In retail, staying ahead of competitors requires not only meeting but anticipating customer needs. Direct store delivery (DSD) empowers you to do just that.
For many retailers, DSD is the ideal solution for efficiently managing inventory across multiple locations. This strategy lets you quickly adapt to changing consumer preferences and regional trends, streamlining your supply chain to ensure every store has the right products at the right time.
Learn what DSD means for businesses in the retail space and how to leverage this tactic to reduce inventory lag, improve product availability, and increase customer satisfaction.
What’s direct store delivery?
DSD is a logistics strategy in which suppliers deliver products directly to retail stores, bypassing traditional distribution channels, like an intermediary warehouse step. Think of it as dropshipping for retailers — it enables rapid stock replenishment directly at the point of sale.
While this approach places additional coordination responsibilities on the retail teams who receive the orders, it also helps organizations expedite goods receipt, minimizing the time it takes for products to go from the supplier to store shelves.
DSD distribution strategies won’t suit every business model, but they work best in situations demanding quick stock replenishment and perishable goods delivery. In particular, they’re useful for:
- Local deliveries that would otherwise require routing products through distant distribution facilities before reaching your store
- Perishable item orders such as fresh produce, dairy, or meats that demand immediate shelf placement to maintain freshness
- Special, one-time orders for seasonal merchandise, ensuring timely availability for consumer demand peaks
- Quick restocking of popular items that have unexpectedly run out
The direct store delivery process: 5 key steps
A DSD strategy adds new layers of complexity to store inventory control. Leverage this approach by investing in high-quality direct store delivery software and following these five steps.
1. Order placement and processing
The DSD process begins by submitting an electronic order request through specialized software, such as electronic data interchange (EDI) technology. Common platforms include SPS Commerce, TrueCommerce EDI Solutions, and 1 EDI Source. You don’t need to use the same EDI platform — just make sure the information provided is standardized across orders.
This technology enables real-time communication between retailers and suppliers to process orders and estimate delivery timeframes. It also clearly indicates how much stock individual stores will receive to better manage inventory levels and prepare for incoming orders.
2. Product picking and packing
After the supplier confirms the order, the picking and packing phase begins. Here, suppliers prepare items for shipment and prioritize quality control to maintain the product’s condition until it reaches the store.
Choosing suppliers who take quality control seriously is critical, especially when using the DSD method. Unlike traditional methods, which include an additional quality inspection before goods reach the retail store, DSD eliminates this step, placing the responsibility solely on the supplier. If a supplier’s quality assurance measures falter, you might receive damaged and expired products.
3. Delivery and store stocking
Once the supplier picks and packs your order, they deliver it directly to your store. Here, your retail team accepts and organizes the products within the store’s designated storage and display areas. This flexibility means that products arrive promptly and ready for immediate stocking, regardless of the store’s infrastructure.
For DSD transactions, suppliers often use smaller, more agile delivery vehicles like sprinter vans to navigate the logistical complexities of direct deliveries. If small retail locations are on busy streets, quick, front-door delivery is crucial. But for stores equipped with commercial-grade loading facilities that can accommodate larger vehicles, such as a wholesale club, suppliers might use traditional semi trucks and trailers. Consider how your retail team will receive the product when scheduling deliveries.
4. Merchandising and inventory management
The DSD workflow doesn’t end when the goods arrive. You have to complete merchandising activities like setting up product displays, integrating pricing details into your point-of-sale system, and diligently managing inventory levels to coordinate the next DSD drop.
5. Invoicing and payment
After you confirm the products are in satisfactory condition and receive them, you’ll pay based on the supplier’s invoice terms. Some common terms include “Due upon receipt” and “Net 30.” The former demands immediate payment, while the latter provides a 30-day window.
Whatever the terms, prompt payment is crucial. It sustains a healthy and productive relationship with suppliers, ensuring smooth future DSD services.
Direct store delivery pros and cons
DSD offers distinct advantages over traditional supply chain methods, including:
- Enhanced perishable goods handling: By removing an intermediary step in the supply chain, taking a DSD approach lets businesses improve the freshness and quality of perishable products.
