Auto Service World
News   July 17, 2007   by Auto Service World

Job Not Finished, say Inventory Efficiency Award Winners

Winners of the Polk Inventory Efficiency Awards accepted the recognition just a little sheepishly.
The award was presented this morning at the Aftermarket eForum in Chicago, Ill.
It is kind of an uncomfortable topic because I know our inventory is terribly inefficient. We dont by any means have it figured out, says Willi Alexander, president and CEO of The Parts Depot. But, he adds, the U.S. Eastern Seaboard chain of stores–With revenues of over $400 million USD, the 9th largest volume auto parts company and the 5th largest volume wholesale auto parts company in the United States–has learned a few things.
Our One Simple Rule (OSR) application, is really a store management tool, he says of the companys main platform for change.
The application evaluates sales, inventory, and other data and changes inventory activity in kind.
It makes reactive recommendations based on sales history, lost sales and buyouts, and it also makes proactive recommendations based on vehicle registrations, category manager input and vendor new number announcements and other data that might be useful.
The Parts Depot runs monthly fast mover and slow mover additions and removals, and weekly new repair part additions and removals.
To be honest with you we have grown a lot and if we didnt have this application I dont know how we could physically get the work done.
Standardized data plays a big role in making this possible. I estimate that if we didnt have standardized data we would have to have two or three more people organizing, aligning and comparing data.
The Parts Depot has instituted what it calls a location-specific platform.
It is built around deploying complete repair systems. Not just rotors, but rotors, friction, hardware, callipers, for example. You know that sometimes if you dont have all the parts, you dont get the sale. It was designed so that we could earn more sales by having the parts for the complete job on the shelf.
Using PIES and ACES standard data for the complete jobs, those are reviewed, and implemented by category managers and parts people.
Without that we couldnt accomplish what we have with inventory. We still have a long way to go but at least we can now see where our inefficiencies are.
The real key, he say, is not data standards, but the business rules you apply to the data. The one thing we have found is that the rules we came up with in the first year or two have all turned out to be wrong.
As you get more data, and learn more, your rules change, and performance tightens, he says.
It doesnt mean that you can just take the ACES and PIES data and drop it into your inventory mix.
There is no substitute for parts people reviewing what our software application produces, no need to put an alternator for a hybrid Civic on the shelf, Sometimes what makes sense from a data standpoint, doesnt make sense from a parts standpoint.
Jerry McCabe, who spoke on behalf of parts manufacturer Affinia also honoured, said that it was a real struggle, fighting through myriad legacy systems and old assumptions while trying to institute an integrated, visible supply process. All with the looming threat of offshore competition.
The results were quite remarkable. Our average fill rate improved by four full points, up to an acceptable level. We were also able to get the number of orders turned around in 24 hours up by a full point. Heres the best part: by mid year we had reduced our inventory by 27%. That got everybodys attention. And we continued to fill at 95%.
These key results, perhaps more gratifying results, was awareness of this helped move us along to the culture of continuous improvement. It is really the foundation of every activity we take.
Much was revealed in the downstream analysis, inventory synchronization, that followed, says McCabe.
He rolled out some stats on its customers: 20% of SKUS were at the optimum level; 50% of stock was overstocked, mostly fast movers; and 30% were under stocked. And an unknown amount that was not stocked but should be.
The inventory glut in the aftermarket is real. It is not going to go away unless we change the way we live. I am afraid it is bigger than we realize. Nobody can see the whole picture. But if we are to solve the problem we will have to have the right tools and processes in place. And to work together, up and down the supply chain.
Trust has to be in place. We can either work together and work hard at collaboration, or fail together.

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