William J. Montanez knows a thing or two about the perilsof shipping cargo. As director of risk management for Ace HardwareCorporation of Oak Brook, Ill., he has oversight of theretail-agency operations for the largest retailer-owned hardwarecooperative in the industry.

Montanez credits Ace Hardware's freight-shipping program withavoiding the types of cargo theft problems that other industriesare seeing with identity theft, fictitious pick-ups and otherscams. Part of the solution is maintaining its own transport team,which it augments with outside haulers when needed; the other halfis knowing where its cargo is at all times—at least when it comesto domestic deliveries. 

Ace boasts a private fleet of 400 tractors and some 1,200 dryfreight trailers used to deliver to its 4,400 retail outlets in theU.S., from 14 domestic Retail Support Centers across the country.GPS and other electronic tracking technologies are used to monitorall of those shipments. “We have our own loss-prevention folksinternally who monitor our distribution centers,” says Montanez.“We always know where a truck is.” 

The company's hauling team also boasts a built-in feedbacksystem: “If a retailer doesn't get their product in their orderthey report it back to the distribution center right away,”Montanez says. 

Store deliveries run one to three times a week, depending on thedemand for warehoused products (extra stock is not kept on-site atits stores). The hardware chain claims a 97-percent efficiency ratein getting replacement products to stores to keep the shelvesfilled.  

Much of Ace's loss prevention, he notes, has to do with beingdiligent and following up on meeting those re-stockingneeds:  “We hold our feet to the fire when it comes toshortages. We have some very strict internal controls and checksand balances on incoming and outgoing freight as well.”

Ace keeps some 300 professional commercial drivers on itspayroll, and when an extra hand is required it enlists the aid ofoutside small or independent “carriers” that the company has workedwith previously.

Theft, which he says is essentially a non-issue in the U.S., ismore of a concern when Ace exports product to its internationalretailers. In those cases, its standard policy is to ensure all itsshipments are sealed before they leave the country.

“Because you're placing things into a container that's goingonto a boat, there tends to be a little more 'shrinkage' going toforeign countries,” says Montanez. “We ship to Latin America andthe Mideast and other parts of the world that perhaps aren't ashigh in security as the U.S.”