The Home Depot’s Holifield meets big retailer supply chain challenges

As senior vice president of supply chain at The Home Depot Inc., Mark Holifield is responding to many challenges, including through use of the Georgia Ports Authority’s Port of Savannah as one of four primary import gateways.

Mark Holifield takes a hands-on approach to his position as senior vice president of supply chain at The Home Depot Inc. (Photo by Paul Scott Abbott, AJOT)

Holifield shared industry and personal insights in an exclusive interview as the American Journal of Transportation caught up with him – in his orange company apron and providing assistance to shoppers – at The Home Depot store in the shadow of the company’s headquarters in suburban Atlanta’s Cobb County.

As the largest U.S. home improvement retailer, The Home Depot has more than 2,200 stores, in each of the 50 states and beyond. Based solely upon those numbers, the company’s supply chain operations must pose significant challenges. What are the greatest of those challenges, and how are you responding?

Certainly, the size and scope of The Home Depot supply chain is vast. One of the things I first learned when I came here [in 2006] was that you can add three zeros to pretty much any number that you look at, because the volume can be just staggering.

There are many, many interesting things about The Home Depot from a supply chain perspective. One of the challenges we have is related to the type of construction that takes place in different parts of the country. Homes that are built in Boston are quite different from those in Florida or Phoenix... different construction techniques, different vendors for windows, doors, flooring, those sorts of things. So it does lead to a complexity in the supply chain beyond that of many other retailers. We work with our merchandising team to assort the stores correctly for the local area. That’s been a real education for me.

Another key challenge in The Home Depot supply chain is that our business is very, very seasonal compared to other retailers in many cases. At Office Depot, we were able to find out when the first day of school was in every school district in the country and manage our supply chain around those dates. What we don’t know with The Home Depot is exactly when that first day of spring is going to be. And, once that first day of spring has arrived, that weekend, our stores go crazy with the volume spike that occurs. So our supply chain has to be poised to respond when spring breaks anywhere in the country, and it breaks at different times around the country. It does make just-in-time delivery and some of the key aspects of the supply chain difficult to execute. You have to plan for that and be ready when that first beautiful weekend happens and be ready to replenish stores based upon that.

One of the things The Home Depot has been engaged in recently is the expansion of online business. How has the supply chain evolved to support this e-business?

We do operate direct fulfillment distribution centers that actually fulfill online orders. We also fulfill online orders direct from vendor to the customer, and we’re working on fulfilling online direct orders from our stores.

Today, you can buy online and pick up product in your local store and have that order picked and packed and ready to go for you when you come into the store. You can buy online and return in store, which is a great convenience for our customers. That’s one of the unique advantages that bricks-and-mortar retailers enjoy over pure-play-online competition.

We’re working more and more on what we call “interconnected retail,” and that’s really delivering on the promise for our customers to be able to fulfill what they need anywhere, anyhow, anyway they want, whether that’s picked up in the store or delivered to their jobsite or their home. We see this as a key challenge going forward and something we in the supply chain team are working hard on.

Specific to that, we’re building our direct fulfillment distribution centers. We have a facility that is under construction here in the McDonough, Ga., area that will open in 2014. It’s about a million square feet, with the capability to hold many more SKUs [stock-keeping units] than what a store holds, so we’ll be able to have an extended assortment beyond what is sold in stores and be able to fulfill that to customers quickly via parcel freight from there direct to their home or via box truck delivery with added-value services.

Another key piece of our interconnected retail strategy is delivery – making our delivery a more effective capability for our customers. We deliver millions of deliveries a year today, and we expect that volume to continue to increase as people get more and more attuned to buying online and having product delivered. So building a very effective delivery network and being able to meet our customers’ needs with fast and low-cost delivery is a key part of what we’re working on as well.

Folks find it convenient to pick up orders in stores. A lot of folks don’t want a UPS or other box dropped off at their door. The store’s a great option for folks. It’s usually pretty convenient, and it’s a low-cost way to get product to customers. We don’t charge customers extra for pickup in store.

