Home Depot Supply Chain: How Faster Delivery Drive Growth

Home Depot Supply Chain Pushes Delivery Speed Beyond Two Days

Over the past eight years, The Home Depot has quietly transformed its supply chain from a traditional store-centric network into a fast, flexible delivery engine that now outperforms its original two-day shipping ambition.

Back in 2017, the home improvement retailer laid out a vision centered on positioning inventory closer to customers to enable two-day parcel delivery. Today, the company has moved well beyond that goal. Fifty-five percent of deliveries for in-stock SKUs now arrive eitherthe same day or the next day, more than tripling performance levels achieved in 2022, according to company data shared at a recent investor and analyst conference.

 

A Purpose-Built Network of Nearly 200 Facilities

Fueling this acceleration is a massive expansion of Home Depot’s physical supply chain footprint. Over the past eight years, the company has added nearly 200 facilities, each designed to support a specific fulfillment role:

 

• • 160 Market Delivery Operations (MDOs): Cross-dock facilities that consolidate, sort, and stage large and bulky products such as appliances

    

  • 20 Direct Fulfillment Centers (DFCs): Customer-proximate facilities that stock popular and extended-assortment SKUs for fast fulfillment

  • 17 Flatbed Distribution Centers (FDCs): Specialized hubs focused on building materials like lumber and other oversized items

 

Together, these facilities allow Home Depot to move more inventory off store shelves, improve delivery speed, and scale capacity without overburdening retail locations.

Algorithms as the Supply Chain Brain

Complementing its physical assets is Home Depot’s proprietary “ship from best location” algorithm, which evaluates customer profile, geography, inventory positioning, and available distribution assets to determine the optimal fulfillment path for each order.

Executives say the combination of infrastructure, inventory investment, and technology has materially improved delivery speed and reliability across channels.

“Our distribution assets, combined with inventory investments and technology enhancements, have significantly increased the speed of our delivery,” Broggi said.

From Network Buildout to Asset Optimization

According to CFO Richard McPhail, Home Depot has “essentially completed” the buildout of its MDO, DFC, and FDC networks. The company’s focus is now on maximizing utilization of those assets to gain market share in an environment marked by consumer uncertainty and tariff-related pressures.

One key lever is expanding the number of products eligible for fast delivery. For instance, while an average Home Depot store may stock around 25 water heater models, that selection may not meet every customer’s needs. By working with suppliers like Rheem to stock a wider assortment at direct fulfillment centers—and routing orders through MDOs for last-mile delivery—Home Depot has dramatically reduced delivery times for extended-aisle items.

Historically, non-store-stocked products could take five to nine days to arrive. Today, more than half of extended-aisle deliveries reach customers within one or two days.

Relay Extends Flatbed Reach

Earlier this year, Home Depot introduced a new delivery method called Relay, designed to extend the reach of its flatbed distribution centers in a capital-efficient way.

Under the Relay model, flatbed drivers transport loaded trailers overnight from FDCs to designated store parking lots. The trailers are then dispatched to job sites the following morning. The program launched in the Atlanta market and has expanded coverage into adjacent regions such as Chattanooga, Tennessee.

By deploying Relay across multiple flatbed distribution centers, Home Depot has extended service into 18 additional markets, according to EVP of Pro Michael Rowe.

“This allows us to get greater coverage in our Atlanta market while also extending our reach into adjacent markets,” Rowe said at the conference.

Obsessing Over the Misses

Delivering at speed—while striving for a 100% on-time performance rate—remains a significant challenge, particularly for a retailer managing diverse product categories and fulfillment paths. Rather than focusing on the majority of deliveries that go right, Home Depot places intense scrutiny on failures.

“We don’t celebrate that the vast majority of our deliveries are perfect,” Broggi said. “We obsess over the misses and use each failure as an opportunity to improve our processes.”

That discipline has helped the retailer reduce missed deliveries while continuing to improve customer satisfaction, reinforcing logistics as a core competitive advantage rather than a back-end function.