How AutoZone Can Become More Efficient As a Automobile Parts Manufactuer Case Study

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. Evaluate key elements of the selected production or service organization\'s operational efficiency with its operational strategy. Determine three tasks that do not align with the operational strategy. Determine the weaknesses that are evident in each task.The success of the United States economy is predicated on the wellbeing of the service sector. As of 2019, services account for roughly 68% of GDP. This has been roughly in line with prior percentages ranging from 65% to upwards of 70%. As services are such a large element within the economy, it is imperative to have them operating a peak operation efficiency. The unique quality of services in general is that they do not need to be price competitive. Other aspects such as commodities, or labor are almost always looking for the low-cost producer. Service providers, however, can mitigate pricing pressure through increase efficiencies, higher value add, and more. Operation efficiency is the most effective method as it allows the company to maintain a standard of service while simultaneously lowering costs. This ultimately improves margins and overall profitability. Operation efficiency is particular important in the service industry as barriers to entry are often lower than other industries. Due primarily to technology, it is relatively easy to start a service with little to no capital. Bloating cost structures for example can invite leaner competitors offering the same service at a much cheaper price. As switching costs are low, consumers often elect to choose the low-cost producer, unless the service provider has a value proposition that is compelling. For example, consumers tend to pay more for high quality tax preparation as they often will get back a higher refund or avoid paying out additional taxes. A low-cost tax preparing that doesn’t provide comparable value cannot properly compete as its value position is not compelling enough relative to peers. This distinction is important when it relates to operation strategy and efficiency (See, 1984).For this topic, I will be reviewing AutoZone, which is an auto parts supplier within the United States, Mexico and Brazil. This company is particularly warranted as it relies heavily on service and operations efficiency to derive its profits. First, the company is auto parts supplier primarily based in the United States. Roughly 6000 of its 6500 stores are located throughout the U.S. Within the U.S. its locations are primarily located in high growth areas such as Texas, Florida, California, and New York. The company primary target market are individuals within the “Do-it-Yourself” category (Keenan, 1996). Here, the company targets individuals who are looking to do minor repairs and maintenance on there vehicles without paying large fees to dealerships. Consumers are therefore looking for easy and accessible solutions that they can quickly and efficiently implement. Task such as changing windshield wipers, charging a battery, changing a battery, changing spark plugs, purchasing oil, are all aspects the company looks to help consumers with. This requires a high degree of operations efficiency due to the sheer volume of cars on the market today.

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According to the company’s latest financial report, the average age of a vehicle on the road today is roughly 11 years (Hill, 2007). This is above the historical average of roughly 8 years. The increase in the age of cars in due to multiple factors such as consumers deferring purchases due to lower incomes from the COVID-19 pandemic, higher quality cars, better maintenance of cars, and less miles driven due to improvements in transportation infrastructure in some states. As such, the company must maintain operations discipline as cars are now much older, thus requiring more repairs, and the variety of the overall cars…

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…example, online channels cannot install a new battery for a consumer. The internet can not install new spark plugs or windshield wipers. These services, although small enhance the quality of service, which ultimately enhances operation efficiency.Time – Time is a critical element as it relates to operation efficiency. As noted the company must invest in just-in-time inventory management systems, while also leveraging the mega-hub strategy listed above. This will ensure that customers have the products they need when they need. If they don’t, the distribution network with the Mega-Hub strategy can deliver the product to the customer within hours.Flexibiliy – The ability to be flexible with consumer demands will be critical. Here, the ability to have mega-hubs and use them as distribution networks will enable the company to be flexibly in delivery products to consumers.3. Analyze both the structure of the competitive priorities and infrastructure of the production process. Develop three new enablers that are aligned with the long-term plan of the selected organization. Evaluate three pros and three cons of the new enablersEnabler 1 – Older Vehicles on the RoadPros - Higher likelihood of repair, higher maintenance costs, higher potential for add-on servicesCons – Higher likelihood of competition, higher demand which requires higher inventory levels, much more sophisticate cars.Enabler 2 – Higher savings rate and discretionary income from consumersPros – Higher ability to pay for services in cash, higher willingness to pay for value added services, lower likelihood of default on AutoZone credit cards or other receivables.Cons – Higher likelihood to purchase competitive products, higher likelihood to purchase a new car, higher likelihood to use discretionary income on products other than the vehicle.Enabler 3 – TechnologyPros – Increase in “Do-it-yourself” mentality, higher likelihood to research AutoZone online, higher chance or purchasing online.Cons – Low switching costs on the part of….....

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