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Direct Store Delivery in 2021: A Complete Guide

Stack of cardboard boxes in a retail store on the background of shelves with goods to represent direct store delivery
Featured image credit: cybrain/iStockphoto.com

Running a retail business has become harder.

The competition has become fierce, forcing many companies to explore new ways to gain a competitive advantage.

Reducing expenses and inventory in the supply chain, shortening delivery cycles, and responding to demand faster are just some of the ways retailers are trying to improve.

All of this is leading the suppliers to shift from multi-stage distribution systems to the Direct Store Delivery (DSD) Model.

But, what is DSD?

What are its advantages and disadvantages?

How can you use it to your benefit in 2021?

We discuss all this below.  

What Is Direct Store Delivery (DSD)?

DSD is an alternative distribution model for centralized distribution. It means directly delivering goods from the supplier, distributor, or manufacturing facility to the retail store or retail customer. In this way, the retailer no longer has to maintain warehouses.

It helps retailers increase their bottom line by reducing their labor required for replenishment and warehouse maintenance costs

Who is the Direct Store Delivery (DSD) Model Suitable for?

The Direct Store Delivery model is particularly suited for smaller retail shops (such as convenience stores, drug stores, and gas stations) that require frequent replenishment and for companies that need tight delivery windows for their products. 

If you belong to the market segment where the freshness of products is important or the products are produced locally (for example, baked food items, snacks, soft drinks, and beer), DSD can be a boon for your business, its bottom line, and its sustainability in this intense competition.

Due to the reduced labor requirement for replenishment and zero warehouse maintenance costs, you’ll be able to provide your customers with products as per their evolving tastes and needs. 

You should also adopt the DSD model if you have a high consumer demand, high velocity, and fast-tuning merchandise. 

Direct Store Delivery vs Distribution Centers

The DSD model enables retailers to procure products directly from the supplier. It is the supplier that carries out almost all the works in the supply chain, including:

  • Checking the inventory
  • Stock ordering
  • Pallet unpacking
  • Shelf space assigning
  • Removal of outdated or expired stocks
  • Setting up of promotional displays
  • Pricing display

The Direct Store Delivery model also enables each product manufacturer to ship their products directly to the retailer or location through a distributor.  This model is significantly different from the traditional Centralized Distribution model.

In the centralized system, the supplier ships inventory to a central location. The products are then warehoused or kept in a distribution center till they are needed by the retailer. Once the store manager or someone in charge of the inventory orders the inventory, they are shipped to the retailer from the central location. 

While the retailers remain fully responsible for everything in the centralized distribution model, the manufacturer remains fully responsible in the DSD model. 

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The Advantages of Direct Store Delivery Model

The DSD model comes with many advantages, such as the following:

Quicker Delivery of Products to Retail Shops 

The DSD system bypasses the warehouses and distribution centers, which, in turn, saves time by avoiding the diversion, stoppage, and waiting time at the distribution centers.

Direct Store Delivery has come up as a more valuable strategy for retailers when it comes to making certain products available to consumers quickly.

 More Effective Shipping of Fragile or Short Shelf Life Goods

In the case of handling products that are large, fragile, and lightweight, the DSD model has been found more effective because the manufacturers maintain greater control of handling the products. This, in turn, reduces breakage.

The Direct Store Delivery model reduces the time a fragile or spoil-quick product (for example, eggs and potato chips) has to spend in the supply chain and so they reach the shelves of the retail shops more quickly. 

Reduced Labor Costs

Fast-moving grocery items and other products which have low margins don’t give retailers an adequate margin to spend lots of labor. If they employ more people to manage the orders, then it will not be cost-effective. 

Grocery and other retail stores can boost their bottom line, serve customers better, and focus on higher-margin goods if they can delegate the reordering and stocking of high turnover items to the manufacturers or distributors directly. That’s how DSD helps to reduce labor costs. 

Store labor costs can be saved by around 25% by using the Direct Store Delivery model.

How Can You Implement a Direct Store Delivery Model?

