On a recent conference call with a customer we discussed the need for suppliers to offer direct store delivery. This got to me thinking it may be helpful to share some of the highlights of that discussion and explore: Why DSD?
It is a costly decision for Consumer Goods suppliers to have DSD operations (route staff, vehicles, etc.). Consumer Goods suppliers tend to use DSD processes for products that are high volume and time sensitive. These manufacturers use DSD processes to make sure that their products are properly transported, in stock, on the shelf, displayed properly, and correctly priced.
A supplier utilizes DSD operations primarily to make sure that their products get the attention they need to be in stock and properly merchandised to maximize sales.
Manufacturers of consumer product goods (CPG’s) use DSD operations to be close to the end customer. This helps solve the problem of restocking the retailer's shelves in a timely manner. DSD operations offer greater merchandising opportunities when the process is owned by the driver/distributor. Suppliers may have concerns with the transportation and handling of their product, particularly if it is frozen, fragile or perishable (short shelf life).
Retailers welcome DSD for these product categories, as the CPG suppliers provide the retailers with additional labor in their stores. Statistics from the Grocery Manufacturers Association found for DSD product categories:
For a typical large format store, DSD suppliers provide up to 17,000 labor hours per year per retail outlet for a retailer
DSD accounts for 24% of grocery volume and 52% of store profits
DSD products are the fastest growing categories
Direct Store Delivery reduces out-of-stock rates
DSD can increase promotional lift with trade funds by 2X
DSD enjoys five times faster replenishment to the shelf
DSD is responsible for 7 of the 10 largest grocery product categories
So, why DSD? Because it has proven revenue and resource benefits for both suppliers and retailers. This creates a winning offering for the end consumer. We would love to hear from manufactures why you choose DSD? What are the benefits you are experiencing? Retailers: Share the benefits you receive from suppliers that utilize DSD operations. Let’s start the conversation.