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Introduction
Home Depot, Inc. is the largest improvement retailer chain in North America and was founded in 1978 in Atlanta. Compared to other traditional retail stores that carry other items in addition to their primary product offering, Home Depot stores specialize only in home improvement products (Hughes, 2022). It operates about 2312 stores across the United States, Mexico, and Canada with over 500, 000 employees (Home Depot, 2021a). This Depot store averages about 104,000 square feet of enclosed space, with approximately 24,000 extra square feet of exterior garden space. Further, the company has a network of distribution, fulfillment centers, and e-commerce websites in the U.S., Canada, and Mexico. Among its services to customers are a wide assortment of building materials, home improvement products, lawn and garden products, and décor products (Home Depot, 2021a). Additionally, Home Depot facilities maintenance, repair, and operations products, as well as home improvement installation services and equipment rental. By the end of the fiscal year 2021, the business operated 2,317 stores within the United States (including Puerto Rico and Virgin Island), Canada, and Mexico.
Its business strategy incorporates the large-scale acquisition of clients using saturation promotion and low pricing. Operating big-box stores enables the company to stock an array of home improvement products and offer value-for-money prices on commodities that no other retailer sells (Hughes, 2022). Further, it runs a business model that maximizes the number of clients who visit its stores by focusing on a volume other than market share. This entails offering discounts, free delivery of heavy-duty appliances, and selling quality items at affordable prices. The model is anchored on centralized purchasing practices that push down costs, increases efficiency in management, and improves supplier relationship and an excellent distribution system that has boosted consumer loyalty (Hughes, 2022). In market development, Home Depot has developed a solid footprint in the online channels that have allowed it to expand its potential customer base.
Logistics
Geographical diversification in the U.S., Mexico, and Canada gives Home Depot much-needed protection from regional economic downturns. Further, it boasts of a world-class logistics system with excellent supply chain management processes (Hughes, 2022). Additionally, its experience and expertise pool in the logistics network allow the company to limit the risks associated with the operational distributions, thus creating greater flexibility. In 2017 Home Depot invested $1.2 billion and constructed 150 logistics facilities in the United States within a period of three years. Today, about four years after the investment, the company has been serving customers seamlessly, irrespective of whether they shop in stores or online.
It has fostered a culture of innovation within its logistics system that encourages experimentation and collaboration with Freight Technology startups and new methods of partnering with carriers. Further, it has a logistic strategy that self-reinforce reliance on drop trailers. To reduce loading and unloading time which eliminates delays and makes carriers happy, Home Depot uses drop trailers extensively throughout its network (Paul, 2021). This necessity carries getting in and out faster without waiting for live loads and unloads. Currently, the logistical strategy is incredibly visionary as Home Depot managed to realize 80% digital sales growth and a 60% increase in orders fulfilled at the stores (Paul, 2021). Its comparable U.S. sales were up by over 24.6% between 2019 and 2021, the period which had the most challenging business environment that retailers have faced in the 21st century.
Logistics Partnerships
Fostering partnerships as a strategy facilitated cooperation with companies like Convoy, and it assisted carriers in dealing with difficult-to-handle freight and ended up playing a key role in keeping The Home Depots network fluid. This has allowed the company to continue performing at its best-in-class ability levels and on-time performance because Convoys capacity model is sustainable through the volatility of the trucking service (Paul, 2021). Further, Convoy has an innovative solution called Convoy Go with a gray pool through the program. The mechanism allows the freight to offer drop-trailer solutions by committing their trailers (Paul, 2021). Additionally, Convoys universal trailer pool model gives Home Depot the best service of drop-and-hook shippers that help the company to keep its supply chain fluid and make drivers move in an efficient manner.
Home Depot has another partnership with TAGG Logistics, which fulfills and distributes products to all the improvement stores it operates in many countries. This collaboration entails designing a distribution system that meets EDI standards, including product documentation and labeling (Home Depot, 2022b). In addition, there is a routing guide that uses procedures that allows all shipping requirements such as pallet configurations, advanced shipping notifications (ASNs), and delivery appointments, are met.
