Discount Auto Parts
Discount Auto Parts is a leading auto parts and accessories retailer in the Southeastern region of the United States. The company serves the do-it-yourself consumer and professional installer.
The Challenge
Complications to Discount Auto Parts’ growth plans included increased distance between the DC (Distribution Center) headquarters and new stores as well as increased store count, SKU (Stock Keeping Unit) count, number of distribution points, and transaction volume.
Knowing that improvements would require substantial investment, and with a history of a “don’t take on too much, too soon” attitude, Discount Auto Parts realized that it needed a fact-based analysis to identify, justify, and prioritize improvement opportunities.
Discount Auto Parts recognized Capgemini’s experience in supply chain transformation and highly valued the Group’s automotive and consumer packaged goods experience. It selected Capgemini as its business partner to perform an assessment of its supply chain processes based on a value-added approach for identifying improvement opportunities.
Discount Auto Parts’ information technology barriers included a dated legacy system platform, limited integration between systems and processes, and a proliferation of ‘home-grown’ systems.
Discount Auto Parts recognized that the Capgemini approach would evaluate all facets of their supply chain rather than optimize a single process at the expense of others.
Capgemini Approach
The team utilized an end-to-end, action oriented, results driven methodology for an assessment that focuses on delivering value across three key areas: growth, efficiency and capital management. This approach produced a prioritized improvement portfolio, including “quick hits” enabling near-term value attainment, which facilitated an adaptive supply chain for Discount Auto Parts.
Each value proposition was grouped into tactical and strategic initiatives and included a return on investment, time to value, and key initiative impacts.
Inventory management initiatives included implementing an advanced planning and scheduling solution, distribution network optimization and stock keeping unit rationalization. These initiatives enabled Discount Auto Parts to improve forecasting and planning accuracy and reduce inventories at all levels within their supply chain.
Supply base management initiatives included strategic sourcing and a program for supplier management and evaluation. This enabled Discount Auto Parts to rationalize supplier relationships and reduce total costs, as well as to begin collaborative planning with vendors.
Distribution management initiatives included launching a new distribution center, implementing improved warehouse management technology and an ASN (Advanced Shipment Notification), a cross-docking program and reducing lost time accidents. These initiatives enabled Discount Auto Parts to streamline (DC) processes, reduce costs, increase efficiency and create a network strategy for expansion.
Transportation management initiatives included implementing a ‘pay for performance’ program, utilizing excess private fleet capacity to generate additional revenue, implementing a core carrier program, establishing fleet process improvements and implementing a transportation management system.
Value Delivered
Implementing the identified improvement opportunities enabled Discount Auto Parts to create an adaptive supply chain that is decisive and collaborative. These opportunities provide the basis for Discount Auto Parts to achieve a competitive position across key industry operating benchmarks with some of the following results:
- $56.5 million in freed up working capital
- $1.52 EPS (Earnings Per Share) increase over 3 years
- $106 million in cost reductions over 4 years
- The collective value proposition estimated a total savings of $85 million and a ROI (Return on Investment) of 409%.
Other key impacts anticipated include increased inventory turns, 25% inventory reduction, 3% COGS (Cost of Goods Sold) reduction, service level improvements (DC/store/supplier), increased customer satisfaction and employee morale, improved inventory accuracy and increased ROI on fleet assets.