STORES - October 2010 - (Page 79)

THE LAST THIS / CONSIDER LAUGHPOV Weighing the Direct-to-Store Delivery Model BY GUY TOKSOY Consumer goods manufacturers are increasingly using a direct-to-store delivery model to drive efficiency in their supply chains and improve their levels of service to retailers. In a direct-to-store delivery model, products are taken on how to prevent theft — and how Guy Toksoy is from a CPG manufacturer warehouse or cross-dock to respond when a theft situation vice president of straight to a retail outlet. Vehicles typically make multiple unfolds — is mission critical. Train- operations, Canada, stops and then “close the loop” back to the warehouse. Is ing programs should address for Ryder Supply Chain your operation a good candidate for such a delivery awareness of suspicious vehicles Solutions. model? There are several issues to consider. and loiterers, especially around deDirect-to-store makes sense when control of deliveries livery doors. When a security situaand customer service are very important. If you have tight tion develops, drivers trained on protocols such as using delivery windows open only during certain times of the day, code words and hidden alarm buttons help ensure a safe this requires a high level of scheduling precision. resolution. Another consideration is whether your market share of a At Ryder, we take several additional measures. Vehiproduct is threatened by not being on store shelves. Concles are tracked with the latest GPS technology, and we sider this scenario: A brand-loyal consumer stops in at a use a variety of alarm systems and cameras throughout retail outlet to buy a bottle of Diet Pepsi on her way home our facilities, dock yards and in our vehicles. Our drivers from work. If Diet Pepsi is not on the shelf, she will buy a are in constant communication with our command center, Diet Coke instead, even though this is not her preference, which is staffed 24/7 and directly connected to law enresulting in a “lost sale” for Pepsi. forcement. Lastly, if your company is challenged with security and Technology not only plays an important role in security, product theft — especially in the case of high-value goods but also in facilitating payment between CPG manufacturlike alcohol and jewelry — a direct-to-store model can help ers and retailers. Electronic proof of delivery via handheld mitigate these risks. Convenience store retailers are typically good Convenience store retailers are typically candidates for this model because their storegood candidates for direct-to-store delivery rooms are relatively small and unable to hold much excess inventory. And smaller stores may because their storerooms are relatively small only be staffed by one individual, so deliveries and unable to hold much excess inventory. can’t be made during peak traffic periods when that person is manning the cash register. Determining optimal routes for deliveries to multiple retail devices has greatly impacted the retail and CPG indusoutlets can be complicated. It’s best to start with the detries. For one customer, Ryder utilizes handheld devices to mand profile, based on the orders that need to be fulfilled transmit successful delivery information at the exact time a on a particular day. There’s a long list of variables to conretailer takes receipt of goods. That triggers a direct debit sider, such as traffic patterns, speed limits, distance and from the retailer’s bank account — in essence, paying the time calculations. The good news is that there are a variety CPG manufacturer immediately after the delivery is made. of software systems that will marry the demand profile, the This has reduced that customer’s order-to-cash cycle time variables and the vehicle capacities for a specific route. It’s from 27 days to less than 24 hours. important to determine if your company has the expertise Technology also enables you to gather and evaluate data to manage this type of route planning and, if not, to considon an ongoing basis in support of a “green” transportation er consulting with an outside provider. network. The efficiency of your network, including the abiliProduct theft while in transit or at the time of delivery is a ty to reduce your carbon footprint with reduced miles travserious concern for CPG manufacturers and retailers alike. eled and less fuel consumed, depends on how frequently Creating a defined plan for training employees and drivers you can evaluate your metrics and make adjustments. WWW.STORES.ORG STORES / OCTOBER 2010 79 http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES - October 2010

STORES - October 2010
Editor’s Page
President’s Page
Retail People
Customer Experience
Game Changer
Power Players
NRFtech Recap
Concept 2 Watch
Customized Shopping
Consumer Behavior
Software & Analytics
Crowd Control
Payment Fraud
ARTS Update
Point of View
NRF News
Retail Industry Calendar
End Cap

STORES - October 2010