How has your background in information systems
served you in running distribution operations? Q
A It has been a great benefit. I have a good knowledge of systems and networking, and I’m able to stay abreast
of the evolution of both technology and supply chain best
practices. One example of how we have integrated technology with operational best practices would be through
voice-directed picking. At Mid-State, we used RF [radio fre-quency-directed] picking, and at O’Reilly, we started down
the road of developing and creating specs for that. However,
I put the brakes on that project because by that time, voice
had matured enough to be considered a viable alternative.
We spent several months researching voice, running pilots,
and conducting head-to-head vendor evaluations before
selecting the Vocollect system. It’s one of the several ways
my technology background has helped.
O’Reilly has grown quickly, most recently with the
CSK acquisition. Tell us about the integration Q
A Last year, we planned 220 new store locations but cut hat back to 150 after the acquisition. Previous acquisitions have had distribution models similar to ours. CSK
deployed more of a retail model, distributing on a weekly
basis. What we have had to do is institute our distribution
model, which is a daily service model. We started work early
last year to figure out where we needed distribution centers,
what our transportation requirements would be, and what
kind of total budget we’d need.
How is the O’Reilly business model different from a
pure retail operation? Q
A We operate under a dual market strategy, which means that we service both retail (do-it-yourself ) and wholesale (do-it-for-me) customers. We compete with the aftermarket retailers and have attractive storefronts. That’s
about 50 percent of our business. We offer daily replenishment to our stores. Customers can order a part by 5: 30 and
we will have it to our stores the following morning.
We also cater to the professional installers, and they have
very high demands. If they have a car up on the rack and
need a part, they want to be confident we’ll get them the
part the next morning. We see growth in the CSK market by
getting buy-in from the professional installer base. To do
that, we have to implement the service model in advance.
That’s what we’re working on.
You have a technology background: What role does
technology play in the success of your distribution Q
A Technology projects have contributed in different ways. We are a very committee-driven company. We
don’t want to make process or system changes without buy-in from the people who know the functions best, the people
who do the job every day. To ensure that we are identifying
true best practices and implementing necessary systems
changes to support them, we have established five task
forces to focus on key functional business areas. These task
forces consist of representatives from both the corporate
office and our distribution centers. We are constantly evaluating how we can better utilize technology to improve our
Beyond CSK, what strategic supply chain initiatives
do you have in store? Q
A We formed a supply chain committee three years ago to make sure we are addressing significant opportunities. Within distribution operations, we have several projects that we plan to roll out over the next 24 months. These
projects will enable us to continue to improve service to
our customers while reducing costs throughout our supply
SHEKAR NATARAJAN EXEMPLIFIES THE
new generation of supply chain managers.
The director of supply chain at Pepsi
Bottling Co. is young, technically savvy, and
eager to use technology and analysis to
improve supply chain performance.
Natarajan has racked up a considerable list
of accomplishments and recognitions in just
a few years. Rather than take the credit, he
cites the guidance of mentors as being
instrumental in his success.
How did you become involved in logistics and supply
some of the
A I received my bachelor’s degree in mechanical engineering in India in
2001. I came to the United States and
received my master’s in industrial engineering from Georgia Tech.
Having done research in micro electro-mechanics, I had not planned to pursue a
supply chain career. Harvey Donaldson, the
executive director of Georgia Tech’s professional program, invited me to attend supply
chain professional courses, where I met
best thinkers in the field: Lee Hales (my mentor), Ed Frazelle, Dick Ward (a great influence), John Hill,
Don Ratliff, and others. Lee helped me to tie together my