COMPUTERIZED DSD CUTS GIANT FOOD PAPER FLOW

MARC MILLSTEIN

DALLAS -- By moving to an automated direct-store-delivery system, Giant Food succeeded in eliminating almost half a million paper invoices in 1994, and that figure is expected to grow to about 750,000 invoices this year.

Those were among the Efficient Consumer Response DSD pilot study findings presented by James Peterson, director of system research at Giant Food, Landover, Md. He spoke about Giant's DSD program at the first Joint Industry Conference on ECR here Jan. 18 to 20. The conference, "ECR: A to Z," was attended by close to 1,600 industry executives.

"At Giant Food, we manually process in excess of 1.5 million DSD invoices per year. That is over 30,000 invoices a week, manually. Can you imagine that?" Peterson told attendees during a workshop session titled "Improving Direct Store Delivery Effectiveness."

"Even though DSD accounts for only 16% of our sales, it accounts for over 90% of our invoices," he added.

To improve the traditional labor-intensive DSD system, Giant Food, in partnership with key suppliers, has been moving aggressively to implement an extensive paperless DSD program driven by transmission of crucial data via electronic data interchange.

At present, Peterson said, Giant Food has completed its initial rollout of the automated DSD system chainwide. The next step is to add more vendors to the system and transmit more types of information via EDI. Peterson is a member of the ECR Integrated EDI subcommittee.

"We have completed our rollout and have all 164 of our stores

up and live on the system. We now have 18 vendors up on DEX [direct exchange] and three vendors on NEX [network exchange]. Of the 18 vendors DEXing with us, 11 are paperless, eliminating over 450,000 paper invoices a year," Peterson said.

"We also have several DEXing and NEXing commitments for 1995 that will eliminate another 300,000 paper invoices, totaling over 750,000 paper invoices eliminated a year," he said.

The benefits of moving to an automated DSD environment, though, have extended well beyond simply eliminating a specific number of paper invoices, he noted. The direct store delivery system has also helped boost efficiency in several other key areas.

"We are now beginning to see a reduction in the nasty proof-of-delivery problems. We can now produce a vendor invoice match rate report, and track and measure our vendors," Peterson said.

"As a result of the tremendous reduction in paperwork and the streamlining of the payment process, we are now beginning to see relief in accounts payable, and we have better control of product entry in our stores.

"Our receivers' job is made easier. Giant's DEXing [and NEXing] suppliers are better organized, contributing to a more efficient and timely receiving process," he said.

As part of the program, the results of which are expected to be outlined in somewhat greater detail in a DSD Best Practices Report soon to be released by the Joint Industry Project on ECR. Giant is also making significant headway in using EDI to transmit a much wider range of information.

"I might add that we have completely closed the EDI loop with two of our suppliers, that is from receiving at the back door through payment. No more paper," Peterson said.

"With the two suppliers, we are now DEXing at the store, sending product authorization, deal authorization, receiving price changes and promotion announcements, and sending remittance advice and electronic fund transfer, all electronically," he added.