One of the hottest supply chain trends to come out of the pandemic is the delivery method known as DSD or Direct Store Delivery.
Key Takeaways:
- Direct Store Delivery is very useful for supply chains where products require frequent replenishment, and for companies that need tight delivery windows for their products, or have a short shelf life.
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Its advantages include quicker delivery of products to retailers, effective shipping of fragile goods, increased visibility into consumer behaviour, merchandising opportunities, and more control over replenishment.
- The biggest disadvantage of direct store delivery is the cost, but this can be mitigated.
According to Retail Insider, many retailers and manufacturers have used Direct Store Delivery to adapt during the pandemic to face new supply chain challenges.
So, what is the DSD model? Direct Store Delivery involves removing the middle ground of a distributor, manufacturer, or supplier delivering goods to the customer's warehouse or distribution center and taking the goods straight to their final location. There are a lot of benefits of this model in the current supply chain landscape.
Today we’re going to explore DSD, looking specifically at who benefits the most, what those benefits are, any hidden disadvantages, and some best practices.
Who Benefits the Most?
Direct Store Delivery is incredibly useful for supply chains where products require frequent replenishment, and for companies that need tight delivery windows for their products, or have a short shelf life. Supply chain disruptions are at a peak during the pandemic, and DSD can give your business a competitive edge if used correctly.
Snack food giant Mondelez implements direct store delivery into a lot of its brand's distribution strategies and has reported that although costly to begin with, it has led to profitable growth.
Similarly, a Routeique partner, Nestle Canada, implements DSD in its Nestle ice cream division as it is a profitable model for quick-moving products.
The Advantages of the Direct Store Delivery Model
Quicker Delivery of Products to Retail Shops
The DSD model skips warehouses and distribution centers entirely. This saves time by avoiding the diversion, stoppage, and waiting time that happens at the distribution centers.
Direct Store Delivery has grown to be an invaluable strategy for retailers who benefit from making certain products available to consumers quickly.
More Effective Shipping of Fragile or Short Shelf Life Goods
Direct Store Delivery is effective in reducing breakage in the handling of products that are large, lightweight, or fragile because the manufacturers maintain greater control of handling the products. Having the product handled fewer times increases the chance it arrives at its end destination in perfect condition.
The DSD model reduces the time a fragile or short shelf-life item like eggs, bread, or milk has to spend in the supply chain.
Increased Visibility into Your Consumer Behavior
Becoming a distributor of your products, in addition to the manufacturer, will give you unique and unparalleled insight into the behaviour of your end-line consumer. Understanding where your product is most popular, and allocating appropriately will increase sales and profits in that specific sector. Correct allocation is also a big step in building customer confidence and satisfaction because when your customer is succeeding, so are you.
Merchandising Opportunities
Another benefit of engaging in both roles and being the creator and distributor of your products is that you can often be the merchandiser as well. Ensuring that your product is displayed exactly how you want can drive sales by maintaining the exact shelf image you want of your products. Putting this step of the process in your hands opens up unique marketing and merchandising opportunities.
Vendor-Managed Replenishment
Putting the replenishment of inventory in your own hands cuts steps out of the supply chain. Doing this reduces complexity, and therefore reduces mistakes and unforeseen costs. Also, being in charge of your own replenishment allows you to move products on your own terms, increasing sales and optimizing inventory spaces.
The Disadvantage of Direct Store Delivery
The largest barrier for a supplier or distributor to take on Direct Store Delivery is the cost to implement it. However, if done right it can be a scalable solution that yields great results.
Direct Store Delivery Best Practices
Direct Store Delivery can be a perfect fit for a lot of producers and distributors. There are some ways to get the most out of the system, and Routeique can help with that.
Finding Solutions that Work for You
To get the most out of the DSD model, it's best not to go at it alone. The best way to take advantage of DSD is by making sure products arrive as efficiently as possible in order to cut as much cost as possible. Many businesses find that centralizing their operation with the right technology allows them to operate efficiently and seamlessly. However, it’s also important that when aiming for efficiency, you’re not compromising product integrity or safety. This is especially true when it comes to perishable and temperature-sensitive products—cold chain monitoring and compliance, as well as proper product handling, are essential.
Supply Chain Software and Consulting
Routeique employs cutting-edge technology to optimize every step of the Direct Store Delivery process. Routeique route optimization tools and delivery management systems help you maximize the number of deliveries per route while minimizing the distance travelled. This saves time and money, bringing you the most efficient deliveries possible.
The Routeique Delivery Management System, or DMS, lets you stay on top of your delivery system with real-time tracking and reporting of the delivery status. It also maintains digital proof of delivery, doing away with the pesky paper processes where important details fall through the cracks.
Routeique also uses in-truck sensors and the Vehicle Intelligence Hub in order to monitor the status of your goods in transit, including trailer humidity and temperature. This ensures that your goods arrive as optimally as possible. The in-truck sensors assist with maintaining your temperature-sensitive goods, ensuring you maintain cold chain compliance.
But Routeique is also much more than a hardware and software company. Finding a partner is the biggest step towards driving the change you want to see in your business. Routeique has a dedicated client success team with its finger on the pulse of supply chain trends and is ready to help you make the jump to getting the most out of your supply chain.
