Posted: May 25th, 2022
Home Depot and Management Tool
Company background — must include sales and employment data. Products or services provided. Size vs. major competition.
The Home Depot (NYSE: HD) is the world’s largest home improvement chain and the fourth-largest retailer of home improvement and construction products and services. Founded in 1978, Home Depot has about 2,500 locations in each of the 50 states as well as in the 10 provinces of ten provinces of Canada and in Mexico and China. It also operates an online company. The company’s headquarters are in Cobb County, Georgia, in Greater Atlanta and its CEO is Francis Blake.
Home Depot targets the do-it-yourself (DIY) and professional markets with its selection of some 40,000 items, including lumber, flooring, plumbing supplies, garden products, tools, paint, and appliances. Home Depot also offers installation services for carpeting, cabinetry, and other products. (Hoover.com)
According to Forbes.com:
The Home Depot stores sell an assortment of building materials, home improvement and lawn and garden products and provide a number of services. The Home Depot stores average approximately 105,000 square feet of enclosed space, with approximately 24,000 additional square feet of outside garden area. & #8230; The Home Depot stores serve three primary customer groups: -It-Yourself (D-I-Y) Customers, Do-It-For-Me (D-I-F-M) customers and Professional Customers. In January 2012, the Company acquired Redbeacon.
Home Depot’s top three competitors are Lowe, Menards, and True Value Company, but Home Depot is actually the largest home improvement retailer in the United States, according to the U.S. Securities and Exchange Commission. As of 2013, Home Depot employs 189,390 employees and possesses a total of $75,614 in sales. (Forbes.com)
Hoovers shows the following ratings for Home Depot:
#35 in FORTUNE 500 (May 2012)
S&P 500 (December 31, 2012)
Dow Jones Industrials
#78 in FT Global 500 (July 2012)
#35 in FORTUNE 1000 (May 2012)
Forbes (2013) listed it as the 48th most powerful brand in the world (Forbes.com )
Home Depot suffered, as many companies did, during the recession and housing crisis in the U.S. However, it managed to retain its footing by focusing on its core businesses and exiting China.
Conditions that lead to selection of Operations Management tool. What were the conditions in the company that lead to the decision to select and implement the management tool?
Home Depot suffered, as many companies did, during the recession and housing crisis in the U.S. Aiming to get beyond that and to maintain its footing, Home Depot determined to focus on their core business. That meant ensuring that amendments and improvements would be made in the operations management realm.
In 2009, Home Depot frightened at its situation, evaluated its circumstance and had its executive management team tell analysts and investors that their long-range goal was to consistently deliver operating margins of 10% and return on investment capital of 15%. To that end, the company determined to make immense changes in its megalithic business – changes that were intended to penetrate every single nook of its operation and that were intended, too, to reverses the competitive disadvantages in Home Depot’s customer service, supply-chain management, information technology, and store productivity. Optimism in 2009 was such that with these changes in place, HD’s executive team predicted increase in revenues from its deep slump of 26% up to 7%, or by 20% to 26% on an adjusted basis.
Wanting to fissure its mammoth store closer together so that all could work in tandem and achieve faster and superior results as well as superb communication, Blake called for all of HDs moving parts “reading from the same script,” which, in essence, meant tighter integration between parts of the company so that they could raise sales from the $270 in 2009 to a hoped- for $340 and $350. At the same time, HD planned to reduce operating expenses to around 25% of annual revenue (Forbes.com).
Analysis of the company’s operation showed too that many customers were not receiving sufficient attention or assistance:
To tackle the perception that Home Depot workers are always too busy to help customers, the company is spending $60 million on hand-held devices that will help workers check on the spot if something is in stock. Marvin Ellison, a former Target Corp. executive who is Home Depot’s executive vice president of U.S. stores, conceded there was no good reason it took so long to devise the devices, which replace consoles resembling EKG heart machines that workers would constantly leave customers to go use. (Lariviere, 2010)
To deal with that point, HD therefore focused on customer training for their employees, aside from which they also rolled out a new training program for associates in its installed sales program, which they incorporated into their merchandising and store operations departments.
The recession forced Home Depot to exit its Chinese market as well as its Expo Design Center business and compelled it to close other ancillary specialty outlets. To compensate, HD obsessed itself with perfecting its core businesses making sure that gaps in these were closed and that service was improved so that customer interest would grow and new customers be attracted to their existent stores. Compelled to downsize, HD planned instead to focus on nurturing its original retail format making its big-box stores more productive and simplifying their operations with less corporate protocols and bureaucracy. As means to that end, HD introduced software tools that measured performance, forecast product needs, and imposed greater discipline on the company’s operations. The objective of all of this was to “allow for the consistent delivery of U.S. gross margins.” (Builder, 2009).
