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Thu 5 Mar 2009 04:00 AM

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Tools of the trade

With a solid network of logistics partners in the Middle East, Ace Hardware's Gillian Lewis explains why a ‘DIY' approach to supply chain management isn't always essential.

With a solid network of logistics partners in the Middle East, Ace Hardware's Gillian Lewis explains why a ‘DIY' approach to supply chain management isn't always essential.

A daily delivery of fresh flowers followed by a truck load of dog food may seem like an unusual combination. But for Ace Hardware, distributing a vast range of different commodities to its large customer base has become the norm.

Established in the region in 1991, the Ace brand, which was launched under the Al-Futtaim Group, has expanded from one store to five.

Most of our bulk items come from factories in the Far East.

"We have a small store in Dubai's Green Community, medium sized stores in Abu Dhabi, Sharjah and Sheikh Zayed Road, and our ‘Big Box' store with over 100,000 sq ft of selling space in Dubai Festival City," says Gillian Lewis, Ace Hardware's regional logistics manager.

The stock, which includes more than 30,000 items from six main categories, can arrive from any part of the world, though the majority is imported from the Far East. "Most of our bulk items, furniture and BBQs come direct from the factory in the Far East, either in China, Vietnam, Taiwan, or Thailand.

Ace has a buying office in Shanghai and a warehouse that stocks over 1500 Ace brand items," explains Lewis. Meanwhile, the company also sources products from the US and Europe. "Ace has its own consolidation centre for international vendors such as us in Los Angeles.

Here orders arrive for our store and when there is enough volume to fill a 40ft container, they send it our way." As a cooperative company, orders can be placed in Ace Hardware's international divisions, as well as retail support centres. "The company's head office is in Chicago though," says Lewis.

"They provide support to all the stores through buying, merchandising, supply chain and pricing strategy. This was the original store and provided customers with lawn and garden tools, heating and cooling equipment and home appliances."

Imported stock is brought into Jebel Ali Free Zone and stored in a specially designated warehouse for safekeeping. "GAC Logistics manages our clearance, storage and export," says Lewis. "Our warehouse volume expands and contracts depending on the time of year.

We provide GAC a forecast so that they can plan the space required. We order stock locally as well, and this is delivered directly to each of our stores." Transportation of goods is managed by Aramex, which provides vehicles for both store and private customer deliveries.

Warehouse delivery speed depends largely on the importing vendor and where they are based. "It's important for us to get consistency in lead times as this is built into the order calculation," points out Lewis.

"The less consistent our lead time, the more stock cover we have to build into the calculation, which means we will hold more stock for that item, and that costs us money."

Although much of Ace Hardware's stock includes dried pet food and home decorating equipment, the company also imports live plants, which need to be carefully and quickly delivered. "We order all our plants locally from a number of different suppliers.

We have horticulturalists in our stores who look after the plants, and can provide assistance to the customers," explains Lewis. "Depending on the supplier we either return dead/poor quality plants or we have an allowance for wastage."

But it's not only live produce which is ‘quality controlled.' All goods are carefully checked by GAC and any damages are photographed and the products returned to the vendor.

"If a product has not been stacked or loaded correctly we claim from the vendor. We have found that financial penalties is the only language vendors understand, and because of this, the quality of the stock handling has improved," adds Lewis.

Pallets are shrink wrapped to prevent movement during transportation, thus reducing the risk of damage. "GAC Logistics also has a strapping machine for cargo like furniture and timber that cannot be shrink wrapped, to hold it in place during transportation to the store."But it's not always plain sailing for the company, with Lewis citing road congestion as a logistical nightmare. "Our biggest challenge is getting stock to retail outlets in a timely manner," she explains.

"Due to traffic in Dubai we have worked in partnership with GAC to ensure deliveries are sent early in the morning and trucks are loaded in a manner that allows ease of unloading at the actual store." Consequently, lorries can complete deliveries quickly and avoid traffic later in the day.

At the largest flagship store in Festival City the company employs ‘curtain sided trucks' with load retaining straps to allow a full delivery unload in 20 minutes.

We face competition from other retailers in every section of business.

"The straps, when released, allow the curtain to be pulled back and a forklift to be used for easy loading and unloading. It allows us to make several trips in one day." explains Lewis.

According to the company's management, planning is the key to successful import and delivery. "We need to ensure that we plan our intakes from import vendors to ensure that we flow stock into the warehouse in a seamless way," she says.

And without adequate organisation, delays can cause major problems. "If we do not plan, then a number of containers can turn up at the same time, and it takes time to clear the container and receive it onto our system, ultimately resulting in an out of stock situation in our stores and unhappy customers."

At present, in an unstable financial climate, controlling expense is also a real challenge. "We need to ensure we are saving every fil we can and not spending unless it's necessary. Intake planning will also help us to keep demurrage and port storage charges to a minimum."

In addition the company has recently launched an Ace value range to stimulate business and compete with its rivals. "I cannot think of any other retailer within the UAE that can compete with all our departments; outdoor lifestyle; house and home; painting and decorating; DIY; gardening and pet care.

However we face competition from other retailers in every section of our business," explains Lewis. And as the financial crisis continues to grip the Middle East, no company can afford to become complacent.

"As well as always having an item in stock, we must be price competitive in order to drive our value message."

As Dubai continues to grow despite global recession, Ace Hardware must keep improving its supply chain in line with demand. "We need to meet the increasing demands we've experienced in recent years," says Lewis.

"As part of this development process we work in close partnership with 3PLs to establish Key Performance Indicators (KPIs) and service levels, in addition to monitoring them at all times."

In terms of technology, plans to introduce the SAP warehouse management system into the business are well underway, which should mean time and cost savings are imminent.

Currently the company operates with a SAP material management module which controls the movement of goods. By introducing the SAP warehouse management module, used by the Al-Futtaim Group, the technology process will be simplified.

"We are cooperating with GAC to implement the system. At the moment they use a different technology but changing everything to SAP will make things easier. We'll be operating with one type of system instead of two."

Ace Hardware fact file• Ace stocks over 30,000 items from six main categories.

• The company is supported by GAC Logistics and Aramex.

• The first Ace Hardware shop in the US was launched in Chicago in the 1920s.

• The company was established in the Middle East in 1991 and now has five stores across the UAE.

• Ace operates in 60 other countries worldwide and has more than 900 stores in total.

• The retailer plans to expand its operations in the Middle East, inside and outside the UAE.

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