The Customer in the Drivers Seat Store Systems at AutoZone

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The Customer in the Drivers Seat Store Systems
at AutoZone

• Ken Brame
• CIO
• AutoZone

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Agenda

• About AutoZone
• The Business Challenge
• How We Met the Business Challenge
• How Technology Helped Meet the Challenge

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AutoZone Overview

• Americas 1 auto parts/accessories retailer
• Annual sales of around 6 billion
• Over 3,800 stores in 48 U.S. states and Puerto
  Rico
• Over 100 stores in Mexico
• Founded in 1979
• Listed on NYSE AZO since 1991
• Included in SP 500 since
• 1996

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Overview

• Sell automotive maintenance and repair parts,
  accessories
• Specialize in two customer segments
• Retail Do-It-Yourself (DIY)
• Commercial delivery to professional technicians
• All stores are company-owned and operated no
  franchises

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Our Business Challenge

• There are over a million different vehicle parts
  that we would need to carry in our stores to meet
  every potential sale
• Our stores average 6300 sq. ft.
• Inventory turn rates for auto parts are very slow
  compared to other retail formats
• We can only afford to carry around 22,000 SKUs
  per store

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What is Important to a Customer in Making a
Purchase from an Auto Parts Retailer/Wholesaler?

• First and foremost, you have to have the part
  that fits their vehicle. Substitutions dont
  work with auto parts
• Price
• Location
• Trustworthy advice

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How we are Meeting the Challenge of having the
Right Parts

• Make sure we have the right 22,000 SKUs in each
  store
• Customize assortments for each store based on
  sales forecasts
• Sales forecasts are based on
• Vehicle registrations by zip code
• Sales history
• Missed sales opportunities
• Special order and transfer sales

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How we are Meeting the Challenge of having the
Right Parts (contd)

• We utilized SAS statistical modeling and
  forecasts along with an in-house developed
  assortment planning system to accomplish this.

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How do we say yes if we dont have the part in
our store?

• Option 1 We have larger stores in each market
  called Hub stores
• These stores carry more than twice as many parts
  as a smaller store
• If we dont have an item in stock in one of our
  stores, the first thing we do is check stock
  availability at the nearest Hub store
• If we have it there, we will have it delivered to
  the store for the customer in a matter of hours
• We deliver parts from the Hub to the smaller
  stores several times a day as needed

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How do we say yes if we dont have the part in
our store? (contd)

• Option 2 Check online for the part at our other
  stores in the market
• If we find it in one of these sister stores, we
  can reserve the part for the customer to go pick
  up
• Option 3 Check incoming shipments from our DCs
  to see if the part is already on its way to the
  store
• If yes, we reserve the part for the customer and
  let them know when it will arrive

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How do we say yes if we dont have the part in
our store? (contd)

• Option 4 Special order the part for the
  customer
• We have online visibility to the stock
  availability for special order parts from our
  vendors
• If the vendor has it, we special order the part
  and it is shipped directly to the store for the
  customer to pickup

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How do we say yes if we dont have the part in
our store? (contd)

• Option 5 We can check real time to see if a
  part is available at any of our Hub stores across
  the country
• If a Hub store has it, we will have it shipped to
  the store for the customer to pickup
• Option 6 We are connected to a network of
  salvage yards to find used parts for a customer
• The part can be ordered and shipped directly to a
  customers home

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• As You Can See, We Try To Do Whatever It Takes to
  Help Our Customers Find the Part They need. All
  Without Increasing the Inventory Levels in Most
  of Our Stores

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What are the key capabilities required to make
this work?

• Good assortment planning for our stores
• We utilize objective data and sophisticated SAS
  analysis and forecasting tools on top of a 25 TB
  data warehouse
• Real time, perpetual SKU inventory systems with
  accurate data in our stores, Hub stores and
  warehouses
• Broadband connectivity between all of our
  locations and corporate
• Visibility to our vendors special order stock
  availability and accuracy of that information

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What are the key capabilities required to make
this work? (contd)

• Visibility and connectivity to salvage yard
  networks.
• Software applications to make it all work
• And last, but probably most important a Company
  Culture of Doing Whatever It Takes to Take Care
  of Our Customers

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Relentlessly creating the most exciting Zone for
vehicle solutions! Questions?