WASHINGTON -- A retailer can save nearly $2 million each year by automating direct-store-delivery systems and exploiting new technologies, according to a report by the Joint Industry Project on Efficient Consumer Response.
DSD programs at Save Mart Supermarkets, Modesto, Calif.; Ralphs Grocery Co., Compton, Calif., and Anheuser-Busch, St. Louis, were studied over a 10-month period by Willard Bishop Consulting, Barrington, Ill., as part of a report prepared by the Direct Store Delivery Work Group, a subcommittee of the ECR Best Practices Operating Committee.
Savings attributed to automated receiving can be maximized through direct exchange or network exchange data communications, eliminating paper invoices while improving the speed and integrity of direct-store orders.
Using DEX and NEX to reduce the manual tasks associated with a traditional paper trail can give retailers $500,000 to $900,000 in annual savings, the report estimated. An additional $100,000 to $250,000 can be saved each year through reduced invoice discrepancies.
The report said retailers could also rack up an additional $900,000 in annual savings by investing in electronic signature technology, which slashes retailer administrative costs even further by eliminating the need for vendors to sign paper forms as proof of delivery.
Besides automating their DSD systems, retailers can cut costs further by tightening up delivery procedures to minimize driver delays caused by understaffed receiving crews and poorly balanced delivery schedules. The report found that about 54% of all vendors are regularly stalled at the retailer's back door.
Unbalanced delivery schedules create bottlenecks and ultimately higher receiving costs. Time and motion studies conducted at each pilot store found that from 6 to 7 a.m., the largest amount of the day's deliveries (20%) and delays (28%) occurred. Other time slots had much less activity, such as the 1 to 2 p.m. period, where only 3% of deliveries were made and 4% of the delays.
Delays in receiving mean that vendors have less time to carefully replenish and face their shelves. "Most activities completed by DSD drivers are not value-added," the report said. "The more these non-value added activities can be reduced, the more time drivers will have to sell and merchandise the floor."