Direct store delivery (DSD) boils down to the principle of delivering goods directly from the factory or wholesalers to retail stores. The process bypasses traditional distribution centers or warehouses.
As part of the concept, drivers also often restock store shelves in addition to just delivering the goods at the loading platform. Recent studies have shown that many companies are planning to increase investments in DSD software to increase efficiency as well as adaptability.
Using the concept effectively requires leveraging new technology to overcome some of the challenges that are built into the process.
While the DSD method offers some key advantages, it also has some limitations. Luckily, most of the limitations can be overcome with modern technology. Some of the key requirements are:
- Efficient handling of smaller consignments and multiple ad hoc route stops for the forwarder
- Ability for the drivers to efficiently manage an extended scope of responsibility, which could for example include restocking, storage, returns handling, forecasts, seasonal variations and environmental optimization
- Agile technology, which enables quick adaptation to changes in the market in order to stay ahead of the competition
- Precise demand forecasts and delivery accuracy.
Direct Store Delivery is one of the most trending terms in the Wholesale Industry, especially in Wholesale Distribution. It means that you distribute to retail stores one by one. Wholesalers, retailers and manufacturers should become familiar with DSD solutions, as most customers, category buyers and others ask for it when they are wholesalers. Businesses love DSD software because the trader does all the work for them and because they never run out of the product. If the dealer does a good job, the dealer is always fully equipped with the product.
What is the problem of being a DSD distributor? Well, if you’re a small trader, that’s not really a big deal. If you are a one man operation or distribute in one city, you will have no problems with DSD software and probably don’t need a large investment. Now, if you land a large retail chain on the other hand, chances are they will be all over the state or all over the country. Now imagine how big of a deal it is. You’ll need a fleet of salespeople and trucks.
This is why retailers love DSD, but manufacturers prefer to deliver truck loads to one central warehouse location. There is a large investment with DSD. If you do not want the investment, you still have to go around and sell it to distributors who do have needs to leverage DSD software to increase profitablility. This can take months or even years if you already have the retail accounts aligned.
Why optimize the direct delivery of the store?
The service requirements for direct delivery to the store are increasing, due to:
- Larger, faster assortments that change and grow
- Shorter delivery times
- increase in the number of promotions
- Volatility in demand
How to optimize the direct delivery of the store?
Direct Store Delivery can be optimized by implementing load creation and route optimization at a strategic, tactical and operational level. The main improvements that lead to cost savings and better performance are:
- Moving from static planning to dynamic
- Moving from decentralized to centralized planning
- Create transparency and visibility so that the receiver and the operator can optimize their part of the supply chain
- Optimize the use of truck space and multiple temperature zones by adding an optimized load
What are the results of Direct Store Delivery optimization?
- The main results of Direct Store Delivery optimized are:
- Savings in transportation costs of up to 15%
- Reduced number of kilometers / miles traveled, leading to CO2 reduction
- Satisfied customers to have a better service performance on time
- Increased employee satisfaction by delivering a realistic amount of work to execute
- Reduced hardware footprint, particularly when using cloud solutions
These developments in DSD software have a great impact on the amount of products that will be sent and the decisions that will be made about their distribution. Most all high-level DSD software solutions, reliability and transparency, but also efficiency are crucial to stay competitive. In addition, the cost of direct delivery to the store will increase due to increased labor costs, congestion and rules and restrictions, especially for the distribution of the city. Shippers and dealers want to increasingly fine tune availability, delivery times and margins.
DSD distributors are in 2 main categories, full service and Case dropper
The DSD full service distributors are the ones who bring the products stored in stores to market and market the account by spending several minutes or even hours in each store.
The other type, Case Droppers, are those DSD distributors who do not sell items, as the name implies, they appear from store to store. It is up to the store employees to store and market the products.
Now, what is the best for your products? Well, it’s obvious. Full Service DSD solutions are the best way to deliver products in almost any situation. You will get more sales, you will be stocked more often and if the distributor does a good job you will always have the best spots in the shelves or in the retail floor. Your products will have their appropriate pricing and the employees and managers of the stores will attach a face to your product. That is always very important.
DSD is a sales strategy that offers an alternative to centralized distribution. In 2018, DSD software enables retailers to reduce operating costs by bypassing the dealer’s distribution center. Instead, the goods travel directly from the supplier to the retail store, reducing time and money in the merchant’s profit and loss account. For companies that want a more flexible and cost-effective start to their direct delivery change, cloud-based solutions are an ideal choice of direct in-store delivery software. With web-based DSD solutions, your employees can access the same powerful software tools on a remote server that will ultimately maximize efficiency and profits.