As Home Depot executes a $1.2 billion supply chain investment, the National Retail Federation recently interviewed Stephanie Smith, the company’s senior vice president of supply chain. Read on for insights into the big-box retailer’s efforts to strengthen its supply chain.
Being flexible for customers is key.
“We see customer expectations rising, as they expect to shop whenever, however and wherever they want, whether they’re buying drill bits or lumber or scheduling an appliance installation,” Smith says.
Home Depot has a goal of offering same- or next-day delivery to 90 percent of the U.S. by building four types of distribution centers.
The first type is flatbed delivery centers which will be stationed in 35 major markets and range from 300,000 to 800,000 square feet.
“These centers will be especially impactful for our professional customers, including contractors and tradespeople, who make up 4 percent of our customer base but about 45 percent of sales,” Smith says.
The second type is market delivery centers, which will include five to seven cross-docks to handle local deliveries of products like appliances, doors, windows and other large, bulky items. These centers will be deployed in 20 markets across the U.S. and utilize a hub-and-spoke model.
The third type is market delivery operations, of which 100 will be built in smaller markets. They will allow Home Depot to extend next- and same-day delivery to most of the country.
Finally, Home Depot is utilizing direct fulfillment centers, which range from 750,000 square feet to 1.6 million square feet. the four facilities will support more than half of the U.S. population, Smith says.
Exploring Brick-and-Mortar Support
Smith says Home Depot is ready to meet customer need whether online, in the big-box chain’s app or at its U.S. brick-and-mortar locations. Home Depot will build three new stores in 2020.
Smith says digital sales have jumped 100 percent in the second quarter of 2020, but more than 50 percent of shoppers picked up those purchases in a Home Depot store.
Home Depot’s sales rose 23 percent in the second quarter, and Smith says this surge in sales is proof the chain’s strategy is working well.