Gulf firms 'can save millions by adopting DSD'
Dubai, June 5, 2014
Consumer goods suppliers in the Gulf region can save millions of dollars by evaluating and improving the direct store delivery (DSD) operations, specifically through the manner by which products are ordered, sold, delivered and merchandised, said an expert.
“These companies can thus improve their revenue while cutting costs, enabling them to strategically grow their business and margins in these challenging times,” remarked Brian Schulte, the industry director for DSD for Honeywell, citing a company survey.
Containing significant feedback from 350 C-level executives and directors from across the globe, the report found that 49 per cent of organisations saw increased transport costs severely impacting profit margins in the past 12 months.
According to the report, the top three areas identified that need cost improvement by respondents from the UAE and Saudi Arabia include:
*Delivery – Dh1.86 million ($509,063) projected average annual savings
*Truck loading – Dh1.67 million projected average annual savings
*Fuel and petrol costs – Dh1.42 million projected average annual savings
Majority of the consumer goods suppliers in the Gulf countries continue to face business challenges owing to these issues, said the report.
However, the survey found that those organisations that have carried out process evaluations - known as process re-engineering, in the past year to improve their DSD processes - have cut, or expect to cut, costs by Dh2.68 million ($734,000) per year on average, explained Schulte.
Approximately 20 per cent of all respondents have experienced, or expect to experience, at least $1 million a year in tangible cost-savings through DSD process re-engineering, and about 20 per cent of companies with 3,000 or more employees anticipate saving at least $3 million, he revealed.
“The report shows clearly that re-engineering DSD processes provides an opportunity for business transformation and competitive advantage,” he added.
According to him, time and saving opportunities were critical as the report shows that companies view DSD, the process for consumer goods suppliers to deliver their products directly to retail stores, as a critical focus for their strategy.
Nearly 48 per cent of surveyed organisations from the UAE and Saudi Arabia view DSD as key to their company’s business strategy going forward, it stated.
Consumer goods suppliers see the primary goal of re-engineering their DSD processes as ‘improving their strategic direction performance,’ stated the report by Honeywell.
Currently in the UAE and Saudi Arabia, 32 per cent of respondents said that operational efficiency and productivity have been the primary goal of their re-engineering efforts, whereas 18 per cent and 14 per cent have focused on revenue generation and reducing operating costs respectively, with 14 per cent also identified improving in-store execution such as building in-store promotional displays on time as their primary goal, it added.
"The results of this survey clearly show that business today is increasingly complex and challenging and there is no sign of that letting up," remarked Schulte.
"It’s also clear that companies that are looking for ways to address these growing challenges and jump ahead of the competition are well-advised to look at re-engineering their processes and consider upgrading the systems and technologies they use," he added.
Honeywell Scanning & Mobility is a leading manufacturer of image- and laser-based data collection hardware, including rugged mobile computers and bar code scanners, radio frequency identification solutions, voice-enabled workflow and printing solutions. -TradeArabia News Service