Their Canadian division too experimented with a new Enterprise Resource Planning (ERP) system, called SAP (i.e. Systems, Applications, and Products in Data processing), that was meant to analyze and fine-tune each of the store’s floor-plans with the aim being to improve inventory management. Part of the reason for HDs choosing this ERP system was HDs recognition that some of their departments needed organization. Until 2008, for instance, “neither able to handle domestic and imported merchandise in the same distribution center nor price its clearance inventory by store” (Builder, 2009)
In that same year, HD too focused on customer training for their employees, aside from which it also rolled out a new training program for associates in its installed sales program, which they incorporated into their merchandising and store operations departments.
When did the company implement the management tool?
The Canadian company implemented the management tool in 2009. Compelled to downsize, HD planned instead to focus on nurturing its original retail format making its big-box stores more productive and simplifying their operations with less corporate protocols and bureaucracy. As means to that end, HD introduced software tools that measured performance, forecast product needs, and imposed greater discipline on the company’s operations. In 2009 too, the company consolidates the operations and management of its lumber/bulk and stocking warehouses. Its proposition was that by running more of its inventory through its distribution channel, it could achieve transportation savings that would leverage annual gross margins by an approximate 0.4% to 0.8%. In fact, the company was intent on revamping its supply chain. Lariviere (2010) reported that: “a network of “rapid deployment” warehouse centers being completed this year will combine shipments, trim costs and cut truck trips to stores by up to 50%…”
In 2012, the Company turned to a workforce management tool in order to alleviate their labor-intensive scheduling. What this meant in essence was that the company, employing close to 300,000 workers had a daunting task in organizing and delegating tasks for these workers as well as monitoring quality completion of these tasks. The original forecasting and scheduling system was built on a 1990 model, and Chris Duffey, VP of operations and strategy at HD was intent on remodeling it. The system had become onerous and wasteful with too many people employed in planning and supervising it. HD had gone through this recession intent on reducing coasts and downsizing wherever possible. This was one archaic system that certainly needed some lean management tools. Secondly, the manual scheduling process was also expensive and thirdly, managers failed to improve the work schedule from the customer’s perspective leaving many gaps and much chaos in the system.
Aside from gaps in the demand system, the program too was not integrated with HDs payroll leaving store managers unsure of the financial implications of the schedules that they were posting per week.
Finally — and one last determination for the change — was the unwieldiness of the system. Employees were unsure of their tasks. They had to either drive down to the store to see it, or ask an associate to read their task over the phone. This was clumsy and time-consuming (Harris, 2012).
In 2012, Home Depot launched focus and discussion groups for change and introduced Empower WFM first testing it among eight vendors (Integrated solutions for retailers (2012)).
What were the results of implementation – Document cost savings, productivity improvement, workforce reduction etc.
The IT program Empower WFM benefitted the company in the following ways:
1. It gave the company an extra 15 hours per week which helped them schedule creation.
2. It improved the quality of schedules in the company in that store managers more effectively used the skills of their colleagues and employees across diverse departments
3. Employees could now see their jobs by logging into their system form home. This enabled them to do their work faster and better without wasting time. It, consequently, also saved the company money and gave customers less irritation.
Home Depot’s new strategy proved successful economically too. At the end of 2011, Home Depot had earned $70.4 billion in revenue, up 3.5% from 2010. As of October 2012, a share of Home Depot costs more than $60, an increase of nearly 70% from the same time last year.
Blake had replaced Robert Nardelli in 2007. Nardelli had focused on expansion and slashing employee benefits. Blake, on the other hand, cut costs without destroying morale and set up improving customer service and reversing expansion in order to focus on key business.
“Frank looked at the world and said, ‘We’re fully stored, why we don’t focus on improving the existing stores that we have rather than growing for growth’s sake?’” says Gary Balter, an analyst who covers Home Depot for Credit Suisse. Blake saw, he says, that growing to placate Wall Street didn’t make good business sense. (Dubois, S. (2012))
In 2012, predictions were looking up for the company and their profits were on an upward slope as the following graph shows:
In fact, at the end of 2012, Forbes — one site that reposted this graph, noted that “Home Depot trades well above its 100 and 200-day moving average, a bullish technical indicator.” (Forbes.com (2012))
Home Depot had come a long way since 2008, and Forbes considered the company to be a safe investment.
The company’s growth can be seen in the various accolades that it won since 2008 (Forbes.com)
It was #35 in FORTUNE 500 (May 2012); #78 in FT Global 500 (July 2012); and #35 in FORTUNE 1000 (May 2012). Forbes (2013) listed it as the 48th most powerful brand in the world (Forbes.com, 2013)
At the end of 2012, Home Depot too had profited from Hurricane Irene which together with its management system allowed it to repurchase back $700 million a total of $4 billion by the end of that year.
