Advance Auto Parts 2009 Annual Report Download - page 20

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supply chain, (iii) a reduction in distribution center inventory, or safety stock, due to consistent transit times, (iv)
decreased third party freight and billing service costs, (v) decreased distribution center to store freight costs and (vi)
higher store in-stock position. We utilize two reputable dedicated carriers to ship product from our distribution
centers to our stores.
We currently operate eight distribution centers. All of these distribution centers are equipped with our
distribution center management system, or DCMS. Our DCMS provides real-time inventory tracking through the
processes of receiving, picking, shipping and replenishing inventory at our distribution centers. The DCMS,
integrated with technologically advanced material handling equipment, significantly reduces warehouse and
distribution costs, while improving efficiency. This equipment includes carousels, “pick-to-light” systems, radio
frequency technology, voice technology and automated sorting systems. Through the continued implementation of
our supply chain initiatives such as engineered standards in our distribution centers, we expect to further increase the
efficient utilization of our distribution capacity. We believe our current supply chain network, including a new
distribution projected to open in Indiana in 2011, provides ample capacity for our projected growth in the
foreseeable future.
We currently offer approximately 56,000 SKUs to support all of our retail stores via our 20 stand-alone PDQ®
warehouses and/or our eight distribution centers (all of which stock PDQ® items). Stores have system visibility to
inventory in their respective PDQ warehouses and distribution centers and can place orders to these facilities, or as
an alternative, through an online ordering system to virtually any of the other facilities. Ordered parts are delivered
to substantially all stores on a same day or next day basis through our dedicated PDQ® trucking fleet and third party
carriers. Store inventories are replenished from our eight distribution centers. In addition, we operate a Master PDQ®
warehouse that stocks approximately 31,000 incremental SKUs of harder-to-find automotive parts and accessories
and utilizes our existing PDQ® distribution infrastructure and/or third party arrangements to provide next day service
to substantially all of our stores.
Marketing & Advertising. We have an extensive marketing and advertising program designed to communicate
our ability to meet consumers’ needs through our merchandise offerings, parts assortment and availability,
competitive prices, free services and commitment to customer service. Our marketing and advertising program is
focused on establishing Advance Auto Parts as the primary resource for a customer's automotive needs. We
reinforce our brand image through a mix of media that includes television, radio, promotional signage, outdoor
media, print, on-line advertising and our Internet site.
Our marketing and advertising plan is a brand-building program primarily built around television, direct
marketing, radio advertising, and local marketing. The plan is supported by in-store signage, on-line advertising and
print. Our television advertising is a combination of national and regional media in both sports and entertainment
programming. Radio advertising generally airs during peak drive times. We use Spanish-language radio and
television advertising to market to our Hispanic customers. Our advertising program is also supported through a new
title sponsorship program for Monster Jam, a live family oriented motorsports event tour and television show
highlighted by the racing and freestyle competition of monster trucks, and sponsorships of sporting events, racing
teams and other grass-root level events intended to positively impact individual communities, including Hispanic
and other ethnic communities, to create awareness and drive traffic for our stores. Since 2004, we have used an
integrated consumer education program to build our image as not only the best source for parts, but also the best
resource for vehicle information. Our goal with our consumer education initiative is to continue our long-term brand
building success, increase customer loyalty and expand our customer base.
We continue to support our 2008 branding campaign, “Keep the wheels turning.” This campaign was developed
based on a strategic review of our business as well as extensive research conducted with our customers and Team
Members. We believe this campaign, which targets core DIY and Commercial customers, differentiates Advance
Auto Parts in our industry by positioning us as (i) the brand that best understands customers’ needs, (ii) the source
for brand name parts and products and (iii) the resource for expert advice and knowledge to help customers keep
their vehicles running. The campaign includes creative and compelling television and radio commercials designed to
drive sales and build an enduring, positive image of Advance Auto Parts with our targeted customers.