Consumer goods manufacturers have practiced the “go-to-market” method known as Direct Store Delivery (DSD) since the early twentieth century. As an alternative to traditional wholesaler networks, the practice is the most expensive method to market but has proven to be the most effective for growing revenue and protecting the brand. Throughout the 1980s and 1990s, many DSD manufacturers automated their operations by deploying mobile solutions such as handheld computers and printers. Four decades later, numerous technology advancements are facilitating advanced data capture, streamlining staff communications and helping businesses gain real-time visibility into their inventory. The technology available today provides significant advantages resulting in more accurate sales projections and reduced out-of-stock conditions.
DSD is most popular among food and beverage companies because minimizing supply chain time in the interest of freshness is a top priority. From a manufacturer’s perspective, there are three use cases in grocery that can significantly benefit from ISV solutions:
- One-tier or full-service DSD combines all functions associated with the order, delivery, proper display, and customer relationships.
- Two-tier includes presales order management and customer relationships, and a separate person delivers the ordered product requiring a proof of delivery.
- Three-tier adds a third role of merchandising for larger accounts.
This is a great opportunity for ISV developers to grow within this market, however, they should be prepared for long sales cycles, highly competitive battlegrounds, and very complex application requirements. ISVs looking to acclimate software to DSD trends should consider the following:
- Complexity in Pricing: Reduced percentage discounts and special promotions for products are common in most grocery stores. For ISVs handling multiple grocery accounts, it’s important to keep in mind that much of the unsold products under these pricing models will be credited back to the retailer by the DSD vendor upon retrieval. Mobile applications handling these processes must be able to accurately track and manage all that data to avoid costly errors.
- Order Management: To manage the growing number of stock keeping units (SKU) on a grocer’s invoice, DSD apps must be able to effectively manage shelf, category and account inventory levels daily. Perishable products can complicate this process if product data is not accurately captured or available. Workers should be able to easily access product data, history, and on-premise algorithms through their application to increase efficiency.
- Asset Management: DSD reps are often the first to notice if an asset is displaying signs of a potential breakdown. ISVs should consider building inspection and service alert features into DSD software to help prevent machine failure which can directly impact the in-store availability of certain products that rely on properly functioning mechanisms to stay fresh.
- Real-time visibility: DSD roles heavily rely on communications between the logistics component, the repair team, and management for operations to run smoothly and efficiently. The capability for teams to share real-time data and communicate service issues as they happen is a key differentiator in a competitive DSD.
ISVs looking to enter the DSD market should contemplate partnering with a proven solution provider that aligns with the specific needs and requirements of your organization. ISVs together with the right partner can help optimize the supply chain, enhance customer relationships and increase overall profitability.