Uni-Select®, the seventh-largest automotive parts distributor in the United States, sells an extensive range of aftermarket components to 4,000 – 5,000 independent “jobbers” and via approximately 250 corporate stores. The huge number of vehicles on the road, and the vast array of parts necessary to service them, makes inventory management the industry’s biggest challenge. In his role as Uni-Select USA’s Director of Store Inventory Modeling, Rick Williams is committed to helping Uni-Select’s customers better manage their inventories.
Rick and his team realize that their customers can no longer manage inventories through guesswork or make decisions on which parts to stock based solely on what sold or didn’t sell in the past. In the current fast-paced and competitive environment, Uni-Select’s customers need to have the right parts available when consumers enter their parts stores…or risk losing the business to someone who does. They need to have an efficient tool for determining which parts are selling well, which need to be re-ordered, and which should be returned to the warehouse. To make intelligent business decisions, auto parts stores require updated and credible information delivered via an accessible and easy-to-use tool.
Online E-Modeling Tool for Real-Time Answers
Several years ago, Rick and his team began development of E-Modeling, an online inventory management tool that consolidated information from six mainframe systems into a web-based tool. E-Modeling was designed to help Uni-Select’s corporate stores and independent auto parts jobber customers manage their inventories proactively, which hadn’t been possible in the past. Rather than relying on guesswork and national data to determine which parts to stock, aftermarket repair facilities can use E-modeling to determine which of the 1.2 million parts available from Uni-Select are most appropriate for their shops based on local demand.
Accessing the system via the web, jobbers can model suggested inventories based on sales history and demand for particular parts in the trade area, among other factors. They can decide to view the results in several di?erent ways, such as by top- selling parts in the area; by a specific dollar amount they want to spend on the parts category or by percentage of coverage, which is a way to invest in parts that are likely to fit the broadest range of vehicles in their unique market. Automation of the process for determining which inventory a store should carry can be especially helpful for frequently replaced parts such as brake pads, where 2,000 to 3,000 parts are available.
Jobbers can also upload the current inventory in their stores to have the E-Modeling tool show how it compares to suggested inventory. This provides insights into which parts have a strong potential for selling and which should be returned to the warehouse because they are likely to remain on the shelf.
A key element of the E-Modeling tool is vehicle registration data, which is provided by Automotive.
This is the best tool available to the independent jobber to balance inventory and correctly allocate inventory dollars for maximum sales.
Based on vehicles registered in the trade area, E-Modeling can predict potential demand for components of that vehicle in the surrounding geographic region, down to the ZIP code level.
This level of detail about the sales potential of a particular part in a specific trade area enables auto parts stores to make intelligent parts buying and stocking decisions based on local vehicle ownership.
Manufacturers’ parts inventory data is also accessible via the E-Modeling tool. When viewing a suggested inventory based on an E-Modeling calculation, the jobber sees a listing of part numbers with a link to the electronic parts catalog information for each manufacturer. This information is integrated with VIN-driven vehicle descriptions, such as year, make, model and engine specifications, for each part number. The integration of VIN-based and parts catalog data gives repair facilities the level of detail they need to reduce excess inventory and focus on buying the necessary parts for the local market.
The highly scalable and flexible nature of the E-Modeling tool makes it possible to continually refine the tool based on customer feedback and for use in additional markets. One such enhancement is the future addition of custom trading areas into the E-Modeling tool, which will enable the system to suggest inventories based on vehicle registration data in a store’s true selling area. For customers that don’t use the Internet, Uni- Select’s sales teams use the E-Modeling tool to suggest the types of parts with the highest likelihood to sell based on vehicles in the customer’s trade area. Uni-Select also uses the tool on a corporate basis to manage inventories within their distribution centers.
Better Inventory Management Yields Measurable Improvements
Both Uni-Select and its customers have seen results from use of E-Modeling to manage inventories, including:
- Reduction in excess inventories: From January 2008 to December 2008, Uni-Select’s corporate stores reduced their excess inventory by $6.1 million.
- Identification of returns: During 2008, Uni-Select identified $12.1 million in parts that would otherwise have gone unused. Instead, these parts could be returned to the manufacturer, giving stores shelf space for better-selling parts.
- Identification of parts to order: During 2008, Uni-Select identified $7.1 million in parts to order based on knowing which ones were appropriate for vehicles in their trade area. This number represents the cost of parts purchased from the manufacturer.
- Industry recognition: Uni-Select’s E-Modeling tool won a Polk Inventory Efficiency Award. in recognition of this innovative solution to addressing inventory management challenges.
Uni-Select’s E-Modeling tool shows the number of each type of vehicle in the sales region that utilizes a particular part number