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DIRECT STORE DELIVERY Deployment Environment Guide

Honeywell Safety and Productivity Solutions 9680 Old Bailes Road, Fort Mill, SC, 800-537-6945 www.honeywell.com

DSD Deployment Environment Guide | Rev B | 01/17 Confidential, © 2017 Honeywell International Inc. PAGE 2



This “Deployment Environment Guide” is intended for the use of Honeywell and/or channel partner staff that are preparing to call on consumer goods suppliers with Direct Store Delivery (DSD) operations. After reading this guide, you should be familiar with:

• Environment terminology• The typical job roles, applications and tasks involved• Common problems and challenges encountered, with emphasis on those that can be addressed by

Honeywell • Specific interests of the three buyer types (Economic/Business, User and Technical)• Industry segmentation• Market trends that are driving change

This guide can’t teach you everything about Direct Store Delivery, but it will give you enough information to engage in meaningful application conversations with your customer.



Direct Store Delivery, or DSD, is a collection of business processes used by Consumer Goods (CG) suppliers to distribute their product directly to retail selling locations, bypassing retailer distribution centers. The main alternative to DSD is typically called “warehouse delivery,” where the CG supplier delivers the product to a retailer’s warehouse or distribution center (DC). CG suppliers may use both warehouse delivery and DSD methods depending upon the retailers and the markets where they are doing business.

In a warehouse delivery model, the CG supplier will deliver the product only as far as the retailer’s warehouse or distribution center and the retailer will be responsible for the product after that point. A high-level overview of a warehouse delivery model is:

FIGURE 1

In a DSD model, the CG supplier will typically be responsible for the product all the way out to the shelf in the retail store. A high-level overview of a DSD delivery model is:

FIGURE 2

DSD includes the processes of selling (a.k.a. pre-sales), merchandising and product delivery. Depending upon the company and the market, these three processes may all be done by the same person (known as “route sales,” “peddle,” “van sales,” “conventional”) or they may be separated (e.g., “presales” with “bulk delivery”). These processes are explained in more detail in Primary Applications.

DSD applications can involve complex business functionality, particularly in the areas of pricing/promotions, taxes and methods for determining the best quantities and mix of products to order.



CG brand owners can go to market using two-tier distribution (from CG manufacturer directly to retailers), or using three or more tiers of distribution (through distributors, wholesalers, etc.), or can use a combination of methods. A two-tier distribution model would be represented as:

FIGURE 3. SOURCE: GROCERY MANUFACTURERS ASSOCIATION

A three-tier distribution model would be:

FIGURE 4. SOURCE: GROCERY MANUFACTURERS ASSOCIATION



In some countries and regions, CG suppliers are required by law to use a multi-tier distribution model. For example, alcohol sales in the United States must go through at least three tiers of distribution and in some states more than three tiers are required (e.g., from manufacturer to distributor to retailer to restaurant).

“Distributors” can be companies (e.g., a beer wholesaler or soft drink bottler) or individuals (“independent distributors” or “independent operators”). Independent distributors/operators have acquired the right to operate specific routes from the brand owner. For example, a bakery may license the rights to its delivery routes to individuals that are not employees of their company. For independent distributors/operators, they will likely own/lease their own vehicle and equipment, in some cases including their mobile computer, printer and software. It is important to note that the customer for mobile computers, printers, etc. may not be the brand owner but instead the distributors.

A “store” location can be different by geography and can vary from a very large hypermarket/superstore to a bodeguita to a handcart or a person’s apartment. Whether or not the retailers are typically "organized" or not (i.e., have chain stores) can vary by region and is an important consideration. For example, the ratio of organized retailing to unorganized in the U.S. is around 80 to 20, in Europe it is 70 to 30, while in Asia it is approximately 20 to 80.



It is expensive for Consumer Goods (CG) suppliers to have DSD operations (route staff, vehicles, etc.). CG suppliers tend to use DSD processes for products that are high volume and high velocity. CG suppliers use DSD processes to make sure that their products are properly transported, in stock, on the shelf, in the right mix, correctly priced and displayed. CG suppliers use DSD operations primarily to make sure that their products are in stock and properly merchandised to maximize sales.

