From a supply chain standpoint, Kelly-Moore Paint Co. Inc.’s retail locations have an advantage over other retailers – the company manufactures its own architectural coatings. This synergy enables the company to control shipment and inventory more accurately.
Nevertheless, Bruce McGregor, vice president of manufacturing and supply chain, voices a familiar supply chain refrain. “The biggest challenge we face right now,” he says, “is synchronizing the supply chain, making sure that we have an accurate forecast of what demand is going to be and planning far enough in the future so that we are able to execute the plan and make sure that we have all the raw material we need and all the paint to meet the demand.”
To accomplish that goal, Kelly-Moore Paint Co. is in the process of implementing demand-planning software. “The first step is to develop an accurate sales forecast,” McGregor points out. “We’re going to use that sales forecast – which we’re developing at the store level – to control what we produce at the manufacturing plants. Then we’ll do some long- and short-term forecasting with raw material suppliers for what we need and when we need it.
“What we’ve done in the past is relied heavily on history to predict what we’re going to do in the future,” he recalls. “The latest supply chain demand-planning software is really a lot more powerful and uses a lot more statistical analysis to be able to not only look back at history but predict the future in a statistical way.”
He stresses that the goal is not just to produce a better forecast for its own sake. “It’s about coming up with a more integrated supply chain, one that is synchronized and operating off of the best plan that we can put together,” he continues. “This allows us to look out a year into the future, predict what our business is going to do and be able to provide a good volume forecast for our suppliers, so they know what we’re going to buy.”
Paint for Pros
Kelly-Moore Paint Co. offers a variety of architectural coatings for professionals and homeowners. “We’re one of the last paint manufacturers that actually produces stock colors in large batches,” McGregor maintains. “That gives us an advantage when we’re dealing with commercial contractors, who are our primary customers – the color match is perfect.”
Stores also can tint paint to other colors that are required with a high degree of consistency. The stores carry all the equipment, accessories and sundries needed for painting, many of which are sourced from third-party manufacturers and stocked by distributors. Materials and merchandise are shipped to manufacturing plants and stores mostly by third-party trucking.
McGregor is responsible not only for making sure the 147 company-owned Kelly-Moore Paint stores have enough product, but also ensuring that the company’s two manufacturing plants in San Carlos, Calif., and Hurst, Texas, have enough raw materials.
That task will become more complex as Kelly-Moore expands the locations where its paint is sold to dealer networks, small hardware chains and local paint dealers. Now, the company keeps approximately 50 days of inventory on hand in the company-owned warehouse by its plant in Hurst and in a warehouse in Union City, Calif. – near its San Carlos headquarters – whose operation is outsourced to a third-party logistics supplier.
Union City is more centrally located than San Carlos, McGregor notes. The company’s original manufacturing and headquarters location in San Carlos is so landlocked that there was not enough room for a large, modern warehouse – previously, products had been warehoused in eight different buildings around the plant.
Supply Chain Success
Kelly-Moore Paint Co. is streamlining its manufacturing processes to speed paint production by reducing changeover times on the lines that fill the quart and one- and five-gallon containers in which most of the company’s paint is sold. The company also is focusing its manufacturing improvements on adding value and engaging the work force in more efficient and lean manufacturing techniques.
McGregor attributes the company’s success to its strong customer service orientation. “We have very long-standing relationships with our customers,” he stresses. “We’re very focused on being able to do whatever it takes to make sure they’re successful.”
He would like to reduce inventory levels. “The success of the supply chain is going to be due to better planning,” he says. “It requires a high degree of interaction to make sure it runs successfully. Our new supply chain planning tools will run in a more synchronized and organized fashion and be able to reduce inventory levels.”
McGregor foresees a continued, two-pronged expansion. “One is to continue to grow our stores and probably add six to eight new company-owned stores this year, and continue on that trend in the foreseeable future,” he says. “Then, where we don’t have a retail presence, we’ll look at expanding through dealers.”