Criteria for Selecting Transportation Partner
Companies lay more emphasis on the cost and go for the lowest bid when selecting their transportation partners. However, Home Depot puts weight on the performance of logistics providers and therefore balances both the cost and effectiveness of the services (Kroll, 2020). Likewise, it operates a lean supply chain model that allows it to get the commodities where they should be taken and on time. This gives it an advantage over its competitors in terms of precision, efficiency, transparency, accountability, and timely transportation of products.
Supply Chain
In 2017, it invested $1.2 billion in its supply chain which expanded its distribution network to about 150 new facilities in the United States. This boosted the proportion of clients it is currently serving and helped it meet the ever-changing requirements of all kinds of customers. The efforts are increasingly showing positive effects going by the increase in sales second quarter of 2020, which improved by 24% compared to 2019 (Kroll, 2020). Further, Home Depot has four types of distribution centers that support the needs of its clients.
Distribution Centers
Firstly, there 35 flatbed delivery stations in all major markets across the United States, with capacities ranging from 300,000 to 800,000 square feet. These flatbed centers have the ability to handle all the building materials because they have lanes in the middle of the facility that allows the drivers to pull the flatbed trucks in. Additionally, flatbeds are built on rail lines to enable them to handle both truck and rail products such as lumber and drywall. Flatbeds are useful for professional customers, including contractors and traders and their facilities are driving share opportunities areas such as lumber and building material-type categories, and big and bulky things (Cox, 20221). Secondly, the retailer has market delivery centres with 5 to 7 cross-docks meant to handle products such as appliances, doors, windows, and other bulky items (Kroll, 2020). There are 20 top market stations that Home depot uses to implement a hub-and-spoke delivery model. These newest additional portfolios are supportive of its core business (Cox, 2021). In addition, market delivery centers creates an opportunity for Home Depot to accelerate growth in maintenance, repair and operations (MRO) by focusing distribution of products.
Thirdly, it has 7 direct fulfillment centers with a capacity of between 750,000 to 1.6 million square feet and uses mechanization and automation to turn around parcel orders faster. It portrays Home Depot as a dominant leader in the industry who is not willing to be complacent is continuously investing in improving its services and expanding its territories (Cox, 2021). Currently, Home Depot boasts as the only retailer that sell goods that are heavier and bulkier that its competitors.
On the other hand, the company has invested in its online stores through interconnected retail such that more traffic in its physical stores leads to more activities online and vice versa. Evidently, this investment saw its digital sales rise by 100% in the second quarter of 2020 with over 50% of buyers picking their orders in stores (Kroll, 2020). Further, Home Depots supply chain strategy is pivoted on customer experiences. It plans with the clients in mind by reviewing the existing data about the customers with the view to improving their encounters. Home Depot constantly looks into end-to-end clients exploits to ensure that they get the best ordeal and when it discovers exceptions or weaknesses, the company fixes them as quickly as possible (Kroll, 2020). Essentially, this process has enabled Home Depot to offer faster and more reliable deliveries across all channels and for all products. In addition, the strategy has boosted the customers enthusiasm and improved their satisfaction with the companys delivery service.
Decentralization of Distribution Facilities
In the United States, Home Depot operates more than 60 distribution centers across the country. Of that, 27 are bulk locations supplying lumber and building supplies, 12 are stocking distribution centers (import products) and 18 are Rapid Deployment Centers (RDCs) (Home Depot, n.d.). Within the RDCs, vendor freight delivers to Home Depots mechanized cross-dock buildings, and products are then swiftly delivered straight to stores and placed directly on store shelves. Further, its stores normally receive daily deliveries from the RDCs, and this has enabled the company to cut the amount of inventory each retail location must keep (Home Depot, n.d.). To move products to over 2,000 locations in the United States, it has a contract with a fleet of carriers for three years in each of its distribution centers.
Home Depot has built distribution facilities in major markets such as Dallas, Baltimore, and Miami. Further, it intends to continue building more centers through an investment worth $1.2 billion over a period of five years (Holman, 2021). The drive behind this massive venture is the push to keep its contractors happy as well as attract more clients. In addition, the decentralized facilities have funneling the direct-to-contractor business that simplifies its store operations (Holman, 2021). This mechanism has increasingly seen Home Depots stores used up as fulfillment centers at the same time. For example, in Georgia, most orders move in and out on flatbed trucks, with merchandise going to stores or job sites as long as 200 miles (Holman, 2021). Additionally, the Georgia distribution facility is located on a railway line to enable it to carry 4 times what an ordinary flatbed can manage. This has cut time wasted in stores and helped increase the inventory, reduce pressure on employees, and ensured that all parts of the order are delivered on the same day.
