verticalfocus
Items not suitable for cross-docking
at the RDCs will continue to move
through other channels. These
include lumber, which will continue
to flow through the lumber DCs;
imports; and bulky domestic products
like lawn tractors. About 20 percent of
items will still ship directly from ven-
dors to stores. These include products
supplied by regional vendors and
items like trees and other live plants
that require specialized handling.
With the RDCs in place, the transit
facilities will no longer be needed.
They will close as the RDCs serving
their areas come on line, Holifield says.
The ripple effect
Although only a third of the RDCs are up
and running at this point, Home Depot is
already seeing some benefits. One is
increased flexibility. With products now
flowing through the centers, decisions on
which products to ship to which stores
can be postponed until the last minute.
As a result, the company is doing a better
job of store replenishment, according to
Holifield. In addition, forecasting errors
have dropped significantly. “It is far easier to be right with forecasting for 100
stores, than [for] one store as it was
before,” he says.
Out-of-stocks have been reduced by
half, and customers find product available
98.8 percent of the time, says Holifield.
And because replenishment functions
have migrated closer to stores, overall
inventory has also been reduced by $1 billion on a year-over-year basis, he adds.
Holifield expects to see further inventory
benefits as more RDCs come on line.
It’s not just Home Depot that’s profiting from the new initiative. The benefits
are filtering down to its vendors as well.
“It’s huge for our suppliers,” says
Holifield. For example, the move to centralized ordering means suppliers now
have just one order to process instead of a
hundred POs from individual stores, he
says. In addition, suppliers can now ship
their products in truckload quantities to
the RDCs, which is much cheaper than
sending LTL shipments to individual
stores. The combined savings have
enabled Home Depot to negotiate better
prices with its vendors, which further
reduces overall costs, Holifield says.
As one of the world’s biggest users of
transportation services, Home Depot has
also been able to negotiate better deals on
outbound transportation, Holifield says.
The retailer is also doing a better job of
carrier selection and controlling its overall transportation spend, he adds.
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. “What the whole network is about is providing on-time and
accurate service to our stores so that they
can focus on the customers,” he says. ;
