CarMax: How a Vehicle Flows through the Network
Former Senior Operations Director at CarMax
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CarMax: How a Vehicle Flows through the Network(November 1, 2023)
Former Senior Operations Director at CarMax
The expert is a former CarMax executive with 20 years of experience, with roles across store, regional, and corporate levels. He played a key role in the early stages of CarMax's omnichannel strategy and was instrumental in implementing cost control strategies. He was also involved in testing the company's pictures program and can provide a comprehensive breakdown of the unit flow through the CarMax network.
Interview Transcript
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Could you elaborate on your involvement in the supply chain? Specifically, from the moment a car is purchased at an auction or from a customer, until the time it's sold to another customer or wholesaled at the auction.
Some locations are designated as hubs, while others are satellites. In the CarMax model, satellite locations do not perform any reconditioning. They only sell and provide post-sale service or service to any customer who walks in. They also accept appraisals or trade-ins, which are then transferred to the hubs.
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Could you elaborate on your involvement in the supply chain? Specifically, from the moment a car is purchased at an auction or from a customer, until the time it's sold to another customer or wholesaled at the auction.
There are various steps involved in the transportation process. For instance, major auction houses in the US, like Manheim, will deliver the cars or offer discounted driving services to bring the cars the same day or the next. The main consideration is space. If the cars are being transported from here to Denver, for example, you would need to work with transportation lines. Years ago, CarMax used third-party services for this, but now they handle about 90% of it themselves using CarMax trucks and drivers. This was part of their omnichannel strategy, which is similar to how airlines operate with a hub and spoke system.
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Apart from ensuring the availability of cars in markets where they are more likely to sell, what other factors did CarMax consider when deciding to insource their entire logistics for moving cars from auctions?
There were two main factors we considered. Firstly, we looked at cost, specifically how much we were paying third-party companies to transport our cars. Secondly, we examined the quality of those deliveries.
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