Best Buy

Virtual Distribution Program

How National Parts
Automated Best Buy’s
Parts Procurement

The Problem: To acquire repair parts across more than 6 million SKUs for their “carry-in” repair facilities, Best Buy had worked with countless separate vendors - faxing, phoning and manually keying orders. The process was time consuming and not as reliable as needed. It was time for Best Buy to centralize and automate their supply chain.

The Solution: In 2000, third party logistics provider National Parts, a Fidelitone Logistics-affiliated company and Best Buy vendor, presented a technology-based virtual distribution system with centralized order processing and data management based on Best Buy’s business rules. This automated, non-traditional approach would consolidate and centralize Best Buy’s repair parts supply chain functions for carry-in repair facilities while allowing the execution of parts distribution to remain flexible and decentralized. Best Buy embraced this concept, and the two companies collaborated to interface National Parts’ technology with Best Buy’s systems.

“Acquiring the massive number and variety of repair parts required for Best Buy's repairs is a major challenge,” said Dave Telschow, Best Buy Director of Repair Service. “National Parts offered us an innovative partnership that allows us to maintain much needed flexibility in procuring and distribution while keeping costs down and maximizing timeliness and accuracy.”

Using National Parts’ proprietary systems and processes, all communication takes place automatically through FTP. Throughout each day Best Buy transmits a list of parts needed. National Parts’ system transmits the list - essentially a parts ‘RFP’ - to more than 42 vendors. These suppliers respond to the request with price, availability and location of the part.

Based on business rules established with Best Buy, the system automatically chooses a supplier based on the best combination of price and delivery speed. A purchase order is created and transmitted to the supplier. The supplier then ships the same day directly to Best Buy’s repair facility. From order to invoice, the entire process can take just minutes and thousands of transactions occur each day.

“Our expectation is to have repair parts shipped the same day,” said Telschow. “Using this process, we are able to make more parts available faster than ever before, thus providing superior service to our customers.”

Conclusion: The results of the automation have been a resounding success. Best Buy’s parts supply chain for its carry-in facilities is more cost effective and seamless, saving the company millions of dollars in parts each year. With an automated system that runs 24 hours a day, seven days a week, procurement and distribution options are never limited by time or location, and same day shipping is now a standard, rather than a goal.

Based on its success with carry-in repair facilities, Best Buy recently decided to expand the automated parts procurement process to its “in-home” repair requirements. National Parts and Best Buy are currently conducting a nation wide roll out of “in-home” to capitalize on many of the same efficiencies as the carry-in facilities.

About National Parts: A Fidelitone Logistics affiliated company that provides supply-chain management solutions, technology based order management and reverse logistics services to Best Buy's consumer electronics, appliance and PC repair parts.

About Best Buy Co., Inc.: Best Buy Co., Inc. (NYSE:BBY) is an innovative Fortune 100 growth company that continually strives to create superior customer experiences. Through more than 940 retail stores across the United States and in Canada, our employees connect customers with technology and entertainment products and services that make life easier and more fun. We sell consumer electronics, home-office products, entertainment software, appliances and related services. A Minneapolis-based company, our operations include: Best Buy (BestBuy.com and BestBuyCanada.ca), Future Shop (FutureShop.ca), Geek Squad (GeekSquad.com and GeekSquad.ca) and Magnolia Audio Video (Magnoliaav.com). We support our communities through employee volunteerism and grants from The Best Buy Children's Foundation.