Focus on supply chain pays off for Home Depot


describe the imageThe Home Depot, the top home improvement chain in the nation, recently increased its yearly outlook for the third time in six months as it continues to beat out its top competition, Lowe's. According to the company, much of its success is due to a renewed focus on improving supply chain management programs and practices.

This year alone, Home Depot has implemented several new programs that have improved inventory management, lowered prices and increased margins. And the company is not yet finished with its supply chain. Chief Financial Officer Carol Tome said there are plenty of areas that can be improved.

"We just are not done, there is more value to be created here," she said, according to the Wall Street Journal.


Analysts are crediting the supply chain improvements for the company's continued success and stranglehold on the home improvement market above Lowe's.

"Overall, they are just out-executing Lowe's at this point," RBC Capital Markets analyst Scot Ciccarelli told Reuters. "Lowe's is trying to copy a lot of these same efforts that I think have helped Home Depot, but it is going to take a while for them to benefit from some of the changes that they are currently making."

Among the most effective supply chain management measures implemented by Home Depot are its rapid-deployment centers, which have allowed the company to ensure that inventory levels are where they should be so that both shortages and overstocking of products can be avoided.

Warehouse management has also been near the top of Home Depot's list of improvements. According to the Journal, the company has examined how it can better optimize how it loads and stocks trucks at its distribution centers. It also is looking into changes that can be made to the process for shipping goods that are produced overseas, the report noted.

Many of the largest and most recognized brands in the world have an effective and top-performing supply chain to thank for their success. Consumer electronics leader Apple is widely regarded has having one of the best supply chains on the planet, as it took the top spot on rankings released by Gartner earlier this year, while food producer Kellogg's recently announced that it plans to invest heavily in its supply chain during the coming months.