Organization reduces error and maximizes efficiency.
When space is at a premium, the location of your tire inventory is absolutely critical. “You don’t want to put your fast-moving items at the back of your facilities,” advises Tony Beck, Vice President of Logistics and Distribution, OK Tire. “You want them near the front so that you can grab them faster and get them to the customer.”
Distribution centres need to have their tires dynamically slotted. That way, it’s intuitive to the person who’s going to pick out the product. Slow movers or discontinued inventory are at the back. “Right now, it’s peak season for winter tires,” says Beck. “You want those key winter products nearest to your door.”
Winters aren’t as long as they used to be in Canada, and there isn’t as much snow. That can result in excessive inventory and a lack of space. “You have to go to external sources,” says Beck. This can add complexity and inventory visibility issues. OK Tire is currently relocating all storage sites in eastern Canada into a brand-new facility in Quebec. “It’s extremely onerous and cumbersome to not have an optimized distribution capacity footprint, which has been a challenge at OK Tire for years.”
The company has been growing, adding 20 or 30 dealers a year. In January 2021, a new system, “Total Warehouse Logistics,” will go into place to help deal with inventory logistics. It’s based on RF technology and uses Telxon guns, which are like a handheld scanning gun, for taking stock. “Right now, we’re still heavily dependent on paper,” says Beck. “But soon, employees can use the gun, scan the location, scan the product and send the information. Inventory stocktaking will be a breeze.”
With the new system, errors will be reduced, dealer service will be improved, as will be efficiencies. “Every touch costs you,” says Beck. “You touch something once, it’s $10. You touch it twice, $2O. We have to reduce our touches. That manifests itself to efficiently moving tires.”
Inventory management comes down to planning and trying to anticipate the needs for the coming season or year. “The tire business is very cyclical,” says Kristi Dubeau, General Manager of Marketing at Fountain Tire. “It’s really about understanding where the demand is going to be this fall and the byproduct of what stores think they’re going to sell this fall, and what do they need to have on hand for inventory. The stores do it, but we do it with them.”
Planning by market
While Fountain Tire provides some suggested booking orders to their stores that would best capture the opportunities in the market, they also do individual planning by market to understand what vehicles are the most popular. “It’s part of our enterprise resource planning (ERP) system, which includes a replenishment piece, a min/mix function, so when inventory goes down below a certain level on any particular SKU, stores set up their levels,” explains Dubeau. “There are different trigger points for different products, and the system generates a suggested order or automatic order depending on the setting.”
Although the technology is the lynchpin, and drives the efficiency, the overall system also incorporates corporate expertise. “We’ll layer in where we think the opportunities in the market are, what the stores know in their own market,” she says. “It’s really a mix of experience, intuition, data and science to plug in and sum up the plan.”
COVID-19 has thrown a wrench into the works, since consumers have been driving less while working at home. “Consumers aren’t venturing outside to do what they might believe is discretionary spending,” says Dubeau. “You could argue that for some people, tires are not on that list.”
However, tire retailers provide an essential service. “We feel incredibly fortunate from that perspective,” says Dubeau. “Inventory is a function of what we plan on selling and so what we plan on selling is a function of how we offer our product.” Stores have provided pick up and drop off service, where a vehicle will be picked up, taken for service, disinfected and returned disinfected. There are contactless payment options, online bookings, digital vehicle reports. “It’s been welcomed with open arms, offering something for customers on their own terms. It’s their way to feel like they’re getting looked after and we’re meeting their needs.”
When it comes to inventory, Jack Benzacar, CEO of Tire Butler, emphasizes that “less is more.” All the tires in his storage facility have a barcode, and nothing more. “We track our customers, our dealers, all the data entry about the tire, its age, tread depth, rim damage, all those are tracked upon entry into the system,” he says.
Sometimes, photographs are taken, which are put into a system that tracks everything by that one number; or is cross-referenced to customer name or dealership. “You walk into our warehouse, and everything looks the same,” says Benzacar. “To the layperson, a tire’s a tire. But when you’re walking around trying to find one set of tires in the midst of 40,000, it’s a different story.”
At Tire Butler, Benzacar is constantly making systems and processes. “The more you systemize something, the easier it gets,” he says. “You’re constantly setting up processes that make things repeatable.”
When they pick up tires from a dealership, that dealer likely has their own software system. “They get a code right away, and that code now becomes how they choose the name of the client, what types of tires they have, the tread depth, tire or rim damage, whether the rim has a centre cap or a hubcap, and so on,” says Benzacar. “When we go pick up the tires, we match the description, we match the number, and then they come into our warehouse.”