In the future, we’re working on buy-online/ship-to-store. What we mean by that is, for SKUs that are not stocked in the store but stocked online, we want to be able to ship that product to your local store and have you be able to pick that up in the store.

There are a lot of supply chain details to work out on that, though. It sounds simple, but, when you think about it, you’ve got to get the vendor or the direct fulfillment DC to pick, pack and ship that order to the store. We want to be able to tell the customer about each event as it happens... Keeping customers informed about the status of deliveries is a big part of serving customers on direct fulfillment orders.

We have about 35,000 SKUs in the store, but we have many more items on the website available for sale – about a half a million. Buy-online/ship-to-store – the “endless aisle” in retail parlance – is a way to fulfill more product demand than what we carry in the store.

Before joining The Home Depot, you held supply chain positions over the course of three decades with such firms as Office Depot, Dallas Systems Corp., Frito-Lay and the Texas-based H-E-B grocery chain. How have you applied your knowledge from those experiences to enhancing The Home Depot’s logistics?

H-E-B is a fantastic company and was a fantastic place to learn about supply chain. The things I learned in my nine years at H-E-B really helped prepare me for The Home Depot. In the grocery business, you have a lot of volume. Grocery – that’s what really taught me about fast-paced, multiple truckloads per day to the store, multiple delivery requirements, with refrigerated, nonrefrigerated, frozen, produce at different temperatures...

We don’t have that in home improvement, but we do have products that ride best on a flatbed truck, as an example, and we have other products that need to be protected from freezing... We have a wide range of products in home improvement, some big challenging products. Think about that big shower-tub enclosure; those are a challenge to get to the store. Lots of odd-size freight, Lots of heavy, bulky freight. That poses some of the challenges that we work on every day.

From the opening of its first two stores in metropolitan Atlanta in 1979, The Home Depot has been deeply rooted in Georgia. What role does Georgia, including the Port of Savannah, play in The Home Depot’s supply chain?

Our Georgia roots are deep and strong. We have had a long-term relationship with the Port of Savannah. We made a commitment there when the port was much smaller, and we have a long-term commitment going forward. It’s so well-located and so well-operated that it really is a competitive advantage for the region and the folks who live in this region.

We operate what we call a “four corner” strategy in terms of our ports. We use Seattle/Tacoma, L.A./Long Beach, Savannah and New York/New Jersey, primarily. That’s not to say we don’t use any other ports, but the bulk of our imports come through those ports. Having a good distribution of product amongst those ports, and being able to dynamically change that as we go, helps us to stay on top of things and avoid issues like disruptions and allow us to land product very efficiently.

This is very important, because our logistics costs are directly related to the prices that we charge to customers. One of the things about The Home Depot has always been about bringing great value to our customers in the form of low prices. We can only do that if we are very efficient from a logistics perspective.

Savannah and the logistics infrastructure here in Georgia is key. Right around 20 percent of our import volume comes through the Port of Savannah, so it’s a major port for us. Given that so much of the freight comes from Asia, that tells you how significant it is that Savannah gets that much.

You certainly have a demanding job, but, hopefully, you get some time to pursue outside interests. Are you a do-it-yourselfer and/or are there other activities and hobbies you enjoy?

Well, I’m not as handy as you might think. I’m pretty handy with automobiles. I do projects around the house, though. Typically, at least once every weekend day, I’ll make a trip to The Home Depot to pick something up.

I’m pretty good with a ceiling fan; I can get those installed pretty quickly. I can do a faucet. I can do a number of basic things. But, one of the phrases they use around here is “inside the wall,” and I haven’t broached that barrier yet. I wouldn’t consider myself proficient, but I do my share of do-it-yourself things.

As I mentioned, automobiles have always been a passion for me. I enjoy puttering with cars. I think it relates directly to transportation. Anything that moves I’ve always had a passion for. I majored in transportation management at UT [University of Texas at Austin, prior to earning a master’s at Baylor University], and I love trucking and trucks.

I enjoy pro football. My son and I go to the Falcons games. Growing up in Texas, you never quite shake that Cowboy thing, but, were they playing each other, I’d root for Atlanta against them at this point.