Home Depot Supply Chain Management

Supply chain has never been star sign stores key strategic priorities in the past. Instead, the Atlanta-based home improvements wariness had always been focusing on expanding its retentivenesss. At the time, the companys accent mark on expansion was appropriate considering the history of massive growth. What origin whollyy helped star sign Depots growth was a decentralized business toughie where stores were populated with highly knowledgeable sales persons with backgrounds in various grammatical construction trades.Regional and store-level managers, those closest to the customer, were empowered with decisions of merchandising and inventory mix kinda of the people at the head quarters. IT also played a operative role. groundwork Depot relied heavily on home grown strategys. By building its own applications, it didnt get bogged crush in customizing off-the-shelf software system and didnt invest time and money in endless enterprise immense implementations.In addition, a standard database design and an application architecture that reused software components allowed the IT staff to develop applications, such as the companys mobile ordering system (a cart equipped with a computer and printer that clerks could wheel nearly the store to reorder products and change prices). Average store revenues in primeval geographical markets were roughly $60-$80 million, which could justify high levels of de-centralization. The direct-to-store model make sense to Home Depot in the past because of its high sales in each store.With network expansion and competition, per store sales dropped and a decentralized ordering model caused high inventory problems for Home Depot. The legal age of supplier institutionalizements flowed directly to the stores and resulted in the Home Depot being the angiotensin-converting enzyme largest less-than-truckload shipper in the United States, since just about 80% of goods were flowing direct to store on half-empty trucks, which wa s inefficient, lead to poor inventory turns, poor in-stock and high logistics cost.Meanwhile, intimately retailers, such as rival Lowes and discount powerhouse Wal-Mart, ship to distribution centers that can serve up to 100 stores. There, they break down larger shipments into smaller ones that are parceled out to stores. Home Depots individual stores were their own stocking centers and store associates had to spend more time in unloading trucks than serving customers. The business model became compromised as to who had the most stores in the most locations vs. superior customer service.After 30 years in business and taking pride in towering shelves of in-stock items Home Depot is taking the largest initiatives to move to a more traditional supply chain. In 2006, Home Depot hired Mark Holifield, formerly with Office Depot, as senior vice president of supply chain to modernize the companys supple chain. Part of this new initiative is to get the forklifts out of stores and reduce t he get along of inventory piled up in stores. The move to centralized ordering government agency suppliers now have just one order to process sort of of a hundred POs from individual stores.In addition, suppliers now ship their products in truckload quantities to the RDCs instead of sending LTL shipments to individual stores. The combined savings have enabled Home Depot to negotiate better prices with its vendors, which further reduced overall costs. Although all of these changes have helped streamline its supply chain operations, Holifield emphasizes that the overarching goal is to make Home Depot a better place to shop. The whole network is about is providing on-time and accurate service to individual stores so that they can focus on the customers.