A project for Ace International, Panama

This is a project to accompany the course and the book Warehouse & Distribution Science, at the Georgia Institute of Technology, by John J. BARTHOLDI, III and Steven T. HACKMAN. Everyone is welcome to use the book and materials for educational purposes, as long as all copyrights remain intact.

The company

Co-owner David Cohen writes:

“First let me say that our family business is only 20 years old. We started out wholesaling and in 1990 we started our retail part of the business. Up to that point warehousing was not an issue. We just had enough space in a large warehouse with some racking and just picked, packed and shipped orders. After a few years we started incorporating pick locations and some other basic principles for warehousing.”

“Today the scenario is very different. We have 8 retail stores in Panama and a wholesale business in Panama and in other 20 countries in Latin America and in the Caribbean.”

“We expect to continue growing volume at 10-15 percent per year (but we do not expect to significantly increase the number of skus that we distribute).”

The warehouse

“In the last 2 or 3 years our warehouses have just been more congested. Up to now we had no growth strategy. We have a 90,000 square feet warehouse with back-to-back racking 16 feet high, 42 inches deep. Two years ago we started renting approximately 50,000 square feet of additional warehouse space to try to manage our inventory. Still, today, more than 50 percent of our aisles are full of merchandise that does not fit in the racks and this interferes with operations. It is obvious that our sales and purchases have grown at a higher rate than our space or storage capabilities. We underestimated the importance of space.”

“The warehouse that we are building, and because of space constraints in the Colon Free Zone itself, is in two levels. The floor is approximately. 115,000 square feet (22 ft high) and the second level is 130,000 square feet (15 ft high). This second level has a weight constraint of 600 Kgs/square meter. ... We are just building the box and we are not sure what to put inside or which is the best way to design it.”

“We have approximately 25,000 active skus and because we are in the Home and Hardware Business we have all kinds of products: Light, heavy, with big and small volumes, steel tools, nuts and bolts and pillows, comforters and coolers; bulbs and furniture too. Our stores do not have warehouses, only receiving areas so we ship their orders on a daily basis. This is the website of our stores in Panama: www.doitcenter.com.pa.”

“Today around 60 percent of our orders are directed to our stores and the other 40 percent for export. However that is not the trend for dollar sales.”

Take a tour

You can see a retail store and tour the current, too-small warehouse here.

Here is a copy of the talk given by Pete Viehweg about Ace on 09 February 2006.

The challenge

“I am very interested in putting some science in our warehousing and improve our effectiveness and service levels. We do have bar code and order picking by locations but not all of our products have a location at the floor level, so it is very difficult to pick some products without using a forklift or a ladder.”

“We will be moving to a brand new warehouse, so we need to consider what kind of racking we should use or in how many zones should we organize the new space.”

“I would think that you will analyze all the data, generate a hit map for all the products, and from there recommend a new home location in the new warehouse layout for each item.”

“But how should we arrange the flow? Should there be a full-case picking area and a less-than-full-case area? Considering my new warehouse is 143 meters deep and aprox 80 meters wide, should such areas be in the front and in the back? Or should they be on the left and on the right? Or should there be more than 2, 3 or 4 sections, besides staging?”

“If there are to be separate full-case and less-than-full-case picking areas, should a replenishment system be in place to re-stock the less-than-case area?”


The company data is copyrighted and proprietary. You may use it for the purposes of this course only. If you would like to use it for something else, please contact me to discuss.