@ Supply Chain Management


Is an underperforming supply chain Home Depot’s pressing problem today?

I reported in this post (Item 2) – SCM Newz Roundup (originally reported at SC Digest) about Home Depot’s brand new panacea that is going to help it return to the top of its game. Only its no panacea. Its just foolhardy.
Here’s the gist of the SC Digest news report:

The moves clearly reflect in part the impact of Home Depot’s VP of Supply Chain Mark Holifield, who came to the post after a similar and well-respected stint at Office Depot.
He said that Home Depot would focus on improved inventory management, implement a system that will provide better visibility and control over products delivered to the home, improve visibility of product flow from suppliers all the way to the store shelf, and cut order-to-delivery lead times, and improve inbound distribution.
Home Depot said the company is also looking to improve its supply chain technology is in several other areas, including:
* Supply chain analytics and decision-support
* Demand planning and forecasting
* Store replenishment
* Financial planning relative to merchandising
Home Depot noted the power of inventory improvements, saying that every one-tenth improvement in inventory turns means drives an additional $200 million in cash flow.

Here’s what Home Depot wants to do – improve its operations in order to drive better cash flow through its supply chain. But is that Home Depot’s problem?
Like I have said before, I have not done a comprehensive survey of customer attitudes to Home Depot. So I do the next best thing i.e. stick my thumb in the air and ascertain the direction of the wind. And which way does that blow?
1. Home Depot’s Real Problem
Here’s what she recounted as her Home Depot experience:

I recently visited Home Depot so I could use a gift card. Was all primed and ready to spend several hundreds of dollars (in addition to the $50 gift card) on paint, ceiling fans, and the like. Net-net, I didn’t spend a dime at Home Depot. I ended up going to Lowe’s and Samon’s. Why? Well, the Depot was dirty, cramped and cluttered. I couldn’t even find the aisle with the ceiling fans. The paint selection was far smaller than that of other stores. Nobody seemed interested in helping me and I don’t know that I blame them. The employees I did see (huddled around the end of aisles or at the checkout counter) looked terminally depressed. Overall, a dismal shopping experience.

Whoever gave Mary Schmidt her gift card actually contributed to Home Depot’s cash flow except that it lost out Mary Schmidt in the process. That’s like getting a ‘F’ in Business 101

2. Do you have a Home Depot problem?
Seth Godin notes,

Walk into the store and you can see which worldview the story is tailored to. It’s not for the homemaker or the occasional do it yourselfer. No, the store is clearly designed by, stocked for and organized around people who buy in volume and, even more than that, hardware geeks.

And further, here is Seth Godin’s insight into Home Depot’s problem,

Take a look at this picture and tell me the truth: is it exciting to you? Does it fill you with anticipation to make your way down this aisle, looking at each item and finding an amazing deal? If so, you’ve got a worldview that matches the story Home Depot tells.
Many people, though, see nothing but dread here. They see a store with no helpful salespeople, a jumble of product, none just quite right, a very very long checkout line and fear. The fear of screwing up. The fear of having to come back and return something. The fear (very real) of something big falling from the top of one of these shelves and squashing them like a bug.

3. Consumeraffairs.com reports on Home Depot Kitchen Dept.
Here’s a sampling:

In early April, my husband and I purchased about $15,000 worth of cabinets and install from Home Depot. We then sent in the rebate form for a $500 rebate gift card. The paper work said to wait 4-6 weeks. I carefully read all the fine print and made sure that I submitted every piece needed and on time. After 6 weeks, I called to check on the status, still not received they said. After another 2 weeks, I called and was told that it may have been lost because they were updating their systems and to please wait another 4-6 weeks. It has now been 16 weeks.
When I checked the status on their website today, it said that they’ve received the paperwork, but my receipts are not for the same purchase. In the meantime, I had also sent a letter to Bob Nardelli, President of Home Depot. I got a curt letter back stating that Home Depot’s Management supports any decision made by the Rebate Center and is unable to make any exceptions regarding rebate requests.

And another one,

We ordered kitchen cabinets and granite counters from the Weston, Florida store. The worst mistake of my life . All I am having is agravation. The cabinets came too big to fit on the avalible space. I had to go and purchase cabinets from other Home Depot stores to get what I needed. The quality of the wood is bad. Al colors and with blemishes. Not as advertised on the samples at the store. We paid for the measuring of the space, and after all that,.. they still came too big. All they could say is I gues they made a mistake. I have been without a kitchen for 8 weeks now. With no end in sight, I am wondering if I will ever have a kitchen again.
The granite top has been the culprit for the most part. We have waisted about 7 working days of pay just waiting for them just to cancel or just not even showing up. Just to measure the granite took about 3 weeks. Then to deliver the granite, I do not know since nobody seems to know anything. The store manager says they can not do anything about it. All I can do is wait…. or change to another vendor and start from scratch. Of course you figure, I am already in the soup, I’ll stick with it. But then that may be the only way to get it to move. If you ever order anything from The Home Depot, you know it must be paid in advance, so there is no way you can hold money for damages or other problems. I am also still waiting for other parts of the cabinets to show up. The came late and broken so the had to re-order them. The gentlemen that we dealt with is no much help, and his attitude is of buy your granite somewhere else or wait.
Between me and my wife I have used about 5 days each of pay, not to mention the expense and inconvinience of eating out or pre-prepared food. Driving arround all over south florida for parts to complete the caniets, and lots of time and time.

4. Angry Customers Lash Out At Home Depot

Similarities between some of the complaints we heard really raised a red flag, so we took our concerns to the State Licensing Board.
As a result, the state called Home Depot to a meeting today to discuss the problems we brought to their attention.
Vanessa Hendry, Oakley: “I didn’t even know it was backwards…”
After spending about $18,000 on new windows, Vanessa Hendry says she couldn’t believe how many problems cropped up.
Vanessa: “The caulking is starting to peel up in certain spots. The holes, they’re kind of badly, poorly notched into the window frames.”
It wasn’t windows but a kitchen remodel that Michele Widmer had problems with.
Michele Widmer, Concord: “I was at the point of despair. I had no kitchen, cabinets that wouldn’t fit.”


Alex Barbalat, San Francisco: “They came twice to measure and I end up with 12 extra boxes of marble tiles left.”
Broken promises made by store employees:
Dennis Song, San Francisco: “We’ll make it done right, I promise you that, a couple of weeks go by, that manager is no longer with the store.”
And projects taking longer than promised:
Eric Knopf, Mountain View: “We basically had a baby faster than we had a kitchen.”
But the complaints were mainly about Home Depot passing the buck to a third party.
Michele Widmer: “They don’t take any ownership for their mistakes.”
ABC7’s Michael Finney: “Everyone’s shaking their head, do they take ownership?”
Group: “No.”
Autumn Casadonte, San Jose: “Their mistake becomes your problem because then it’s your issue to resolve when it was really initiated by them.”
Dennis Song: “The contractor said it’s Home Depot’s fault the wrong windows were installed. Home Depot said no, it’s the contractor’s fault.”
Donna Ray, Richmond: “Nobody wants to pay for anything, all they want to do is switch blame.”

And the sad fact is that on and on it goes.
5. Home Depot: Strong Feelings From Friends And Foes

Now tell me, what part of better cash flow management addresses the problem above. If anything, it is about to get much worse. But they’re getting the message and some signs of it are coming through:
‘Juiced’ to serve customers

And here’s a useful place to start doing the right thing when it comes to Customer Service

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Category: Supply Chain Management


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March 2007