Av Mikael Wällstedt | Article | September 18, 2017

Direct Store Delivery – a way to advance your retail business

Direct Store Delivery “DSD” is a logistics method that is rapidly spreading to many new industry sectors. The method has traditionally been used mostly within food and beverage logistics. Its rapid expansion is mainly due to the significant cost advantages that can be achieved. New technology has made it possible to overcome some of the method’s previous challenges.

The DSD concept is based on the principle of delivering goods directly from the factory to retail stores. The process bypasses traditional distribution centers or warehouses. As part of the concept, drivers also often restock store shelves in addition to just delivering the goods at the loading platform.

Recent studies have shown that many companies are planning to increase investments in DSD to increase efficiency as well as adaptability. The advantages of the method include reduced order times and faster turnaround of stock, which enables faster decision making. Using the concept effectively requires leveraging new technology to overcome some of the challenges that are built into the process.

Transformation of the retail store

While the ecommerce trade is increasing exponentially, traditional retail stores are undergoing a transformation. The physical store is not less important, as many may think, but its role is changing. One example is the emergence of the omni-channel experience. Modern consumers first search for a product online, then examine it in a physical retail store, and finally purchase it online. A significant change is that the modern retail store is becoming much more than just a shop. Often it is rebuilt to also be the collection point for packages to be picked-up, a learning center to learn more about the products’ functionality (e.g. Apple store), a fresh bakery or just a social place with seats for a nice cup of coffee. Data collection for improved understanding of the customer experience is a very important part in the store. The DSD concept, with its rapid restocking, fits very well into this modern retail concept.

Technology requirements

While the DSD method offers some key advantages, it also has some limitations. Luckily, most of the limitations can be overcome with modern technology. Some of the key requirements are:

  • Efficient handling of smaller consignments and multiple ad hoc route stops for the forwarder
  • Ability for the drivers to efficiently manage an extended scope of responsibility, which could for example include restocking, storage, returns handling, forecasts, seasonal variations and environmental optimization
  • Agile technology, which enables quick adaptation to changes in the market in order to stay ahead of the competition
  • Precise demand forecasts and delivery accuracy

Intelligent Mobile workflows

One efficient technology that can be used for Direct Store Delivery is “intelligent mobile workflows”. The concept includes multiple tools that help overcome and manage some of the challenges with DSD. The key objectives are to optimize and digitalize the process, enhance user experience, optimize routing and leverage data collected.