Rating Carriers
Rebidding all of the national carrier agreements every year needs an excellent understanding of how each transportation partner and the network are performing. Home Depot has developed the Carrier Rack and Stack system. This is a scorecard that rates the efficiency of all the 80 carriers in the network. Once the rating is done, the results are shared with all the carriers on a weekly basis. It is done on a weekly, 4-week, and 12-week basis and used to compare all other transportation providers in the network (Home Depot, n.d.). The rating mechanism has accelerated the competitive nature of all the carriers, transport, and trucking companies that Home Depot contract for its services and thereby enhancing the effectiveness of the service. Further, the scorecards assist the company in determining the true cost of its contracted rates. In the end, the process helps Home Depot to reward its carriers based on a combination of performances, rates, and how best they reduce carbon emissions to the environment.
Inspiring Loyalty through Competitive Bidding
Home Depot has instated yearly bidding in a competitive environment which has kept its top-performing core carriers remain locked in. Today, its top 10 transport partners are still making up the largest part of its total shipping volume and the loyalty is mutual between Home Depot and its trusted core carriers. This open process has ensured limited turnover while creating opportunities for several small trucking companies in the long run. For instance, in the last five years, it has added between 25 and 30 new players to its network while removing just less than 15 that underperformed (Home Depot, n.d.). Further, it is evident that the big national carriers still take the bulk of Home Depots shipments. The bidding procedure has created new partnerships with most regional trucking companies that have between 200 and 700 truck fleet range, thereby proving cost-effective with above-average performance. Currently, loyalty has made Home Depot the shipper of choice by carriers and drivers.
Supply Chain Technology
Home Depot, together with Georgia Techs Advanced Technology Development Center (ATDC) is implementing a new supply chain and logistics startups. The program mentors participants and give them guidance and expertise to enhance their growth (Rodriguez, 2022). Further, it introduces a new vertical within the system that contributes forward-thinking, innovative ideas to the ever-evolving supply chain and logistics industry. Companies participating in the initiative work closely with Home Depot and Georgia Tech as they build, test, and take to market their new services (Rodriguez, 2022). With more than 140 technology firms based in Georgia, it makes collaboration easier under a unique framework that combines coaching, connections, community, and direct access to Tech resources.
E-Commerce
In response to the changing retail environment where online and physical stores work and complement each other, Home Depot has built its interconnection capacity. It has made great strides by creating its digital niche to boost the encounter of its clients (Bonde, et al, 2019). Currently, it is implementing a new electronic commerce platform that has increased its mobile functionalities, speedy searches, and improved customers engagements through chats. This has improved clients satisfaction levels, enhanced better communication, and increased its sales (The Home Depot, 2018c). For example, digital sales grew by about 20% in 2018 because of improved online traffic (Zacks, 2018). Gives a clear indication that the companys strategy of interconnected retail services is excellent for customers.
In 2017, Home Depot launched a process called Home Depot with $11 billion investment to increase its presence in the interconnected shopping experience. The aim was to allow its clients to seamlessly blend the digital and physical worlds. However, it recognized that both online and offline retail services are tied and, thus, the connectivity. For example, in 2019, more than 50% of its digital orders were picked up at the stores. So far, the interconnection is working as evidenced by the fact that in the last quarter of 2019, e-commerce sales grew by 20% and at the same time, store sales went by 5.2% ((Venkatraman, 2022). Today, Home Depot is among the top 5 largest e-commerce ventures in the United States. It managed to generate $10 billion in digital retail sales in 2019.
