Home Depot Vs. Lowe’s – Who Is Better At Inventory Management?

by Trefis Team
-6.70%
Downside
320
Market
299
Trefis
HD
Home Depot
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For both Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW), the number one and two home improvement retailers in the U.S., inventory management is crucial, especially since these retailers cater to a wide range of customers — from Do-it-yourself customers to Pro customers, and carry a wide range of products — including outdoor and indoor categories.

HD Q&A 6

Home Depot seems to be in the best shape in terms of inventory management. Although holding more inventory per unit square feet, the retailer needs less days to turn over its inventory.

Home Depot has been focusing on supply chain improvements through its central distribution system. Rapid Deployment Centers (RDC) aim to aggregate product needs for multiple stores to a single purchase order, and then rapidly allocate and deploy inventory to individual stores upon arrival at the RDC. This move aims to simplify the ordering process and improve inventory management. Home Depot had 18 fully mechanized RDCs in the U.S. and also opened two RDCs in Canada by the end of 2015.

In order to enhance delivery systems, Home Depot also started the development of three new direct fulfillment centers, the first of which opened in February 2014 near Atlanta, and the second opened in California during Q3 2014. The third center was opened in the second half of fiscal 2015. Each facility is able to hold approximately 100,000 product offerings available to be shipped directly to customers, along with the capability to ship most orders the same day they are received. Home Depot is able to reach 90% of the U.S. population within 48 hours with parcel delivery. The retailer remains committed to leveraging its supply chain capabilities to fully utilize and optimize its logistics network.

Have more questions on Home Depot? See the links below.

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Home Depot

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