The right technology can reduce the complexity of direct store delivery (DSD), whilst improving sales and customer service.
The COVID pandemic accelerated the growth of direct store delivery (DSD), and the global Direct Store Delivery market is expected to grow at a 6.5% CAGR through to 2027, driven by increasing demand for fresh and organic products which cannot risk extended time in warehouses or distribution centers.
ADVANTAGES OF DSD
DSD can help improve inventory management, reduce costs, and increase sales. Manufacturers and distributors can manage their supply chains more effectively by reducing lead times and inventory levels. It can reduce transportation costs and minimize waste.
By reducing the number of touchpoints in the supply chain and with greater visibility of touchpoints in real time, manufacturers can respond to changes and issues more quickly, and frequently and accurately answer retail customer status queries. Delivery frequency and reliability is increased whilst transport costs are decreased.
It enables manufacturers and distributors to offer a wider range of products, and more convenient delivery options in a way that is hyper-targeted and taps into local demands for customized product ranges. Stronger customer relationships can be built through more personalized service.
The data generated by DSD can by analyzed to not only identify trends in retailer and customer preferences but also to iteratively improve and optimize supply chain efficiency and inventory levels.
From a retailer standpoint, DSD reduces their inventory holding costs and reduces the likelihood of out of stocks, thus improving customer experience. They can offer a wider range of products without large inventories. And in cases where the supplier and distributors are placing the merchandise on shelf and ensuring correct pricing, DSD saves retailers on payroll. For smaller retailers it saves them on space they don’t have to carry large inventories. So ideally a supplier’s DSD platform is combined with a Retail Execution program at store.
CHALLENGES, PERILS AND PITFALLS
DSD isn’t all sunshine and rainbows though. As with anything, there are downsides as well as upsides.
With DSD the challenges include:
- High and increasing costs: rising labor costs, shipping costs, distribution costs including purchase or lease of trucks and drivers
- More responsibilities: ensuring timely deliveries and liability for damaged or defective goods. Product quality and safety during transportation is paramount
- Increasing service requirements: growing assortments, shorter delivery times, more promotions, and demand volatility in some categories
- Complexity: such as the need to monitor distribution assets such as trucks’ physical and mechanical condition and physical location throughout each day, monitoring the status of every delivery at each checkpoint
- Inadequate customer service: dealing with myriad customer enquiries and disputes about order and delivery status, invoices, delivery delays, and product information requests
- Poor decisions and inability to act quickly: if using old or manual DSD solutions, a supplier may have limited visibility of what is happening in the field (such as delays, damaged products, poor marketing/non-competitive products, late orders), and lack the data to make informed business decisions.
MITIGATING THE RISKS AND STREAMLINING OPERATIONS
Employing a technology platform that minimizes the challenges and exploits the advantages listed above is the name of the game.
A quality DSD solution, which may be a combined solution across Order Management, Warehouse Management, and Retail Execution solutions, should be able to:
- Integrate and automate route and customer orders
- Enable real-time visibility across the supply chain by providing operation workflow and delivery visibility
- Monitor all delivery and sales activities to increase safety, security, and traceability. Track delivery from warehouse to recipient
- Provide intra-day intelligence on order adjustments, returns, credits, cash and driver performance
- Provide visibility of field activity such as delays, damaged products
- Eliminate reconciliation paperwork
- Manage mileage, fuel expenses, and bank deposits
- Control inventory and cash transactions
- Monitor and maximize portfolio distribution at the point of sale
- Provide customer servicing and route reconciliation data
- Provide proof of delivery (POD) to reduce queries and disputes
- Monitor and track sales opportunities including identifying and tracking operator and distributor sales targets
- Be easily integrated with any ERP system.
The right solution, or combination of solutions, can help improve execution, productivity, and efficiency at the point of sale whilst reducing error likelihood. It can take the pain out of customer service and route reconciliation whilst streamlining and improving sales, deliveries, merchandising, productivity, and analytics. It can boost operational efficiency and maximize revenue by 50 percent, such as by improving sales and order-to-cash cycle times and growing portfolio distribution at the point of sale. It can reduce inventory shrink and loss by up to 40 percent, and shelf out-of-stocks by up to 50 percent. Customer disputes, chargebacks and collection issues can be decreased by 75 percent.
Ultimately a good DSD solution will boost your operational efficiencies and maximize customer service whilst reducing costs and increasing revenue. TELUS Consumer Goods has a number of solutions to help streamline your DSD operations. Find out more or request a demo at www.exceedra.com and www.ignition.afsi.com