Home Depot plans to invest an additional $900 million on logistics and $500 million on technology between 2007 and 2010 to improve its supply chain.
The returns could be impressive, according to executives speaking at Home Depot's analyst meeting. For instance, every one-tenth improvement in inventory turns means an additional $200 million in cash. Home Depot needs to improve its supply chain since it's competing with Lowe's and facing a housing downturn.
In a presentation, Mark Holifield, vice president of supply chain, said Home Depot would focus on inventory management. On the technology front in 2007 Home Depot will:
- Implement supply chain analytics;
- Install improved demand forecasting tools;
- Improve central replenishment;
- And improve merchandise financial planning processes.
Home Depot is also looking to implement a customer delivery tracking system in 2007 to better track deliveries. The general idea is to be able to track deliveries, orders and their status across the company between 2008 and 2010.
On the logistics front in 2007, Home Depot is looking to improve central distribution, cut lead time from order to delivery, manage freight and coordinate suppliers better. For 2008 to 2010, Home Depot is looking to consolidate logistics platforms and get better visibility as products move from supplier to the shelves.
It's safe to say that many of those aforementioned projects will involve SAP. Home Depot is powered by SAP for the most part.
Another observation from the analyst meeting: Notably absent from Home Depot's presentation roster was CIO Bob DeRodes. in previous years, DeRodes presented at Home Depot analyst meetings.
DeRodes still has a bio on Home Depot's site so his absence may just indicate the company's major IT rebuilding is downshifting a bit. Indeed, Home Depot's technology investment for 2007 lags previous years where the company spent $1 billion or so.