Why is an efficient supply chain necessary for Dollar General?
Dollar General (DG) must maintain an efficient supply chain in order to juggle hundreds of products in over 13,000 stores in 44 states across the United States.
Efficient supply chain management is essential for proper functioning of any company’s day-to-day operations. A good distribution network maintains the freshness of its products, reduces waste, and lowers costs. The two together enhance the ability of a value-oriented retailer like Dollar General to maintain low prices.
A look at the supply chain
For a smooth supply chain, Dollar General maintains direct relationships with its suppliers. While the company offers a variety of product types, each product type has a limited number of options, which gives the retailer a negotiating advantage with its suppliers.
The company does not depend on a single large supplier for its products. The top two suppliers accounted for only ~16% of the company’s 2016 purchases.
Distribution and transportation
Dollar General currently has a strong network of 14 distribution centers located strategically across its geographic footprints. The company is working on two more distribution centers located in Georgia and New York, which will become operational by end-2017 and mid-2018, respectively.
Dollar General also leases temporary warehouses to support its distribution needs. The company uses third-party trucking companies to get its products delivered from the warehouses to its stores.
Investors looking for exposure to Dollar General through ETFs can consider the SPDR S&P Retail ETF (XRT), which invests 1.2% of its total holdings in the company.
Read the next part of this series to learn about the company’s financial performance.
Dollar General’s (DG) same-store sales have grown for 27 consecutive years. What's more interesting is that comps rather improved during the recession period.
In April so far, Italian-American auto giant Fiat Chrysler Automobiles (FCAU) has outperformed the broader market by a wide margin after underperforming in the first quarter.
Royal Dutch Shell (RDS.A) is slated to release its Q1 2019 results on May 2. Before we review the Q1 2019 estimates, let’s recap Shell’s Q4 2018 performance compared to forecasts.
United Parcel Service (UPS) is scheduled to report its first-quarter earnings results on April 25.
Cleveland-Cliffs (CLF) is expected to report its first-quarter earnings results on April 25.
While the overall cannabis sector experienced weakness on April 23, some stocks managed to gain some positive momentum in the first half of the day.
After being listed on the NASDAQ (QQQ) on March 29, Lyft (LYFT) stock has traded on a negative note so far.