executives (red is bad) and the key stakeholders are driven to “You are what you measure.” Business stakeholders are asked to come up with action plans and to self assess their performance against those action plans.

The nice part of the SCC is that it provides a path to improvement with formal programs, tools, and support structures for all the supply chain processes. Cross-business sub-teams focus in on establishing best practices for the entire enterprise. These guides are then provided as roadmaps to success.

Recently, PPG top executives set a 10 day reduction in inventory challenge.

Luckily, the SCC has a 6-Step Inventory Management Program:

1. Model
2. Clean up (unhealthy inventory)
3. Simplify (your portfolio)
4. Understand Drivers
5. Optimize through SAP Inventory Optimization Software
6. Monitor

And, of course, those that implemented the program had the quantifiable benefit of reduction in Days on Hand. So why not do it!

The keys to PPG’s Supply Chain Transformation success:

• Secure Executive Sponsorship
• Keep metrics front and center.
• Keep Business Unit leadership up to date on initiative progress.
• Provide a path to success to those who are behind.

Thanks to all who attended and contributed to the event, the PPG team for hosting, especially Thomas Oberhauser, Lisa Vincenty, and Dan Kohler for coordinating, and to Scott Sinetar and Peter Ten Hagen for inspiring us to achieve supply chain and business success!

*SAP Inventory Optimization Solutions include SAP Enterprise Inventory and Service-level Optimization and SAP Integrated Business Planning for inventory