CG suppliers use their own DSD operations to be close to the end consumers and because they cannot rely upon the retailers’ staff to restock their product in a timely manner, nor merchandise it well enough. Suppliers also may have concerns with the transportation and handling of their product, particularly if it is frozen, fragile or perishable (short shelf life).

Retailers are generally in favor of suppliers using DSD for these product categories as the CG suppliers provide the retailers with additional labor in their stores. U.S. statistics from the Grocery Manufacturers Association found for DSD product categories:

• For a typical large-format store, DSD suppliers provide up to 17,000 labor hours per year per retail outlet for a retailer • 24% of grocery volume and 52% of store profits • DSD products are the fastest-growing categories • Lower out-of-stock rates • Up to 2 times higher promotional lift with trade funds • 5 times faster replenishment to the shelf • 7 of the 10 largest grocery product categories

SITUATION: CG suppliers face increasing competition from many fronts, putting pressure on their revenue and margin. It is critical that CG suppliers increase or maintain customer loyalty while controlling inventory and operating costs.

CONFLICT: CG suppliers are not only competing with other suppliers but in some cases also with their customers – retailers selling their own store brand/private-label products. Growth by global suppliers and acquisitions are also intensifying competition.

RESOLUTION: Honeywell is the only company that has over three decades of DSD experience and can deliver the full breadth of purpose-built hardware, specific value-added software and complete set of lifecycle services that address the unique needs of DSD operations.

BENEFIT: Honeywell's complete solution improves selling, merchandising and delivery operation effectiveness, driving top- and bottom-line results and a lower total cost of operation.

Increasing revenue, TCO and ROI are primary considerations for this buyer. DSD automation is mature for many medium and large CG suppliers, with many having implemented multiple generations of systems. The Economic Buyer, therefore, needs to be convinced that an investment in technology will achieve a rapid ROI over their existing systems. The Economic Buyer will compare pricing with the competition. They will want to understand the long-term warranty and maintenance costs, and may require Net Present Value (NPV) calculations in addition to ROI and TCO analysis.



Creative financing may arise in discussions with the Economic Buyer. This is particularly important where companies are using an independent distributor network. Equipment leasing and payment terms may be of interest. Software as a Service (SaaS) or Hardware as a Service (HaaS) and managed services may be attractive, especially for companies that are short on capital or looking to level out their expenses. Cloud computing, where IT equipment is housed by the software company or an independent third party, may reduce IT costs.

The Economic Buyer is interested in the process used to track and measure benefits of a solution. This becomes significantly easier with a mobile computing solution.

Technical Buyers are concerned with integrating and supporting all elements of the system. They will examine how well each solution element performs and how well it ties into existing systems. They will want to be sure there is a clear path for installing and supporting the solution. Technical buyers will be very concerned about compliance with industry standards, data and network security, system reliability, ease of deployment and management, and the ability to support potential needs (future-proofing).

Technical Buyers will vary in their desire to stay ahead of the pack with technology. As in any industry, some will be early adopters who want to be first with new technologies. Some will want to move with the majority of their peers, waiting for the early adopters to first prove the technology. These customers will want to hear about success stories for other similar businesses and companies they view as their peers.

The Technical Buyer will be concerned about the mobile computing system. They may seek advice from their existing Route Accounting system, mobile DSD client software, ERP, WMS or CRM provider, so maintaining good relations on those fronts is important. They will compare hardware specifications with competitive offerings to make sure that they are getting a good deal on the cost of equipment necessary to meet their requirements. They will want to:

• know that the system will run quickly and reliably • ensure that the system is compliant with relevant industry standards (e.g., PCI for mobile payment) • verify that the system can be easily deployed and managed in the field • ensure that the system interfaces to any peripheral components today and as future requirements dictate • know the roadmap of product platforms to ensure that they grow as their requirements expand

The Technical Buyer is responsible for supporting any new users on IT systems and networks. This means that Technical Buyers will have concerns about the ease of training and deployment as well as ease of use. Technical Buyers will raise concerns about network access and security, especially considering field users who may be transmitting highly sensitive information (such as credit card numbers). The IT help desk will need to be educated on applications and interfaces as well.

