WHITE PAPER WELCOMING DEX TO THE 21ST CENTURY

Welcoming DEX to the 21st Century From its humble beginnings in the technology dark ages, direct-to-store data exchange (DEX) is finally leaping from the past into the future.

WHITE PAPER WELCOMING DEX TO THE 21ST CENTURY

BY THE NUMBERS:

21ST CENTURY DSD AND DEX

Food, beverage and packaged goods is a

$2 trillion industry

7 of the top 10

DSD is used for grocery food product categories DSD is a factor in

24% of all unit sales DSD accounts for

52% of retail grocery channel profits Source: Powering Growth Through DSD: The Impact of DSD, The Grocery Manufacturers Association, AMR Research, Clarkston Consulting and The Nielsen Company 2 zebra technologies

WHITE PAPER WELCOMING DEX TO THE 21ST CENTURY

DSD and DEX Account for 25% of Grocery Products and 50% of Profits Whenever a customer buys a package of English muffins, a quart of sour cream or a six-pack of beer, she’s taking advantage of one of the most crucial operations in the retail grocery and pharmacy business: Direct Store Delivery, or DSD. In large-scale grocery, pharmacy and big box stores, many items that are date-sensitive, have short shelf lives or need frequent replenishment can’t be shipped through the retailer’s warehouse. There’s just not enough turnaround time. DSD and DEX

25%

OF GROCERY PRODUCTS

BY THE NUMBERS Why is this important? The numbers tell the story. Taken together, food, beverage and consumer packaged goods are an over $2 trillion industry globally. Due to time and shelf life constraints, approximately 24% of all items carried by large format retail operations must be delivered directly to the store via DSD. The data captured, reconciled and transmitted by Direct Data Exchange, or DEX, tells an even more important tale: these products encompass 7 of the 10 largest grocery food product categories, and account for 52% of retail profits in the grocery channel. DSD and DEX are important because the numbers behind them are important.

OUT FROM THE DARK AGES DSD and DEX are hardly new solutions. They’ve been around since the technology dark ages when shipping, receiving and payment processes were done manually. Since that time, the basic ideas behind DSD and DEX haven’t changed. Suppliers or third-party carriers continue to deliver perishable and short shelf life products directly to individual stores’ back door receiving systems. What has changed dramatically, however, is the process.

PROCESS EVOLUTION

50% OF PROFITS

DEX has quickly evolved from a slow, error-prone paper-based system to faster, more accurate computer-driven solutions. Now, DEX is evolving again. More and more of today’s suppliers and carriers have begun to replace wired DEX connections with fast, secure, Bluetooth-enabled wireless connections. DEX has finally entered the 21st Century.

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WHITE PAPER WELCOMING DEX TO THE 21ST CENTURY

LEADING DSD INVESTMENT DRIVERS 44%

Increased profitability 41%

Reduced operational costs 35%

Increased revenues Reduced out-of-stocks

33%

Improved inventory turns

33% 30%

Faster decision-making

29%

Improved stock to sales ratio Reduced shelf spoilage

27%

Competitive differentiation

27%

Source: VDC Research, 2014

More Efficient DEX Leads Directly to More Profitable DSD In the DSD world, the goal has always been to perform direct store delivery and data exchange— including delivery confirmation, accurate invoicing, discrepancy reconciliation, high-speed data transmission, remote troubleshooting and timely payment—electronically. Achieving this level of efficiency has proven, however, to be elusive. A TANGLE OF INEFFICIENCY TOP THREE INVESTMENT DRIVERS

1

Increased profitability

2

Reduced operational costs

3

Increased revenues 

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Over the years, even with the adoption of the DEX digital communication protocol, the DSD experience has often been less than ideal. It’s been about delivery and receiving personnel sorting out a tangle of paper invoices, manual errors, uncharged batteries, ineffective troubleshooting and wired cables that regularly deteriorate or break as they attach a mobile computer to a wall receptacle in the store’s back room. There are other inefficiencies, too. Long driver wait times at the store’s loading dock. Increased greenhouse gas emissions due to extended vehicle idling times. Stores’ traditional reluctance to allow use of their Wi-Fi networks for DEX doesn’t help, either. Now it’s time to take a closer look at eliminating these and other DEX shortcomings.

