PURCHASE, N.Y. — The majority of large direct-store-delivery (DSD) vendors are now using advance shipment notifications (ASNs) as part of an electronic back-door receiving process that encompasses about 4,500 stores operated by five food retailers, according to PepsiCo here.
John S. Phillips, vice president of PepsiCo customer supply chain and logistics, told SN that over the past 24 months, these DSD vendors, including PepsiCo, Coca-Cola and Anheuser-Busch, have each begun employing the ASN process for DSD receiving with “more than one” of the retailers.
PepsiCo itself is using the process with “the majority” of the five retailers, Phillips said. He declined to name any of the retailers, though they include national and major regional operators. Six more retailers are looking at adopting the ASN process with PepsiCo, he said.
By using ASNs, PepsiCo and the other DSD vendors are able to improve the accuracy and speed of the back-door receiving process at stores while ensuring that retailers suffer no “catastrophic” delivery mistakes, Phillips said.
“Once you move to ASNs, you engineer large errors out of the process,” said Phillips. “You validate at the store that all of the component pieces are part of the order.”
ASNs enable manufacturers and retailers to expedite the delivery process and reduce receiving time by as much as 60%, according to a 2005 study by the Grocery Manufacturers Association, “Unleashing the Power of DSD.” This can represent a savings of 65,000 receiving hours per year for a 250-store, large-format chain if only one quarter of the deliveries are via ASNs, the study said.
The ASN process for DSD works as follows: An order is picked at the vendor's warehouse and then double-checked for accuracy; a serial shipping container code (SSCC) bar code (or license plate), which contains data on the cases on the pallet, is applied to the pallet; and an ASN containing the SSCC data is sent via an EDI (electronic data interchange) transaction 856 to the retailer's headquarters and then to specific stores.
“When the order leaves the manufacturer's warehouse, it is significantly higher in accuracy than in a non-ASN world,” said Phillips. “That's the key to making it work.”
At the store, the order is delivered and brought to the back room; the receiver scans each SSCC bar code, confirming that they agree with data in the ASN, thereby performing an electronic “handshake”; the receiver may opt to audit the contents of one of the pallets; and the order goes to the shelf.
According to the 2005 GMA report on DSD, only 35% of large-format food retailers used some form of an electronic receiving program. Of those, 54% used DEX (direct exchange), whereby the DSD delivery representative connects a handheld device into a docking station at the retailer's back room to transmit invoice information.
Another 6% used NEX (network exchange), similar to DEX except that the information is sent from a supplier's headquarters to a retailer's headquarters and then to stores. The rest used scanning (17%), scan-based trading (20%) and ASNs (3%, though the number has grown since the study was conducted).
PepsiCo, said Phillips, still regards DEX as the best electronic system for highly perishable DSD items like bread and cakes that need to be ordered at the store, or slow-moving items shipped in less than full-case loads. It is also better suited for small-volume stores in remote locations.
ASN is employed with larger stores and full-case shipments of goods that are not highly perishable and can be pre-ordered. “When a store is capable of receiving ASNs, we will always choose it,” said Phillips. “But we don't force ASNs” on stores for which it is not appropriate.
For retailers, the ASN process allows retailers to conduct random audits rather than checking an entire delivery. “A retailer can pick one pallet at the store and validate that the license plate is correct,” said Phillips. “So the retailer can build a process to periodically sample and have confidence that the system is performing as engineered.” Suppliers can be rated individually for their accuracy.
Because the retailer is only auditing random deliveries, the receiving process is expedited by 15-20 minutes per vendor, said Phillips. That time savings makes up for the extra time spent by the supplier at its warehouse double-checking accuracy. Time is also saved transferring invoice data electronically into a retailer's systems.
To participate in ASN receiving for DSD products, retailers need to have scanning equipment (most do) and must support EDI communications, including transmitting the data to their stores from headquarters, as well as random audits. “It's not a three-year IT project,” said Phillips.
Retailers and manufacturers can improve the ASN process by engaging in data synchronization, Phillips noted. “Item and price synchronization makes you better at whatever electronic trading you do,” he said.