The company that we visited was The Home Depot and based on the questions we asked to the operations manager we found out that the structure of its logistics functions are as shown in Figure 1.1. Home depot owns most of their distribution centers; this benefits Home Depot because they are in a direct line of contact with the distribution centers and the retail stores. This breaks the barriers between the retail stores and the distribution centers and helps them to get their supplies efficiently. From the distribution center the shipment is then transported via their privately owned trucking fleet to a factory or a warehouse where all the product are kept organised and made ready to go to the Retail stores. When the product reaches the retail stores there is a manifest attached to the shipment that holds the information stating how many products have been delivered to the store. Home depot uses a software system called the SAP that automatically re-order stocks for products depending on the sale frequency of that particular product and it is also based on the past 2 year sales trend. A flow like this helps home depot to always be organised and stocked unless a customer buys a large quantity, which was unforeseen. In this situation the store refers the customers to a nearby local store. Due to this tight flow of the logistics functions and good communication between the distribution centers and the retail stores they are better than its competitors.
A line organisation has only direct, vertical relationships between different levels in the firm. There are only line departments-departments directly involved in accomplishing the primary goal of the organisation. For example, in a typical firm, line departments include production and marketing. In a line organisation authority follows the chain of command.
Home depot has approximately 180 employees per store and almost 371,000 (2015) just in United States. The Canadian operation consists of 180 stores and employs over 35,000 people in Canada. Home Depot Canada has stores in all ten Canadian provinces and serves territorial Nunavut, Northwest Territories, and Yukon through electronic means (Online sales). The Canadian head office is located in Toronto.
Forecasts are a basic input in the decision processes of operations management because they provide information on future demand. The importance of forecasting to operations management cannot be overstated. The primary goal of operations management is to match supply to demand. Having a forecast of demand is essential for determining how much capacity or supply will be needed to meet demand. For instance, operations needs to know what capacity will be needed to make staffing and equipment decisions, budgets must be prepared, purchasing needs information for ordering from suppliers, and supply chain partners need to make their plans.
Two aspects of forecasts are important. One is the expected level of demand; the other is the degree of accuracy that can be assigned to a forecast (i.e., the potential size of forecast error). The expected level of demand can be a function of some structural variation, such as a trend or seasonal variation. Forecast accuracy is a function of the ability of forecasters to correctly model demand, random variation, and sometimes-unforeseen events.
There 3 types of Forecasting Time Horizon
1. Short-range forecast
Up to 1 year, generally less than 3 months
Purchasing, job scheduling, workforce