Home Depot says it is 65 percent of the way toward completing a network of what the home improvements retailer calls Rapid Deployment Centers to overhaul its U.S. supply chain and expects to finish the project by the end of the year.
“We can already see some of the benefits of improved Š forecasting in inventory and markdown control,” Home Depot Chairman and CEO Frank Blake said in a recent conference call with investment analysts.
“We are years behind other retailers in these areas but we are on a path to catch up over the next five years,” Blake said.
The company opened its 12th Rapid Deployment Center in January in Topeka, Kan. The revamped distribution centers are aimed at moving goods more rapidly through the company’s supply network, part of Home Depot’s effort to keep inventory as lean as possible while pushing goods more rapidly to where sales are most likely.
Company officials said they expect to start seeing the benefits of the strategy on the bottom line starting next year.
“We have really never broken out the cost of the supply chain transformation because it is all part of what we are doing from a merchandising transformation perspective,” said Carol Tome, the company’s chief financial officer. “The real margin opportunities are going to show for us in 2011 once it is up and running. It is not just the margins. While we have done a really nice job I think on inventory we have some inventory opportunities coming at us in 2011 too.”
Atlanta-based Home Depot cut its merchandise inventories 4.5 percent over 12 months ending Jan. 31 as the company’s net sales fell 7.2 percent amid the downturn in the retailer’s key housing market.