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Details of 7-Eleven's test of an alternative delivery system for typical DSD (direct-store delivery) products came to light recently when Teamsters officials complained that use of a third-party logistics provider for the plan would eliminate hundreds of union jobs.
As part of the test, Coca-Cola Enterprises is delivering soft drinks to 7-Eleven stores in southern California, using Costco Wholesale Corp. as an intermediary. Through the program, "drinks will be shipped to a Costco business center, where a third-party logistics company will pick them up and deliver them to a warehouse. When 7-Eleven stores need replenishment, the drinks will ship to the stores with other products as well," according to published reports.
In the typical DSD model, Coke ships drinks from its bottling facility to an adjacent warehouse, where they await shipment to a distribution center before being shipped to individual stores. Besides moving away from the traditional DSD method, the most notable change is the test brings together different brands onto the same truck for delivery to each 7-Eleven store from a single warehouse.
David Laughton, director of the Teamsters' Brewery and Soft Drink Workers Conference, told reporters on a recent conference call that the Coke plan is "dangerous" and could lead to a work stoppage. "We will fight for our jobs," said Laughton. A spokesman for the Coca-Cola bottling affiliate in southern California said the pilot has resulted in the loss of eight net jobs. He declined to speculate on whether the test would be expanded to other markets, according to published reports.
The inefficiency of the current DSD system has long been a focus for 7-Eleven CEO Joseph DePinto, who told Convenience Store News in 2008: "The convenience channel's distribution system was built for the grocery industry, and the way product is delivered today is basically the same as 30 years ago — but costs are higher — labor, credit card fees, distribution costs, fuel."