Home Depot

Posted on August 21, 2012 Network design can play a key role in transforming a supply chain. Dan Gilmore of SupplyChainDigest wrote a nice article on the transformation of The Home Depots supply chain. In the article, Mr. Gilmore reported on the aggressive transformation of The Home Depots supply chain from one where the suppliers mostly delivered directly to the stores to one where product flowed through distribution centers first. The Home Depot had to use network design software to determine the best number and locations of these distribution centers. The article did not mention the transportation savings, but mentioned that the strategy could help free up $1 billion in inventory. The transformation of the supply chain was so important that it was mentioned in the letter to shareholders in the 2009 Annual Report.

Supply Chain Strategy: Home Depot says its Ready for Supply Chain Transformation SCDigest Editorial Staff
In the face of slowing sales growth and a slumping stock price, home improvement retailer Home Depot plans to increase investment in logistics infrastructure by $900 million, with a big focus on inventory management and improved central distribution. The comments came from Home Depot execs at the companys annual meeting for financial analysts. The moves clearly reflect in part the impact of Home Depots VP of Supply Chain Mark Holifield, who came to the post after a similar and well-respected stint at Office Depot. He said that Home Depot would focus on improved inventory management, implement a system that will provide better visibility and control over products delivered to the home, improve visibility of product flow from suppliers all the way to the store shelf, and cut order-to-delivery lead times, and improve inbound distribution. Home Depot said the company is also looking to improve its supply chain technology is in several other areas, including:

Supply chain analytics and decision-support Demand planning and forecasting Store replenishment Financial planning relative to merchandising

Home Depot noted the power of inventory improvements, saying that every one-tenth improvement in inventory turns means drives an additional $200 million in cash flow.

Our History

The Beginning
The Home Depot was founded in 1978 by Bernie Marcus and Arthur Blank. Along with investment banker Ken Langone and merchandising guru Pat Farrah, the founders vision of one stop shopping for the do-it-yourselfer came to fruition when they opened the first two Home Depot stores on June 22, 1979, in Atlanta, Georgia. The first stores, at around 60,000 square feet each, were cavernous warehouses that dwarfed the competition and stocked 25,000 SKUs, much more than the average hardware store at that time. Empty boxes piled high on the shelves gave the illusion of even more product.

From the start, associates were able to offer the best customer service in the industry, guiding customers through projects such as laying tile, changing a fill valve or handling a power tool. Not only did store associates undergo rigorous product knowledge training, but they also began offering clinics so customers could learn how to do it themselves. The Home Depot revolutionized the home improvement industry by bringing the know-how and the tools to the consumer and by saving them money.

According to Bernie and Arthur, the customer has a bill of rights at The Home Depot, and this entitles the customer to the right assortment, quantities and price, along with trained associates on the sales floor who want to take care of customers. Their philosophy of customer service whatever it takes means cultivating a relationship with customers rather than merely completing a transaction. As Bernie says in Built from Scratch, At the end of the day, were in the people business.

A Story of Growth
The Home Depot is the fastest growing retailer in U.S. history. In 1981, the company went public on NASDAQ and moved to the New York Stock Exchange in 1984. The 1980s and 1990s spawned tremendous growth for the company, with 1989 marking the celebration of its 100th store opening. The company arrived in Canada with the acquisition of Aikenheads home improvement centers in 1994, and it began flying its flag proudly in Mexico in 2001 through the acquisition of Total HOME. In 2006, the company extended its reach to China by acquiring The Home Way, a 12 store chain. From the beginning, The Home Depot developed strategic product alliances directly with industry-leading manufacturers to deliver the most exclusive assortments to customers. Through a combination of national brands and proprietary products like Ryobi tools, RIDGID tools, BEHR paint, LG appliances, and Toro and Cub Cadet lawn equipment, the company sets the standard for innovative merchandise for the do-it-yourselfer and the professional contractor.

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The Home Depot Values The Home Depots values guide the beliefs and actions of all associates on a daily basis. Our values are the fabric of the Companys unique culture and are central to our success. In fact, they are our competitive advantage in the marketplace. Associate pride and our orangeblooded entrepreneurial spirit are distinctive hallmarks of our culture.

1. Taking care of our people: The key to our success is treating people well. We do this by encouraging associates to speak up and take risks, by recognizing and rewarding good performance and by leading and developing people so they may grow. 2. Giving back to our communities: An important part of the fabric of The Home Depot is giving our time, talents, energy and resources to worthwhile causes in our communities and society. 3. Doing the right thing: We exercise good judgment by "doing the right thing" instead of just "doing things right." We strive to understand the impact of our decisions, and we accept responsibility for our actions. 4. Excellent customer service: Along with our quality products, service, price and selection, we must go the extra mile to give customers knowledgeable advice about merchandise and to help them use those products to their maximum benefit. 5. Creating shareholder value: The investors who provide the capital necessary to allow our company to grow need and expect a return on their investment. We are committed to providing it. 6. Building strong relationships: Strong relationships are built on trust, honesty and integrity. We listen and respond to the needs of customers, associates, communities and vendors, treating them as partners. 7. Entrepreneurial spirit: The Home Depot associates are encouraged to initiate creative and innovative ways of serving our customers and improving the business and to spread best practices throughout the company. 8. Respect for all people: In order to remain successful, our associates must work in an environment of

mutual respect, free of discrimination and harassment where each associate is regarded as a part of The Home Depot team.

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Stores, Products, and Services For most people, their home is the biggest financial and emotional investment they make. Through a variety of innovative merchandise and services, The Home Depots goal is to help consumers create the home of their dreams whether they want to do it themselves or have it done for them. In addition we offer specialized support and services for professional contractors and tradespeople to ensure they have the right tools and supplies for the job site.

Stores and Products

The Home Depot has more than 2,200 convenient locations throughout the United States (including the territories of Puerto Rico and the Virgin Islands), Canada, China and Mexico. Stores average 105,000 square feet with approximately 23,000 additional square feet of outside garden area.

Our store inventory consists of up to 40,000 different kinds of building materials, home improvement supplies, appliances and lawn and garden products for all of your project needs. Selections may vary from store to store because The Home Depot stores are always stocked with merchandise that is localized to match your area's specific market needs. We even offer a low price guarantee to beat anyone's advertised specials. And if for some reason you can't find it in the stores, we offer 250,000 other products that we can special order for you.

To find a store near you, visit our store locator.

Services
Home Services Instead of doing it themselves, many customers choose to have qualified professionals complete home renovation projects for them. The Home Depot Home Services offers national installation services through pre-screened independent contractors for products ranging from floors to roofs, windows to water heaters, and kitchen cabinets to vinyl siding. Customers can call 1-800HOMEDEPOT to schedule a free in-home consultation or learn more about the services offered.

Home Services

Serving the Pro Customer The Home Depots retail stores offer professional customers, including repair and remodel contractors, special services and support to make them more successful on the job site. Through dedicated contractor services desks in more than 1,900 stores, professional customers have access to loyalty programs, a pro bid room to handle large customer orders with volume discounts, direct ship programs, credit programs and other specialty sales initiatives.