A Guide to Direct Store Delivery DSD
DSD or direct store delivery is a logistics model where a product that sells quickly and at a high volume go straight from the manufacturer’s facility to the retailer. It skips the distributor and the retailer-owner warehouses. The inventory levels, merchandising, and promotions are all handled by the manufacturer directly. DSD is not something new. The growth of retail profits has been attributed to DSD. Today, with advances in technology, DSD has become faster, more accurate and more efficient than ever before. Manufacturers, retailers, and customers are all benefitting from DSD.
With DSD, the cost of inventory, delivery, merchandising, and stocking labor is handled by the manufacturer. This helps to reduce the capital investments and operating expenses of the retailer. And this leads to higher profit margins.
Manufacturers then become more visible when it comes to consumer behavior, sales volume, patterns, etc. This then helps the manufacturer better personalize the demands of specific stores and their customers. They have a direct impact on sales without relying on the efforts of the retailer.
Ordering and replenishing traditionally is quite a very slow process. When stores order products from the warehouse, it has to wait for the scheduled delivery which could be days away. With this delay, it could mean lost sales and unhappy customers, for both manufacturer and retailer. On the other hand, in the DSD model, manufacturer’s representatives are in each store several times a week. The representatives will be able to report the items that are still sitting on the shelves, the items that are being sold fast, the items that are getting low, and those that have outages. With these direct line products are taken to the stores more quickly. There is no long waiting time for products to be replenished; it will only take a day or two to replenish them.
Manufactuers will have the opportunity to predict and take advantage of trends if there is a representative in the store every few days. Manufacturers can check out certain products that increase on demand if there is an event of festival going on in the place, for example.
When there is a new product to be released, both manufacturer and retailer can put up the money and promote it together. And with DSD, there is an assurance that the stock of these new products will not run out through the duration of the promotion.
DSD can help retailers take away their employees time from being used in ordering stocking, cycle counts, and merchandising but instead focus their efforts on customer services and other activities that drive sales.