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Home Depot and Inventory management.

For this project, examine how Home Depot manages its inventory and then write a paper. APA Style, references, citation answer the following questions.

Q1. Describe the ways in which Home Depot manages its inventory.

Q2. How does the Home Depot's approach to inventory management impact on the efficiency of its supply chain, either positively or negatively?

Q3. How might Home Depot improve the management of its inventory?

Solution Preview

Inventory control is important because it affects cash flow and productivity within an organization. Every time an item is purchased it takes time and money to engage in the negotiation process/cut a purchase order, receive, stock, and process paperwork. Retailers that are successful have fine-tuned this process so that they are able to buy at the best price, with the most efficiency, and equally important, to only buy what they need when they need it. Every product that is sitting on a retailer's shelf not selling is costing the company money. Bernie Marcus and Arthur Blank (founders of Home Depot) struggled with inventory problems from the very beginning, having the desire and vision to open more stores but lacking the money to stock the stores. (The Home Depot, Built from Scratch How a Couple of Regular Guys Grew the Home Depot from Nothing to $30 Billion. Bernie Marcus and Arthur Blank with Bob Andelman, Times Business 1999.) As the company developed it used the stores enormous trading volume to get the best prices. Home Depot's major competitor is Lowes, which uses a successful inventory management system called Rapid Response Replenishment (R3) to maximize just in time ordering. (http://stockherd.com/mic/?p=5).

When Home Depot was originally set up, individual store managers could order directly for their stores. This allowed managers to buy what the community needed (storm supplies for instance) but did not take advantage of bracket pricing, nor did it focus on inventory ...

Solution Summary

This VERY detailed solution outlines how Home Depot manages its' inventory, the effect this approach has on the company's overall efficiency, and gives ideas as to improving the management of inventory. It includes multiple links and examples.

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