- What Direct Store Delivery Consolidation (DSDC) is
- The benefits of DSDC
- How DSDC works
Finding a way to keep freight costs and shipping discrepancies down is challenging when shipping to many Walmart stores. There are so many ways it could all go wrong before it gets to the retailer. That’s where Walmart Direct Store Delivery Consolidation comes in.
What is Direct Store Delivery Consolidation (DSDC)?
Walmart Direct Store Delivery Consolidation (DSDC) is a way to consolidate freight by shipping to a Regional Distribution Center (RDC) rather than individual retail stores. It’s efficient and cost-effective as suppliers no longer have multiple shipments going to all corners of the region.
Switching to DSDC streamlines the shipping channel process from multiple streams down to just one. It speeds up delivery while reducing receipt time at the store.
DSDC is all about less-than-case orders, which means a shorter supply plan timeframe, leading to fewer out-of-stocks at the store. It also means that suppliers can package loose items into one container for more compact transport.
Unlike direct store delivery, where the product goes directly from the supplier to the store, DSDC has the supplier send the product to a distribution center before it goes to the stores. It may seem like a more extensive process, but it benefits both the vendor and the retailer in the long run.
The benefits of DSDC
There are many great benefits to having a DSDC system in place. There is a system to eliminate concealed shortage claims, and reduce labor hours and out-of-stocks at the store. Using DSDC means more inventory for customers to purchase and potentially more orders for the supplier.
Just a few of these benefits are:
- Reduced supplier shipping costs
- Greater inventory accuracy
- Reduced handling costs
- Fewer missing goods
- More accurate budgets
How does DSDC work?
It all starts with a purchase order (PO). Either the system creates the purchase order automatically, as the stock of certain items runs low, or the Walmart replenishment team manually creates it with a ticket.
Purchase orders typically arrive electronically through the electronic data interchange (EDI) portal. EDI is simply the exchange of business documents between computers. It’s in a standardized format, so there are no miscommunications.
Once the supplier has received the PO, then the supplier packs the order in store-specific cartons with unique shipping labels on every carton. The supplier sorts DSDC orders via distribution center locations and purchase orders. The warehouse places the order on a pallet, shrink-wraps it, and stages it for shipment.
Each pallet has to go to a single RDC for fast handling and delivery. According to the dropoff locations, the DC arranges the pallets on the truck, so there’s no need to rearrange the freight to get out the needed orders.
Before shipping, the supplier sends an advanced shipment notice (ASN) for each purchase order through the EDI system. Then the supplier monitors the acceptance or the rejection of the EDI 856 transmission.
If Walmart accepts the ASN, then the supplier can send and invoice the shipment. If Walmart rejects it, then the supplier must correct the ASN before shipping can take place.
An approved ASN must be in the system before the goods arrive at the RDC. Once the goods arrive at the distribution center, the RDC scans the cartons and loads them onto outbound trailers heading for a Walmart store. The supplier’s part of the job is over, and it’s all on Walmart from there.
Once the cartons get to the store, the store team members unload the DC trailer and finalize the counts of the goods, automatically updating the inventory. Then the products go onto Walmart shelves for customer consumption.
There are plenty of forms in any company, but with DSDC, it can be confusing, especially when the supplier is just starting. Most of the documents the supplier receives are EDI transactions which can be tricky to tell apart.
Here’s a list of the most common EDI transactions and what they do:
- EDI 850 (Purchase Order): The EDI 850 will have everything a paper purchase order has, such as items, quantity, price, and shipping address.
- EDI 856 (Advanced Shipping Notice or ASN): The EDI 856 alerts Walmart of a pending shipment much like a packing slip.
- EDI 824 (Application Advice): The EDI 824 transmits error messages. Walmart sends 824s when the retailer rejects an ASN. The supplier must correct the form before it can ship the order.
- EDI 997 (Functional Acknowledgment): Walmart sends an EDI 997 when it receives an ASN or as a rejection if something is wrong. The EDI 997 will have the details of the errors so the supplier can correct them.
- EDI 810 (Invoice): The EDI 810 requests payment of an order after the supplier ships the order.
