Advance Auto Parts Revamps Supply Chain in Effort to Reverse Sales Slump

Advance Auto Parts (AAP), a leading automotive aftermarket parts provider, is taking bold steps to revamp its supply chain in an effort to reverse its recent sales slump. The company, which serves both professional installers and do-it-yourself customers, is consolidating its distribution network and implementing new inventory management systems to improve efficiency and better serve its customers.



The company's President and CEO, Shane O'Kelly, has stated that the current distribution network is inefficient and needs substantial work to improve cost structure and inventory availability. To address this, advance auto parts is converting smaller, legacy facilities from replenishment nodes to market hubs, where inventory is forward-deployed closer to customers. This move aims to increase inventory productivity and reduce costs by ordering products into fewer distribution centers.



In addition to the distribution network consolidation, Advance Auto Parts is also implementing a new inventory management system (IMS) and a new warehouse management system (WMS). The new IMS, completed in July 2024, actively manages over 300,000 SKUs, helping the company capture demand signals more quickly and ensure accurate availability of parts. The new WMS, expected to be fully implemented by the end of 2024, will allow the company to order products into fewer distribution centers, further increasing inventory productivity.

The consolidation of Advance Auto Parts' distribution network into a single operation is expected to significantly improve inventory management and overall supply chain efficiency. By converting smaller facilities into market hubs, the company aims to increase inventory productivity, reduce operational costs, and enhance inventory management. This streamlined approach is part of a larger supply chain overhaul aimed at boosting efficiency and better serving customers.

While the consolidation process is expected to extend into 2026, Advance Auto Parts is moving as fast as it can to complete the overhaul. The company plans to have 14 large distribution facilities operating on a single WMS by the end of the year, with remaining distribution centers either closed or converted to market hubs. This streamlined approach is part of a larger supply chain overhaul aimed at boosting efficiency and better serving customers.

In conclusion, Advance Auto Parts' supply chain overhaul, including the consolidation of its distribution network and the implementation of new inventory management systems, is a strategic move to improve efficiency and better serve its customers. By increasing inventory productivity, reducing operational costs, and enhancing inventory management, the company aims to reverse its recent sales slump and remain competitive in the market. As the company continues to execute its turnaround plan, investors should keep a close eye on its progress and the potential impact on its stock price.