Recent supply chain issues and rising costs across just about every industry are hitting businesses hard, leading to decreased inventory and increased prices on kitchen staples like milk and cheese. The strained economic environment has resulted in anxiety and budget-consciousness for consumers.
Rather than try to maintain the status quo, retailers and CPGs should adapt and rethink their supply chain. That’s why efficiency-driven distribution strategies like Direct to Store Delivery (DSD) are surging in popularity in 2022. DSD is particularly well suited to short shelf-life products like milk and other dairy products. Here’s how working with a DSD dairy distributor can help your business stay profitable in undesirable market conditions.
Why are dairy prices so high?
The global supply chain is still struggling to adjust to the shift in consumer behavior and demand that came about during the height of the covid-19 pandemic and persists to this day.
Production and logistical bottlenecks compounded with once-in-a-generation inflation levels have hobbled the consumer packaged goods (CPG) industry and forced the costs of doing business ever higher.
According to the July 2022 Producer Price Index from the US Bureau of Labor Statistics, the cost of dairy products has risen 21.3% in the past year. The price of raw milk has risen more than 50%.
The increase in cost has a natural ripple effect, driving up prices at every point along the supply chain until it reaches the consumer and begins to impact their purchasing decisions—shoppers are wincing at the cost of dairy and buying less of it as a result.
While there’s little to be done about the rising cost of milk production, retailers should explore strategies that keep the cost to their customers low without stifling margins. One such strategy? Using direct-to-store dairy distributors like Buffalo Market.
What's the difference between direct and indirect distribution?
When it comes to stocking store shelves, manufacturers and retailers have several routes to choose from, but most fall under two umbrellas: indirect distribution and direct-to-store delivery (DSD) distribution. Finding the right dairy distributor for your business can make all the difference.
What is Indirect or Centralized Distribution?
Centralized distribution involves transporting products from the manufacturer to a warehouse, from which it is further distributed among individual stores. This method of distribution gives the retailer more control over their inventory, but it’s more expensive in terms of maintaining storage space, transportation, and labor. Also, having more touch points for products invariably increases the number of goods damaged in the process.
What is Direct-to-Store Delivery Distribution?
DSD distribution eliminates the intermediary stop of delivering to a warehouse. Instead, products are trucked directly from the manufacturer to the retailer’s receiving dock. Oftentimes, DSD food distributors will also inspect the sales floor to replenish and tidy shelves. This method does relieve the retailer of a bit of control over inventory, but it also shortens the supply chain, which can reduce costs and protect against out-of-stocks—one of the biggest headaches for anyone in sales.
What are the benefits of Direct-to-Store Delivery?
As mentioned above, Direct-to-Store dairy distributors shorten the supply chain. Here are a few reasons why that can help businesses keep prices low and customers happy:
- Reduces waste - The product spends less time in transit and storage, which means its sales window is wider. With more time to sell, less dairy reaches its sell-by date.
- Saves space - Since the retailer never has to store the inventory offsite, they don’t need to pay for storage space.
- Saves time - If your dairy distributor does merchandising for you, your staff doesn’t need to spend valuable time stocking shelves and counting inventory.
- Prevents out-of-stocks - DSD distributors tend to be smaller and more nimble, which gives them the opportunity to make more frequent deliveries—o multiple times a day.
Buffalo Market Dairy Distributors
Buffalo Market is the most efficient, transparent, and brand-friendly food distributor on the market. We specialize in working with the fastest moving products like beverages and dairy and service the largest retail chains across the United States.
Our fleet makes daily pickups and deliveries, and our team of dedicated drivers provides in-store merchandising, so you can rest assured that your dairy is always fresh and looking its best.
If you’d like to learn more about how Buffalo Market’s legendary direct-to-store dairy distribution can help keep your prices low and your milk aisle stocked, reach out to our team today!
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