Making the Investment in DSD

Making the Investment in DSD

Last week, I was fortunate enough to spend some time with one of the finest family owned food product companies in the US. I was asked to attend a meeting with respect to improving the Direct Store Delivery operations within the organization.

The meeting included employees representing multiple divisions of the organization. Each individual was committed to improving the efficiency and reliability of the DEX transaction and overall DSD experience inside the retailer. It was very clear to me this company has made significant resource investments in the DSD operation at both the monetary and employee level. This group of strong leaders were each stakeholders in this investment.

It got me thinking about the drivers of investment of DSD operations at other suppliers. Let’s explore why CPG suppliers make this critical investment of both money and people.

  • Increased Profitability- 52% of grocery profits are associated with DSD and DEX

  • Reduced Operational Costs- DSD offers reduced operational and employee costs for the retailer/supplier

  • Increased Revenues- Products delivered via DSD and DEX account for 25% of all CPG products and 50% of profits.

  • Reduced Out-of-Stocks- Dedicated DSD operators/drivers assure your favorite products are always on the shelf.

  • Improve inventory turns- Regular visits result in greater ability to turnover current and future inventory.

  • Faster decision making- Supplier has far greater visibility into consumer habits and purchasing trends.

  • Improved Stock to Sales ratio- Driver/Operators make better business decisions during each DSD visit.

  • Reduced shelf spoilage- DSD allows for faster shipping direct to consumer and better replenishment.

  • Differentiates Supplier from Competition- Some retailers asking keep a score card for successful DEX transactions in DSD.

Retailers and Suppliers: Tell us about the investments you have made in DSD. Where have you seen the greatest ROI? What’s not working? Let’s discuss!