Ace Hardware's 2006 Annual Report - Home Page
Driving Retail Support Performance

Ace supply chain initiatives will pay dividends to the entire enterprise in both the shortand long-term.
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.

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Driving Retail Support Performance