Better DSD Ops Could Save Suppliers Millions, Report Suggests

Consumer goods suppliers could save millions of dollars by evaluating and improving direct store delivery (DSD) operations -- namely the way products are ordered, sold, delivered and merchandised -- according to a new report from Fort Mill, S.C.-based Honeywell.

The report, which contains feedback from 350 C-level consumer goods executives and directors from across the globe, finds that 49 percent of organizations feel increased transportation costs have severely impacted profit margins in the past 12 months. Moreover, those organizations that have carried out process evaluations (known as process re-engineering) in the past year to improve their DSD processes have cut, or expect to cut, costs on average by $734,000 annually.

Additionally, approximately 20 percent of all respondents have experienced, or expect to experience, at least $1 million per year in tangible cost savings through DSD process re-engineering, while about 20 percent of companies with 3,000 or more employees anticipate saving at least $3 million.

"The report shows clearly that re-engineering DSD processes provides an opportunity for business transformation and competitive advantage,” said Brian Schulte, industry director for direct store delivery for Honeywell. "Consumer goods companies can improve their revenue while cutting costs, enabling them to strategically grow their business and margins in these challenging times."

According to the report, the top five areas identified by survey respondents for cost improvement are:

• Fuel and petrol costs - $889,000 projected average annual savings
• Merchandising - $725,000 projected average annual savings
• Delivery receiving/check-in  - $686,000 projected average annual savings
• Delivery -  $682,000 projected average annual savings
• Payment procedures - $665,000 projected average annual savings

Respondents said that time, as well as money, could be saved across key workflow areas. Through making improvements to delivery, truck loading, delivery receiving/check-in, merchandising and order processes, respondents indicate that approximately 30 minutes could be saved in each of those five areas per route, per day, equating to more than 2.5 hours per day for each DSD route.