- Quicker delivery times: DSD’s shorter delivery times let retailers replenish stocks more rapidly.
- Enhanced cost savings: DSD reduces the amount of resources involved in transportation and handling, especially for locally sourced goods. It also saves on warehousing and inventory handling costs by bypassing storage in distribution centers.
But DSD isn’t without its challenges. Potential obstacles include:
- Shipping process variability: Early arrivals and shipment delays can disrupt retail operations, putting additional pressure on store personnel.
- Communication gaps: Some retailers don’t have direct lines of communication with their suppliers, which could complicate order adjustments and updates.
- Integration necessities: Effective DSD requires potentially expensive and complex integrations of retail inventory systems with supplier technologies.
Direct store delivery versus centralized distribution
The key differences between DSD and centralized distribution models revolve around how each approach manages and stores inventory before it reaches the final retail location:
- The centralized distribution model consolidates all inventory in one central warehouse or fulfillment center. Suppliers deliver products to this centralized location, where the items await distribution to retail outlets or direct-to-consumer shipments. This approach streamlines inventory management and operations but slows the distribution process to individual stores.
- Direct store delivery bypasses the centralized warehouse and fulfillment center, sending goods directly from suppliers to retail stores. This decentralized method enhances logistics flexibility and responsiveness, making it ideal for quickly getting products (especially perishables) onto shelves. But it demands direct coordination with retail locations, and without robust inventory management in place, not having stock pass through the warehouse could present inventory tracking challenges.
Direct store delivery best practices
DSD boasts supply chain efficiency and flexibility, but it also shifts distribution management responsibilities onto your retail team. To empower them for success, follow these essential best practices.
Enhance visibility across all locations
Use a comprehensive platform that consolidates data across all locations, like Fishbowl, to serve as a single source of truth for inventory information. And train your team to use lot and serial numbers to accurately update your inventory as orders arrive to further enhance stock oversight.
The best solution inventory management system will also identify optimal reorder times so you know when locations need more stock. An analytics-driven approach to ordering will help keep your inventory management strategy working smoothly, without the risk of running out of or overstocking product.
Prioritize customer satisfaction
When choosing between DSD and centralized distribution, always prioritize customer service. Before deciding which method is best for you, open feedback loops and engage with your customers to verify that DSD meets their expectations.
A robust inventory management solution also offers forecasting tools to predict customer demand, helping you maintain adequate stock levels to avoid disappointing your customers.
Streamline route planning
While centralized distribution offloads route planning to logistics providers or warehouse managers, adopting DSD means taking on route optimization responsibilities. Maximize route efficiency to avoid backtracking and keep carrier costs to a minimum. That might look like organizing deliveries to stores within the same area on the same day to cut transportation expenses instead of scheduling sporadic, individual deliveries.
Maintain open communication
Clear communication with DSD distributors is essential for synchronizing delivery expectations and schedules between retailers and suppliers. This alignment reduces delivery misunderstandings and errors, which can affect your inventory levels.
Designate one contact within your organization for suppliers to ask questions. And make sure your team knows who to contact about orders. This approach simplifies problem-solving for both parties and strengthens the relationship between your company and its suppliers.
You should also develop clearly defined policies for creating and approving purchase orders. Identify who can create a purchase order, who approves it, and how to track records of past orders and requests. This tactic ensures your team processes purchase orders effectively, supporting effective inventory management and financial planning.
Optimize your direct store delivery operations with Fishbowl
Whether you decide to adopt the DSD model or stick with a more traditional centralized distribution strategy, your success hinges on the quality of your inventory management technology. Fishbowl stands out as a premier solution, streamlining your supply chain for peak efficiency and providing unparalleled inventory visibility.
By integrating Fishbowl into your operations, you unlock powerful features like advanced reporting, automation, and QuickBooks integration, all designed to transform how you manage your supply chain.
Discover how Fishbowl can revolutionize your stock management by scheduling a demo today.