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Supply Chain

Applying a total systems approach to managing the entire flow of information, materials, and services from raw materials suppliers through factories and warehouses to the end customer. Supply Chain.

colleen-beach
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Supply Chain

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  1. Applying a total systems approach to managing the entire flow of information, materials, and services from raw materials suppliers through factories and warehouses to the end customer. Supply Chain

  2. A quick overview of the company would reveal Home Depot as a Fortune 500 Company listed on the New York Stock Exchange as HD. The company has a market cap of $115 billion. They generated more than $75 Billion in revenue last year and employ more than 340,000 people. Home Depot

  3. 2200 stores place orders to multiple vendors on multiple days of a week. Vendors receive, fill, and ship to store. -shipments expensed to HD and HD absorbs transportation in COGS. -20%thru HD DC’s 80% DTS. LTL-Less than Truck Load DTS 80% Store orders- 70%, 37,000 people “Storecentric”

  4. (Supplier): -persons to manage purchase orders -persons to pull orders -increased time to fill -decreased fill rates (Store):-persons to order-increased minimums-increased holding costs -increased stock outs

  5. Implement supply chain analytics • Install improved demand forecasting tools • Improve central replenishment • Improve merchandise financial planning processes • Improve transportation management Keys to improvement:Mark HolifieldSVP of Supply Chain, 2006

  6. 2012 Investor Conference

  7. RDC system

  8. RDC Network Flow of Goods ordered

  9. Revenue: ↑ COGS: ↓ • In stock means better customer service. • Reduces lost sales due to stock out. • Greater purchase price discounts. Reduces cost. • Less inventory increases inv. turns and reduces working capital. • Home Depot C.E.O. stated the 1st year direct impact of the supply chain initiatives contributed 26BPS of gross margin . • Improving inventory management by just one full turn per year can generate $1.5 billion in annual cash flow. • Inventory turnover 4.5x 4.3x 4.1x 4.1x 4.0x from 2012-2008 respectively. Big Deal?

  10. A study conducted by Acenture, INSEAD, and Stanford documented strong direct relationship between supply chain and financial performance.* 600 of Global 3000 companies in 24 industries. -Leaders consistently beat the S&P 500 for the entirety of the study. (1995-2000) -Compound average annual growth in market capitalization of leaders was 10-30%.

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