Inside a Home Depot MDO (source: The Home Depot)
Completes five-year transition from outsourced fulfillment
By Alan Wolf, YSN
The Home Depot has ended its reliance on a fourth-party logistics network for appliance deliveries, bringing all of its last-mile fulfillment in-house.
The move, five years in the making, was part of a $1.2 billion investment in its supply chain that included the creation of 150 “market delivery operations” facilities (MDOs) and dedicated fulfillment centers for oversized orders.
The nation’s No. 2 appliance retailer described the stockless MDOs as local area delivery hubs that receive inventory directly from vendors and schedule and deliver them to customers. Staffed by Home Depot employees, the MDOs primarily handle home appliances but may also deliver other big-bulk items from the company’s online catalog such as furniture.
Prior to 2017, Home Depot outsourced 100% of its last-mile appliance deliveries through a fourth-party logistics network. The world’s largest home improvement chain said direct control of its appliance deliveries has lowered fulfillment costs, increasd efficiency and extended its next-day capabilities without adding inventory stocking points.
Early tests of the in-house network indicated a 7% improvement in customer satisfaction scores, executives noted.
The MDO announcement was made by President/CEO Ted Decker earlier this week on a fourth-quarter earnings call. “We are very pleased with the continued progress on our supply chain build-out, as we reached an important milestone earlier this year,” he told analysts. “All of our appliance delivery volume is now managed through our market delivery operations, significantly improving the customer experience.”