DEX INEFFICIENCY CUTS PROFITABILITY Many current DSD/DEX systems continue to force suppliers to deal with issues that are not only annoying, but actually negatively affect profitability. Every time a transmission fails to go through due to a faulty cable, uncharged battery or human error, suppliers and carriers can lose time and money. Every transmission or invoice problem delays timely payment, and every delay in receiving payment eats into profitability. What’s needed are new DEX hardware and software solutions designed to counteract the inefficiencies of creaky, outdated systems.

WHITE PAPER WELCOMING DEX TO THE 21ST CENTURY

Where Have All the Cables Gone? Although they have been used for DEX connectivity for years, cables have reliability issues and are problem-prone. Forward-thinking suppliers are now looking at phasing out physical DEX cable connections, with interest growing in replacing them with Bluetooth-enabled wireless connectivity. These new high-speed wireless connections use both hardware and software to provide crucial new DEX capabilities: automated check-in and data collection, simplified invoice reconciliation, improved inventory and systems visibility and remote troubleshooting. AN ENDANGERED SPECIES

10%

HOW BIG A PROBLEM ARE INVOICE DISCREPANCIES? What percentage of DSD invoices contain discrep­ ancies? It’s not 1 or 2%. It’s not even 5%. The reality is, more than 10% of DSD invoices contain discrepancies that affect DSD operations—and DSD profitability— in large format stores. Source: “Unleash the Power of DSD,” GMA, September 2005.  

At the delivery docks of a growing number of large format stores, cables are becoming an endangered species. For years, the DSD industry has relied on—and struggled with—cable connectivity between handheld computers and stores’ inventory systems. Cables get lost. Cables wear out. Cables break or snap. Plus, cables are often unwieldy and difficult to work with. They can also be expensive. Aside from costly connection and transmission glitches, it’s estimated that over the lifecycle of each DEX unit, cables must be replaced an average of four times. At more than $60 to $120 each, that’s a considerable expense in and of itself.

THE BLUETOOTH ALTERNATIVE Thanks to the emergence of sophisticated Bluetooth-enabled wireless connectivity, cables aren’t likely to be missed. Wireless connectivity makes everyone’s job easier. Delivery drivers no longer have to worry about old or broken cables, faulty cables or spare cables that never quite get loaded onto the truck. Even more important, with automated check-in, drivers can actually begin working before they leave on their routes by simply scanning a barcode on their DEX device. The system automatically and securely pairs the Bluetooth key fob with each mobile terminal on the day’s route, helping to shorten wait times, guard against potential data theft and optimize routing.

ENHANCED PROCESS EFFICIENCIES Components of the innovative new DEX solutions of today and tomorrow include powerful, ruggedized handheld computers; mobile printers, scanners and chargers; secure wireless Bluetooth connectivity devices; and efficient new information management software. How big a difference can enhanced process efficiency make? Through the use of efficient, automated connectivity and check-in processes, stores and carriers can reduce DSD receiving time by 60 percent. Other key DSD and wireless DEX benefits include increased profitability and revenues, reduced operational costs, improved inventory turns and more. Equally important, new DEX technology will not become obsolete. With DEX, equipment manufacturers have created a uniform electronic code that enables retailers and operators to add new features to their systems for many years to come. Once an operation’s information management systems are organized to support DEX, the company will be able to take advantage of future DEX-based benefits.

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WHITE PAPER WELCOMING DEX TO THE 21ST CENTURY

The Emergence of Smarter DEX Software In the DSD universe, margins are extremely tight. Large format store suppliers are constantly looking for ways to increase profitability by increasing productivity and efficiency. DEX is important because it is the glue between delivery to the store and payment for the goods. Failure points anywhere in the process can significantly affect the bottom line.

