Home Depot Warehouse always open

© Ildar Sagdejev, Wikimedia. Retrieved from Wikimedia Commons on February 26, 2016.

If you’re looking to get things done around your home or yard, many turn to the quintessential home improvement store – The Home Depot. The entire essence of their company is helping YOU, the customer, get things done. But they really have a knack for getting things done FOR you as well.

Let’s take a step back.

Supply chain management (SCM) and social media have a rather new connection. As Ranjan Sinha points out in his post on LinkedIn on the subject:

“There was once a time when companies were adding policies that discouraged their employees from using social media while on the job. Over the course of the last few years, this notion has taken a turn for the opposite.”

Of course, we already know this – there are jobs in all sorts of fields these days that completely revolve around social media. Managing a Twitter feed, Instagram account, or blog could be someone’s primary function in his or her employment.

The marriage of SCM and social media is what has changed.

The Home Depot does this really well. Especially considering many companies aren’t even on the same page as them yet. Sinha points out that 57 percent of companies interviewed for a study on SCM did not use social media in their supply chain (though that 57 percent would use it if available) – this of course begs the question…why aren’t they finding a way?

The company’s spending on new kinds of infrastructure – online infrastructure – has increased quite a bit in recent years and it seems as if the spending has been worth it. Supply chain news site joc.com reported on this in 2014:

“Five years after the world’s largest home improvement retailer redesigned its supply chain to speed goods to its stores, the company has launched a major upgrade of its fulfillment processes to support burgeoning e-commerce sales. Online sales increased 50 percent year-over-year in the third and fourth quarters of 2013. In the third quarter, online sales represented 3 percent of Home Depot’s $19.5 billion in sales — about $585 million. If that trend were to hold for a full year, the retailer would have more than $2 billion in online revenue. Home Depot expects double-digit growth online.”

Their online growth since then has been spectacular. Yahoo! Business reports that 30-40 thousand different items are available in-store at Home Depot. But when you log online with them, you can find about 700,000 products. This has boosted sales far beyond the competition – with sales per square footage of store space beyond all major competitors.

Home Depot identified they needed to make changes in 2007 – they knew their SCM was a “disadvantage” for the company, and got the ball rolling to make changes.

So, here in 2016…how are things going for Home Depot?

Josh Bond at Modern Materials Handling writes they’ve improved things in three phases. The first: they “recognized the customer value of online product research and inventory visibility…[they have] restructured its supply chain to integrate the experiences of online and in-store shopping.”

“Restructuring” meant the creation of distribution centres for product replenishment and “direct-to-customer fulfillment” – the second phase. The Direct Fulfillment Centres (DFCs) were the third phase. These help with same-day shipping for orders.

“Think of this supply chain remodelling project in three phases. Phase one involved the creation of centralized replenishment. Phase two saw the build-out of Home Depot’s RDC distribution network for store replenishment. The company’s new DFCs are the third phase, targeted squarely at meeting the e-commerce challenge. The most challenging aspect of the three new facilities was the complete uncertainty of their future activity.”

Home Depot has also created The Warehouse – a sort of internal social media tool. It’s a place for employees to communicate with each other on the inside. It’s used to generate ideas, to make suggestions on how to improve the business, and to create community. This helps create a stronger and clearer supply chain.

Lessons for Others

Large companies are beginning to employ services like The Warehouse more often – but many have a long way to go. Home Depot was out in the wilderness not so long ago, but their proactive approach looking to the future has really set them apart.

If you have concerns as to the accuracy of anything posted on this site, please send your concerns to Peter Carr, Program Director, Social Media for Business Performance.

References