DC Velocity - October 2009

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key market differentiator. “One competitive advantage we have is the ability to provide overnight service to our stores,” explains Greg Johnson, O’Reilly’s senior vice president of distribution operations. “That’s what we’ve built our reputation on. To run our fleet of 350 tractor-trailers nightly is costly, but we are confident that this more costly model continues to provide the highest level of service to both our do-it-yourself and do-it-for-me customers, and therefore continues to drive higher revenues for both our company and our shareholders.”

It was also clear from the outset that the team charged with overseeing the distribution network integration would be working against the clock. O’Reilly is committed to completing the project by the end of next year, so that it can move forward with plans to expand its business in the former CSK markets. “We cannot grow the wholesale model to its fullest extent until distribution is in place,” explains Johnson, a 27-year O’Reilly veteran and one of the key executives involved in the CSK integration. “We cannot go to installers and say ‘We deliver once a week’ and expect them to make us their primary supplier.”

Adding to the challenge was the need to carry out the
integration project while simultaneously overseeing a
long-planned expansion. So far this year, O’Reilly has
opened a new DC in Greensboro, N.C., and moved its
Kansas City distribution operations into a new, larger facil-
ity. In addition, the company is on track to open 150 new
stores in 2009.
Network news

In order to meet the aggressive network integration timeline, the team began planning months before the acquisition was completed, says Johnson. The first step was to conduct an overall network evaluation to determine where the company would need to add DCs and what should be done with the existing CSK facilities. At the time of the acquisition, CSK was operating four main DCs—located in Arizona, California, Michigan, and Minnesota—plus four smaller facilities.

Based on its network review, O’Reilly decided it would need to add four more centers, to be located in Seattle, Denver, Salt Lake City, and Moreno Valley, Calif. The Seattle DC is scheduled to open in November, with all four scheduled for completion by June 2010.

That left the question of what to do with the four CSK sites. After some review, O’Reilly decided to close CSK’s Minnesota facility, consolidating its operations with those of an existing O’Reilly DC in the Minneapolis/St. Paul area. O’Reilly has also decided to relocate operations at the former CSK facility in Dixon, Calif., to a larger DC in

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