$1 billion Average revenue lost each year by consumer packaged goods companies due to out-of-stock conditions on the retail shelf.*

50–70% of potential service revenue is lost due to poor record keeping and management.** * Source: A Compre-

hensive Guide To Retail Out-of-Stock Reduction In the Fast-Moving Consumer Goods Industry

** Source: Improving

Route Accounting with Mobile Printing Applications, AMR Research

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ACCURATE INVENTORY VISIBILITY

SMARTER SOFTWARE

Having the right quantity of product in stock when the customer is ready to make a purchase is critical to DSD. Both retailers and suppliers want to avoid having excess product in inventory; even more, they want to avoid products not being available. This is especially important to suppliers because it’s easy for a customer to default to the next available competitive brand, running the risk of losing not only sales but also brand loyalty.

The answer? The DSD industry needs a new kind of software solution that performs a number of vital functions while eliminating the need for partners and customers to create and maintain their own DEX application software.

Paramount to an optimized DSD environment, therefore, is enhanced inventory visibility, made possible by timely DEX transmission, invoice reconciliation and sophisticated software solutions that provide an accurate snapshot of inventory at any given time.

AUTOMATED TROUBLESHOOTING Failure points anywhere in the process— especially with DEX connectivity—can severely affect everyone’s bottom line. Unfortunately, current DEX technology is often antiquated, with no easy way to troubleshoot what and where the problem is. Is it with the terminal, the cable, a bad receptacle at the store, or the store’s server? Is the issue in all stores, or just some? This uncertainty leads to frustration. The driver trying to complete a route is frustrated. The IT department, with no simple troubleshooting process, is frustrated. Especially frustrated are the DSD drivers. If they can’t quickly fix the problem, they’re forced to manually write out the order and process it back at the office, slowing down both invoicing and payment.

As DEX continues to evolve, the need is for smart third-party software solutions that provide accurate inventory counts and automated break/fix capabilities, as well as diagnostics and analytics remotely and in real time. Especially important, these solutions create data logs that enhance inventory visibility by showing successful DEX transmissions. In addition, they provide alerts that tell you if your DEX devices are too far apart for connection, and notify you when batteries need charging. In case a driver chooses not to use the DX30 as a key fob for the vehicle ignition keys, the software provides an “electronic leash” to keep the device from being lost. With a portfolio of new benefits, including the elimination of cables, the emergence of Bluetooth-enabled wireless connectivity and smarter, more practical software solutions, DEX is entering the 21st Century. And not a moment too soon.

WHITE PAPER WELCOMING DEX TO THE 21ST CENTURY

21st Century DEX Solutions from Zebra

Based on our decades of experience in retail environments of all kinds,



Zebra is quickly becoming the industry leader in solving the entire

complement of enterprise DSD and DEX challenges. We provide a first in the industry: a complete, ruggedized enterprise-grade hardware and diagnostic software solution. We are the only supplier that is addressing the entire market with hardware, software and ongoing support to help troubleshoot and sustain your operations. LOOK MA, NO CABLES

SMARTDEX SOFTWARE

With the introduction of Zebra’s new DEX Bluetooth-enabled wireless key fob—no bigger than a typical automobile key—we’ve removed physical cables, and eliminated common failure points at the wall jack or device. But our new key fob is part of a system that does much more than eliminate cable issues.

With Zebra’s addition of the breakthrough new SMARTDEX line-of-business software solution to our Mobility DNA Solution Suite, your operations benefit from modern analytics and diagnostics for the DEX process that were never before available. You are no longer burdened with the challenges of application development, integration and maintenance, and our analytics capabilities enable you to enjoy faster fault remediation. In addition, Zebra continues to provide solutions for both Android and Microsoft serial port communications.

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WHITE PAPER WELCOMING DEX TO THE 21ST CENTURY

FOR MORE INFORMATION ON ZEBRA’S INDUSTRY LEADING DSD AND DEX HARDWARE AND SOFTWARE SOLUTIONS, PLEASE VISIT

Columbia, Maryland 21046 | Tel: 800-239-4472 | Fax: 410-309-6219 | [email protected]

worldwide. All other trademarks are the property of their respective owners. 07/2015