Dive Brief:
- Advance Auto Parts is conducting product line reviews to identify unproductive SKUs in a bid to improve inventory management across its network, according to a Nov. 14 earnings call.
- The auto parts company expects to undertake 200 to 250 line reviews this year, and to increase that number over the next two years, President and CEO Shane O’Kelly told analysts.
- “Our ability to bring parts to the market faster also depends on the speed at which the parts are set-up in our system,” O’Kelly said. “Our goal is to bring this timeline down significantly by breaking down existing processes and leveraging automation.”
Dive Insight:
Advance Auto Parts manages more than 90 million unique store SKU combinations in its network, O’Kelly told analysts. He added that the company aims to address any SKU gaps to expand customer availability.
“This will also support higher labor productivity as our frontline team can reduce time chasing parts from surrounding stores that they do in order to complete an order,” the CEO said.
Conducting line reviews will also help the auto parts company evaluate private versus national brands, introduce new products and assess supplier diversification to improve market speed, O’Kelly said during the Q3 earnings call. The reviews also will enable the company to capture demand signals more quickly and ensure accurate availability of parts, the CEO added.
Advance Auto Parts has been undergoing an efficiency overhaul across its supply chain this year, with inventory productivity being a focus area.
In July, the retailer implemented a new inventory management system that manages more than 300,000 SKUs. The retailer also transitioned to a new warehouse management system at a distribution center in Georgia earlier this year.
Advance Auto Parts has also been consolidating its distribution network into a single operation, and aims to have 14 large distribution facilities operating on a single WMS by the end of the year. All remaining distribution centers will either be closed or converted to market hubs — another critical move in its larger supply chain overhaul.
