Home Depot, established in 1978 in Atlanta, Georgia, opened its first home improvement store. Since then, it has grown into a renowned specialty merchant offering customers a wide range of products and services. Home Depot primarily caters to contractors and do-it-yourself customers by providing free how-to clinics and workshops for children on-site, where they can build items. With an inventory exceeding 40,000 building materials, lawn and garden products, home improvement supplies, appliances, as well as over 250,000 special-order products; Home Depot has become a global brand with more than 2,200 locations across the United States. The average size of their stores is approximately 105,000 square feet including about 23,000 square feet dedicated to outdoor garden area (Unknown, 2003-2012). If you’re interested in pricing information.
Home Depot must understand the needs and desires of its customers. The company’s annual report reflects its domestic expectations regarding procurement policies and procedures, which have been altered. As part of these changes, Home Depot no longer offers design centers for kitchens and baths. Although these centers allowed customers to incorporate Home Depot products into their kitchen and bathroom designs, they did not result in increased store productivity. Many customers would have Home Depot’s design center create the layout but then purchase items from other home centers or online. Thus, Home Depot’s operating strategy was to close its EXPO design centers and other internal businesses, such as HD Bath designs. By doing so, the company could focus on maximizing the productivity of its existing stores rather than offering services like kitchen and bath design (Unknown, 2013). However, one solution to boost demand for a service is for Home Depot to enhance its features or improve shipping reliability and speed, as this can help reduce production costs.
The procurement process of Home Depot is detailed in the Supplier Reference Manual, which contains important supplier information. This manual aims to promote successful partnerships and collaboration between Home Depot and its suppliers. It covers various aspects such as electronic data interchange requirements, distribution information, purchase order methods, store environment conditions, manufacturing excellence, customs compliance, and transportation constraints (refer to Appendix A).
Home Depot’s EDI system facilitates collaboration with suppliers, who are encouraged to utilize it regularly to meet business and supply chain requirements. The EDI system encompasses mandatory transaction sets, a product catalog, image specifications, and computer system access needs. Distribution details encompass product flow, freight requirements, and product/packaging characteristics. Home Depot ensures clarity regarding distribution by specifying delivery locations based on origin, product, and final dispersal. The supplier reference manual also mandates customs compliance and transportation procedures for international imports/exports. Furthermore, transportation conditions incorporate a routing guide suppliers must adhere to. Pricing strategies involve adjusting along the Demand curve, particularly in markets with high price elasticity of demand like monopolistic competitive markets. Even a slight price reduction can significantly impact demand. Non-pricing strategies include expanding demand by employing tactics like TV advertising campaigns.In markets with low price elasticity of demand, like oligopolies, this is a commonly used strategy. These are known as marginal factors.
When operating globally, it is crucial to understand the patterns that emerge in local markets. For a company like Home Depot, providing resources to these markets is essential. To achieve this, Home Depot maintains a global resource merchandise program from its store support center, which allows customers to directly access high-quality products from manufacturers worldwide. Maximizing profit requires ensuring that marginal revenue equals marginal cost, which means knowing the cost of producing one additional unit of a service. A business can also use the total revenue – total cost method to determine profitability. Profit is maximized when the total revenue and total cost curves are at their greatest distance from each other (McConnell, Brue & Flynn, 2011). Overall, it is imperative for Home Depot and similar companies to understand local market patterns and provide necessary resources in order to optimize profitability.
The customer service strategy and product innovation at Home Depot are heavily influenced by the highest standards of product quality, availability, on-time delivery, safety in production and shipping, compliance with laws and codes of conduct, and sensitivity to brand reputation. These factors also impact the company’s policies and procedures. The procurement decisions and policies have a significant influence on the broadening potential business movement, including product variety, shipping, import details, contracts information, and processes. The company’s relationship with state and federal laws results in different business treatment and regulations. Opting for a combination of strategies that have the greatest impact on demand in the industry may yield the best results.
