Network design can play a key role in transforming a supply chain. Dan Gilmore of SupplyChainDigest wrote a nice article on the transformation of The Home Depot’s supply chain.
In the article, Mr. Gilmore reported on the aggressive transformation of The Home Depot’s supply chain from one where the suppliers mostly delivered directly to the stores to one where product flowed through distribution centers first. The Home Depot had to use network design software to determine the best number and locations of these distribution centers. The article did not mention the transportation savings, but mentioned that the strategy could help free up $1 billion in inventory.
The transformation of the supply chain was so important that it was mentioned in the letter to shareholders in the 2009 Annual Report.
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