Having a stable mobile computing solution is one of the Technical Buyer’s biggest concerns. The IT help desk is part of their organization so they will want to keep the calls and complaints to a minimum. The rugged message will resonate well with this Buyer, knowing that high failure rates associated with consumer-grade products will result in calls to the help desk.

User Buyers are primarily driven by performance metrics – particularly in increasing sales, productivity, efficiency, consistency and employee satisfaction. User Buyers seek to optimize workforce efficiency and motivate their workers. Giving their workforce the right “tools” to do their job is their goal. The User Buyer often turns to the Technical Buyer for help in a crisis, especially when business is increasing and hiring more staff is not an option.

In many cases, User Buyers will view solutions from the typical worker’s perspective; feedback from the staff is important to them. They may request a pilot of the total solution proving out the benefits before accepting it. The User Buyer wants to ensure that the system will be easy to learn and will result in improved scores on all the key metrics for which they are responsible.

User Buyers want staff to be focused on completing the work, not distracted by issues with technology. Ease of use, simple interfaces (e.g., large keys for heavy numeric input) and high-quality products will go a long way with this Buyer. Any “paperwork” is



also seen as a necessary evil, and they are all for anything that reduces it or makes it easier. Systems that are well-suited or specific to DSD operations (e.g., DEX/UCS support in North America) are critical.

Training new staff is also a concern of the User Buyer. It can take weeks, months or even years for a new employee to reach optimum productivity. Training aids and knowledge management solutions will shorten the learning curve for new staff in this buyer’s organization. New technologies for on-demand learning (i.e., video aids, electronic training material and access to product specialists) are of interest to User Buyers.

Ergonomics are important to User Buyers. They will be interested in solutions for carrying the equipment, vehicle mounting options, peripheral handling, etc. Safety issues are also a concern.

Figure 5 shows the top business challenges for companies with DSD operations surveyed on our behalf in September and October of 2013. The figure shows the top responses identified as significant challenges.

FIGURE 5. TOP BUSINESS CHALLENGES – RESPONDENT % IDENTIFYING AS A SIGNIFICANT CHALLENGE. SOURCE: HONEYWELL



The primary target segments are CG suppliers selling high-volume, high-velocity products, in many cases food-based. CG suppliers with DSD operations can include manufacturers or their distributors/wholesalers/bottlers.

Food-based products being delivered using DSD processes are categorized into beverage, bakery, dairy, snack food and "other". There are also sub-categories within these groups. For example, within beverage there are many categories including carbonated soft drinks, bottled water, sport and energy drinks, beer, wine, liquor… Beverage companies may sell multiple categories and brands. Frozen foods including ice cream and pizza can also be delivered using DSD processes.

DSD is also used for additional product categories beyond food-based products. Additional categories can include tobacco, confections, magazines and greeting cards, to name a few.

Figure 6 shows the breakdown of the global install base of routes by product category as of 2007. Figure 7 shows the shipments of DSD systems per year by product category.

FIGURE 6. SOURCE: VENTURE DEVELOPMENT CORP. FIGURE 7. SOURCE: VENTURE DEVELOPMENT CORP.

It is important to note that in some cases our targeted customers will not be the brand owners themselves but will instead be their distributors/wholesalers. It is also possible that companies will operate as separate entities with their own brand but be a subsidiary of a large national or global parent.



Figure 8 shows DSD shipments split per year between Rugged Handheld Computers, Mobile Printers and Application Software/Middleware. Figure 9 shows DSD shipments per year by region.

FIGURE 8. SOURCE: VENTURE DEVELOPMENT CORP. FIGURE 9. SOURCE: VENTURE DEVELOPMENT CORP.

In addition to route operations, there are additional opportunities for automating or upgrading CG suppliers' operations. Additional opportunities include automating or upgrading their manufacturing plants, depots and distribution centers, field service operations (e.g., installation and repair of point-of-sale equipment), vending sales/service and asset management.



There are three primary DSD route applications. The applications are pre-sales/sales, delivery and merchandising. On the route, these applications can be the responsibility of one person, two people or three people.

