Advance Auto Parts 2007 Annual Report Download - page 28

Store Technology. Our store-based information systems, which are designed to improve the efficiency of our
operations and enhance customer service, are comprised of a proprietary point-of-sale, or POS, system and
electronic parts catalog, or EPC, system. Information maintained by our POS system is used to formulate pricing,
marketing and merchandising strategies and to replenish inventory accurately and rapidly. Our POS system is fully
integrated with our EPC system that enables our store team members to assist our customers in their parts selection
and ordering based on year, make, model and engine type of their vehicles. Our centrally based EPC data
management system enables us to reduce the time needed to exchange data with our vendors and ultimately catalog
and deliver updated, accurate product information.
Our EPC system also contains enhanced search engines and user-friendly navigation tools that enhance our
team members’ ability to look up any needed parts as well as additional products the customer needs to complete
their automotive repair project. If a hard-to-find part or accessory is not available at one of our stores, the EPC
system can determine whether the part is carried and in-stock through our PDQ system. Available parts and
accessories are then ordered electronically from another store, LAW, PDQ or Master PDQ with immediate
confirmation of price, availability and estimated delivery time.
We also support our store operations with additional proprietary systems. Our store-level inventory
management system provides real-time inventory tracking at the store level. With the store-level system, store team
members can check the quantity of on-hand inventory for any SKU, adjust stock levels for select items for store
specific events, automatically process returns and defective merchandise, designate SKUs for cycle counts and track
merchandise transfers. Our stores use radio frequency hand-held devices to help ensure the accuracy of our
inventory. Our standard operating procedure, or SOP, system is a web-based, electronic data management system
that allows our team members instant and quick access to any of our standard operating procedures through a
comprehensive on-line search function. Additionally, we utilize a labor scheduling system known as management
planning and training, or MPT. All of these systems are tightly integrated and together provide real-time,
comprehensive information to store personnel, resulting in improved customer service levels, team member
productivity and in-stock availability.
Store Support Center
Merchandising. Purchasing for virtually all of the merchandise for our stores is handled by our centralized
corporate offices in Roanoke, Virginia, or store support center. In 2007, we purchased merchandise from over 400
vendors, with no single vendor accounting for more than 7% of purchases. Our purchasing strategy involves
negotiating agreements with certain vendors to purchase merchandise over a specified period of time along with
other terms, including pricing, payment terms and volume.
Our merchandising team is skilled in sourcing high quality products globally and maintaining consistent
inventory levels. The merchandising team has developed strong vendor relationships in the industry and, in a
collaborative effort with our vendor partners, utilizes a category management process. We believe this process,
which develops a customer focused business plan for each merchandise category, has been highly effective and is
critical to improving comparable store sales, gross margin and inventory turns.
Our merchandising strategy is to carry a broad selection of high quality brand name automotive parts and
accessories such as Bosch®® ®
, Castrol , Sylvania , Prestone®® , Monroe , Bendix®® , Purolator , Dayco® and Trico®,
which generates DIY customer traffic and also appeals to commercial customers. In addition to these branded
products, we stock a wide selection of high quality proprietary products that appeal to value conscious customers.
These lines of merchandise include everything from chemical and wash-and-wax products to tools, batteries, parts
and interior automotive accessories under the names of Professional’s FavoriteTM, Joe’s GarageTM, Mechanic’s
ChoiceTM, Auto XpressTM, AutocraftTM TM
, Endurance , WeareverTM, JobmateTM and MirageTM.
Supply Chain. Our supply chain consists of centralized inventory management and transportation functions
which support a logistics network of distribution centers, PDQ® warehouses and stores. Our inventory management
team utilizes a replenishment system, or E-3, to monitor the distribution center, PDQ® warehouse and store
inventory levels and order additional product when appropriate while streamlining costs associated with the
handling of that product. E-3 utilizes the most up-to-date information from our POS system as well as inventory
movement forecasting based upon history, sales trends by SKU, seasonality and demographic shifts in demand. E-3
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