Advance Auto Parts will close its San Antonio distribution center by the end of 2018, the company announced.
The move is part of Advance’s broader plan to overhaul its supply chain, CEO Thomas Greco said during the company’s second-quarter earnings call.
“ … We continue to execute on strategic initiatives to streamline our end-to-end supply chain,” Greco said during the call. “We’re confident we’ll achieve long-term cost reductions and efficiency, and have deployed a detailed plan to optimize our distribution network.”
Earlier this year, Advance said it would close its distribution center in Gallman, Mississippi. That process is underway, and the company expects to close the Gallman facility by the end of the year.
“As with Gallman, we’re committed to providing our impacted San Antonio team members with assistance during this transition,” Greco added.
When asked if there are more DC closures on the horizon, Greco said the company is in the latter stages of the consolidation process. But as the company looks at its network of DCs, Advance has concluded, “We do not need 54 distribution centers,” he said.
“You have to do it in a way that is not disruptive,” Greco said. “ … We’re not going to flip a switch on this. It is a gradual migration.”
The Gallman DC serves several hundred stores. Advance has been shifting that distribution to its DCs in Nashville and Houston, according to Greco. At one point during the shift, Advance had to tap the brakes on the migration, as replenishment rates were falling behind last year’s rates, Greco noted. Overall, though, he said the Gallman and San Antonio closures “have been executed flawlessly by our supply chain team.”
Greco added: “We really like the outcomes that we’re seeing so far.”
Advance, which reported strong second-quarter financial results, also closed 20 stores during the quarter.