Features of Digital Retail Services
Some of the features of online retail are the digital signs that allow Home Depot to provide ratings and reviews of merchandise in stores so that customers have faster access while shopping. There is a mobile app called the digital product locator which directs the clients to what they are searching for from the stores using a mapping technology (McKinnon, 2020). The customers only need to download the application into their smartphones to quickly help them navigate the online stores. The tool has a shopping list function that directs the users to the location of the products they are looking for. Further, the app has a Pick up locker service where Home Depot customers can pick up e-commerce orders and has been rated 5 out of 5 stars by 95% of clients (McKinnon, 2020). In addition, there has been a 250-point increase in checkout scores for stores with lockers compared to those without. Likewise, its Quick access to ratings and reviews for customers while in stores enables them to scan an items barcode and get product reviews and ratings in a matter of seconds.
Home Depot expanded its functionality in the mobile app to create Augmented reality shopping , this tool allows users to overplay merchandise in any room in their homes. The tool ascertains the dimensions of items such as refrigerators and chandeliers to enable clients to get a 3D visual of the products in any space they want to view them (McKinnon, 2020). Additionally, the mobile app has visual search mechanisms that use artificial intelligence to give product recommendations equivalent to the products the users could be looking for. Visual search allows people using the app to take a picture of a product which Home Depot then matches with products it stocks and is key in improving consumer improve engagement and satisfaction.
Surge in Digital Retail at Home Depot
The evidence available shows an increase in digital commerce at the company and much is attributed to its omnichannel or interconnectivity efforts. 50% of online orders are picked up at the stores and this has been made easier by mobile services. In the fiscal year, 2019 was number 7 in the 2019 digital commerce 360 top 1000 (Evans, 2020). It grew its online sales by 20.8% for the 4th quarter of 2019 and overall, Home Depot registered a 21.4% growth in digital sales on average in 2019 (Evans, 2020). Further, there has been increased online traffic and additional footsteps to its stores happening on the Home Depot.com website (Perigo, 2021). It launched a digital appliance label that enables clients to have access to online reviews of appliances while shopping in stores and today; it has over one million pro customers. Without any doubt, interconnectivity and digital commerce have tremendously enhanced the visibility of Home Depot and given it an edge over its competitors. The retailer has managed to respond to customers needs for a seamless shopping experience between channels by providing an app that is easy to use.
Inventory
Home Depot has a business protocol that works on electronic trading interchange (EDI). All the clients who wish to have their products on the shelves of the company in all its stores must meet all its EDI requirements (Home Depot EDI, n.d.). EDI is the mechanism by most businesses currently use to complete their B2B transactions with retailers. The EDI improves the accuracy and efficiency of the processes involved in the services. Hence, the reason why Home Depot like other big box retailers insist on its use by all their partners. It translates exchanged data into a legible format for all systems through the use of a value-added network (VAN) (Home Depot EDI, n.d.). Once a business is EDI-ready with a VAN link established, it is able to implement an EDI order management system for the digitization of tasks, and quicker order and truncation processing.
Further, it enhances its proficient management of inventory and trading relationships. EDI management procedures help businesses to better prepare on how to handle complex and voluminous orders coming from Home Depot (Home Depot EDI, n.d.). It is a requirement that all suppliers of the company be EDI compliant before being allowed to trade officially with Home Depot. The vendors must meet this standard and have a VAN in place before they can supply or sell to Home Depot (Home Depot EDI, n.d.). An EDI structure provides many benefits to clients including reducing data re-entry, easily managing voluminous orders, quickly importing orders, and guiding picking, packing, and shipping. Further, with EDI even small businesses have the capacity to easily manage their financial data, predict future trends more accurately, reduce costs, and strengthen relationships with Home Depot as partners. EDI assist the company and its clients in reducing cost and increase their profitability while automating tasks, and managing inventory.
EDI Data Entry and Management
The process of data entry is always time-consuming and error-prone. EDI order management technique helps Home Depot to eliminate data re-entry because of previous mistakes. Instead of the workers spending several hours or weeks re-keying orders from the Home Depot (Home Depot EDI, n.d.). Its Activates EDI manager directly works with VAN to receive and manage all data from Home Depot in a single place. Once the people in charge open the Acctivates EDI manager, they will get orders, invoices, and other documents ready for viewing.
