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THE HOME DEPOT INC. HAS LAUNCHED A FOUR-year, $1.2 billion initiative to streamline its outbound delivery operations in an effort to shave one day off its nationwide delivery times.

The program, in the pilot phase as of early June, is aimed at providing next-day delivery by 2022 to every U.S. customer and same-day deliveries to a large percentage of the population, Mark Q.

Holifield, Home Depot’s executive vice president, supply chain and product development, told an industry conference in Atlanta.

Virtually all of Home
Depot’s outbound deliv-
eries are made via two-
day parcel services, but
Holifield said that in a world where customers demand
delivery speed and flexibility, “we need to be [providing]
one-day [deliveries] to every customer.”
The new network will consist of an array of consoli-
dation centers, local direct fulfillment centers in major
markets, specialized parcel fulfillment centers, and what
Holifield described as “market delivery” centers that will
be established in an undisclosed number of second-tier
markets. Under the plan, Home Depot will build local
direct fulfillment centers in 25 locations, with each
location capable of holding 35,000 stock-keeping units,
or SKUs, Holifield said. It will build “parcel plus” direct
fulfillment centers in seven locations, and direct fulfill-
ment centers for flatbed truck deliveries in its 40 largest
markets to support deliveries of high-volume lower-val-
ue products to projects and job sites, he added.

The company will also utilize direct deliveries, and it
will roll out van and passenger-car services to support
local deliveries of small parcels, according to Holifield.
The direct fulfillment center and market delivery
operations are under way, said Holifield, who called
2018 the “year of the pilot.” The company, which cur-
rently employs 15,000 in its logistics and supply chain
operations, is in hiring
mode for the initiative,
he added.

The plan is a major step in Home Depot’s ongoing expansion of its outbound delivery program.

The company already operates five sprawling direct fulfillment centers serving nationwide end markets and is pushing the so-called “BOPIS” initiative, which stands for “buy online, pick up in store.” Home Depot’s stores will play key roles in the new initiatives as delivery nodes, Holifield said.

One challenge may be ensuring that store inventory is well stocked across the network to support online ordering. Home Depot has about 1 million SKUs online, while the typical store supports about 30,000 SKUs, Holifield said.

The outbound program could mirror in scope and significance Home Depot’s program of nearly a decade ago to centralize product ordering and inventory management functions from vendors to distribution centers. The inbound program continues to be fine-tuned eight years or so since its launch, but it has been successful in streamlining what had once been a disorderly process, Holifield said.