Direct Store Delivery, or DSD, is a distribution strategy that offers an alternative to centralized distribution. DSD allows retailers to reduce operating costs by sidestepping the retailer’s distribution center. Instead, goods travel directly from the the supplier to the retail store, shaving time and money off of the retailer’s bottom line. Additionally, bypassing the distribution center and communicating directly with the supplier gives retailers greater control over their inventory, which in turn can drive sales growth. From the supplier’s perspective, DSD represents a commitment to remain flexible and responsive, adjusting deliveries to meet the changing wants and needs of the end customer. Within the consumer product landscape, DSD is most popular with the food and beverage industry, where minimizing supply chain time in the interest of freshness is a top priority.
So, do suppliers just have one huge warehouse? Usually not. More often, suppliers rely on a network of distribution centers that serve as regional distribution hubs. Some distribution centers, like Commercial Warehousing, can also provide value-added services like repacking to prepare products for special promotions at the point of sale.
According to an article in Inbound Logistics, retailers whose products and supply chain exhibit the following characteristics would benefit from adopting a DSD distribution model:
- Controlled deliveries during a limited window
- Drivers who can develop an amiable relationship with your retailers, as they will be the main (and frequent) point of contact between your brand and the retailer.
- The majority of your customers are smaller retailers with minimal storage space on-site and inventories that need to be restocked frequently.
- With more frequent deliveries, security or theft could be an issue. Low-value items (like frozen pizzas) are better suited to this model than alcohol, for example.
If you’re looking for a warehousing partner to help support a DSD program for both temp-controlled and ambient goods, please give us a call.