Not having certain products delivered to your store in time for key sales windows can be a major blow to your bottom line. Not only do you miss out on large numbers of sales, but you also disappoint customers and cause them to find what they need at a competitor’s store instead.
Thus, you work hard to avoid this situation and probably put a lot of energy into inventory forecasts and designing your supply chain accordingly. However, whether your plan is highly detailed or a one size fits all approach, it’s critical to consider how unique products and transportation requirements could cause hiccups in your supply chain.
For example, apples and blueberries are temperature and time sensitive and require cold chain transportation. I bet they probably ride on the same truck to the store from a distribution center (DC), right? Now what happens when your blueberry truck gets stuck in traffic? Do you have your DC to store truck wait for the blueberries to arrive, or leave without them? Odds are they probably leave without them, causing the store to be without an item that I came for.
Seasonal pushes and items that can surge unexpectedly add yet another layer to your planning. Without a good contingency plan, surges can push your supply chain to the breaking point. Direct store delivery (DSD) programs can offer a solution to this challenge.
What is Direct Store Delivery?
Direct store delivery (DSD) means delivering products from a supplier or distributor directly to a store, bypassing the retailer’s distribution center. DSD tends to also put the unloading and stocking of products into distributors’ hands, instead of the stores’. In the grocery industry, DSD is an important channel, since not only gets produce with short shelf lives to their destinations quickly, but it also provides control over shelf space.
DSD is widely known for solving retailer problems by quickly and cost-effectively replenishing out-of-stock products. It can cover a wide range of scenarios:
– A one time, high volume delivery of flowers and candy for Valentine’s Day
– A full outsource of fresh produce
– A short order of fresh lettuce, potatoes, and corn for the dinner rush
– A local delivery that you would send product out of state to your warehouse and then back in-state to your stores (Food Miles)
Ultimately, a DSD program helps ensure that you have the products your customers want most—exactly when they want them.
Key Benefits of Grocery Direct Store Delivery
Direct store deliveries are growing in popularity. Many in the beverage, dairy, and bakery industries are already employing some sort of direct store delivery program. Expect more types of industries to follow. Whether it’s just an unexpected purchasing surge on particular items or seasonal promotions that you don’t have room for in your warehouse, you need the ability to stock your shelves with the products that are in demand—right now.
Let’s take a look at the major benefits of DSD in the grocery store sector
Quick Time to Market:
Direct store delivery is a quick way to get products onto shelves. Bypassing distribution centers saves time, since goods do not have to divert, stop, and wait at centers before moving onto stores. If your store needs to get certain products into consumers’ hands quickly, DSD is a valuable strategy.
Shipping Fragile Products or Products with Short Shelf Life
Items that are large, fragile, and lightweight benefit from DSD models because they need to prevent damage in transit. Examples of fragile grocery items include products like potato chips and eggs. Direct store delivery allows manufacturers to maintain greater control of handling, reducing breakage.
Products like bread, dairy, and produce are high-volume items (meaning grocery stores sell a lot of them), but spoil quickly. By shipping them using DSD, you reduce the amount of time the products spend in the supply chain, giving them longer to live on shelves. Additionally, because these types of products tend to sell out quickly, you need to frequently replenish stock.
Reduce Labor Costs
One of the most important benefits to retailers is reduced labor costs. Since the types of items shipped via DSD often have low margins, oftentimes it’s not cost-effective to have store personnel manage them. By delegating the reordering and stocking of high turnover items to the distributors, grocery store can focus on higher-margin goods, as well as on serving customers. In the grocery industry, DSD accounts for as much as a 25 percent savings in store labor costs.
Direct Store Delivery Best Practices
Utilize these best practices to ensure your business is leveraging DSD to the fullest:
Use a Transportation Management System
A transportation management system (TMS) provides shipment optimization, visibility, business intelligence, and global supply chain talent needed to lower costs, improve efficiencies, and gain a competitive advantage in your global supply chain.
With a TMS, your business gains full insight into every aspect of your supply chain. Thus, you can make decisions around DSD that you know will benefit your bottom line. A TMS can help your organization ensure you are being charged the correct rates, optimize goods and routes, and answer any questions you may have along the way.
Employ an Experienced Food & Beverage Logistics Provider
With the right sourcing and logistics provider, DSD works for most merchants. Look for a provider with national coverage that works with other companies in your industry, has access to the right equipment for all of your products, and has the ability to ship product the same day you need it. Also look for a provider who has the technology to handle all of your order management needs from one source—orders, tracking, delivery, and billing. Whether you are an independent convenience store or one of the biggest chain retailers in the world, there are days that everyone can use a little help.
Also , look for a provider who has the technology to handle all of your order management needs from one source—orders, tracking, delivery, and billing. Whether you are an independent convenience store or one of the biggest chain retailers in the world, there are days that everyone can use a little help.
DSD is not limited to special events and in-season promotions. In fact, you can use it as your primary outsourcing program if you don’t have a DC or the capabilities to manage an onsite refrigerated program. In addition, many merchants use DSD as a secondary sourcing tool when they need quick delivery. Are your goals to simplify your tasks, retain customers, increase traffic, and possibly reduce costs while doing so? The right DSD program can deliver a wide range of products right to your store and get you closer to your goals.
Learn more about how an experienced food and beverage logistics provider can help your grocery business leverage direct store delivery most effectively.