Stocking and storing inventory in the aftermarket is by far one of a company’s largest investments. One of the winners of this year’s Polk Inventory Efficiency Award, Parts Depot, recently focused on developing an inventory solution to increase their ability to make stock/no-stock decisions and to add new parts to inventory in their stores and distribution centers, says Mike Gingell, VP of strategic markets at R. L. Polk & Co., who presented the award along with Stephen Polk, chairman, president and CEO, to Parts Depot’s President and COO Willi Alexander at this year’s Global Automotive Aftermarket Symposium.

The company, which won in the retailer/distributor category, developed a system called One Simple Rule, in conjunction with technology partner Activant, which allowed them to evaluate each of their over one million SKUs for attributes like positive sales, lost sales and buyouts.

(L to R) Mike Gingell, Willi Alexander and Stephen Polk

“Using a complete supply chain approach, they were able to instantly evaluate what products needed to be on the shelves and when those products needed to be there,” says Gingell.

In a Polk-produced video, Alexander explains that One Simple Rule was devised because they had no way to complete all the processes they needed to set the assortments in their stores. Until this program was implemented, specific employees made the decision on what to stock and where, and that became increasingly difficult as the company increased their number of locations as well as the part numbers they carried. |

The new system allows Parts Depot to pull inventory that isn’t selling and deploy more of the right inventory, which in turn results in improved customer service and an increase in inventory turns.
Jonathan George, chief information officer for Parts Depot, says it was extremely important for them to take vehicle registration data and marry it with their POS system information, as well as their catalog and product data, so they could look at the distribution of vehicles across their markets.

“If we hadn’t implemented this system, we would have still had the problem where we had three parts for a four-part job,” explains Alexander. “And, in many cases, you don’t get the sale if you don’t have all the parts on the shelves for the vehicles that are in the marketplace.”

He adds that the registration information available through Polk and the partnership with Activant were key factors in making the program successful.

Drumming up savings
By the end of 2004, parts maker The Affinia Group was having significant space issues with all makes, all models coverage. Chuck Burns, VP of inventory management, points out in a special video feature that “because drums and rotors were space hogs,” they were the proper area to focus on in terms of inventory and replenishment savings.

(L to R) Mike Gingell, Jerry McCabe and Stephen Polk

Gingell explains that Affinia’s system is unique because they used an electronic pull system that coordinates all manufacturing, distribution and sales activity across the company’s North American operations into one location. “This system not only helped reduce their working capital and inventory costs, it has helped strengthen their relationships with suppliers and customers by enhancing product fill rates, order turnaround and accuracy.”

Drum and rotor order fill went from an average of 92 percent in 2004 to a little over 96 percent in 2005, with 27 percent less inventory, says Burns. This resulted in both order turn improvements and working capital investments, as the project freed up $60 to $80 million worth of cash flow.

Jerry McCabe, Affinia’s VP of communications and marketing services, who accepted the 2006 Polk Award on behalf of his company in the manufacturing category, reports that the impact the initiative had was substantial. “It has improved relationships with channel partners because our fill rates are so high. It’s given us more confidence as a company because working capital is substantially reduced. It’s made marketing and sales more efficient, and it’s had a similar effect on the operations side.”

Polk launched the Inventory Efficiency Award at last year’s Symposium and they plan to increase the implementation timeframe to 30 months to give companies a larger window of measurement next year. They are already accepting applications for 2007.