How Tire Distributors Can Grapple with the SKU Explosion

The number of SKUs that your average tire distributor has to deal with has grown exponentially in the last two decades. According to one report in 2019, 80% of the typical tire distributor’s business was taken up by 600+ different SKUs—nearly triple the number from 20 years previously. At the same time, the increasing popularity of larger rim diameter tires means that you can actually fit fewer tires per pallet in your warehouse.

The result of this SKU explosion is a series of added challenges on top of what was already a challenging business. The ability to get the right goods to your customers quickly is paramount to success, but if you actually kept sets of all of the most common SKUs in your warehouse at all times your costs would pile up rapidly. 

At the same time, the more variety there is in what end customers are buying in tires, the more week-to-week change there’s going to be in the orders your customers place. If you’re mostly running static routes, too much order fluctuation can cause challenges and ultimately lead to delivery disruptions. 

So how are tire distributors supposed to navigate these changing conditions and grapple with the exploding number of SKUs they have to handle? The answer starts with finding the right technology for managing delivery operations. 

Prioritizing Visibility in the Tire Distribution Technology Stack

Obviously, one of the biggest impacts that proliferating SKUs can have is on your warehouse footprint. There’s obviously warehouse management technology that can impact how you approach the process of optimizing your storage footprint, but in point of fact it’s a job that your entire tech stack has a hand in helping with. 

When you have more efficient delivery operations, for instance, you can increase the speed with which tires move through your supply chain—resulting in a significantly smaller inventory footprint. To make that happen, you need to make sure you’re deploying technology that’s designed to provide visibility and connectivity across the board. 

What does this look like in practice? For starters, your delivery technology should integrate closely with your ERP. It should be easy to share order and delivery data between systems, and users across functions should be able to find the right information at the right time without having to hunt for it. 

Making this happen is often easier with SaaS solutions that are designed to interoperate easier with other systems. But the important thing here is to be sure that your delivery software can reliably share information with other systems. You don’t want to make decisions constantly worrying that you’re working with incorrect or out-of-date data. 

This focus on connectivity and data visibility ultimately serves a strategic purpose: it helps you speed up processes up and down the supply chain, specifically with regard to delivery. In this way, you can decrease your inventory footprint and make it easier to manage the process of juggling more distinct SKUs than ever.  

How Hybrid Routing Makes You More Flexible

Visibility into your inventory, your orders, and your delivery capacity is paramount to moving tires through your supply chain quickly—but where the rubber really meets the road is in your daily delivery planning and execution. How quickly and easily are you able to turn your weekly route plans into fleshed out daily plans based on the day’s actual orders? How effectively are you able to translate your strategic plans into smooth, efficient on-the-ground deliveries? 

Part of the answer to these questions will come down to your route optimization capabilities. Most tire distributors are running static routes with recurring stops to the same customers every week—which can make it difficult to adapt to the changing orders that define your day-to-day delivery schedule. 

Here, a hybrid route optimization technique that combines weekly planning and daily route execution offers a potential way to grapple with increasing volatility. Here’s what that might look like in broad strokes:

• You develop optimized static weekly route plans that reflect your current customer service goals, i.e. servicing particular customers at particular times and days of the week with the same driver. 
• You codify things like driver affinity, route positions, time windows requests, etc. within your routing and planning system. This includes noting which stops and time windows have flexibility and which absolutely don’t.
• Once the orders for a given day come into view, you leverage dynamic route optimization to flesh out daily routes based on your static plans. Your routing solution should route dynamically around your existing parameters, maintaining the stop orders and time windows you’ve specified. 
• As your customer roster changes or your distribution network evolves, you update your strategic plans to reflect the new market conditions. Here, it can be helpful to run what-if scenarios to test out the cost implications and other impacts of potential changes. 

This puts you in a position to accommodate customer orders efficiently, no matter how much the specific SKUs and volumes change from week to week. It can also make it much easier to handle off-day delivery requests without throwing your entire route into disarray. The trick is to find route optimization that works quickly enough that you can plan, route, and execute at the speed of business. 

Why Optimizing Customer Experience Is Key

If there’s been a running theme here, it’s this: the right technology helps you keep your customers’ needs front and center while still maximizing efficiency. Ultimately, keeping a laser-focus on customer satisfaction is the best way to overcome any number of new challenges, SKU proliferation included. 

For our purposes, that means building a lot of flexibility into your processes. Like we saw above, if you’re able to route daily orders rapidly, then you can accommodate last minute customer requests even when they’re asking for a different product mix than usual. By the same token, if you can handle off day deliveries without breaking a sweat, your customers learn that they can rely on you and they keep bringing you their business. 

Of course, there are other elements to a great delivery experience. The ability to provide customers with accurate delivery schedules and real-time ETAs on the day of delivery go a long way towards boosting confidence on the customer’s part. Likewise, the ability to follow up after deliveries with a receipt that includes proof of delivery (especially since the particular SKUs being delivered could be changing from week to week) also helps streamline the process for both you and your customer. 

This level of customer service is intimately tied up in the kinds of processes we’ve been discussing up to this point. Hybrid routing should give you the ability to consistently deliver on time to your customers and enable you to provide accurate ETAs throughout the process. It also gives you a lot of added flexibility in responding to delivery requests. This obviously has a big impact on customer experience. 

At the end of the day, one of the best ways to grapple with the proliferation of SKUs in the tire industry is to build processes that boost efficiency without sacrificing customer experience. This might sound like it’s easier said than done, but when you have a single solution that covers the entire last mile delivery process from end to end and integrates seamlessly with your ERP and other technology, you can make that a reality.