Moreover, the U.S. housing market, an impediment to the company at one point, was now an encouragement towards growth since rising sales pushed down the stock of unsold properties on the market, lifting prices and giving builders more confidence to take on new projects. This was the news in 2012, and the trend in 2013 seems to be reiterated growth in the same direction.
Home Depot’s earnings by the end of 2012 had BEEN 74 cents per share. Sales rose nearly 5% to $18.13 billion, topping analysts’ estimates of $17.93 billion whilst sales globally increased 4.2% including a 4.3% rise in the United States.
Appraisal was optimistic.
Edward Jones analyst Robin Diedrich, for instance, concluded that: “Things are going pretty well for them; with sales remaining strong & #8230; The stock has done extremely well and trades at quite a premium to the rest of retail.” (Reuters.com (Tue Nov 13, 2012))
Much of this was the result of their improved customer service and management tool. Home Depot’s better pricing and enhanced customer service boosted them above Lowe’s. This was the first time in more than 13 quarters where Lowe and HD had run neck-to neck together (ibid.)
Future of the company — What has the successful implementation allowed the company to do?
At the start of 2013, the company employed 189,390 employees. Its latest news has been that due to its booming business, it plans to employ 80,000 more associates for its predicted busy Spring season (Home Depot (2013) News Releases.). HD apparently has its system back on track and has managed to not only tidy their concerns but to also improve them and win over customers by so doing. Their ERP system has been boosting to their business.
In 2012, Home Depot executive management told Reuters that “We believe we’re on a path to recovery. We’re not there, but we’re on a path,” The path seems to be wending ever clearer in the future.
Although HD may be increasing its workforce, it seemingly has learnt its lesson of the past and is not planning to reopen more stores or to expand at least not in the near future. It did not, as it reported, plan to expand in Europe (even though Alpha reports that “Home Depot could easily double its revenue and market capitalization by expanding into Europe”) and as to whether or not it would open more stores in the U.S., it saw only negative repercussion from that resulting in cannibalization of existent stores. The U.S., its representatives said, were already glutted with HD outlets.
Instead, HD plans on keeping its focus on customer service and an improved efficacious IT system. Similarly, in 2012, a company representative noted that HD was not planning on major remodeling of stores or of introducing new store formats, but planned to maintain the status quo.
Results of its management system showed success wherever it had been introduced. Home Depot in Mexico, for instance, reported 34 consecutive quarters of positive comparable whilst the Canadian HD reported its first positive comparable since 2004 (Alpha.com). HD even managed to expand in Canada during the last year.
Meanwhile, Home Depot’s online business, too, is doing well and outperforming the rest of the company and this trend is expected to continue. In line with its emphasis on customer service, HD recently upgraded its dot-com platform in order to improve the aesthetics and responsiveness of the site.
Home Depot too has been seeing an increase in its larger pro-customers far more than in its smaller pro-customers due largely to its generous credit available to these customers. This trend may or may not continue depending on HDs policies. In the meantime, it is cautiously optimistic in regards to its pro-business segment (Seeking Alpha. Com (2012))
2012 was a year where Home Depot’s stock prices went ballistic largely due to tis leaving China and focusing on its core business by revamping its management practices. Whether this will continue is still to be seen, but the future promises to be optimistic since HD plans on continuing this same route. Their ERP system has proved helpful; their rating has soared. The future seems promising.
Builder, (June 10, 2009) Home Depot Tries to Reassert Its ‘Power’. http://www.builderonline.com/economic-conditions/home-depot-tries-to-reassert-its-power.aspx
Forbes.com Home-depot http://www.forbes.com/companies/home-depot/
Lariviere, J (2010) The Operations Room, http://operationsroom.wordpress.com/2010/02/25/rebuilding-home-depot/
Integrated solutions for retailers (2012) The HJDs scheduling improvement www.tesseract.com/uploaded/files/HomeDepotPrint.pdf
Dubois, S. (2012) Home Depot knows when to call it quits http://management.fortune.cnn.com/2012/10/26/home-depot-knows-when-to-call-it-quits/
Forbes (2012) what to Do with Home Depot’s Stock http://www.forbes.com/sites/panosmourdoukoutas/2012/11/12/what-to-do-with-home-depots-stock/
Reuters.com (Tue Nov 13, 2012) Home Depot view up as housing heals; Sandy lift looms http://www.reuters.com/article/2012/11/13/us-homedepot-results-idUSBRE8AC0FF20121113
Home Depot (2013) News Releases.
Seeking Alpha. Com (2012) Can Home Depot’s Improvements In Operation Overcome Lower GDP? http://seekingalpha.com/article/782201-can-home-depot-s-improvements-in-operation-overcome-lower-gdp
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
There is a very low likelihood that you won’t like the paper.
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!
Place an order in 3 easy steps. Takes less than 5 mins.