Integrated DSD Increases In-stocks, Sales: GMA/Willard Bishop Report
Less than 60 percent of manufacturer’s sales representatives (MSRs) of the major direct store delivery (DSD) suppliers have access to store specific retailer plan-o-grams, according to a new report from the Grocery Manufacturers Association (GMA) DSD Committee and Willard Bishop.
The report, “Optimizing the Value of Fully Integrated DSD,” was developed to examine ways trading partners can fully integrate their DSD systems to increase in-stocks and sales. According to the findings, a fully integrated DSD system gets its additional power by combining four key elements of the supply chain: ordering, warehousing and delivery, merchandising, and coordinating. In an integrated model, the MSRs are aligned with the retailers’ store management to be a coordinated team that efficiently executes the retailers’ merchandising.
“When a fully integrated DSD system is operating seamlessly, shoppers find the products they are looking for every time they shop and retailer resources are engaged only with receiving and checkout,” said Jeanne Iglesias, GMA senior director of industry affairs and collaboration. “Taking advantage of these efficiencies can free up nearly 17,000 hours of labor per year in a typical large format store.”
Retailers participating in the study included Cub Foods, Hannaford Bros., The Kroger Co., Safeway Inc., SaveMart Supermarkets, Wegmans Food Markets, and Winn-Dixie Stores. The data captured is based on shelf analysis, market observations, surveys of MSRs, and senior executive interviews collected in cooperation with participating retailers from a total of 28 stores. Key findings include:
- Challenges in managing plan-o-grams are an important reason why shelf conditions don’t always deliver the optimum shopping experience.
- The in-stock level for DSD averaged 98.2 percent, versus the 94.0 percent found in a study of DSD and warehouse delivered products.
- The incidents of “under facings”, how often the shelf was not carrying the required days of supply, which is an indicator of the likelihood of out-of-stocks, in this study average 13.1 percent.
- There are significant differences in retailer adoption of DSD practices, which creates untapped potential for improving performance.
The report provides best practices for enhanced shelf performance and revealed five questions that are key to the management of the plan-o-grams. Every retailer interested in making sure that shelf conditions reflect their authorized plan-o- grams will want to ask each of these questions, for both DSD and warehouse products, to see if current practices are delivering the intended results.
Washington, D.C.-based Grocery Manufacturers Association represents more than 300 leading food, beverage and consumer product companies around the globe. For more information, visit the GMA Web site at www.gmaonline.org.