Acctivate EDI manager updates change from Home Depot to prevent chargebacks and ensure the accuracy of the information. Further, it is a simple system that detects all mistakes; and with just a click, the customer is able to process and send invoices directly to Home Depot. Additionally, the Acctivates EDI orders manager assists clients in processing large volumes of complex orders flowing from Home Depot (Home Depot EDI, n.d.). The system uses incoming orders to create, streamline, and automate workflows and guides the warehouse for picking, packing, labeling, and shipping. It has data centralization and digitization of activities that allows users full visibility into the management of their orders; this provides control and clarity that improves performance and benefits customers.
EDI & Inventory
EDI order management helps clients to run and control their inventory, trading partners, finances, and other parts of their businesses in the whole country. EDI equally boosts the chances or likelihood of improved trading relationships with Home Depot (Home Depot EDI, n.d.). Acctivate, an EDI command system, manages and optimizes all sections of customers businesses, such as inventory, warehouses, and cost analysis. The success of a businesss management is directly correlated with its EDI operational accuracy (Home Depot EDI, n.d.). Strong inventory control is key for trading partners to achieve Home Depots and its customers demands. This EDI Acctivate does by monitoring inventory in real-time, alerting you on low stocks, and suggesting and automating re-order amounts (Home Depot EDI, n.d.). In addition, it provides tools for calculating landed costs, multi-currency and cost of goods, multiple-warehouse management, and trend and data analysis. Thus, customers are able to view the strengths and weaknesses within their operations and evaluate the value of trading partnerships to your business.
Law of Business & Carriage
Home Depot is committed to ethics and integrity, and its core values shape the way in which it carries out its business. It puts faith in doing the right thing for the good of clients, vendors, suppliers, service givers, and the communities it serves (Homer TLC, 2016). In all its operations each day, the company strives to be fair, and consistent, and comply with the laws that regulate its business environment. Further, it has a business code of conduct and ethics that guide its employees in making the right decisions. In addition, it operates based on its corporate compliance policies and standard procedures and is always guided by the spirit that all staff and partners must embrace (Homer TLC, 2016). To actual this, Home Depot encourages all its business associates and partners to report all cases where they feel the companys values are compromised, or compliance with the law is not followed. This can be done through the immediate supervisor, human resource manager, or corporate compliance or by making anonymous complaints through Aware Line (800-286-4909) or the Associate Advice and Counsel Group (866-866-698-4347).
Business Code of Conduct
The Business Code of Conduct and Ethics (the Code) is supposed to provide clients with straightforward information about Home Depots management principles. In addition, they give direction to help customers make decisions that align with the companys ethical standards and legal obligations (Homer TLC, 2016). All associates of the firm are required to act with honesty and integrity. Further, they must observe the highest level of ethics as well as do the right thing.
These have been the driving forces behind Home Depots success and have been core factors in how it has conducted its business since its inception. It has examples of ethical decisions its clients may face, as well as references to the companys global corporate compliance policies that are availed to all its partners. Additionally, they are provided with information on what they must do in case they have questions regarding some aspects of the ethical conduct of any staff of the organization. The code provides a broad overview and scenarios on how to execute Home Depots business in a process consistent with its core values (Homer TLC, 2016). Therefore, it applies globally to all its associates including its controlled subsidiaries, partners, and all members of the Board of Directors.
It recognizes that it operates in several countries and that its operations are subjected to s diverse set of local laws and cultures. Thus, in cases where the laws of a particular country conflict with its code, its partners are advised to get guidance from corporate compliance or Home Depots legal partner in that country. Additionally, Home Depot uses clean transportation best practices such as truckload optimization, greenhouse gas data gathering, and reporting (Home Depot, 2017e). It is a chartered member of the EPAs SmartWay program, thus, it audits all its carriers every year to ensure that their data is submitted to EPA.
Open Door Policy
Home Depots open door policy is anchored on the belief that each individual or corporates has a right and responsibility to ask questions about issues that are not clear to them. Therefore, it encourages and gives its associates, partners and other stakeholders access two-way, honest, and respectful communication (Responsibility Report, 017). The intention of the policy is to establish an atmosphere that encourages people to voice their concerns, express doubts, discuss problems, ask questions, make observations, and offer suggestions about workplace issues. Partners whether individuals or corporates, should feel comfortable approaching staff, corporate officers, or any other company resource at any time for assistance. Further, anybody or firm that feels they are wronged or that there is a violation of the code, policy, or law, are encouraged to report it immediately without fear of victimization. The openness approach has over the years, built a high level of trust between Home Depot and its partners that has elevated t above its competitors.
