Advance Auto Parts 2002 Annual Report Download - page 4

As you drive into Maiden & Sons Garage in Salem, Virginia, the first thing
you notice is that the parking lot is full. Bob Maiden has run a successful
repair business for more than 20 years and by the looks of the parking lot,
business is really good.
With over 1,000 customers, Bob has built his business on a reputation for
skillfully performing repairs at a fair price. He doesn’t have to advertise. In
fact, there are families with three generations of happy Maiden customers.
To keep his customers coming back, Bob insists on quality parts and a
company that stands behind that quality with a strong warranty.
Ask Bob why he buys his parts from Advance Auto Parts and he’ll say, “The
Advance way of doing business is the way we do business - It’s all about
taking care of the customer.”
In 1995, Bob Maiden became our very first commercial delivery customer.
He took a chance on us and has been loyal ever since. We quickly won him
over with our quality brand-name parts, warranties that we stand behind,
and fast and friendly service. Because Bob is so well respected, other pro-
fessional service stations in the area quickly opted for the benefits of the
Advance commercial program.
Bob respects our people as well. “Mike Whitley, Ross Jackson, and
Christian Gibbs bend over backwards for us. They get us what we need,
when we need it.” That’s the main reason Advance Auto Parts commercial
delivery program is so successful. Each of our commercial Team Members
is focused on satisfying their customers. That means those customers will
call us first when they need a part.
“We have to go out and win our business every day,” remarked Gray Turner,
Vice President of Commercial Sales at Advance Auto Parts. “It’s all about
serving the customer, and we know it.”
ADVANCETALK
Our first
commercial
customer.
With more than $1 billion in inventory in our stores and distribu-
tion centers, managing our supply chain is key to Advance Auto
Parts’ success. With more than 30 years of experience in logis-
tics, Roy Martin, Senior Vice President, Logistics and Replenishment
joined our team from Discount Auto Parts, taking on added
responsibilities after the retirement of Ray Fralin, who managed
Advance Auto Parts distribution system for more than 25 years.
What does a strong "supply chain" mean to Advance?
It means we will provide the most responsive and cost-effective
logistics service in the automotive aftermarket. Our objective is to
keep all our stores fully stocked with the products our customers
want, when they want them. Managing the supply chain starts
with working hand-in-hand with our suppliers to streamline their
manufacturing process, and ends with the sale of that product.
All the functional areas of our organization, from Store
Operations to Merchandising to Inventory Management to
Finance to Logistics to IT play key roles in keeping our supply
chain operating at peak performance levels.
Advance has eight distribution centers that support more than
2,400 stores – how does your team manage to ship over 511
million products and make over 1.4 million deliveries per year?
Over 3,000 logistics team members are dedicated to keeping our
stores well stocked with the right merchandise. These team
members operate with a 100% paperless state-of-the-art inven-
tory management system and a sophisticated distribution infra-
structure, including miles of conveyor systems, pick-to-light and
carousel order filling operations and other advanced material
handling equipment. We also have over 500 delivery vehicles on
the road virtually every day. These vehicles are driven by a team
of professionals who drive over 37 million miles per year with
one of the lowest accident-per-miles-driven rates in any industry.
How do you motivate all 3,000+ Team Members who work in
the logistics operation?
That's the easy part, these folks care! They understand that the key
to the Company's success is the success of our stores, and they
know the stores can’t operate without having the right merchandise.
The logistics team knows it is a valuable player on a winning team.
How has the distribution system performed during the
Discount Auto Parts (DAP) integration?
The integration has been a huge undertaking, but our team came
through with flying colors. Aligning the merchandise in more
than 500 Discount Auto Parts stores took about eight months.
The logistics teams, primarily in Lakeland, Florida, handled more
than 12 million pieces of returned merchandise and at least 20
million pieces of new merchandise sent to our stores. Because of
this merchandise conversion, these stores now have a larger
selection of quality merchandise to offer their customers. Our
Florida logistics team worked seven-day shifts for weeks at a time
to support the transition. We couldn't be prouder of their efforts
and dedication.
What will your team be doing in 2003 to enhance its performance?