If you want to shift to the DSD model, you have to remember that it’s not a one-size-fits-all approach. You will need to make several changes and take up several key steps that are suitable for your business. These include the following:

Create a Demand Profile

Analyze your sales data thoroughly to identify what type of retailers you are doing business with and how much order volume they generate.

Work on Your Sales Approach

Assess your sales reps or team and delivery drivers to identify the best way to manage the sales process.

Plan Well-Optimized Routes

Planning well-optimized routes is required to best serve the demand of your customers and so you need to adopt an advanced delivery route planner that can help you plan a route with multiple stops.

You can’t go for a generic route planner but must adopt one of the best route planner apps for delivery drivers, such as Route4Me. 

Without the Route4Me truck routing app, you won’t know:

  • What is the most cost-effective sequence to visit and service all your retailers
  • How many routes you should create per vehicle per driver, taking into account your vehicles’ carrying and loading capacity
  • How to deliver more products with fewer vehicles
  • How to account for your retailers’ availability time windows and minimize the wait time
  • How to comply with your DSD state regulations?

Route4Me’s delivery scheduling software can import thousands of store addresses, and will automatically output the optimal number of best-sequenced routes for all the available drivers. 

The route planner app also factors in weight, volume, maximum stops per route, maximum route duration, time windows and more. So, you literally don’t need to worry about accuracy or optimization at all.

And, once planned and optimized, you can manually or automatically assign drivers and vehicles to your routes. 

Moreover, Route4Me’s multi-stop route planner will tell you how many drivers and vehicles you really need to complete all deliveries, helping you identify unnecessary expenses.

Route4Me’s route optimization software can even help you with both single and multiple depot DSD routing

To top it all off, Route4Me’s delivery driver app comes with a territory-based route planning feature that helps you split large numbers of addresses into optimal geographical territories and plan optimized routes with different business rules within each store territory.

Efficiently Track Stock Keeping Units

One of the challenges of DSD is that the manufacturer must track thousands of various Stock Keeping Units, and this number increases almost every day. 

Route4Me’s route planner app allows you to add and reconcile multiple barcodes at all route addresses. This mobile barcode reconciliation feature will help you track all delivery Stock Keeping Units, without additional software or expensive barcode scanners.

You can also use the map route planner to track your vehicle locations (and recover missing vehicles) and onboard inventory tracking to monitor shrink or merchandise theft.

Focus on Proof of Delivery and Compliance

Different states have different regulations concerning consumer safety. Many demand distributors and suppliers track their deliveries, provide proof of delivery, keep expirable receipts, and so on.

To help you comply with your local state regulations, you should use advanced fleet management software that offers multiple solutions.

For example, with Route4Me’s telematics features and flexible telematics integrations, you can track all your drivers and shipments in near real-time.

Moreover, all the data is securely stored on the cloud, and you can access your route GPS tracking data at any time.

Route4Me’s Route Manifest allows you to keep all your route data in a single, easily accessible place.

Your route manifest can contain order parameters, ETAs, stop types, and other important information that may be requested based on your local regulations.

Moreover, Route4Me supports various types of proof of delivery features for your optimized DSD routes.

You can use Route4Me’s iOS and Android mobile delivery driver apps to collect customers’ e-signatures, photos, notes, and more.

So, are you ready to switch to the Direct Store Delivery model?

Want To See For Yourself How Route4Me Can Boost Your Profits?

Whether you want to slash the time it takes you to plan routes for your drivers, increase the number of stops they can make, or keep your customers satisfied knowing that your drivers show up on time… Route4Me helps you achieve that!

Start Free 7 Day Trial

 

About Route4Me

Route4Me has over 32,000 customers on almost every continent. Route4Me's mobile Android and iPhone apps have been downloaded over 2 million times since 2009. Extremely easy-to-use, the apps synchronize routes, enable two-way communication with drivers, offer turn-by-turn directions, delivery confirmation, and more. Behind the scenes, Route4Me's operational optimization platform combines high-performance algorithms with data science, machine learning, and big data to plan, optimize, and analyze routes of almost any size in real-time.

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