As online sales rise, The Home Depot is focusing on predictability, options

By: | Issue #642 | at 08:16 AM | Channel(s): International Trade  

Sure, speed matters, but delivery predictability and its communication may well be even more important for the world’s largest home improvement retailer, The Home Depot, which consistently ranks among the top five U.S. importers.

That view was among a broad spectrum of thoughts shared by supply chain leaders at Jump Start 2017, presented Jan. 23-25 in Atlanta by SMC3.

The conference also featured commentary from authorities in rail, trucking, port and third-party logistics sectors, as well as economists, transportation management system providers and even a roboticist.

Erin Donnelly, director of delivery support for The Home Depot, said her company, based in suburban Atlanta, has been realizing 20 percent year-over-year gains in online sales, but, with e-commerce still accounting for just between 7 and 8 percent of the firm’s total sales, she said, “We still see a lot of room to grow.”

In addition to aligning distribution centers to be closer to consumer populations, The Home Depot is relying upon inventory in its more than 2,200 stores across North America for fulfillment of many online orders, Donnelly said.

Speed remains an important factor, she said, noting that the company’s 2016 goal was to get goods to 90 percent of buyers within two days, while the current objective is to complete as many deliveries as possible within one day.

Erin Donnelly, director of delivery support for The Home Depot, is meeting challenges of increasing e-commerce at the top-five U.S. importer. (Photo by Paul Scott Abbott, AJOT)
Erin Donnelly, director of delivery support for The Home Depot, is meeting challenges of increasing e-commerce at the top-five U.S. importer. (Photo by Paul Scott Abbott, AJOT)

However, Donnelly said, predictability is just as crucial, if not more so.

“Being able to tell them when they’re going to get it is even better than getting it to them faster,” she said, adding that The Home Depot also is concentrating upon furnishing options, with many customers willing to get product a bit later if shipping is free. Online visibility – allowing receivers to see precisely where a shipment is – also is a growing industry priority.

Donnelly said product returns, which one expert said represent about 30 percent of all omnichannel activity, are running at a much more favorable rate of about 10 percent for The Home Depot. Nevertheless, she said, The Home Depot is looking to expand the 15-member returns department at its headquarters and, to reduce instance of damage, is assertively reducing the number of times a product is touched on its way to the consumer.

Supply chain enhancements also are playing a crucial role in advancing the intermodal business of Class I railroads, according to a Norfolk Southern Railway executive.

Jerri Parks, Norfolk Southern’s director of intermodal and automotive systems, said technologies such as real-time tracking and information exchange are facilitating efficiencies throughout the supply chain, including for containers moving by rail.

Parks pointed to Norfolk Southern’s John W. Whitaker Intermodal Terminal in the Atlanta suburb of Austell as an example of facilities benefiting from technology that reduces the time truck drivers spend on drop-offs and pick-ups.

Jerri Parks, Norfolk Southern Railway’s director of intermodal and automotive systems, looks excitedly to technology in advancing intermodal efficiencies. (Photo by Paul Scott Abbott, AJOT)
Jerri Parks, Norfolk Southern Railway’s director of intermodal and automotive systems, looks excitedly to technology in advancing intermodal efficiencies. (Photo by Paul Scott Abbott, AJOT)

She said the 15-year-old terminal’s original terminal operating system was developed to support billing, not to make truckers happy. With a new TOS and the company’s ExpressNS mobile app now in place, drivers are much more content, according to Parks, as they now can handle most processes before they get to the gate.

Between less waiting in queue and the ability to head straight to the right container for pick-up, a typical driver may reduce time at the Austell facility to 20 minutes from the prior 28 minutes. Figuring two trips a day, five days a week, those 8 minutes per trip add up to more than 60 hours of productivity a year, she computed.

Noting that driver mobile apps have also recently been implemented by such companies as Hub Group, J.B. Hunt Transport Services and BNSF Railway, while CSX Transportation is developing one, Parks said she believes app-to-app integration will be the next big step in bringing about intermodal efficiencies, asking rhetorically, “What if these apps would work together?”

In a discussion of regulatory impacts on the U.S. trucking industry, Rob Estes, president and CEO of Estes Express Lines, the nation’s largest privately owned less-than-truckload business, said he believes electronic logging devices becoming mandatory before yearend will have “honestly a good impact” in improving safety and leveling the playing field among motor carriers.

Jason Craig, director of government affairs for C.H. Robinson, left, and Rob Estes, president and CEO of Estes Express Lines, discuss regulatory impacts on trucking. (Photo by Paul Scott Abbott, AJOT)
Jason Craig, director of government affairs for C.H. Robinson, left, and Rob Estes, president and CEO of Estes Express Lines, discuss regulatory impacts on trucking. (Photo by Paul Scott Abbott, AJOT)

Estes added that he believes ELDs provide a perfect opportunity for gauging detention time for truck drivers, and Jason Craig, director of government affairs for third-party logistics leader C.H. Robinson added that he sees ELD implementation leading to shorter driver waits, thus improving utilization of trucking’s human and equipment assets.

