At a recent investor and analyst conference, Jordan Broggi, Executive Vice President of Customer Experience and President of Online Sales at Home Depot, stated that the company's supply chain has changed significantly since 2017.

At that time, the retailer aimed to build a two-day delivery network, based on a strategy of bringing goods closer to end consumers. However, to date, the company has far exceeded its initial goal. According to released data, 55% of orders for in-stock products are now delivered the same day or the next day, more than three times the rate in 2022.

The primary driver behind Home Depot's acceleration is its system of nearly 200 logistics facilities, added over the past eight years, which fulfill various roles within the supply chain.

Currently, the company operates 160 market delivery operations centers, specializing in consolidating and sorting bulky products like home appliances. Additionally, there are 20 direct fulfillment centers located near residential areas, storing fast-moving items and processing orders quickly. The company also has 17 flatbed distribution centers, specifically serving large-sized building materials.

Another important factor is the proprietary "ship from best location" algorithm. This algorithm allows the company to analyze its entire distribution network to select the optimal shipping point for each order. It considers multiple factors, including customer profiles, geographical location, warehousing capacity, and inventory levels.

"The combination of our distribution system, inventory investment, and technological improvements has helped us significantly increase delivery speed", Broggi said.

According to Chief Financial Officer Richard McPhail, Home Depot has largely completed the construction of its core logistics network. The next phase involves optimizing the efficiency of these assets to expand market share, especially in an environment of more cautious consumers and increased cost pressures due to tariffs.

One strategic direction is to expand the range of products available for rapid delivery. Billy Bastek, Executive Vice President of Merchandising, noted that an average Home Depot store typically displays about 25 Rheem water heater models, while actual customer demand is more diverse. Consequently, the company has collaborated with the manufacturer to integrate more products into fulfillment centers, enabling same-day or next-day delivery via regional transit points.

"Previously, if a product wasn't available in-store, customers might have to wait 5-9 days. Now, most orders are delivered in 1-2 days", Bastek stated.

Concurrently, the company is expanding the operational reach of its bulky materials distribution centers. Earlier this year, Home Depot launched a new delivery model called Relay. Under this model, trucks from distribution centers in Atlanta transport trailers to designated store parking lots overnight, then deliver directly to job sites the next morning.

This solution has allowed Home Depot to broaden its service area in the Atlanta market and extend into neighboring regions like Chattanooga, Tennessee, while adding 18 new markets.

According to Broggi, ensuring fast delivery with near-perfect on-time rates is a significant challenge, particularly for a company handling diverse order types. When issues arise, Home Depot focuses on analyzing the root causes and improving processes to prevent recurrence.

"We don't celebrate because the majority of orders are delivered perfectly. We focus on the cases that didn't meet expectations and see those as opportunities for improvement", he said.

The Dan (according to Supply Chain Dive)