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What Is a Direct Store Delivery?

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  • Written By: G. Wiesen
  • Edited By: Heather Bailey
  • Last Modified Date: 29 October 2016
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A direct store delivery system is a form of inventory management in which products are sent directly to stores by the manufacturer for sale at those locations. This is in contrast to models that utilize a warehouse for a retail company, to which products are sent by a manufacturer. Those products are then sent from the warehouse to the actual store locations, which can introduce delays in merchandise being received at a store and other issues. A direct store delivery effectively eliminates this “middle man” and allows products to more quickly reach retail locations and customers.

There are a number of ways in which a company can use a direct store delivery system for receiving products from a manufacturer. In general, however, inventory systems are used by a retail company to track products on the shelf or in excess at the retail locations themselves. As inventory at the point of sale (PoS) begins to dwindle, the manufacturer can then be notified through an automated system about the reduced product at the store. This then creates a ticket or request for a direct store delivery from the manufacturer to that retail location that is low on inventory, though the actual delivery may take several days to fill and ship.

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A direct store delivery system can also require the intervention of a store employee, usually a manager or associate tasked with maintaining store inventory. Daily inventory counts or reports are used by this associate to determine when new inventory must be acquired and then send an order to the manufacturer. Large companies can also have these inventory requests handled remotely, by employees that monitor inventory through computer systems, and then place orders for more product as inventory numbers decrease. In the end, however, the products are shipped directly to the store location, rather than through an intermediate warehouse.

The use of direct store delivery, rather than warehouses, has some potential advantages and drawbacks. By eliminating the warehouse in the inventory replenishment process, stores can receive products more quickly and companies may require fewer employees to accomplish the same task. Dealing with manufacturers directly at the store level, however, can be complicated, and when issues with damaged or incorrect inventory arise, it may be difficult for store associates to remedy such issues. Since direct store delivery systems are also frequently automated, there is room for error in discrepancies between the inventory according to computer counts and the actual inventory in a store.

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emtbasic
Post 3

Small businesses unfortunately have a big problem with employee theft. In some cases using direct delivery can make it harder to detect that problem because each store is doing its own ordering and keeping its own records.

If they were go conspire with someone at the supplier, it would be relatively easy in some industries to skim money by selling the unreported inventory or by using it to make products and sell them "off the books".

Centralized inventory can make it much harder to do this, unless of course the manager of the distribution center is the one ripping you off in the first place.

KLR650
Post 2

I think a lot of midsized businesses are moving away from direct store distribution in an effort to be more efficient. With profit margins so thin, keeping control of logistics can be really important, so a central point of purchasing and shipping can save money if done right.

This can be especially true with companies that do Internet or mail order. They have to keep a centralized warehouse to be able to fill orders from all over the country. It would probably be a lot of trouble to have the individual stores do it.

Veruca10
Post 1

This kind of delivery can be good for a relatively small business with multiple locations, like a local pizzeria or maybe even a hardware store with a few places in one metro area.

I work in a clothing store, and we buy some of our things from a local supplier. We have six locations in the area, and each store does its own ordering and deals with the supplier. It works out fine for us and them, largely because they are still kind of small themselves and we are their biggest customer.

If either one of us gets much bigger, we are probably going to go to a warehouse system just to be able to keep better track of things and make sure that inventory doesn't get messed up in the shipping process.

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