Home Depot’s 10 strategic decisions of operations management (OM) support the company’s continuing leadership in the home improvement retail market. Founded in 1978, Home Depot is now the largest firm in the industry, with Lowe’s following closely as the biggest rival. To maintain its industry position, Home Depot needs to effectively address the 10 strategic decisions of operations management, corresponding to the various areas of the firm’s business. While other aspects of the business influence Home Depot’s success, the company’s operations management practices for the 10 strategic decisions significantly influence its competency and competitiveness.
Home Depot’s practices for the 10 strategic decisions of operations management highlight the importance of coordinating and streamlining all areas of business. Streamlining leads to the high productivity of Home Depot stores.
Home Depot’s Operations Management, 10 Decision Areas
1. Design of Goods and Services. Home Depot designs its goods with emphasis on low price and satisfactory quality. The company designs its services based on the criterion of high quality. Affordable goods and quality service, including expert advice, attract customers to the firm’s stores. Home Depot’s generic strategy directly relates to this strategic decision area of operations management.
2. Quality Management. Quality management involves Home Depot’s training programs to ensure quality service. The company also imposes certain quality requirements for suppliers. Through training and quality requirements, Home Depot addresses this strategic decision area of operations management. Nonetheless, the firm prioritizes quality in its services, which includes expert advice for customers at its stores.
3. Process and Capacity Design. Home Depot uses traditional retail business approaches for process and capacity design at its stores. However, the company also integrates online technology for this strategic decision area of operations management. For example, Home Depot uses its mobile apps for iOS and Android OS, as well as its online ordering system to help process sales transactions.
4. Location Strategy. The company’s locations are mostly near or in densely populated centers. However, based on Home Depot’s marketing mix, the firm’s mobile apps and an online ordering system are also used to reach the firm’s customers. In this strategic decision area of operations management, Home Depot uses physical locations to reach population centers, and online strategies to fill the gaps in its physical location strategy.
5. Layout Design and Strategy. Home Depot’s strategy for its store layout and design emphasizes space utilization and efficiency. The warehouse style ensures that the company’s store space is maximally used. The firm has also continued to construct increasingly large stores to accommodate more goods and customers. In this strategic decision area of operations management, Home Depot emphasizes space utilization.
6. Job Design and Human Resources. The company’s HR strategies for job design highlight sales teams in Home Depot stores as well as personnel expertise. For instance, field experts like carpenters and plumbers are hired to give advice to customers regarding their home improvement projects. Home Depot addresses this strategic decision area of operations management through teamwork and expert knowledge development.
7. Supply Chain Management. Home Depot uses a strategy of diversification for its supply chain. This strategy aims to widen the company’s reach to more suppliers in various locations around the world. In this way, market-based risks in the supply chain are minimized. In this strategic decision area of operations management, Home Depot focuses on risk reduction through supply chain expansion.
8. Inventory Management. Considering its warehouse-style stores, Home Depot uses store space for retail display and inventory purposes at the same time. Also, the company has an online portal for suppliers to help in managing inventory. Thus, Home Depot addresses this strategic decision area of operations management through automation, supplier involvement, and retail and inventory space integration.
9. Scheduling. Home Depot uses conventional approaches to schedule human resources. In addition, the company uses its mobile app and e-commerce website (Home Depot online store) to get orders and initiate schedules for order fulfillment processes. In this strategic decision area of operations management, Home Depot emphasizes on online technologies for streamlined and efficient schedules.
10. Maintenance. Considering Home Depot’s organizational structure, store maintenance is performed and managed at the store level. However, design aspects of facility maintenance follow corporate guidelines. To maintain its website and apps, Home Depot has a dedicated corporate IT group. Thus, Home Depot addresses this strategic decision area of operations management by delegating some maintenance activity to store management.
Productivity at Home Depot
Home Depot’s operations management practices emphasize maximum productivity, although service quality is of higher priority. Some of the measures or criteria of productivity used at Home Depot are as follows:
- Order fulfillment rate (store productivity)
- Stockout rate (inventory management productivity)
- Revenue per square foot (store productivity)
References
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- The Home Depot (2015). Message from Supplier Diversity Leadership.
- The Home Depot (2015). Stores, Products, and Services.
- The Home Depot, Inc. Form 10-K 2015.
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