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Advance Auto Parts

Advance Auto Parts. Vic Stewart Assistant Vice President Corporate Purchasing. Business to Business Marketing. “The Buyer’s Perspective”. Advance Auto Parts. Founded by Arthur Taubman in 1932 Headquartered in Roanoke, Virginia 3 Stores 2 in Roanoke, VA 1 in Lynchburg, VA.

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Advance Auto Parts

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  1. Advance Auto Parts Vic Stewart Assistant Vice President Corporate Purchasing

  2. Business to Business Marketing “The Buyer’s Perspective” DM Meeting September 29 - October 1, 2000

  3. Advance Auto Parts • Founded by Arthur Taubman in 1932 • Headquartered in Roanoke, Virginia • 3 Stores • 2 in Roanoke, VA • 1 in Lynchburg, VA DM Meeting September 29 - October 1, 2000

  4. The Advance Promise “With quality parts and dedicated people, our goal is to serve you better.” DM Meeting September 29 - October 1, 2000

  5. Advance Auto Parts Business Philosophy • Make Advance Auto Parts a Special Place to Work! • Serve Our Customers Better than Anyone Else! • Make Enough Profit to Accomplish #1 and #2! DM Meeting September 29 - October 1, 2000

  6. Who is Advance Auto Parts? DM Meeting September 29 - October 1, 2000

  7. Advance Auto Parts • Nation’s 2nd Largest Automotive Aftermarket Retailer • $3.4 Billion in Sales • 2420 Stores in 37 States, Puerto Rico, and Virgin Islands • Trade as Advance Auto Parts, Discount Auto Parts, and Western Auto Parts (PR and VI) • 500 + Western Auto Wholesale Stores DM Meeting September 29 - October 1, 2000

  8. Company Growth 1995 - 2000 • 1995 - $602,559,000 - 536 stores • 1996 - $705,983,000 - 649 stores • 1997 - $848,108,000 - 814 stores • 1998 - $1.22 Billion - 920 stores • Acquired Parts America/Western Auto 10/98 • 1999 - $2.2 Billion - 1617 stores • 2000 - $2.29 Billion - 1729 stores DM Meeting September 29 - October 1, 2000

  9. Company Growth 1995 to 2000 • Sales grew $1.685 Billion or 379% • Store count increased 1193 stores or 323% DM Meeting September 29 - October 1, 2000

  10. Company Growth 2001 • Reported Record Sales and Operating Income • Comp Store Sales Increase of 6% led Industry • YE Sales • $2.5 Billion • 1802 stores • Top 80 Retailer in U.S. DM Meeting September 29 - October 1, 2000

  11. Company Growth 2002 to 2005 • Project Continued Growth • 2002 - $3.33 Billion - 2412 stores • Open 125 New Stores/Convert 200 • 2003 - $3.63 Billion - 2562 stores • Open 150 New Stores/Convert 200 • 2004 - $3.97 Billion - 2737 stores • Open 175 New Stores/Convert 200 • 2005 - $4.365 Billion - 2937 stores • Open 200 New Stores DM Meeting September 29 - October 1, 2000

  12. Company Growth 2002 to 2005 • Acquisition of Discount Auto Parts • 675 Stores • 420 in Florida and 255 in GA, AL, LA, MS, SC • Projected Sales Increase • $1.86 Billion or 74.2% over 4 Years • Projected Store Location Increase • 1135 stores or 62.9% over 4 Years • Top 65 Retailer in U.S. DM Meeting September 29 - October 1, 2000

  13. Personal Career Info • Joined the Company in March 1985 as Parts Manager in Chesapeake, VA • 68 Stores • Became a Store Manager in 7 months • Managed four different locations over 6 years • Chesapeake, VA; Roanoke, VA; Blacksburg,VA; Burlington, NC DM Meeting September 29 - October 1, 2000

  14. Personal Career Info • Promoted to Division Manager over 14 stores in November 1991 • based in Florence, SC • Promoted to Special Projects Manager in 1992 • Reporting direct to President of Company • Managed Special Projects, Corporate Communications, Media Relations from1992 - 1995 DM Meeting September 29 - October 1, 2000