Safety Policy
The company is committed to offering all its associates and customers a safe working and shopping environment. All partners are expected to comply with all of Home Depots safety procedures and needs (Home Depot Status Update, n.d.). Those concerned about safety protocols or have questions, comments, or feedback regarding regulatory requirements must follow the right channels to notify the company. No partner, stakeholder, or client is allowed to perform any activity that is considered unsafe.
Dignity of Clients
Home Depot believes that all people should be treated with dignity. Thus, it does not allow conduct that fails to show appropriate respect to others. Its value of respect for all exemplifies how the firm must treat our fellow associates, customers, suppliers, vendors, and service providers (Home Depot Status Update, n.d.). Any conduct or behavior that fails to show utmost respect to others, including staff, clients, professional customers, vendors, suppliers, and service providers, violates the Companys principles. Further, the company prohibits insults, threats, intimidation, ridicule, vulgarity, discrimination, harassment, physical or verbal abuse, and sexually explicit humor (Home Depot Status Update, n.d.). Additionally, it does not allow slurs, stereotyping and unwelcome sexual advances, unwelcome touching or invasion of personal space, ignoring the rights of others, and insensitivity to the beliefs and customs of others. Therefore any staff employees found in violation of this are subject to immediate termination of their contracts (Thomas, 2022). This policy has earned Home Depot respect among its partners and clients and made them feel it is the best retailer of choice.
Supply Chain Law
The company, its affiliates, divisions, and subsidiaries strive to operate in a responsible manner. It tries to preserve human rights and safety in the work environment as it expands its operations and works with suppliers locally and globally (The Home Depot, 2022d). It restricts all its partners from complying with both local and international laws, rules, and regulations in the production and distribution of merchandise or services offered to Home Depot. Further, all suppliers are advised to follow the firms guidelines and to promote constant improvements in their activities.
Since 2005, Home Depot has been implementing both social and environmental responsibility (SER) standards that all its partners must subscribe to in order to do business with the organization. In addition, Home Depot carries out a factory audit of its suppliers and assesses their compliance with its SER (The Home Depot, 2022d). After each audit, an issue of noncompliance is either corrected or stopped depending on the level of risk it poses to the company. It has a buying agreement that requires all its partners to adhere to both international standards and applicable laws and regulations. In the event that any supplier or firm it works with does not comply, a termination mechanism is activated to exclude such an organization from conducting any future business with Home Depot.
Sustainability Strategy
Home Depots environmental, social, and governance (ESG) strategy is centered on three key factors. The company focuses on people, creating business sustainably, and strengthening the communities around and within its premises. It strives to work as a firm that reflects and supports diversity, equity, and inclusion among its associates, suppliers, and in the humans it serves (About the Home Depot, 2022). For this to happen, Home Depot lays more emphasis on creating an environment hinged on its core value of respect for all people, where diversity, equity, and inclusion are observed. Further, it tries all the time to give equal and fair opportunities to all its clients and suppliers to they can grow. It anchors its sustainability on building a more diverse, equitable, and inclusive organization within its enterprise and the communities it serves. Based on this conviction, by 2020, Home Depot had employed 35% women and boasts of achieving about 55% ethnic/racial diversity in its staff (About the Home Depot, 2022). Additionally, the company is providing its associates with over 1,000,000 training hours career training per you all through to 2023; as well as creating opportunities for diverse businesses by asking its suppliers to spend more with them.
Operation Sustainably
Further, Home Depot tries to eliminate its carbon footprint by improving the efficiency of its activities by investing in alternative energy sources. Through its partnership with suppliers, they focus on social and environmental responsibility. It helps all its customers reduce their environmental impact by offering products and packaging created with sustainability in mind. This is demonstrated by the fact that Home Depot has managed to reduce electricity use by 44% between 2010 and 2020 (About the Home Depot, 2022). In its vision and plans, it intends and is committed to achieving 100% renew
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