TAMPA, Fla. -- Save Mart was able to cut its accounts payable staff by 65% after automating its direct-store-delivery system.
That was just one of the cost-saving efficiencies uncovered as a result of instituting an automated DSD program, said Ed Martin, director of information systems and technology at Save Mart Supermarkets, Modesto, Calif.
The reduction in accounting staff resulted in annual department savings of about $500,000 through reassignment of 30 clerical staff members.
As a result of automating DSD procedures, Save Mart also virtually eliminated the use of paper, streamlined its check-in procedures, reduced shrink at the backdoor and increased the frequency of deliveries of baked goods, Martin said.
Martin spoke at the Food Marketing Institute's MarkeTechnics convention here at a workshop titled "Learning from the DSD Pilot -- ECR Implications for In-Store Systems." Also presented at the workshop were the results of a DSD Best Practices study, commissioned by Anheuser-Busch and conducted by Willard Bishop Consulting.
The study focused primarily on Save Mart's experience. "Our experience with the DSD project has been a positive activity," said Martin. "It allowed us to begin the introduction of automated systems into everyday store activities.
"The key to any ECR-type project is the identification and execution of mutually beneficial operational efficiencies. In the same way, the key to an in-store automation project is to communicate the mutual benefits to all parties."
Products directly delivered to Save Mart's 486 stores from manufacturers account for 28% of total grocery and general merchandise sales. Items delivered
represent the top 200 items sold nationally, including Budweiser beer, Dorito's chips, Oreo cookies, Wonder Bread, Pepsi Cola, Miller beer and Coca-Cola.
"After looking at the positives and negatives of the DSD program, an executive decision was made to set up an automated DSD receiving program to control product flow and reduce paperwork," Martin said. But before the program could be instituted, receiving procedures had to be reviewed and reinforced so that the system could be developed "around existing practices rather than having the system attempt to create operational discipline," Martin said.
Once that was done, a system whereby product was keyed in through a handheld terminal was instituted. Store-level personnel were used as in-store trainers. Each of the three operating divisions named six people with receiving experience to serve as the trainers. This allowed Save Mart to install the system in up to six stores a week.
"The paper flow has been almost eliminated," Martin said. Now drivers simply connect their direct exchange (DEX) based handheld terminal up to the Save Mart in-store processor via the DEX port.
"Because the items are all verified for authorization at store level before the invoice is accepted, the correct departmental and taxable totals are entered into the accounting system.
"This step has allowed Save Mart to reduce the clerical staff in accounts payable by almost 65%," said Martin. "We plan to add service invoices for laundry, repair and maintenance bills over the next 30 days, which will reduce the clerical staff in accounting even further," Martin said.
Automating DSD is part of the larger picture of refining backdoor practices. The Anheuser-Busch study identified seven best practices, several of which Save Mart is already doing:
Load supplier vehicles to reduce store-select time, a practice that could save suppliers as much as $72,600 weekly for a 100-store chain. Retailers' dollar savings would be negligible. If the savings are prorated industrywide to include both retailers and suppliers, the savings would be about $30.9 million.
Schedule night deliveries to improve use of the fleet. In a 100-store chain, that could cost a retailer $97,800 because of increased labor costs to cover the night shift, but suppliers would save an estimated $164,500. Overall savings in the supply chain, therefore, would be $66,700. Industrywide, the savings are estimated at $27.8 million.
Stage products for more efficient check-in by sequencing products from the truck to coincide with the invoice order. In a 100-store chain, about $48,800 could be saved; suppliers would see a savings of $33,900. Industrywide, savings would be about $35.5 million.
Reduce receiving delays by increasing the store's receiving capacity. This can be done by assigning a trained receiver to cover the lunch hour break and by establishing a continuous receiving period of a minimum of six hours. Industrywide savings would be about $63.3 million. A 100-store chain could be expected to lose about $50,000 a year because of increased labor; suppliers would save about $213,000.
Automated best practices include improving efficiency of non-DEX transactions. Those transactions involve drivers who use retailer-provided handhelds to transmit their orders into the computer. The study suggests developing a unit UPC bar-code card, redesigning invoices and expanding printing capacity.
Two other automated best practices are using "totals only" receiving to reduce invoice verification and using electronic signatures as proof of purchase.