  15. Personal Career Info • Promoted to Director of Budget & Expenditure Control in 1995 • Promoted to Assistant Vice President Corporate Purchasing in 1997 DM Meeting September 29 - October 1, 2000

  16. Business to Business Marketing “The Buyer’s Perspective” DM Meeting September 29 - October 1, 2000

  17. Corporate Purchasing Department • Responsible for Procurement of all “Non-Retail” Products, Goods and Services DM Meeting September 29 - October 1, 2000

  18. Corporate Purchasing Department • Total Expense Management Responsibility • Exceeds $100 Million Annually • Capital Asset Management Responsibility • Exceeds $1 Billion DM Meeting September 29 - October 1, 2000

  19. Corporate Purchasing Department • Supplies for Offices, Distribution Centers, Stores • $14 Million Annually • Travel for all Team Members • $11 Million Annually • Uniforms • $2.5 Million Annually DM Meeting September 29 - October 1, 2000

  20. Corporate Purchasing Department • Waste Management • $3 Million Annually • Company Auto Fleet • $6 Million Annually • Company Meetings • $5.5 Million Annually DM Meeting September 29 - October 1, 2000

  21. Business to Business Marketing “The Buyer’s Perspective” DM Meeting September 29 - October 1, 2000

  22. Business to Business Marketing What is Business to Business Marketing? DM Meeting September 29 - October 1, 2000

  23. Business to Business Marketing What is the difference between “Buying” and “Procurring”? DM Meeting September 29 - October 1, 2000

  24. Business to Business Marketing Buying - the act of acquiring in exchange for money or its equivalent;to purchase (American Heritage Dictionary) DM Meeting September 29 - October 1, 2000

  25. Business to Business Marketing Procurement - to obtain; acquire. (latin) to take care of for someone else (American Heritage Dictionary) DM Meeting September 29 - October 1, 2000

  26. Business to Business Marketing Our Definition - Anyone can buy. But Procurement requires a complete understanding of the “Big Picture”. DM Meeting September 29 - October 1, 2000

  27. Business to Business Marketing To procure you must understand the following: • Customer Need & Budget • Product Knowledge • Quality • Make Up • Perspective Vendor Market • Vendor Capabilities & Needs • Delivery Mechanisms • Price and Terms DM Meeting September 29 - October 1, 2000

  28. Business to Business Marketing Procurement Requires 4 Steps • Identify Customer Needs • Pre-Qualify Potential Vendors • Formal Bid Process • RFP/RFQ/Reverse Auctions • Post-Validate Potential Vendor Bids DM Meeting September 29 - October 1, 2000

  29. Identifying Customer Needs • Form of Internal Marketing • Define Scope and Type of Need • “One on One” Discussion • Special Requests, Large $ Purchases, New Items • Requisition Process • Standard Product Requests like Equipment, Furniture, etc... • “On-line” Ordering • Office Supplies DM Meeting September 29 - October 1, 2000

  30. Pre-Qualifying Potential Vendors What are the “Most Important” Issues? DM Meeting September 29 - October 1, 2000

  31. Pre-Qualifying Potential Vendors • Vendor Reputation and Integrity • Product Quality • Manufacturing Capability/Availability • Manufacturer Direct vs Third Party Distributor • Delivery Mechanisms • “Just In Time” vs “Make and Hold” • Delivery Fleet vs Common Carrier • Price and Terms DM Meeting September 29 - October 1, 2000

  32. Vendor Reputation and Integrity • A Successful Vendor Will Focus on the Customer’s Needs, NOT Making the Sale • A Successful Vendor Will “Under Promise and Over Deliver” • A Successful Vendor Will Deal Reputably and with Integrity • A Successful Vendor Will Know Their Limitations and Say “NO” If They Can Not Meet the Customer’s Needs DM Meeting September 29 - October 1, 2000

  33. Price and Terms When do “Price and Terms” Become the Single Most Important Issue? DM Meeting September 29 - October 1, 2000

  34. Price and Terms • “Price and Terms” Become the Single Most Important Issue When Purchasing a “Commodity” Item DM Meeting September 29 - October 1, 2000