- EDI 864 (Text Message): The EDI 864 is a form of communication between the supplier and the DC when an error on the invoice has occurred.
What are the DSDC shipping standards?
Every company has its way of shipping things. Walmart DSDC has standardized shipping instructions to help ease the transition and make things move faster.
- Suppliers must palletize and shrink-wrap their shipments. While it’s perfectly okay to have a single pallet stacked with orders to the same DC, this is not okay for orders for different DCs.
- The supplier must clearly state all PO numbers and cases shipped on one bill of lading per DC. Walmart does not require packing lists.
- Each separate store container must have the correct shipping label that specifies:
- Origin of the container
- Destination distribution center
- Final destination store numbers
- PO numbers.
- If possible, the shipping label should include the name of the supplier’s freight company, the tracking or PRO number, and the bill of lading number. Optional things to add to the shipping label include postal zip barcodes and the Walmart-assigned vendor number.
- Carton barcode location is vital so that transportation of the order doesn’t damage the barcode or render it unreadable, and so automated scanners don’t miss cartons. The longest side of the container must have the shipping container barcode attached to it.
- The label is to be no less than ¾ of an inch away from the edge of the container. If it does not fit on the side, the supplier must place it on top with the barcode facing the shortest side and at least 1.25 inches from any edge of the container.
How to convert to DSDC
If a supplier wants to convert to DSDC, there are a few things to do first. Switching to DSDC is a big move, and the supplier will need to think of the changes, plan for them, and implement them. There are two stages: the consideration stage and the implementation stage.
The consideration stage
- First, the supplier must put in a request to convert to DSDC. The supplier should contact its Walmart buyer, replenishment manager, or the DSDC program manager.
- If the supplier has more than one vendor number, it should treat each one separately in the DSDC system, and the supplier must request each vendor number to be a part of the DSDC system.
- After the initial stages, the supplier will appoint a person to contact the DSDC program manager and learn what to do on the supplier’s end.
- The supplier or its representative will need to fill out the appropriate evaluation form and return it to the DSDC program manager. Each vendor number requires its own form.
- The supplier should complete a supply chain analysis to determine the impact of operating costs and the effect on the business processes after the DSDC conversion.
- For entities that the conversion will impact, the supplier should share the DSDC standards with them so they know how things will run.
- The supplier should read the DSDC standards carefully and submit any questions it has to the DSDC program manager.
- The DSDC program team and manager will schedule a conference call to go over the questions and concerns that the supplier has and go over the requirements and ensure program compliance.
- The Supply Optimization team and DSDC program manager will determine if the supplier is a good fit for DSDC.
- While the supplier waits for the final decision, it should submit all item dimensions through the Online Item File, as the supplier will need to know the size of the cartons required for its goods.
The implementation stage
Once the approval for the conversion to DSDC has gone through, then the training can start.
- The DSDC team and the supplier will get together to determine a rollout date for the new initiative and a DC rollout schedule to get everyone used to the new system. The rollout typically goes a couple of weeks if converting from direct to store to DSDC. The DSDC team will also go over operational requirements in detail at this point.
- The supplier will have to complete EDI training so the new process can go smoothly when implemented. The supplier takes EDI training through the vendor self-testing portal at least one to two months before the rollout date.
- The supplier will receive test orders. These are typically three orders containing five stores and five items. The supplier will use the EDI system to process test orders to get used to sending ASNs electronically.
- The supplier may fill test orders to ensure there are no bugs in the system but will never ship test orders.
- To complete EDI testing, a supplier must receive a 100% pass rate.
- During the implementation stage, the supplier will submit a sample shipping label to the DSDC program manager for approval.
- Two weeks before the DSDC rollout happens, Walmart will double orders for all of its stores so that if something goes wrong so the store won’t have a shortage of goods.
- The DSDC program team will audit the first shipment, so they can correct issues.
- Lastly, the DSDC program team will share the audit data with both the supplier and the buyer.
And that’s probably more than anyone needs to know about direct store delivery consolidation. Suppliers have so many options these days about how to go about shipping their goods and services, and this is just one of them.
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