Product Overview

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 signaled 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.