Ace addresses 2011 strategy, supply chain

Chicago -- During a general session that included sales and marketing strategies for success, Ace Hardware Corp. executives also expressed disappointment in the co-op's wholesale performance during its recent supply-chain conversion.

They also expressed optimism that its systems have stabilized and that the transition will bear fruit in the form of sales and growth.

"For 100 years we were the best in the world, and for the last five months, we struggled," said executive VP John Venhuizen, about the company's phase 4 transition to SAP. The system's Event Planner merchandise tool disappointed users during the transition, but he added that the systems transformation represents a "new V8 under the hood at Ace."

Just a few seconds into his opening remarks, Ace CEO Ray Griffith acknowledged the problem in the company's more-challenging-than-anticipated supply chain transformation: "Ace as a wholesaler has not performed up to your or our expectations, nor our historical high standards," he said.

Reflecting an effort to go back to basics, Griffith spelled out several areas where the co-op will benchmark its wholesale performance.

• Cost of goods compared with wholesale competition: Ace expects to be the lowest, he said.

• Service level: The co-op's service level was 95.9% for 2010; that's below its goal of 96.7%.

• Wholesale inventory turns: The 2011 goal is 4.6.

• Wholesale purchases: "If you're not growing, your dying," Griffith said. In 2010, revenues were up 2.1%. The goal for 2011 is an increase of 3.0%.

• Distribution productivity: Ace expects to be No. 1 in RSC sales per employee, sales per RSC and RSC sales per store, Griffith said.

Regarding sales performance in 2011, Griffith said same store sales at retail in the month of February were up an impressive 5.8% over last year. Transactions increased an "equally impressive" 3.6%, he said. 

"We have not seen that kind of increase in over 47 months -- not since Feb. 2007," Griffith added.