Nardelli's Changes
1. What is your assessment of Nardelli’s changes at Home Depot? Which of the changes had the greatest impact?
In my opinion Nardelli, during the years he was The Home Depot’s CEO, did an overall great job. The changes he introduced to the business model were necessary to help The Home Depot to keep growing in the right direction. The Home Depot, at the time Nardelli was appointed CEO, was a company with an old style management and operations that could have compromised the future of the company. Nardelli focused on and achieved increasing sales and profitability, by 2006 sales had doubled from $45.7 in 2000 to $90.8, and profits had more than doubled from 2000 to 2005 to $5.8 billion. Among all the changes he made, the ones that had …show more content…
He also took the decision to switch full time store employees to part time employees and to reduce the number of employees in the stores. This had actually a negative impact as it certainly contributed to the erosion of the share price during the years and it actually cost Nardelli his job.
2. How did Nardelli’s changes affect profitability, labor productivity, and customer service? What metrics would you use to assess these impacts?
The main change that Nardelli introduced that affected profitability was the centralization of the merchandising and purchasing. It is true that before 2000 the store managers were able to be closer to customers and to decide what products stock in the stores, but at the same time that was highly inefficient from an operational point of view, leading to a mismanagement of stock levels. Thanks to Nardelli’s new centralized approach the company was able to eliminate almost 20,000 unprofitable items and to introduce other higher priced, higher-end products which contributed to increase sales and eventually …show more content…
• Six Sigma Approach.
As mentioned above, Nardelli actually worsen the Customer service since he started his job, mainly switching the full time store employees to part time employees.
The result was that customers were unhappy about the level of customer service since the part time employees were not enough prepared as the full time workers. This eventually led to the share price erosion during the years.
Some of the metrics used by Nardelli to measure the productivity were pallets per hour for the monitoring of the freight flow process and inventory velocity to measure the length of time it took for products to flow through stores. He also used other sort of performance metrics such as financial, operational, customer and people skills metrics. He definitively should have monitored closer the customer satisfaction and people skills to avoid the problems he had at the end of his career with Home Depot.
3. Did Nardelli’s emphasis on process discipline cause the decline in customer service?
In my opinion Nardelli’s emphasis on process discipline improved the store operations performance and could have possibly even improved the customer service. The reason of its decline was purely determined by the switching the full time store employees to part time
In my opinion Nardelli, during the years he was The Home Depot’s CEO, did an overall great job. The changes he introduced to the business model were necessary to help The Home Depot to keep growing in the right direction. The Home Depot, at the time Nardelli was appointed CEO, was a company with an old style management and operations that could have compromised the future of the company. Nardelli focused on and achieved increasing sales and profitability, by 2006 sales had doubled from $45.7 in 2000 to $90.8, and profits had more than doubled from 2000 to 2005 to $5.8 billion. Among all the changes he made, the ones that had …show more content…
He also took the decision to switch full time store employees to part time employees and to reduce the number of employees in the stores. This had actually a negative impact as it certainly contributed to the erosion of the share price during the years and it actually cost Nardelli his job.
2. How did Nardelli’s changes affect profitability, labor productivity, and customer service? What metrics would you use to assess these impacts?
The main change that Nardelli introduced that affected profitability was the centralization of the merchandising and purchasing. It is true that before 2000 the store managers were able to be closer to customers and to decide what products stock in the stores, but at the same time that was highly inefficient from an operational point of view, leading to a mismanagement of stock levels. Thanks to Nardelli’s new centralized approach the company was able to eliminate almost 20,000 unprofitable items and to introduce other higher priced, higher-end products which contributed to increase sales and eventually …show more content…
• Six Sigma Approach.
As mentioned above, Nardelli actually worsen the Customer service since he started his job, mainly switching the full time store employees to part time employees.
The result was that customers were unhappy about the level of customer service since the part time employees were not enough prepared as the full time workers. This eventually led to the share price erosion during the years.
Some of the metrics used by Nardelli to measure the productivity were pallets per hour for the monitoring of the freight flow process and inventory velocity to measure the length of time it took for products to flow through stores. He also used other sort of performance metrics such as financial, operational, customer and people skills metrics. He definitively should have monitored closer the customer satisfaction and people skills to avoid the problems he had at the end of his career with Home Depot.
3. Did Nardelli’s emphasis on process discipline cause the decline in customer service?
In my opinion Nardelli’s emphasis on process discipline improved the store operations performance and could have possibly even improved the customer service. The reason of its decline was purely determined by the switching the full time store employees to part time