Ace Hardware 2005 Annual Report Download - page 18

2005 ANNUAL REPORT NEW FRONTIERS. NEW OPPORTUNITIES. 17
Throughout the history of the company,
Ace’s retail support network has served
as the backbone to the corporation,
ensuring retailers have the products
they need for their customers.
In 2005, Ace’s Retail Support team
experienced yet another banner year, with
operational efficiencies reaching all-time highs.
Productivity levels at the retail support centers
improved 2.6 percent in 2005 – and more than
20 percent over the last five years.
Driving this strong performance are the
improvements Ace has made to the retail
support network to enable additional expansion
and continue to support retailers with service
levels that lead the industry at nearly
97 percent.
With strong retail growth projected over the
next decade for the northwestern U.S., Ace
broke ground on its newest distribution facility
in Moxee, Wash., which is scheduled to open
in mid-2006. The new 800,000-square-foot
building is located only 10 miles from the
current warehouse, allowing Ace to retain
much of the existing, experienced workforce
and sustain high service levels to retailers
throughout the transition.
Ace’s Colorado Springs, Colo., facility was also
expanded by 250,000 square-feet to support
excellent sales growth in the mountain region
and provide greater efficiency to retail support
operations in the surrounding area.
While growth is important, flexibility and
responsiveness are key when it comes to today’s
supply chain.
The culture at Ace’s distribution centers is
characterized by an atmosphere of constant
tweaks and enhancements that have Ace
operating from a position of strength. Ace
has broadened its scope beyond individual
facilities to scrutinize operations throughout
the entire supply chain. For example, Ace’s
800,000-square-foot Wilton, N.Y., distribution
center increased its retail support capacity
by more than 10 percent in 2005 without a
major capital investment.
To maximize efficiency throughout the Ace
network, Ace created a Supply Chain team in
2005 to develop a strategy that could efficiently
support its dynamic future. After comprehensive
analysis, the team identified new efficiencies
that can drive costs down in
logistics, reduce millions in
inventory and significantly
minimize Ace’s capital
requirements without the
need to expand the current
distribution network into
the foreseeable future.
The new Supply Chain
team is moving Ace toward
a more fluid system where
information and feedback
is exchanged continuously
among retailer, supplier,
vendor and wholesaler.
Over the next five years and
beyond, this synchronization between
merchandising and logistics will ultimately
enable Ace to help retailers get the best
product mix in their stores at the lowest cost
and highest service levels.
Ace supply
chain initiatives will
pay dividends to
the entire
enterprise in both
the short-
and long-term.