  35. Formal Bid Process What is a Request for Proposal/Request for Quote? DM Meeting September 29 - October 1, 2000

  36. Formal Bid Process • A formal written document presented by the “Procurement Specialist” to a “Perspective Vendor” DM Meeting September 29 - October 1, 2000

  37. Formal Bid Process • The Document should contain: • Well-Defined Explanation of Product Need • Time Parameters • Length of Agreement • Delivery Expectations • How, When, Where? • Product Usage Information (Expected Annual Qty) • Terms DM Meeting September 29 - October 1, 2000

  38. Formal Bid Process “The Cutting Edge” in Procurement • Internet Based B2B Trading and Procurement • Ariba, Commerce One, Global Net Exchange and Others • Two Types • “Pre-Determined” Vendor Groups • Reverse Auctions DM Meeting September 29 - October 1, 2000

  39. Internet B2B Trading and Procurement • Expedites the Procurement Process • Reduces Internal and External Costs • Reduces Product Costs DM Meeting September 29 - October 1, 2000

  40. Internet B2B Trading and Procurement How do the B2B Trading and Procurement Sites Work? DM Meeting September 29 - October 1, 2000

  41. Internet B2B Trading and Procurement • “Pre-Determined” Vendor Group Sites like Ariba and Commerce One • Allow Business to Procure from Other Companies Direct via Internet • Both Buying and Selling Companies Purchase Memberships • Streamlines Process and Reduces Expenses DM Meeting September 29 - October 1, 2000

  42. Internet B2B Trading and Procurement • “Potential Pitfalls” • Valid Suppliers may not be Members • Limits Availability • Can Not Always Negotiate Price and Terms DM Meeting September 29 - October 1, 2000

  43. Internet B2B Trading and Procurement • “Reverse Auction” Networks like Global Net Exchange (GNX) • Allow Business to Procure from Other Companies Direct via Internet • Buying Company Purchases Membership • Selling Companies May Purchase Memberships if Desire to Join Vendor Database • Streamlines Process and Reduces Expenses DM Meeting September 29 - October 1, 2000

  44. Internet B2B Trading and Procurement • Difference in “Reverse Auction” Networks like Global Net Exchange (GNX) • Selling Companies May Be Invited by Buyers to Participate at “No Cost” • Multiple Vendors Participate Simultaneously in “Real Time” On-line Auction • Competitive Market “Almost Always” Creates Lower Prices • Buying Company Pays % of Total Auction Volume to GNX as Auction Fee DM Meeting September 29 - October 1, 2000

  45. Strategic Business Initiatives • Determine Strengths and Weaknesses • Bundling vs Unbundling DM Meeting September 29 - October 1, 2000

  46. Strategic Business Initiatives • Bundling vs Unbundling • 1995 Bundled Majority of Supplies • Gain Control • Gather Information through Reporting • Reduce Costs • 1998 Began to Unbundle • Store Bags - Direct from Manufacturer • Achieved Costs Reduction Exceeding $250,000 Annually • 2001Continued Emphasis on Unbundling and Buying Direct From Manufacturer DM Meeting September 29 - October 1, 2000

  47. Strategic Business Initiatives • Determine Strengths and Weaknesses • Bundling vs Unbundling • Define Core Competencies • Eliminate Inefficiencies • Improved Technology • E3 Procurement Technology • New Store Kits • Direct Ship vs Staging Warehouse DM Meeting September 29 - October 1, 2000

  48. Strategic Business Initiatives • Electronic Summary Billing • Goal of One Detailed Summary Bill for Vendor • Continue Managing Consumption While Decreasing Unit Cost • 2002 - 2005 Goal - Reduce Costs by $3.0 Million per Year • Extended Terms DM Meeting September 29 - October 1, 2000

  49. Strategic Business Opportunities • SKU Mix Product Review • Eliminate Unnecessary Items • Question Product Use and Life • Develop Storenet • Provide On-line Catalog of SKUs • Use Vendor Graphic Support • Develop New Process • Identify Efficiencies and Shared Savings DM Meeting September 29 - October 1, 2000

  50. Other Marketing Opportunities • Sports Marketing • NASCAR and NHRA Auto Racing • Major League Baseball, NFL Football, and NBA Basketball • Collegiate Programs • Local Community Programs DM Meeting September 29 - October 1, 2000

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