That said, Estes said trucking regulations combine to conservatively take a 3 percent to 5 percent bite out of his company’s revenues. Based on an anticipated $2.5 billion of business in 2017, that equates to between $75 million and $125 million this year for his firm, he said.

In a presentation on the U.S. Customs and Border Protection’s Automated Commercial Environment system for electronic facilitation of goods clearances, Barry Bramble, director of brokerage systems for global package delivery leader UPS, said ACE has now been more than 90 percent implemented, but he said adjustments continue to be made. He concurred with an American Journal of Transportation observation that the acronym could appropriately be alternately spelled out “Anticipate Change Endlessly.”

Nonetheless, Bramble, who noted that UPS had 25 million U.S. import clearances in 2016, said UPS engagement in ACE has furnished an enhanced level of comfort to customers and, in a business that has long been paperwork-intensive, “It’s really forcing us to get out of the paper world and get into the electronic world.”

Barry Bramble, director of brokerage systems for UPS, says electronic U.S. Customs processes are helping the logistics industry get away from piles of paper. (Photo by Paul Scott Abbott, AJOT)
Barry Bramble, director of brokerage systems for UPS, says electronic U.S. Customs processes are helping the logistics industry get away from piles of paper. (Photo by Paul Scott Abbott, AJOT)

Jump Start 2017 also provided a forum for recognition of productive supply chain collaborations, with honored partnerships including two involving automakers and U.S. Southeast port entities. One comprises the South Carolina Ports Authority and its Greer Inland Port, Norfolk Southern Railway and BMW, while the other engages the Georgia Ports Authority, Cordele Inland Port, third-party logistics provider GLOVIS America Inc., Georgia Central Railway, Heart of Georgia Railroad and Kia Motors.

Among highlights of other Jump Start sessions:

Benjamin Hartford, senior research analyst for transportation at the Baird investment banking firm, said growing U.S. trade protectionism is of great concern, with the future “inherently uncertain,” but he said he does anticipate improved growth in pricing for truckload freight;

Dr. Walter Kemmsies, managing director, economist and chief strategist for the ports, airports and global infrastructure practice of the Jones Lang LaSalle commercial real estate firm, said he believes growth in U.S. exports to be the only viable solution to reduce the nation’s multiple economic deficits, and he said American infrastructure investment must now focus on inland corridors, as he sees waterside concerns having been largely resolved;

(L to R) Jonathan Lafevers, president and chief commercial officer, Cordele Intermodal Services.; Kevin M. Kinsey, procurement subdivision senior manager, Kia Motors Manufacturing Georgia; J.T. Smith, manager of sales and operations, GLOVIS America; Bill Barrs, regional sales manager for trade development, GPA; Joseph (Kyung Rok) Ji, freight forwarding manager, GLOVIS America (Photo by Paul Scott Abbott, AJOT)
(L to R) Jonathan Lafevers, president and chief commercial officer, Cordele Intermodal Services.; Kevin M. Kinsey, procurement subdivision senior manager, Kia Motors Manufacturing Georgia; J.T. Smith, manager of sales and operations, GLOVIS America; Bill Barrs, regional sales manager for trade development, GPA; Joseph (Kyung Rok) Ji, freight forwarding manager, GLOVIS America (Photo by Paul Scott Abbott, AJOT)

Monica Wooden, CEO of transportation management systems provider MercuryGate International Inc., urged TMS investments to help take empty miles out of the supply chain, saying embedded analytics should provide U.S. enterprises with more than $60 billion in annual savings by 2020; Blake Thomas, director of professional services at transportation management software firm TMW Systems Inc., reminded that using even the best routing solution will prove to be “all for nothing if you’ve entered the wrong data”; and

Dr. Magnus Egerstedt, an applied mathematics scholar and roboticist who directs the Georgia Robotics and Intelligent Systems Lab at the Georgia Institute of Technology, said technology should be in place to facilitate 30 percent of U.S. trucks being driven via highly automated means within five to 10 years, but policy issues make predicting the future incidence of driverless vehicles virtually impossible. (For a page of Jump Start 2017 reception photos, see page 23.)

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American Journal of Transportation

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For more than a quarter of a century, Paul Scott Abbott has been writing and shooting images for the American Journal of Transportation, applying four decades of experience as an award-winning journalist. A graduate of Northwestern University’s Medill School of Journalism, with a master’s magna cum laude from Trinity Evangelical Divinity School, Abbott has served as president of chapters of the Propeller Club of the United States, Florida Public Relations Association and Society of Professional Journalists. Abbott honed his skills on several daily newspapers, including [em]The Cincinnati Enquirer, The Richmond (Va.) News Leader, Albuquerque Journal and (South Florida) Sun-Sentinel, and was editor and publisher of The County Line, a weekly newspaper he founded in suburban Richmond, Va.[/em] A native Chicagoan, he is a member of American Mensa and an ever-optimistic fan of the Chicago Cubs.