DSD applications can involve complex business functionality, particularly in the areas of pricing/promotions, taxes and methods for determining the best quantities and mix of products to order.

The selling and ordering process in DSD is referred to as Pre-Sales or Sales. During Pre-Sales, the route sales rep is developing what will be sold to the retailer. When possible, route sales reps will work with the retail store category/department managers to discuss ways to increase their sales through tactics like promotions, additional shelf space, signs and special displays.

It is critical for the route sales rep to create future orders that will result in high sales, no out of stocks (empty shelf) and minimal excess inventory. This is particularly critical for perishable product with a short shelf life (e.g., bakery, dairy products). Excess perishable inventory is usually brought back as unsellable and is either sold at a discount, donated or thrown out. Companies with perishable products can provide their route sales reps with data and software tools to help them best determine the best future order.

A problem experienced by many CG suppliers is managing the proliferation of SKUs (e.g., flavors, pack sizes) and best lining that up with the expected demand from the consumers.

Due to the highly competitive nature of today's markets, many CG suppliers are particularly focusing their efforts on maximizing the performance of their sales, promotion and merchandising efforts.

During the delivery process, the actual product is brought to the store, usually to the store back room/receiving dock, to be checked in and accepted by a store employee receiving clerk. Delivery can also include the return of sellable or unsellable product.

A manual check-in process can be used during deliveries since the retailers want to approve what is being delivered to their stores and verify that they are actually getting what they are being invoiced. Retailers can give the suppliers specific time windows when they will accept deliveries. This can also be complicated by noise ordinances and laws limiting times of the day or neighborhoods where larger trucks are allowed.

The delivery process can be a source of lost time for route sales reps. Significant time can be lost during the time it takes to check in with the receiving clerk (can be all invoice line items), while waiting in line for other suppliers to be checked in, and while waiting for a store employee to be available to do the check in.

Retailers can require different methods. These can include Scan-Based Trading, Advance Shipping Notices and DEX/UCS.

With Advance Shipping Notices (ASN), the supplier electronically sends the retailer what will be delivered before it is delivered. The delivery is associated with an ASN number, which the retail store can access at the time of the delivery to speed up the acceptance process. The retailer can typically access the ASN number by scanning it on a pallet label on the shipment. ASNs are typically used in conjunction with Pre-Sales or retailer-generated orders.

For Scan-Based Trading (SBT), the store does not purchase the product from the supplier at the time of the delivery. The product that is physically in the store on the shelf or in the back room is on consignment to the retailer and is the property of the supplier. The product is only technically the property of the retailer at the instant it is sold in their Point-of-Sale (POS) system to the end consumer. Since the retailer does not buy or pay for the product being delivered, there may be no receiving/check-in process done at the store. Suppliers are not paid by what they deliver but instead based upon what has been sold by the retailer. Using SBT can eliminate the delivery check-in process but introduces risk from shrink (missing product). CG suppliers tend to not favor SBT as



they continue to own the product and it increases their risk. Some retailers may require delivery information even when using SBT, for traceability/recalls.

DEX/UCS is a standards-based process used in North America for the electronic exchange of invoice line-item information (i.e., delivery quantities, pricing) between the supplier and retailer at the time of the deliveries/returns in the store. DEX/UCS can potentially speed up the payment and check-in processes for the supplier and is typically used with Route Sales.

Merchandising in the store is the process of making sure that the product is on the shelf, priced accurately and displayed properly. Merchandising is very important as DSD categories are usually high-volume, high-velocity products. It is particularly important that the products are on the shelf for the consumers as “out-of-stocks” of a particular product can result in lost sales for the supplier and possibly the retailer (if they don’t buy an alternative product).

Item-level pricing can be important as some products can be individually priced with regular and promotional/sale pricing. If pricing on individual items does not match the price charged by the retailers’ POS system, significant penalties can be assessed in some regions. The merchandising activity needs to be in sync with promotions being done by the supplier and/or the retailer. It is important to note that out-of-stocks are notably common and costly industry-wide when products are being promoted.

