ATD is America's largest tire distributor. What is the current size of your footprint?
Indeed, we are the largest replacement tire distributor in the U.S. which makes us the largest also in the world, given the number of tires that are replaced across the country every year - about 250 million. It is a very sizable economic market. We have 120 facilities across the U.S. (all major markets are covered), and as you can imagine there are a lot of places where tires are installed: car dealers, club stores, corporate retailers, independent dealers, etc. - we serve them all, in total a portfolio of over 90,000 customers. The car parc nowadays is so significant and diversified that our role has become central.
You recently opened a new distribution center in Salt Lake City, Utah. What motivated this expansion?
Salt Lake City is one of the fastest growing markets in the country - there are others as well, and you will see us continuing to invest in bigger facilities. We also expanded our facility in Louisville, Kentucky earlier this year. Here’s why: 45 years ago, dealers needed 12 tires on hand to meet customer demand, whereas now they need thousands due to new brands, new sizes, new applications - and we have to stock all of them.
The complexity in the supply chain has also grown exponentially in the past years as a result of new technology, ACES and evolving consumer behaviors and expectations.
Another important thing to note is the U.S. car parc is aging. Additionally, the length of time a tire survives in the electric market is a lot less than with internal combustion engines (the instantaneous torque and the weight of the batteries causes the tire to burn the rubber off faster, almost like a race car). For both of these reasons, the car parc is going through those tires much quicker, putting even more pressure on us to get the supply chain running in order. Having a digital supply chain becomes even more crucial.
You have also set forth a complex recycling program. How does it work more specifically, and what is the impact you expect it to have?
Based on research, we identified two possible ways to reduce the carbon footprint: by consolidating distribution and logistics, and by better handling used tires. At the moment, used tires are burnt for fuel, used in playground materials or buried in landfills; there is a real opportunity to create a more sustainable ecosystem, as well as create new end of life reuse for that product.
By employing a circular system, we are dropping off new tires and picking up used ones in one transaction, thus eliminating an incremental truck that would collect them separately. Furthermore, by making sure that they go to the appropriate recycling plant, the components can be used for secondary purposes (carbonate, for example, can be converted into roads).
Speaking of technology, AI has recently been the talk of the town. Did it find an application in your field?
We endeavored about five years ago to go on a journey of digitization, to understand where product exists and how we can get it into the marketplace in the most efficient manner, to drive out cost and redundancy. This is something new in our space and we see it as a core competitive advantage for us.
When we think about our demand signals coming from markets and where products can be positioned, there are a lot of elements that have an influence: the demographics of the market, the time of the year, the part of the country you are in etc. Using AI makes it possible to be a lot more predictive in the demand cycle - getting the right product in the right spot - so that we can always fulfill it. It is good for the consumer, and it is good for us also because then we do not have to do reruns, less carbon is involved and also less cost. Using an overlay of AI technology on top of our own standard forecast and inventory visibility will make us that much more efficient.
What ambitions are you pursuing with priority in the coming 2-3 years?
One of the most exciting things about what is happening now in the automotive sector is the rate of change. This is almost the same revolution in transportation mobility that happened at the turn of the century, going from horses and buggies into the world we know today. As a company we find it stimulating to try and solve the needs of our partners, wherever they happen to sit within the ecosystem.
We strive to be the industry’s most connected and insightful automotive solutions provider, going beyond tire distribution. In other words, we aspire to play a much more complex role in the automotive aftermarket - we think supply chains converge over time to drive out carbon, logistics and operating inefficiencies, and we are in a position to provide the necessary tools for that. We are creating an ecosystem for the automotive aftermarket to do just that. Our retail customers, manufacturers, and partners will reap benefits from our marketplace where they can easily access wholesale distribution, logistics as a service solutions and digital tools to help them more seamlessly serve their consumers – keeping North America’s drivers on the road.
A good example is our collaboration with Halfords, through which we brought to the U.S. the most advanced mobile tire installation platform in the world - people should have the choice to solve their issues at home or at their office, wherever they happen to be. With this investment we have done exactly that, a digital, mobile version of a tire store going out into the marketplace, that can serve internal combustion engines and EVs alike. We offer this mobile installation technology connected to our customer’s e-commerce capabilities to help them serve this evolving consumer need.
It's about choice for the consumer and the retailer. It's about helping them become efficient and actually using technology and digital to lead the forefront to the future, which we see unfolding in front of us.
It's elements like that, and then suites of tools around that from a platform perspective that we think that our retailers need to become very efficient to deal with a changing marketplace. I would say it's our purpose to help them thrive and drive into the future coupled with our vision to be connected automotive solutions. That is really what drives us every day.
