NAPA nabs auto parts business.
The familiar blue and yellow pipeline NAPA logo bedecks 39 auto parts stores throughout Alaska, ranging from Barrow to Ketchikan. This spring will mark the third anniversary of the NAPA Anchorage Distribution Center, which supports the state's NAPA businesses.
Four years ago, Alaska had 34 NAPA stores; 1991 will see two new ones, in Healy and Kotzebue, bringing the total to 41. This represents roughly a 20 percent increase in the number of NAPA stores in only four years - most of that during a time when many businesses, including auto parts stores, were failing.
NAPA - the National Automotive Parts Association - is the world's largest distributor competing in the auto parts aftermarket, or market for replacement parts. There are approximately 6,700 NAPA stores in the United States, serviced by 76 NAPA distribution centers. Sixty four of the distribution centers are owned by Genuine Parts Co., a publicly owned firm with headquarters in Atlanta, Ga., where the first NAPA store opened in 1928. Four private firms variously own the remaining 12 distribution centers. Well-known parts manufacturers, such as Echlin and Dana Corp., supply the parts in NAPA's private packaging.
NAPA is not a franchise or corporate chain. NAPA stores are privately owned and operated under their own business names and identified as NAPA auto parts stores. Greg Durdik, general manager of the Fairbanks-area stores, says, "NAPA is the association we all belong to. There are no dues, no franchise fees, no contracts to sign. It's just a handshake deal. People are surprised to find this out."
Doug Welch, president and general manager of the NAPA Anchorage Distribution Center, explains the different entities that make up NAPA's aftermarket distribution system: "We sell only to NAPA auto parts stores, and they sell only NAPA auto parts. NAPA is the link between the jobbers (the NAPA stores), the manufacturers that supply the product, and the distribution center that distributes that merchandise to the stores."
Before the Anchorage distribution center opened, all of Alaska was served through the Seattle distribution center. Alaskan NAPA jobbers worked for several years to convince Genuine Parts Co. headquarters that an Alaskan distribution center was viable. In the mid-1980s plans began to solidify, and through 1986 and 1987 the sales and distribution of vehicular parts were tracked by computer in Seattle. The data were studied and analyzed to get a complete picture of Alaska's unique market from the oil fields of Prudhoe Bay to Bush communities such as Bethel to the traditional markets of the larger cities - and to determine staffing requirements for an Alaskan distribution center.
In October 1987, the midst of Alaska's recession, Genuine Parts Co. purchased real estate in Anchorage for the center. Welch recalls, "All it was was a snow-covered lot with an empty building." In January 1988 a team came to Anchorage to turn the 31,000-square-foot warehouse into a NAPA distribution center. This task included determining opening inventory requirements and the layout of the building, which needed docks, shipping and receiving areas, office space and a computer room.
After preliminary remodeling, the center was phased into operation during the first half of 1988, first serving Anchorage, then Matanuska-Susitna Valley stores, then Fairbanks and other stores. Subsequent upgrading of the building included an office addition. Just completed is a 15,000-square-foot warehouse addition costing about $1 million. According to Welch, the distribution center now has the potential, through double-decked warehouse space, of expanding to 85,000 square feet.
Says Welch, "We right now sell 130,000 different part numbers - automotive, marine, industry, tools, equipment, paint." He estimates the center's current resale inventory at $8.5 million to $9 million. With 51 full-time employees, the Anchorage distribution center now serves 31 of the state's stores. The eight NAPA stores located in Southeast Alaska continue to be served by the Seattle distribution center, which can provide them with faster service than can Anchorage.
Welch says, "The Anchorage distribution center has probably been the most successful of any distribution center we've opened." In 1987, sales by the Seattle distribution center to Alaska's NAPA stores totaled about $11 million. Welch estimates the Anchorage distribution center's 1990 sales to its 31 jobbers at $20 million and the Seattle center's 1990 sales to the 8 Southeast jobbers at around $5 million.
This $25 million in parts collectively purchased by Alaska's NAPA stores reflects a 225 percent increase in NAPA sales in the state in only three years - most of that during a slow economy. Welch attributes the Anchorage distribution center's success to "the absolute dedication the (NAPA store) owners have to service." Commitment to service also has allowed NAPA auto parts stores to succeed.
A Few of the Many. Mel Money is co-owner of Parts Inc., which operates 13 NAPA stores in Alaska, or one-third of the state's total outlets, and employs more than 100 people. Money explains the main ingredient of the corporation's success: It's service trying to have what our customers need. We run 30-some trucks now to serve our customers." He estimates Parts Inc.'s current inventory at 3 million.
Parts Inc. was formed in 1976 by Money and two other partners who decided to go into business for themselves after working for a failing auto parts store. The three men chose NAPA because the association provided the independence they sought.
From their first store in 1976 in Anchorage and their second in Homer in 1978, the partnership has grown steadily, adding outlets in Anchorage, Kodiak and Valdez, and on the Kenai Peninsula. Says Money, "In the last five years we've really expanded. The recession was a good time to expand when others were pulling back. We added more inventory and put more stores on. We took advantage of the bust periods to increase our inventory to serve the customer."
In Fairbanks, Ed and Karen Brown began their NAPA business in 1981 and now have three stores in the area, including a new one on Gaffney Road that opened a year and a half ago. General Manager Durdik says, What allowed us to survive, got us through the rough times, was service and keeping an eye on expenses. The bottom line is service. People need service. If it's retail, you need a knowledgeable counterman. It's taking care of your customers."
