Direct Store Delivery or DSD is a strategy for distribution, which offers an alternate option to the centralized distribution strategy. Direct Store Delivery allows for retailers to reduce operations costs by circumventing the retailer’s own distribution center. The goods travel directly from the supplier to the retail store instead. This saves a lot of time and money for the retailer. Also, sidestepping the distribution center and having direct lines of communication with the supplier gives retailers better control over the contents of their inventory, and that can help drive the growth in sales.
The DSD system represents a commitment to stay flexible and highly responsive. They adjust their deliveries in order to cater to the changing needs of customers. The Direct Store Delivery system is best applicable to the food and beverage industry when seen in the context of the consumer product ecosystem where reducing the supply chain time to accommodate maximum freshness takes utmost precedence.
The suppliers do not have just one huge storage warehouse. More often, they tend to rely on a network of distribution centers that serve as hubs for regional distribution. Some distribution centers like Commercial Warehousing also provide value-added services like repacking in order to prepare the products for sales promotions at the Point Of Sale (POS).
DSD also covers the planning and managing of the customer delivery with drivers being responsible for presales, sales, delivery or mixed delivery to the customers. Direct Store Delivery is one of the integral parts of the Logistics Execution System and integrates into the following areas:
- Customer Master data
- Material Master data
- Equipment Master data
- Transportation planning
- Inventory management
- Customer relationship management
- Mobilizing Direct Store Delivery
Adopting the DSD distribution model can benefit those retailers and their supply chains greatly who have certain characteristics:
- If your product and supply chain require control of deliveries then it is an important factor. For example, the delivery windows are very tight or limited to certain times of the day.
- If a large portion of your customer base consists of small retailers like small convenience stores where they have a lack of huge storage space. They cannot store excessive amounts of inventory and need to get resupplied on a regular basis.
- Drivers should be good when it comes to people skills because direct contact with retailers is a key element of customer satisfaction. This means that the drivers will be the ones brokering your relationship with the retailers.
- Security and theft is always an issue, especially when it comes to high value goods like alcohol and tobacco.