Merchandising in a store is typically done by one or more groups including: 1) the retail store staff, 2) the CG suppliers’ staff, or 3) a third-party merchandising company. Companies with DSD operations typically merchandise using their employees, which could be a salesperson, a dedicated merchandiser, a delivery driver or a spot/route sell rep (see next section).

The sales, delivery and merchandising activities for a given route can be handled by one person, or by multiple people. Figure 10 shows the discrete steps that are associated with the DSD delivery process. The two columns on the left of the table show the sequence of the steps depending upon whether all of the process is being done by a single person (“Spot/Route Sell,” column 1) or separating out the three processes (“Pre-Sell," column 2). Figure 10 also shows which steps are usually done by each person when the activities are separated. This is shown by the check marks in columns “Account Manager,” “Delivery Driver” and “Merchandiser”. In a “Pre-Sell” business process, the merchandising activity may also be performed by the “Account Manager”/Sales Rep.

SPOT/ROUTE SELL STEP

PRE-SELL STEP STEPS/ACTIVITY ROUTE

SALESACCOUNT

MANAGERDELIVERY

DRIVER MERCHANDISER

5 1 Oversee picking of pre-sell order or selection of brands/packages for truck inventory at distribution center.

8 2 Load truck.

1 3 Review shelf, remove out-of-code and damaged products from shelf.

3 4 Issue credit from removed product – not physically, just acknowledgment of items requiring credit.

9 5 Reconcile delivery to advance shipment notification (ASN) where applicable.

10 6 Deliver product to backroom.

11 7 Check-in delivery (scan/verify item and price or conduct DEX process).

12 8 Check out-of-code and damaged product. 2 9 Inventory shelf, displays and backroom. 4 10 Create or pick (route sales) order for current needs. 6 11 Review order with retailer (if needed).

7 12 Create/forecast order for future delivery (may vary by DSD channel/supplier).

FIGURE 10. DSD DELIVERY STEPS. SOURCE: GROCERY MANUFACTURERS ASSOCIATION



The truck loading activity is important to make sure that the proper product is loaded onto the truck for the day’s sales/deliveries. Trucks may be staged with the inventory grouped by stop (store), and in-route sequence. Truck loading can be done at a manufacturing plant, a distribution center, a cross-dock, a depot or at a temporary location depending upon how remote the route. Inventory by store may be grouped onto a pallet or placed onto a cart for easier movement into the stores.

Although many suppliers have been automated with multiple generations of systems out on their routes, it may not necessarily be the same case in their in-premise facilities. There can be good opportunities for improvement through automation in these companies, particularly using Voice.

Truck unloading can be used to credit the route sales rep for product being returned. If product has a longer shelf life, then inventory is not usually returned on a daily basis. Some companies do require their sales reps to sell all the truck inventory that they have been given.

See the Odom Corporation video case study for the benefit from automating DSD truck loading operations.

CG suppliers may also have vending machines in the field. It is necessary for them to restock these machines, rotate inventory (change products sold, remove unsellable) and remove cash. Vending sales are typically done by route salespeople separate from the DSD routes.

CG suppliers have assets in the field that need to be serviced. Examples would be a vending machine or a soft drink fountain machine for a beverage company or a dedicated retail store cooler/freezer in a store for a dairy company. These assets need to be properly maintained and serviced in order to keep product sellable. Assets like supplier-owned refrigerators and freezers that are placed in stores are called Point-of-Purchase (POP) displays.

CG suppliers own many assets in their operations. Out on the route these include items like their trucks, POP coolers and freezers, vending machines, POP displays, shipping containers, beer kegs, etc. The initial and replacement costs for these assets are significant for the suppliers. There are opportunities for cost reductions within suppliers by better managing these assets, particularly for those assets they must replace that are lost or misplaced.

See the Mission Foods case study for the benefit of managing shipping container assets using RFID.



CG suppliers are seeing increasing competition and downward price pressure due to the economic challenges being experienced in most regions. This has encouraged suppliers to expand into additional product categories and geographies.

