Ace Hardware has results to report for its SAVINGSource initiative, which was launched in early 2015 to leverage its combined purchasing power to cut costs for its members.
In addition to reduced operational costs (an estimated $120 million, according to Ace), members are also enjoying improved contract terms with vendors.
Through SAVINGSource, Ace stores have access to pre-negotiated pricing for products and services within 40 operational categories across five functional areas, including: technology and communication; supplies and replenishment; professional services; facilities services; and, capital projects and construction. Specific examples include insurance, 401(k) administration, computer hardware and software, phones, office products, waste and recycling and HVAC.
“In today’s ever-changing retail environment, Ace’s small business owners face an incredible amount of challenges, including fierce competition and more complexities than ever before,” said Fadi S. Abu Manneh, senior manager of retail procurement. “We are proud that SAVINGSource saves store owners time and money on these fundamental areas of their business so that they can focus their energy and investments on driving their businesses and communities forward.”
Cost-saving opportunities are identified by members of Ace’s corporate Retail Indirect Procurement department, who use data to figure out which Ace stores collectively use the same service or provider. That puts Ace in a better position to negotiate improved rates and service terms.
Purchasing power is then negotiated in a number of ways: via existing corporate spend, via a sourcing event (where Ace works with a Retailer Input Team to contract with providers directly), or via group purchasing organizations (GPOs), who combine the spending power of their multi-billion dollar members. One such example is Ace’s relationship with Corporate United, the nation’s largest GPO. Corporate United has chosen to work exclusively with Ace Hardware in the convenience hardware channel.
“I am extremely impressed with the amazing work Ace has done to identify opportunities across the organization to further take advantage of our co-op’s scale, strength and reputation,” said Kirby Kuklenski, owner of five Ace Hardware stores throughout Denver and Colorado Springs. “Aligning with SAVINGSource has saved us a meaningful amount of money in a short period of time. The savings potential here truly is exponential and speaks to the power and strength of the Ace Hardware cooperative.”
“As a store owner, I wear many hats, sometimes too many. It’s extremely reassuring that my co-op has a dedicated team of corporate professionals reviewing contract terms and negotiating on my behalf. I sleep a little easier knowing our hard-earned profits aren’t being spent on unnecessary expenses,” added Kuklenski.