... will begin to exit its Direct Store Delivery (DSD) network in the second quarter, transitioning the DSD-distributed portion of the company's U.S. Snacks business to the warehouse model already used by Pringles and the rest of its North American business. The new model will be transformational for Kellogg, reducing complexity and cost structure while driving growth and profitability for the company and its retail partners.According to the Wall Street Journal the shift will involve closing thirty-nine US distribution centers. Kellogg's products will be shipped to -- and then distributed from -- customer distribution centers.
The decision comes even as some food sector firms have indicated an interest in more DSD, in order to reduce both direct costs and elapsed time-to-consumer. But many of these DSD innovations focus on either fresh product or high velocity product (ideally both), not the slower moving shelf-stable snack business.
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