Auto Service World
News   November 19, 2004   by Auto Service World

AutoZone Pay On Scan Still Struggling

According to recent statements, there are still only a handful of companies agreeing to AutoZone’s Pay-On-Scan initiative.
The initiative is designed to effectively track when products are sold, but also involves inventories being essentially on consignement, with payment to the supplier only occurring when each part is sold.
According the aftermakret newsletter Automotive Week, United Components has reiterated its non-participation.
During a recent conference call with analysts to discuss its third quarter results, the management of United Components Inc. was asked to comment on AutoZone’s pay-on-scan program in light of the fact that Toledo, Ohio-based Dana Corp. refused to do business with AutoZone under POS and now no longer has AutoZone as a customer.
UCI CEO Bruce Zorich said nothing has really changed for the company. UCI has not agreed to do pay-on-scan.
“We are not doing it,” he said. “It is, however, an important issue for AutoZone, and AutoZone is an important customer for us. So, we continue to evaluate it, and we’ll continue, as we go forward, looking for ways to make it a win-win. But, as for now, nothing has changed for us.”
CFO Charlie Dickson added that the company’s revenue with AutoZone is up for the first nine months of the year. “If you look at the percentage of [AutoZone’s] supply base that has committed to pay-on-scan it’s a relatively small percentage at this point,” Dickson said.
“What they really want to do is focus us and all their other suppliers on the consumer and on the fact that revenue happens for everybody when something gets sold. We are looking at a whole series of initiatives that helps them do that, which involves more real-time sharing of information on sales trends. We work with them on developing store initiatives and promotions for our commodities to try to improve traffic and improve results. We’re working with them as category captain in a number of our categories to try and help them manage and improve sales. So, the relationship is a long-standing one and a very solid one, and it’s got a lot of facets to it.”
United Components Inc. is the name given to a group of subsidiaries acquired from UIS Inc. last year by The Carlyle Group, a Washington, D.C.-based equity group. Carlyle was mentioned by Reuters in August as having an interest in the ArvinMeritor aftermarket business. If Carlyle were to have the winning bid, it would have control over some substantial aftermarket businesses.

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