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Published by: Darden Business Publishing
Originally published in: 2003
Version: 7 January 2014
Revision date: 20-Jan-2014

Abstract

In January 2003, AutoZone, the largest automotive aftermarket retailer in the United States, announced that all of its vendors would have to convert to a new 'Pay-on-Scan' (POS) reimbursement program. The program would transfer all existing inventory from AutoZone's balance sheet back to the vendors, who would own their inventory until it was sold to a customer at an AutoZone store. AutoZone's initiative was closely observed by its major competitor, which has signalled its own vendors, including Autocar Accessories Company (AAC), a family-owned supplier of replacement parts, that it intended to copy AutoZone. AAC management must quickly understand the AutoZone POS concept and estimate its potential benefits, costs, and overall effect on AAC.

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Abstract

In January 2003, AutoZone, the largest automotive aftermarket retailer in the United States, announced that all of its vendors would have to convert to a new 'Pay-on-Scan' (POS) reimbursement program. The program would transfer all existing inventory from AutoZone's balance sheet back to the vendors, who would own their inventory until it was sold to a customer at an AutoZone store. AutoZone's initiative was closely observed by its major competitor, which has signalled its own vendors, including Autocar Accessories Company (AAC), a family-owned supplier of replacement parts, that it intended to copy AutoZone. AAC management must quickly understand the AutoZone POS concept and estimate its potential benefits, costs, and overall effect on AAC.

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