Our focus in 2003 is on leveraging our considerable resources,
including people, facilities, systems, and equipment. One of our
more significant initiatives is implementing a pay-for-perform-
ance program where we will reward our Team Members for
enhanced productivity. We believe we can grow our sales and
store count without adding square footage while at the same time
leveraging our logistics cost as a percent of sales.
67
We’re ready for change and change has been the name of the game at our Lakeland Distribution Center. Because of the dedication and
hard work of our Lakeland, Florida Team Members, the merchandising alignment process in our Florida stores reached its goal com-
pletion date on schedule. Representing the Lakeland team is Steve Chesser (Distribution Center Manager), David Coney (Returns),
Harris Ford (Storage), Banita Miller (Receiving), Ellen Thielen (Human Resource Manager), Juan Torre (Shipping), Donna Watson
(Production). Each of these individuals has an exemplary attitude and always goes above and beyond the call of duty.
Lakeland team
moving ahead!
Banita
Miller
Donna
Watson
Juan
Torre
Steve
Chesser
Ellen
Thielen
Harris
Ford
David
Coney
Pictured left to right: Mark Jones, Regional Director-Western; Tom
Gearheart, Director of Distribution Operations; John Gower, Regional
Director-Northern; Ken Dill, Vice President-Logistics Support; Ralph
Lewis, Regional Director-Southern; Roy Martin, Senior Vice President
Logistics/Replenishment
Interview with
Roy Martin –
We’re ready
to serve
our stores.
Al Joyner
leading the
MPTcharge!
With more than 17 years of experience at Advance Auto Parts,
Al Joyner has the background and leadership skills to head
our MPT effort – Management Planning and Training. Al
joined the company in 1985 as a part-time salesperson and
since then he has taken on more and more responsibilities,
including store manager and division manager. In 1998, he
moved from the field to the corporate office where he devel-
oped the Corporate Store Support Center.
What is MPT?
MPT is our proprietary system designed to streamline our
labor management and training processes. In order to serve
our customers more effectively, we need the right people at
the right time, doing the right thing. For example, during our
busiest times such as Friday afternoons and Saturdays, we
need more of our parts pros on duty to serve customers.
During times when customer traffic is not as heavy, we can
concentrate on making sure that our shelves have been
replenished properly and that our stores maintain our GOLD
Standard or “Grand Opening Look Daily.”
How is MPT benefiting our customers?
At the core of MPT is our customer. MPT gives our store man-
agers the tools to have knowledgeable and friendly sales people
in our stores at the right time, to have well-stocked shelves to
meet our customers’ needs, and to have clean and inviting
stores that our customers enjoy frequenting. We build our
schedules by forecasting demand using store-specific criteria.
The MPT system will be fully automated during 2003 and we
will be able to analyze each store’s traffic patterns in 15-minute
intervals. This information will allow us to increase staffing dur-
ing peak customer traffic periods. During off-peak times, store
managers will have the tools to prioritize tasks such as stocking
and cleaning. As a result, we will make shopping more enjoy-
able for customers and increase Team Member productivity.
How does MPT help store managers?
MPT clearly defines all the tasks and the times associated with
them to effectively and efficiently run an Advance Auto Parts
store. The system gives them the opportunity to flex up when
sales are strong or to flex down, if necessary. All in all, the sys-
tem gives our store managers a clear vision of how to run their
stores and how to allocate their team members’ time to serve
customers better.
How has MPT impacted the Company’s financial results?
By using MPT, our stores have more effectively used our Team
Members’ time resulting in increased sales with a lower labor
expense-to-sales ratio. As we continue to develop our MPT pro-
gram, we believe we’ve only just begun to experience its benefits.
What are the next steps for MPT?
By the end of the first half of 2003 we expect all of our stores to
be up and running on MPT, including our Advance Discount Auto
Parts stores in Florida. Then we will take MPT to the next step by
more fully automating the scheduling process, giving our store
managers up-to-the-minute feedback on how they are managing
their labor resources. Along with automating the process, Marcy
Kegley, our industrial work measurements engineer, will be aug-
menting our store operations through process improvements.
After a thorough review of all our store processes, she will be
improving our operations by rolling out industry “Best Practices”
on everything from housekeeping to truck loading and unload-
ing. MPT is going to be an MVP for our store operations.