The increasing popularity of lower-cost private-label/store brands can also impact both the CG suppliers’ revenue and margin. This increases the need by the CG suppliers to drive high consumer loyalty for their brands, including surpassing the consumers’ loyalty to the retailers’ brand. It is important to note that CG suppliers can manufacture private-label products for retailers but these are usually at a lower price, resulting in a lower margin.

For example, private-label sales in the U.S. surpassed $108 billion in 2012, according to the Private Label Manufacturers Association’s 2013 Private Label Yearbook. Across the major retail outlets, store brands sales increased more than 2.9 percent, pushing annual revenues up $3 billion to an all-time record of $108 billion, according to the report. Store brands comprised 23.1 percent of all units sold in U.S. supermarkets and 19.1 percent of all dollar sales. In drug chains, store brand units sales were 16.6 percent and 15.9 percent of dollar sales.

In supermarkets store brands sales set a new record in 2012 despite slow growth overall for all brands. Private-label sales volume edged up 0.1 percent compared to the prior year, generating an additional $73 million, and achieving an all-time high of $59 billion in sales. In the four years since 2009, store brands sales in the channel have increased at an average annual rate of 2.6 percent, compared to an average gain of 0.9 percent annually for national brands. Fully 40 percent of all sales gains in supermarkets during that period are attributable to store brands, according to PLMA.

Food traceability regulation and the concern with product recalls have also increased the responsibility of CG suppliers to be able track product movement throughout their entire supply chain, from the source of raw materials all the way to the consumer (“Farm to Fork”). This increases the need for the amount of data that is captured and making that data easily accessible.



CG suppliers with DSD operations are the target market. Customers with existing DSD operations are good candidates and companies using exclusively warehouse delivery are not. In most regions DSD is a mature deployment environment. Customers with automated DSD routes appreciate the value of ruggedness and purpose-built systems.

For customers with existing route systems, it is important that you identify the hardware that has been deployed, the software being used on the route, the route accounting or ERP back-end software, and their communication software and the partners involved.

Customers with Honeywell/Norand 69xx communication products are natural candidates for upgrade to Skynax.

Accounts that are committed to large full-screen/tablet-based applications will be more difficult to sell handheld computers.

Customers with limited support capabilities or looking to focus their limited resources will be interested in advanced services, managed lifecycle services (e.g., Enterprise Mobile) and repair services.

Companies with full-page printers can be good candidates for replacement with smaller PB21/PR2 or PB51 thermal printers (faster, lower expense), if they are not restricted by government or retailer requirements for full-page invoices.

Additional opportunities exist for operations beyond the DSD routes. Companies that are not automated in their plants, distribution centers, depots and are doing paper-based picking for their truck staging/loading are good candidates for automation. Opportunities should exist for mobile computers, voice, services and, potentially, printers.

CG suppliers that are using reusable plastic containers (e.g., trays, crates) for deliveries can be good candidates for asset management with RFID. It is important to understand the expense and frequency that the companies purchase replacement containers. Companies with high expenses can typically see a quick return on investment. It is common to see companies replacing 30% or more of their reusable plastic containers each year.



• Have their own developed software applications for the mobile computers out on the route (DSD client) and/or “route accounting” software

• Sell hardware in addition to their software licenses • May offer other services, like SaaS hosting • May offer other software (WMS, small ERP, etc.) • May or may not lead hardware sales cycle as they are selling business process change and ROI

• Software apps include business logic and “best practices” for out on the route or for “route accounting” software • May also include platform providers with DSD functionality • Tend to lead sales cycle but are selling business process change and ROI • Can be hardware-agnostic and not interested in reselling hardware

• May provide software applications and services as part of the sale • Ruggedized-hardware VARs whose primary revenue is derived from hardware sales, installation, training, kitting,

configuration, activation, deployment, service and support (i.e., software is not their focus) • Large VARs may have a software integration team that can assist with implementation of software, but often they are working

collaboratively, utilizing resources from one of the software vendors above, particularly on Tier 1/Tier 2 accounts



The salesperson/pre-sales person for the route. Also known as an RSR or CSR.

(Or ship notice/manifest.) An EDI transaction set in which the shipper advises the customer of a pending shipment, when that shipment will arrive and what is in the shipment. The ASN enables the customer to identify short shipments before receipt and plan the receiving process more efficiently.

