It’s hard to go grocery shopping these days without tripping over manufacturers’ representatives maneuvering pallets and stocking shelves. This is because of a trend called “direct store delivery,” a logistics model in which merchandise—usually products that sell quickly and at a high volume—go straight from the manufacturer’s facility to the retailer, skipping both the distributor and the retailer-owned warehouses. Inventory levels, merchandising, and even merchandise promotions are often managed directly by the manufacturer. DSD isn’t new—as far back as 2008, it accounted for 24 percent of unit sales and 52 percent of retail profits for the grocery sector. However, advances in technology are making DSD faster, more accurate, and more efficient than ever before.
Why do companies like DSD?
DSD benefits everybody in the supply chain: manufacturers, retailers, and customers.
With DSD, the manufacturer bears the cost of inventory, delivery, merchandising, and stocking labor. Retailers are able to reduce both capital investment and operating expenses, which, in turn, leads to higher profit margins.
Manufacturers are able to increase their visibility into consumer behavior, sales volume, patterns, and etc. This insight leads to better personalization designed around the demands of specific stores and their customers. They’re also able to have a direct impact on sales rather than relying solely on the retailer’s efforts.
The traditional ordering and replenishment process can be slow. Stores send an order to the warehouse, where it sits until that store’s next scheduled delivery (which could be days away). For both the retailer and the manufacturer, that means lost sales and unhappy customers. In a DSD model, on the other hand, the manufacturer’s representatives are in each store several times a week, which allows them immediate insight into what’s sitting on the shelf, what’s moving quickly, what’s getting low, and what, if anything, has outages. With that direct line of communication, manufacturers can get their products to the stores much more quickly—sometimes even within a day or two.
In addition, having a representative in the store every few days gives manufacturers the opportunity to predict and take advantage of trends, like local sporting events or festivals that might increase demand for certain products, for instance.
Retailers and manufacturers often make big investments in joint promotions, especially when it comes to new products. That money is wasted if, due to outages or slow deliveries, the product isn’t on the shelf. DSD helps ensure that the product will be well-stocked throughout the promotion.
Instead of spending payroll hours on things like cycle counts, ordering, stocking, and merchandising, retailers can focus employee efforts on customer service and other activities that drive sales.
How can QStock help businesses that want to implement DSD?
One of the most essential components in a successful DSD implementation is integrating the tracking and accounting systems of two different businesses. QStock delivers by combining cutting-edge mobile technology with a software package that seamlessly integrates with both QuickBooks and Intacct. Features include:
- Elimination of paperwork, including proof-of-delivery signatures
- Real-time syncing that links your delivery drivers’ tasks to your financial systems
- Ability of drivers to create ad-hoc shipments
- Automated end-of-day reconciliation processes, including inventory verification and adjustment, transfers, leave or scrap product, sales orders, return order creation, quality compliance creation, and payment and settlement processes.
- Ability to accurately track chain of possession by lot number or serial number (essential when dealing with products like food, drugs, and electronics)
By using QStock to implement state-of-the-art DSD procedures, manufacturers and retailers can partner like never before, collaborating to reduce costs and maximize profits. Our verticals include light manufacturing, food distribution, consumer goods, e-commerce, and electronics. We can also help you streamline and automate your entire supply chain with solutions that include inventory control, RFID technology, and work orders in addition to DSD and traceability. Contact QStock today to learn more about how we can help you and your business achieve your goals.