Direct Store Delivery (DSD) is gaining popularity among many retailers.
Firstly, running a strictly retail business has become more complicated and less profitable.
Secondly, the competition has become fierce. Therefore, many companies are being forced 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.
This leads the suppliers to shift from multi-stage distribution systems to the DSD Model.
First, what is DSD exactly?
What are its advantages and disadvantages?
How can you use it to your benefit in 2023?
We discuss all this below.
Table of Contents
What Is Direct Store Delivery (DSD)?
Direct Store Delivery is a distribution model which refers to delivering items from manufacturers or suppliers directly to the retail store, bypassing warehouses or distribution centers.
DSD is an alternative distribution model for centralized distribution. Retailers don’t need to maintain warehouses, they can increase their bottom line by reducing the 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 that require frequent replenishment and for companies that need tight delivery windows for their products. For example, convenience stores, drug stores, and gas stations. DSD can also be a boon for retailers selling perishable goods.
Reduced labor and warehouse maintenance costs due to DSD help provide customers with products as per their evolving tastes and needs.
The DSD model is also suitable for retailers with high consumer demand for their products with high velocity and frequent replenishment needs.
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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- Removal of outdated or expired stocks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 DSD Direct Store Delivery model also enables product manufacturers 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. Products are kept in a warehouse or distribution center. The retailer orders the merchandise from the warehouse, and products are shipped to the retailer from the warehouse.
Retailers hold all of the responsibilities in the centralized distribution model. With a DSD model, the manufacturer holds the responsibility.
The Advantages of Direct Store Delivery Model
The DSD model comes with many advantages.
Faster Delivery of Products to Retail Shops
The DSD system bypasses the warehouses and distribution centers. This bypass saves time and results in better products and services for consumers.
The Direct Store Delivery model is a valuable strategy for retailers that quickly make certain products available.
More Effective Shipping of Fragile or Short Shelf Life Goods
The Direct Store Delivery (DSD) model is more effective for large, fragile, or lightweight products.
Therefore, manufacturers can maintain greater control of their supply chain and handling of products. This control reduces breakage.
The DSD model reduces the time a fragile product spends in the supply chain. So they reach the shelves of the retail shops more quickly.
Reduced Labor Costs
Fast-moving grocery items and other products with low margins don’t give retailers an adequate margin to spend lots of labor.
Retailers that have to employ more people for order management will not find DSD cost-effective.
Grocery and other retail stores can boost their bottom line, serve customers better, and focus on higher-margin goods.
For instance, they can directly delegate the reordering and stocking of high-turnover items to the manufacturers or distributors. Above all, that’s how DSD reduces labor costs.
In conclusion, 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 a DSD model, you must remember that it’s not a one-size-fits-all approach. You will need to make several changes and take up several vital steps 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.
If, for instance, you find a product with high demand and a high replenishment rate, that could be a good fit for Direct Store Delivery.
Work on Your Sales Approach
Assess your sales reps and their process and identify the best way to manage the sales process.
Plan Well-Optimized Routes
You should plan well-optimized routes to meet customer demands. Therefore, you should use a delivery route planner.
The best route planners like Route4Me can help you plan a route with multiple stops.
With Route4Me’s multi-stop route planner, you’ll know:
- How many routes should you create per vehicle per driver, considering your vehicles’ carrying and loading capacity
- The most cost-effective sequence to visit and service all your retailers
- 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. In addition, it 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 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 will tell you how many drivers and vehicles you need to complete all deliveries, helping you identify unnecessary expenses.
Route4Me’s route optimizer can help you with single and multiple depot DSD routing.
Above all, Route4Me’s vehicle routing software comes with a territory-based route planning feature. It helps you split large numbers of addresses into optimal geographical territories. And you can plan optimized routes with different business rules within each store territory.
Efficiently Track Stock Keeping Units
One of the Direct Store Delivery Model challenges is that the manufacturer must track thousands of various Stock Keeping Units. However, this number continually changes.
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.
Similarly, many states demand that distributors and suppliers track their deliveries. However, this could mean you need to provide proof of delivery, keep expirable receipts, and more.
To help you comply with your local state regulations, you should use advanced route optimization software that offers multiple solutions.
With Route4Me’s telematics integrations, you can track all your drivers and shipments in near real-time.
All data is securely stored in the cloud. You can even access your route GPS tracking data at any time.
Route4Me’s Route Manifest lets you keep all your route data in a single, easily accessible place.
In addition, 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 route planner apps to collect customers’ e-signatures, photos, notes, and more.
In conclusion, 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!