Products that a company's headquarters authorizes for distribution to a retailer or stores.

A storage area for excess products, kept on hand to restock the store floor as needed.

Entity that has ownership of the brand (e.g., Coca-Cola).

Product that is taken back from a retailer that is still sellable.

Receiving, checking and signing for merchandise delivered.

A date and source code printed on an item to indicate its shelf life.

See Route Sell.

Consumer Goods

Umbrella term for a CG brand owner or distributor.

Consumer Packaged Goods.

Carbonated soft drink.

Customer Sales Rep (representative), same as RSR.

Product that is taken back that is not sellable and has been damaged.

Barcode standards developed by GS1 primarily for smaller items (formerly Reduced Space Symbology, or RSS).

A store-level EDI system that supports DSD by allowing direct data transfer between the supplier’s delivery personnel and the retail store’s receiving agent of invoice data.

A method of delivering product from the manufacturer plant directly to the retail store, bypassing warehouse facilities. Shelf inventory (initial stock and replenishment) can be managed by the brand owner/distributor with varying degrees of retailer oversight, although product check-in is done by both the supplier and store receiver. Major DSD categories include soft drinks, beer, bread and fresh baked goods and fragile items that require special handling, such as salted snacks and some gourmet items.

See Promotion.

The entity that has the responsibility of getting product from the brand owner to the retail store. This entity can be the same as the brand owner, or can be a third-party company. A third party for a soft drink brand owner is typically referred to as a bottler, and a third party for alcoholic beverages is often referred to as a wholesaler. In the two-tier DSD model, the brand owner and distributor are typically the same entity.

Umbrella term for DSD brand owner or DSD distributor.

Returned dairy products that are unsellable.

Barcode using the European Article Numbering format.



A system of industry-standard transaction sets that form the basis for supplier-retailer telecommunications. Also the computer-to-computer transmission of business information between trading partners via an industry-wide, standard format.

The number of units in width a product occupies on the front row of a store shelf or cooler.

Fast-Moving Consumer Goods.

The industry term for the 13-digit number used to uniquely identify any legal, functional or physical location within a business or organizational entity. Its components include a company prefix, a location reference and a check digit.

The industry term for the 14-digit data structure to uniquely identify trade items (products and services) within the GS1 EAN.UCC system. The GTIN provides information on the type, manufacturer, size, weight and price of the product.

Display shelves and racks that form aisles in a retail store.

Organizational entity responsible for issuing barcode standards and allocating company barcode prefixes. Replaced the UCC (Uniform Code Council) and EAN, International (European Article Numbering).

A practice of receiving merchandise without systematically counting the product or checking the contents of cases, but rather trusting that the vendor and shipper have complied with the order. Spot counts are normally conducted in association with an honor system.

Individual that is not an employee of the company that has acquired the rights for a specific route or routes.

Damaged dairy container.

A representative of the brand owner/distributor or retailer who works at the store level to set up and replenish shelves, build displays and in general be responsible for that product in that store.

NEX/UCS supports communications between the office-based computer systems of CG suppliers and retailers. NEX/UCS is used by both the grocery and the mass merchandise industries. It provides additional benefits when used with DEX: automates post-delivery accounts payable and receivable; maintains data files on products, costs, promotions and delivery authorization. Additionally, it minimizes payment discrepancies and the time needed to correct them.

Markets with retail chains with stores and distribution systems.

Over, short and damaged.

A product temporarily oversold and unavailable in a retail store.

The date on which the product was made or packaged for sale.

See Scan-Based Trading.

See Route Sell.

Products with a short shelf life (e.g., bread or dairy).

A department, shelf or display schematic for allocating products by the number of facings and/or the depth of the display.

The place where the purchase is made at the check stand or scanning terminals at the front of a retail store. The acronym POS frequently is used to describe the sales data generated at the checkout scanners. On another level, POS can also refer to the in-store promotional, merchandising and marketing materials, such as stand-ups, displays, etc.

Point of Purchase.



