Nestlé DSD Controls Costs Through Better Warehouse Management
July 2012 Integrated Solutions For Retailers
By Bob Johns, associate editor
Using proper supply chain management and order processing, Nestlé DSD is able to maintain accurate orders and delivery.
In 2010, Nestlé, one of the world’s leading nutrition, health, and wellness companies, saw an opportunity it just couldn’t resist, buying the Kraft’s North American frozen pizza business. As Kraft divested itself of one of its only major frozen food products, Nestlé needed to have an adequate supply chain infrastructure to handle this type of frozen product, which has a limited shelf-life and requires special delivery and handling to prevent spoilage.
Nestlé already had a ton of experience with frozen products like ice cream, and the company looked to Insight Group for help distributing this new product. Nestlé was working with Insight through its association with Dreyer’s, which had been merged with Nestlé ice cream products years earlier. Over a four-year period, Insight had worked with Nestlé to develop a program that began with the national warehouse director rolling out the solution in cities like Seattle and Chicago first and then companywide. The system they had chosen, The DC Expert, integrated fully with the existing ERP (enterprise resource planning) system. This was essential to maintain accurate orders and proper deliveries.
DSD Shipping Requires Accurate Ordering
The acquisition of the pizza line presented a whole new set of challenges for Nestlé. All of the systems needed to be redesigned to accommodate the differences between shipping ice cream and pizza, especially since you are working in a direct to store delivery (DSD) environment. Coordination between stores, corporate, and the warehouse must be seamless. There is just too much risk if you try to deliver more product than needed, which won’t fit in the store’s coolers, or if you deliver too little and the store runs out, costing both companies sales.
Nestlé DSD and Insight worked together to alter plans on 14 different operations during the nearly 13-week acquisition process. As the DC expert has been rolled out into different markets across Nestlé DSD's supply chain, the coordination of data becomes even better. The integration of the system with the existing ERP allows for a seamless order process while allowing for forecasting and manual order changes.
Stock Levels Affect Everyone
Keeping every store adequately stocked at all times is the priority, whether this means a once-a-week delivery or three times a week. With this type of collaboration and order accuracy, shipping and storage costs are driven down. The more accurate the ordering solution becomes, the less waste and overstock that is destroyed. The out-of-stock level will also decrease significantly.
No longer are warehouses full of product waiting to go out. If product is coming in, product is going out. A free flow of product from manufacture, to distribution center, to DSD is essential. It keeps the factories working at the correct levels without creating overstock or having workers incur overtime because enough product was not initially ordered, and therefore not produced.
DSD Can Be A Challenge, But It’s Worth It
As more retailers are looking to companies to provide DSD services, it can be a challenge to the suppliers. Having the right DC management system in place can change everything. In an age where margins are thin, being able to capitalize on accurate deliveries and supply chain management can be the difference between success and failure. Nestlé DSD has taken all of the steps to make sure that as the DSD business grows, Nestlé DSD is right there with it.
For More Information On Insight Group Go To www.insight-holdings.com