Electronic Invoicing Solutions Finance Transformation

Debbie Rich-WalkerSr. Manager, Financial Operations – Merchandise Payable

September 29, 2010

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Who We AreFounded in 1978, The Home Depot (HD) is headquartered in Atlanta, GA

The world’s largest home improvement retailer; the second largest retailer in the United States.

2009 sales of $2009 sales of $66.266.2 billion and $billion and $2.62.6billion in earningsbillion in earnings

2,244 stores2,244 stores

USAUSA

--

1,9761,976

MexicoMexico

--

8080

CanadaCanada

--

179179

ChinaChina

--

99

Approximately Approximately 60 Million60 Million Merchandise AP Merchandise AP transactions annually ($transactions annually ($4040 Billion Spend)Billion Spend)

MORE SAVING MORE DOING MORE SAVING MORE DOING

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AGENDAKPIs

EDI Strategy (End to End)

Reasons for EDI Adoption

Challenges/Best Practices

Key Benefits

AP Back-End Innovation & Automation

Q & A

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Where we are

Merch AP KPIs

95.0%

95.5%

96.0%

96.5%

97.0%

97.5%

98.0%

98.5%

99.0%

99.5%

100.0%

2005 2006 2007 2008 2009 Jul‐10

EDI Penetration

Match Rate

Achieved 99.6 EDI Penetration – Target 100%Achieved 99.6 EDI Penetration – Target 100%

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Where We Want To Be – End to End Strategy

100% Electronic Transaction Required to Do Business with THD100% Electronic Transaction Required to Do Business with THD

Purchase Order850

Invoice810

Credit/DebitAdjustment

(Chargeback)812

Remittance Advice

820ACH/EFT

ASN856

997864

6

On-going governance and follow up of results with tracking mechanisms is a key activity to EDI penetration, but even more important, to change mindsets & behaviors and implement a performance culture

Execute & Manage

Performance2. Create realistic goals & expectations

5. Ensure rewards, consequences and actions

4. Hold robust performance dialogues

1. Establish clear metrics, targets & accountabilities

3. Track performance effectively

Solid Performance Management Drives Continuous Process Improvement

Measure stakeholder valueSet direction & context

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Key Reasons for Full EDI Adoption

Enhance Competitive AdvantageReduce costs enterprise widePromote continuous process efficiency Improve Supplier RelationshipsAct strategically

Support Social/Environmental Responsibility

Help Save Trees60M Invoices per year = 18 Acres“Doing the right thing”

Strategic Alignment of Corporate & Environmental GoalsStrategic Alignment of Corporate & Environmental Goals

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Challenges & Best Practices

Web Forms

Policy Mandate

Supplier Education & Accountability

Opportunities Solutions

Small Volume Suppliers

Supplier Constraints

Value Proposition

Collaboration With EDI Business PartnersCollaboration With EDI Business Partners

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Key Benefits

Front End Automation = Savings to Support AP ProcessFront End Automation = Savings to Support AP Process

Reduction in AP Transaction Cost

Systematic ProcessingEliminate Paper Waste & Human InterventionIncrease in On-Time PaymentsIncrease in System Match RateIncrease in Payment AccuracyEliminate Paper Checks

Enhanced Supplier Relationships/Reduction in Escalations

Increased Focus on Root Cause Analysis

.06 cents per trans.

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Benefits of Trading Data Electronically

►Streamline business processes

►Reduce manual processing

►Reduce errors

►Create a faster turnaround on critical business documents

►Provide an audit trail of transactions

►Technology flexibility

Gain Efficiencies Across the Supply ChainGain Efficiencies across Supply ChainGain Efficiencies across Supply Chain

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Back-End Automation – Dispute ResolutionPrevious Process

Paper based / Access DatabaseCostly for Suppliers & THD45 day cycle time

Current ProcessElectronic Supplier PortalCost Effective - Win/Win10 day cycle time

Future ProcessEnhance Supplier PortalOne stop shop for suppliers

Continuous Focus on Operational Excellence Continuous Focus on Operational Excellence

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Supplier AP Dispute Portal Features

1. Electronic Dispute Submission  Eliminate paper, save on postage, toner, etc       

2. Secure Password protected Portal

3. Flexible Allows for multiple users within your company PDF or fax submissions are accepted

4. Online visibility to invoice payment details Eliminate calls to the help desk

5. Online visibility to Charge back listings Chargeback copy not required

6. Online visibility to package  Package status available in real time

7. Electronic Carrier Tracking  Eliminates need to supply POD (core carriers)

8. Dialogue Feature 2 way communication between THD and supplier

9. Permanent record of package Additional information can be added

Expected Cycle Time 14 days vs. 45 day Paper Process

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Supplier Portal Views – Home Page

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Supplier Portal Views – Paid Invoices

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Supplier Portal Views – CB Dispute

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Supplier Portal Views- POD dispute

Be as detailed as possible

NOPOD

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PAPER

DOING IT!

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Questions