Strengthening Tech Ties With DSD Suppliers
Electronically tying DSDs to retailers remains "last frontier," says tech provider
Published in CSP Daily News
FORT WORTH, Texas -- With the goal of eliminating any form of paper and manual data entry, Greg Gilkerson describes the communication processes that exist between many direct-store delivery (DSD) suppliers and their retailers as "the last frontier" of automation.
Speaking exclusively to CSP Daily News during a break from his company's annual user conference here this week, Gilkerson, president of Temple, Texas-based PDI, spoke of solutions his company was developing to bridge the gap between DSD suppliers and retailers, as well as other technology trends affecting the channel.
Q: Why is it important to automate?
A: We're trying to automate every conceivable business process that the c-store operator has to deal with to allow them to use their time to operate their businesses, handle customers and work with their teams, everything on that side of the equation.
Q: What have you been developing to address the problem?
A: One of areas that is significantly underdeveloped is the old DSD supplier relationship. Various people have come to the table to attempt to deal with it going back 12 years. We were thinking we'd develop it ourselves, but found one already in existence with our new partner, iControl [Burtonsville, Md.]. It's an industry portal that retailers can use to communicate with suppliers.
Q: Why DSD suppliers in particular?
A: We've automated all the interfaces with lottery commissions, fuel suppliers, wholesalers, just about every business partner to make practices electronic. With certain DSD suppliers, there are practices in place that haven't changed since the 1970s. People are still using fax machines. We've collected a bunch of artifacts [outdated devices] used for price changes and we ask, "Is this the way you're still doing it?" Within PDI, we have a whole organization around pricebook that deals with these differences. So one of our goals was to automate the way people do this. Now, not everyone uses our service, but we want to avail the service to all customers. To me, it's one of the last significant business practices that needs to be upgraded and refined.
Q: What do you see as obstacles?
A: We'll have to get suppliers to participate, but with any type of new system, you have to allow the time for adoption. Look at how the industry has adopted scanning. You still have a handful who aren't but most are today. But that took 20 to 25 years. Someone has to adopt the methods. Then you have to give people time to retool and deploy them. People all thought the Internet Age was going to be full of transitions, but there was a lot of plumbing and heavy lifting that had to occur. Here, you had to change a whole community of suppliers who were not easily moved.
Q: Why do you think it's still a problem when other suppliers have changed?
A: DSD suppliers are a very diverse and independent. Many have exclusive territories, so they feel no pressure to change. They're not threatened by anything, except maybe a manufacturer losing favor with them. But as long as you have a regional distributorship, there's no competitive reason to change.
Q: In what other areas do you see change?
A: Every area of the business continues to get more and more sophisticated. We're rewriting our current store system software, which is our handheld piece that covers receiving, replenishing and inventory. It's evolving as people adopt item-level management. The industry is at all different stages with this, but as they continue on this path, they'll start stocking things customers want. Their inventory turns will go up and margins will go up as well, but that's a huge new initiative for us.
Q: You also recently spoke to labor management.
A: Yes, we're working on a more sophisticated labor-scheduling module, something targeted to our space where you don't have the 50-person staff. You don't have someone dedicated to the back room to do this. You have to get it done from within and you need to improve productivity within the existing organization. At the same time, you've got to understand the impact of lottery, of foodservice, merchandise, even banking … the different types of retail going on under one roof. Not many people focus on our industry. Sometimes they don't appreciate the levels of complexity the c-store operator has to deal with.
Q: Where do you see things headed?
A: It's a journey for us, not a particular end game that says you've got everything you need.
From the details of raising credit limits by customer type to the configuration of hardware systems themselves, officials at technology provider PDI's user conference gave about 500 attendees an overview recently of what has been accomplished in the past year and what's on the map to do in the year ahead. Many of the improvements were based on customer feedback so that data entry, delivery and analysis would be easier and more accessible.
The conference, which included a supplier exhibit on Sept. 8, concluded Sept. 11.