O'Reilly Auto Parts 2011 Annual Report Download - page 20

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DIY customer often seeks assistance from a Professional Parts Person, particularly when purchasing hard parts. The ability of our
Professional Parts People to provide such assistance to the DIY customer creates a favorable impression and is a significant factor in
generating repeat DIY business.
We screen prospective Team Members to identify highly motivated individuals who either have experience with automotive parts or
repairs, or automotive aptitude. New store Team Members go through a comprehensive orientation about the culture of our Company
as well as the requirements for their specific job position. Additionally, during their first year of employment, our parts specialists go
through extensive automotive systems and product knowledge training to ensure they are able to provide the highest level of service to
our customers. Once all of the required training has been satisfied, our parts specialists become eligible to take the O’Reilly Certified
Parts Professional test. Passing the O’Reilly test helps prepare them to become certified by the National Institute for Automotive
Service Excellence (ASE).
All of our stores have the ability to service professional service provider customers. For this reason, select Team Members in each
store complete extensive sales call training with their regional field sales manager. Afterward, these Team Members spend one day
per week calling on existing and potential professional service provider customers. Additionally, each Team Member engaged in such
sales activities participates in quarterly advanced training programs for sales and business development.
Customer Service
We seek to provide our customers with an efficient and pleasant in-store experience by maintaining attractive stores in convenient
locations with a wide selection of automotive products. We believe that the satisfaction of DIY and professional service provider
customers is substantially dependent upon our ability to provide, in a timely fashion, the specific automotive products requested.
Accordingly, each O'Reilly store carries a broad selection of automotive products designed to cover a wide range of vehicle
applications. We continuously refine the inventory levels and assortments carried in our stores, based in large part on the sales
movement tracked by our inventory control system, market vehicle registration data, failure rates and management's assessment of the
changes and trends in the marketplace. We have no material backlog of orders for the products we sell.
Our online ordering service provides enhanced customer service capabilities to our DIY and professional service provider customers.
Our program allows customers to view available parts and prices online, purchase parts online and/or either ship these purchases to
their location or have these parts available for pick up in our local store.
Distribution Systems
We believe that our tiered distribution model provides industry-leading parts availability and store in-stock positions, while lowering
our inventory carrying costs and controlling inventory. Moreover, we believe that our ongoing, significant capital investments made
to expand the network of DCs allows us to efficiently service new stores that are planned to open in contiguous market areas as well as
servicing our existing store network. Our distribution expansion strategy complements our new store opening strategy by supporting
newly established clusters of stores located in the regions surrounding each DC. We currently have a total growth capacity of
approximately 500 stores in our distribution network.
Distribution Centers:
We currently operate 23 DCs comprised of approximately 8.5 million operating square feet (see the ―Properties‖ table in Item 2 of this
Form 10-K for a detailed listing of DC operating square footages). Our DCs utilize technology to electronically receive orders from
computers located in each of our stores. Our DCs stock an average of 123,000 SKUs and most DCs are linked to multiple other
regional DCs’ inventory. Our DCs provide five-night-a-week delivery, primarily via a Company-owned fleet, to all of our stores in
the continental United States. In addition, stores within a DC metropolitan area receive multiple daily deliveries from our DC ―city
counters‖, many of which receive this service seven days per week.
As part of our continuing efforts to enhance our distribution network in 2012 we plan to:
continue to implement a voice picking technology in additional DCs;
evaluate routing software to further enhance logistics efficiencies;
begin to implement labor management software to improve DC productivity and overall operating efficiency;
develop further automated paperless picking processes;
improve proof of delivery systems to further increase the accuracy of product movement to our stores;
continue to define and implement best practice procedures in all DCs; and
make proven, ROI based capital enhancements to material handling equipment in DCs including conveyor systems, picking
modules and lift equipment.
Master Inventory ―Hub‖ Stores:
We currently operate 192 strategically placed Master Inventory ―Hub‖ stores. In addition to serving DIY and professional service
provider customers in their markets, Hub stores also provide our other stores within the surrounding area access to an expanded
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FORM 10-K