Solving Backdoor Issues Key to Driving DSD Efficiency

Discussion
Jan 06, 2006
George Anderson

By George Anderson


A new study, Unleash the Power of DSD: Driving Supply Chain Efficiencies and Profitability, conducted for the Grocery Manufacturers Association (GMA) by Willard Bishop Consulting concludes that direct store deliveries (DSD) can be made more efficient with increased coordination between retailers and suppliers primarily aimed at improving the backdoor check-in process.


According to the key findings of the study, DSD route personnel spend between 20 and 27 percent of their time stocking and merchandising stores in small- and large-box locations. Unfortunately, the study concludes, DSD suppliers spend nearly the same length of time waiting to be received and processed through the back door. One result of backdoor delays has been that suppliers have had to hire pre-sellers and extra merchandisers (an additional cost) to support retailers.


By automating the check-in process and limiting delays through improved coordination, best-in-class trading partners were able to have DSD personnel spend 23 percent more time focused on in-store merchandising.


“GMA’s study shows that the DSD system can be far more efficient. By working together to streamline the system, retailers and manufacturers alike can dedicate more time to in-store merchandising, improving shelf-replenishment rates, customizing store-by-store assortments – leading to increased sales,” said Karin Croft, senior director of industry affairs for GMA in a released statement. 


Moderator’s Comment: What is the importance of GMA’s latest study? Where do you see the greatest opportunities for improvement in the area of direct
store deliveries? Will DSD become a more or less widely used form of distribution in the future?

George Anderson – Moderator

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7 Comments on "Solving Backdoor Issues Key to Driving DSD Efficiency"


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David Mallon
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David Mallon
15 years 2 months ago

I agree with Ryan, and would add — what ever happened to Scan-Based Trading?

Art Williams
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Art Williams
15 years 2 months ago

DSD manufacturers need the retailer’s cooperation in streamlining backroom checking. That should start with more flexible hours that the backdoors are open. The short delivery window that many retailers have makes it impossible to schedule deliveries in an efficient manner. Avoiding shrink is a very important element in backdoor receiving that must be controlled but the process needs to be streamlined to shorten wasted time. There are many ways to do this depending on the technologies available and the willingness to employ scan-based trading procedures for example.

Manufacturers must be willing to share the savings with retailers that they receive from backdoor improvements, otherwise there is no incentive for the retailer to cooperate. Time saved in backdoor receiving should be spent in increased sales and merchandising activities to increase sales, but often is not. The opportunities have been repeatedly identified but the majority of business is still done the old-fashioned way just like so much of the overall grocery business. Is it any wonder that the Wal-Marts of the world are slowly taking over?

Don Delzell
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Don Delzell
15 years 2 months ago
While terribly inefficient, DSD is an inevitable result of retailers pushing costs onto manufacturers. The sad truth, as already pointed out, is that it’s a bad use of limited resources. If retailers and manufacturers would one day actually view the world as a win-win scenario and not a zero-sum game, they’d find that if a really inefficient solution benefits the retailer only a little while costing the manufacturer a lot, no one wins. Having said all that, one of the keys to cost effective DSD, aside from route planning and retail adherence to delivery schedules, is advance order receipt. The pack out at the warehouse is time consuming and painful. The more in advance the actual store orders or quantities are received, the more effective the manufacturer can be in staging and processing. If, as a manufacturer, you have a business model with DSD involved, I would suggest investing in a well constructed warehouse process and technology. It is possible to use wave picking and staging zones to minimize the horrible cost of assembling each… Read more »
Mark Lilien
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15 years 2 months ago
DSD is a very high cost supply chain method. Time spent driving from place to place isn’t productive. Retailer and supplier margins are driven down by the expensive use of independent drivers piloting small trucks. Any automation would certainly be helpful. My impressions working with supermarkets in New York City is that the driver/salespeople may be street smart, but many desperately need computer assisted replenishment tools. I am surprised that many companies do not equip their drivers with cell phones and almost no companies use GPS equipment to track their drivers’ actual routing patterns. Some brands make it their policy to omit the company’s phone number from all paperwork, so it’s doubly hard to resolve issues. Some firms have so little control over their drivers that they don’t know who the ultimate accounts really are or what the visit schedule is. Communication is sometimes difficult because the drivers work schedules that differ greatly from their supervisors. There is a wide variation on how DSD works. Some brands have tight control over their DSD field organization… Read more »
Ryan Mathews
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15 years 2 months ago

I haven’t read the study itself, so I’ll confine my comments to the commentary. Seems a bit like confirmation of the obvious. Back in the ancient ECR days of yore it was clear that effective back door scheduling/receiving was perhaps the primary cost efficiency lever for all trucked-to-store-product, DSD and otherwise. That’s what spurred (then) early adopters like Spartan Stores to set variable costs for their retailers based on back door receiving practices. That seems like eons ago, so I’m hoping there’s more to the study than meets the RetailWire eye.

Dan Raftery
Guest
15 years 2 months ago

Here’s what happen to Scan Based Trading. Several smart retailers adopted it and are quietly receiving the benefits rather than receiving the product. Several smart suppliers adopted it and have improved their return on capital investment.

SBT did not spread wildly through the supply chain because of the dual paranoia about shrink control and the initial inventory buy-back. The smart companies referenced above hired supply chain analysts (SC shrinks?) to help them deal with the real issues and put the ghosts behind them.

The main operational advantage of SBT is the same one pointed out in the Bishop study. SBT is just too scary for many companies; for others, the buy-back financials are too wacky. So, in effect, you are seeing a reversion to some of the recommendations that came out in the 1993 DSD Handbook.

What’s old is new again because the brass ring is not within easy reach.

Ed Dennis
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Ed Dennis
15 years 2 months ago

The thought process continues to be conventional and doesn’t allow for the power of the systems currently available and in “partial” use. The waste of time at the door is to check incoming inventory. This is a total waste of time as the DSD driver will cheat the merchant if he chooses in spite of any and all “check in” procedures. Why not simply abolish this step entirely. Let vendors replenish stock, build displays, etc. at will. Don’t waste time “checking anyone in” but pay them daily, electronically, based on scan data.

I believe most vendors would agree to this system as they get their money quicker. Retailers should embrace this because it reduces bookkeeping, reduces loss and allows the sale of merchandise in which they have no financial investment. There is a better way to do things – you just have to get out of the box and look for them.

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