A type of direct store delivery selling in which order placement occurs by the brand owner prior to the date of delivery. Orders are either generated by a DSD brand owner/distributor sale representative or initiated by the retailer via telephone, fax or Internet (PO/EDI). Typically, the order is delivered within a few days of order placement.

A reduction in the price of an item or an invoice usually offered as an incentive to increase sales. Typically offered with a specific start and end date.

The complete definition of a promotion, including requirements for obtaining the promotion, list of items receiving the discount and the type and amount of the promotion. Sometimes referred to as a deal or offer. One or more promotion plans may be assigned to a customer, and the same plan may be assigned to multiple customers.

A description of how the promotion is expressed to the user. Types available include Amount Off Item, Percent Off Item, Net Price, Free Goods, Amount Off Invoice and Percent Off Invoice.

The date by which a product must either be sold or pulled from a shelf.

A refrigerated trailer used to transport perishable product.

Product that is taken back and credited to a retailer that is no longer sellable.

The set of retailer stops that are done on a regular or daily basis.

A form of direct store delivery selling in which order placement is performed at the same time as product delivery. In route sell, the salesperson, typically referred to as the route driver, has the product on the truck and replenishes what is needed immediately in the store.

Reusable Plastic Containers used for transporting finished product or raw materials (e.g., trays).

Route Sales Rep (representative), same as CSR.

Individual store location.

A business process between brand owners – typically DSD suppliers – and retailers. Scan-based trading is a partnership that incorporates daily point-of-sale data to pay for product, full use of database synchronization, electronic funds transfer and various store-level operating efficiencies – such as open windows and elimination of product check-in.

See planogram.

The amount of product delivered to the store that cannot be accounted for. Shrink is equal to the residual of beginning physical inventory, plus deliveries, minus returns, minus scanned quantity, minus ending physical inventory.

Clear plastic film on a pallet to stabilize the stacked products.

Stock Keeping Unit – an individual sellable item.

A manufacturer's incentive to a wholesaler or retailer to stock a new product. Also called conversion allowance or service allowance.

See Route Sell.

A rubber stamp bearing a store's number and name. The imprint of the store stamp on an invoice or other business paper indicates correctness or approval. Stamps are kept under tight security.

The alignment of supplier and retailer information systems and databases primarily in the areas of item authorization, price and promotional programs.

A special manufacturer's offer made to retailers, such as allowances for advertising and/or merchandising.



Pallet barcoding is a numbering and barcoding system that identifies the items and quantities of a specific pallet or complement of pallets being delivered to a store or warehouse location. This technology has historically been used in warehouse-direct delivery systems, but is being used as a method to expedite backdoor check-in.

A numbering and barcoding system used in North America for product identification of consumer items that is scanned at the retail point-of-sale.

See Route Sell.

A manufacturer's management of the inventories inside a retailer's store, including sales forecasting, promotional adjustment/allowances, ordering and delivery.

Honeywell, Grocery Manufacturers Association, Food Marketing Institute

• Grocery Manufacturers Association/Food Processors Association (GMA/FPA): www.gmabrands.org • GS1: www.gs1.org • The Consumer Goods Forum: www.ciesnet.com • Dairy Australia: www.dairyaustralia.com.au • Food and Drink Federation: www.fdf.org.uk • International Council of Beverage Associations (ICBA): www.icba-net.org • International Dairy Foods Association: www.idfa.org • World Alliance for Retail Excellence & Standards: www.worldalliance-retail.org • National Automatic Merchandising Association: www.vending.org • National Beer Wholesalers Association: www.nbwa.org • Snack Food Association: www.sfa.org

• Consumer Goods Technology: www.consumergoods.com • GMA Smart Brief: www.smartbrief.com/gma/ • Beverage World: www.beverageworld.com • bakingbusiness.com: www.bakingbusiness.com • foodbusinessnews.net: www.foodbusinessnews.net • meatpoultry.com: www.meatpoultry.com • Baking & Snack International: www.bsimagazine.com • Dairy Foods: www.dairyfoods.com • Snack Food & Wholesale Bakery: www.snackandbakery.com • Beverage Digest: www.beverage-digest.com • Beverage Industry: www.bevindustry.com

DIRECT STORE DELIVERY - Squarespace

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