ACE Hardware Reduces Inventory by Increasing Lead Time Dependability

Business Process and Problem Definition: Ace wanted to reduce inventory levels at its DCs, but at the same time needed to maintain a low level of out-of-stock instances for its stores. Ace knew that improving inventory turns and reducing cycle time would require reducing the lead time on items inbound to the DCs.

Because ACE experienced low lead time dependability from suppliers, the ERP system used the longest item lead time when placing orders with suppliers and accumulated excessive safety stock as a result. Ace wanted fixed order-ship time commitments from its suppliers and also timely and accurate ready-to-ship data (for command and control and for visibility).

Internal operations added to the problem -- the DCs had no visibility to the Buyer “want” date, so receiving appointments were not connected to the required dates and goods often arrived well after the Buyers needed them. The DCs needed to implement timely and accurate appointment scheduling for all loads, and to receive faster. The appointment scheduling needed to align with the Buyer’s want date and with an overall order-ship cycle compression.

Lack of visibility into performance prevented Ace’s Inventory Control department from monitoring suppliers’ commitments and schedules and following-up on problematic shipments. Lack of Business Intelligence prevented Ace from identifying the source of the problem (i.e., supplier, carrier) for each instance of a late delivery.

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