According to Durdik, each store serves the needs of a particular market area. The College Road store's business is 60 percent wholesale to garages, gas stations, fleets and government agencies, and 40 percent retail; the Gaffney Road store sees 90 percent retail sales; and the North Pole store's sales are 70 percent retail and 30 percent wholesale.
The Fairbanks NAPA stores employ 43 people and realized sales of $1 million in 1990. Expansion plans include an addition to the Gaffney Road store designed to improve delivery time by centralizing offices and delivery service.
When Gary Korthuis, owner of Korthuis Inc. in Bethel, opened his NAPA store in 1981, it totaled 1,200 square feet. Today he has 2,000 square feet of warehouse space and 3,000 square feet of sales area, including a recent addition that doubled the sales area.
Korthuis serves a diverse Bush community market that utilizes a wide range of NAPA products. In addition to automotive parts, he supplies generator parts to the villages in the Yukon-Kuskokwim area, and he does a "sizable amount" of business in marine parts during the summer. Industrial and construction equipment plus heavy-duty truck parts also figure in the trade.
"We really never felt the slump until about 86 or 87," Korthuis says, "and we were able to re-evaluate where we were spending our money and adjusted for it and maintained." Single Identity. NAPA stores benefit from public familiarity with and acceptance of the NAPA product. Durdik and Money attribute a significant amount of their business to military personnel and "people just passing through' from Outside who recognize the NAPA logo. The independent NAPA jobbers benefit from national NAPA advertising.
The NAPA Anchorage Distribution Center plays a big part in the increasing success of the NAPA stores. Welch, who was operations manager of the Seattle distribution center before assuming the top management role at the Anchorage center in 1990, says, "We're now able to give the stores much better service, which in turn enables them to give their customers immediate service. Our turnaround time has gone from approximately two and a half weeks (from Seattle) to, in many cases, a matter of an-hour."
Korthuis says that transportation time from Anchorage to Bethel is two to three days, compared to the two weeks it took from Seattle to Bethel. He adds, The cost of freight has been reduced substantially, and we can pass the savings on to our customers."
Durdik says that the new distribution center has made the Fairbanks operation more efficient. The parts ordered daily from the Anchorage distribution center are shipped to Fairbanks by truck the same evening, allowing overnight restocking of inventory.
The Fairbanks stores now can offer next-day delivery on even special-order items at no extra charge to the customer.
The special-order market is increasingly more significant, Durdik explains, because the old "one part fits all" days are disappearing as vehicles become more sophisticated and parts more specialized. He says that handling special orders now is essentially a full-time job for one employee.
Money recalls some of the problems Parts Inc. encountered before the new distribution center opened in Anchorage. Shipping by air-freight containers (from Seattle) was expensive. Then we went to water, but had more problems with the time lapse. We had to build our inventory, so we poured just about everything back into the business. It took special planning and ordering to look ahead, especially when we were just starting and on a tight budget."
He explains that it used to take an entire day to make out an order, which would be mailed to Seattle on fridays so that it could be shipped out the following week, with water transit time of 8 to 10 days. Now, with computers and the Anchorage distribution center, an extensive order can be compiled electronically in 15 minutes and sent to the warehouse where it's filled and then picked up by truck.
The Anchorage distribution center receives shipments from its suppliers weekly to replenish the stock shipped daily to Alaskan stores. The "road stores" - those accessible from Anchorage by road - can receive the reordered merchandise the same day in many instances. For Alaska's outlying NAPA stores - the Dillinghams and the Nomes - air parcel post is normally used.
Maintaining the Pace. Like modern businesses everywhere, NAPA relies heavily on computers. Each NAPA store in Alaska has a computer that can link not only with the Anchorage distribution center, but also with any of the NAPA distribution centers nationwide, thus gaining access to NAPA's several-hundred-million-dollar inventory.
Should a needed part not be immediately available from the Anchorage center, the computer can locate the item at another distribution center complete with specifics on the most expedient shipping method to the target store. The Anchorage distribution center also is computer-linked with the other NAPA renters and currently is expanding its computer capabilities.
Another NAPA activity is more visible to the public: a national identification plan for the individual stores. Being identified as a "NAPA Auto Parts Store" includes displaying the NAPA logo and color-coordinating the store's interior and exterior in blue and gray, following guidelines from Genuine Parts Co. According to Welch, about 80 percent of the NAPA stores nationwide and most of Alaska's NAPA stores have adopted the voluntary program.
Expanding into new or untapped parts markets is also on the NAPA agenda. One such market involves body shop supplies. Genuine Parts Co. operates specialty paint and body shop equipment stores, known as PBE stores, throughout the country. Anchorage-based Parts Inc. recently opened Alaska's first NAPA specialty PBE store in Anchorage. According to Money, this is the first NAPA PBE store in the United States that is in - NAPA store owners and the Anchorage distribution center recently began dealing in heavy-duty parts, such as components of air brakes and engines for Caterpillars, tractors and heavy-duty trucks.
In the NAPA Anchorage Distribution Center's future, Welch sees continued expansion to support the growth that's been experienced by the state's NAPA stores. This involves increasing the inventory investment and upgrading the physical facility as well as continuing to hire and train people.
Welch has found the Alaska business climate fertile territory to explore and the NAPA outlet operators, who are the distribution center's customers, equal to the task of building new businesses. He says, "In Alaska, the NAPA auto parts stores know their clientele on a first-name basis. In my 17 years with NAPA - and now this is my fifth NAPA distribution center - never have I seen a harder working, more dedicated group of customers, from owners to stockers."
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|Title Annotation:||NAPA auto parts stores in Alaska|
|Publication:||Alaska Business Monthly|
|Date:||Feb 1, 1991|
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