Case 9
Digital Storage (India) Ltd
Leveraging Innovative Supply Chain Practices to Competitiveness
Digital Storage (India) Ltd (DSIL) is an Indian manufacturing company principally engaged in designing, developing, manufacturing and selling of a variety of storage media products such as compact disc, magnetic disc and storage units for its clients across the globe. The company is also in the manufacturing of various solar products such as crystalline silicon cell and modules. The company has its operations across 82 countries in the world including the United States, Japan, Netherlands, Taiwan, India, Cyprus, Slovakia, Germany, etc. DSIL has its headquarters in New Delhi, India.
The company reported revenues of Rs. 21,769 million during the fiscal year ended March 2008. Digital Storage was established in 1983 and successfully developed cutting edge technologies to become the world's second largest manufacturer of optical storage media like CDs and DVDs. The company also emerged as the first to market the next generation of storage formats like blu-ray discs and HD DVD.
DSIL has the distinction of being the preferred supplier to all top global OEM brands. DSIL's products are manufactured at its three state-of-the-art manufacturing facilities. It has over 6,000 full-time employees and multiple manufacturing facilities in the suburbs of New Delhi.
DSIL owns a comprehensive logistics and supply chain system enabled by an in-house IT system, which is integrated with freight forwarders, major shipping lines, customers and suppliers at the backend. DSIL leverages this integration to respond with celerity to changes in customer expectations and market conditions. As one of the major containerized cargo shipping companies, DSIL has reduced its shipment lead time by more than 20 per cent in the last few years; DSIL also brought down the instances of delays in shipments to less than 0.1 per cent of the total despatches. Currently the company has a market share of 14 per cent and enjoys a long-standing relationship with global majors that has enabled the company to penetrate into over 40 countries.
Supply chain is the area where DSIL focused its attention to cut costs and enhance customer satisfaction. As DSIL was rapidly expanding its presence overseas, in 2001 it increasingly felt the need for a robust and efficient supply chain to ensure that all its products are delivered to its overseas customers on time. DSIL's IT-enabled SC has helped to overcome problems pertaining to its deliveries. IT-enabled supply chain is critical in bringing value to DSIL's customers through on-time and correct deliveries. In 2002, DSIL's growth made it imperative to develop a robust and integrated SC management. The purpose was to ensure that there were no errors in documentation and deliveries to customers. These systems were meant to add value and differentiate between the services provided by the firm and that of other competitors.
Today IT-enabled SC has helped DSIL to overcome problems pertaining to SKU identification and value-added tax (VAT) management. It has also facilitated zero-error deliveries to customers and efficiencies of operating teams, thereby providing a platform that has been used to integrate the system with those of customers. The system after its implementation drastically improved the working of SC.
DSIL has another initiative called ‘the round robin movement. This initiative was aimed at synchronizing inbound logistics and outbound logistics. DSIL's exports (80%) were routed through the Rotterdam port. Imports of shipments originating in Europe and being shipped through Antwerp and Rotterdam were carried out in 20 ft shipping containers. Due to a substantial market share in Europe, above shipping lane was critical to DSIL's distribution operation.
MBIL optimized its exports by using 40 ft containers with two-way traffic, moving on to same trade lane. It identified an opportunity where combined volumes and assured freight could be leveraged. DSIL had another supply chain initiative that involved a unique concept called ‘landing legs’. Being an export-oriented unit, DSIL's exports were comprised of 90 per cent of their production with a majority of inputs being imported. DSIL's facilities are located in Noida, UP, about 1,500 km from the nearest gateway port. DSIL used to operate its export and import transactions through an inland container depot at Tughlakabad near New Delhi. However, since the new ICD at Dadri (UP) was closer to the DSIL plant in Noida, DSIL decided to shift all its imports and exports operations here.
The transportation of containers from ICD at Dadri to the DSIL plant became a challenge. DSIL's solution was ‘landing legs on trailer’. It is a unique system that involves carrying its own fleet of trailers. Though DSIL faced teething trouble during the implementation of this novel concept, the project has been successful. DSIL is continuously working on innovative practices in SC to cash in on the opportunities to leverage its competitiveness.
REVIEW QUESTIONS
- Discuss the various supply chain initiatives at Digital Storage (India) Limited.
- How did innovative logistics practices leverage DSIL's competitiveness?