Compliance at Home Depot

10 min read

Suppliers looking to improve their performance in Home Depot have to keep a lot of different programs and strategies into account, some of which are very costly. Many suppliers - in all kinds of retailers - lose a significant portion of revenue and suffer lowering retailer performance scores to compliance fines.

Timing is half of the battle with retailer compliance. Home Depot's fiscal year follows a similar general structure to most other major retailers:

  • Q1 = February, March, April

  • Q2 = May, June, July

  • Q3 = August, September, October

  • Q4 = November, December, January

Compliance at Home Depot is broken down into three major categories: Transportation, Data Quality, DTS (Direct to Store), and RDC/DFC Compliance.

There are a few apps in the Supplier Hub that pertain directly to compliance:

  • Supplier Performance Management (SPM)

  • Supplier Compliance Metric Preview

  • On Time Vendor Feedback

  • Fill Rate Violations - SKU Lst

  • Dispute Tool - Direct Fulfillment Only¬†

  • TMS = Transportation Management System*

*The Transportation Management System is not found under the "Compliance" section of apps under the Tools heading on Supplier Hub, but it's functions are still intimately connected to supplier compliance performance.

For disputing most of these compliance violations, the required documentation can include one or more of the following:

  • Documentation from Home Depot employee

  • Copy of BOL

  • TMS screenshot with applicable information

  • Copy of ASN

  • Copy of Label and UPS Manifest

Transportation Compliance

Transportation compliance is itself broken down into four different violations: 

  • Routing Guide Violations (Collect or Prepaid)

  • Multiple Bill of Lading Violation

  • Parcel PO Violation

These violations result in fines (often referred to as offsets) that are made on a quarterly basis for LTL. Fines will be issued the first week of the month for the previous month. Suppliers will then have a month from then to dispute.

These codes will appear on the remittance advice with the four-letter reference, TRAN, followed by a 1 digit signifying the quarter, then the next two digits signifying the year. For example, a transportation offset received in March 2023 would show up as "TRAN123." 

Routing Guide Violations (Collect or Prepaid)

Home Depot has unique routing guides for both Collect and Prepaid. The Collect guide has specific routes for California origin or destination shipments based on region. It is important to follow routing guides properly to ensure that shipments are scheduled with the appropriate carriers. This applies to both Collect and Prepaid.

Even for prepaid, it is important to use Home Depot's appointed carriers, as they have outstanding appointments scheduled. Using a carrier outside of the routing guide could cause delays in arrival leading to further offsets.

The offset for Routing Guide Violations is $250 per violation.

Multiple Bill of Lading Violation

If shipping multiple POs into the same RDC on the same day, the Supplier is expected to ship under one PRO/BOL and execute a Master Bill of Lading per Home Depot's requirements. See the Rapid Distribution Center in Pain Points and Best Practices below for more information on the RDC Network.

Failure to comply can result in an offset of $75.

Parcel PO Violation

For Parcel POs being shipped to a Home Depot DC or store, POs must have an 8-digit PO Number for the Ref1 field. Ref2 field requires the 4-digit store number.

Failure to comply with these two practices will result in a $10 offset per violation.

Disputing Transportation Compliance Offsets 

All disputing is done through Supplier Hub - Supplier Performance Management App (SPM). Under Transportation Compliance Program, and offset type, there is a link to "Dispute Form" in the top right. The Dispute Form will redirect to a Zendesk form with prefilled Issue and Organization fields. The Issue field should be filled as "Transportation Compliance Dispute Form".

Suppliers can then fill out the form, selecting metrics based on the above offset reasons.  Suppliers are expected to attach an excel file with the copied data from SPM with the appropriate invoices they are disputing. In addition, any supporting documentation needed should also be attached to the Zendesk form.

Data Quality Compliance 

Home Depot requires suppliers to input all item information and keep it up-to-date using their Item Data Management portal. Failure to update item information can lead to offsets. The three main areas that Home Depot's DQC Program encompasses are:

  • Specs and Digital Assets

  • Supply Chain

  • Hazmat

Specs and Digital Assets

During new item set-up, Home Depot requires that all images provided must be 1,000" x 1,000" with a 72 resolution format. Additionally, all images must have a white background.

Failure to comply with these parameters can result in a $1000 offset.

Supply Chain

Within the IDM portal, suppliers are required to create and maintain the product hierarchy. This includes the shipping dimensions for Each, Inner Pack, Case, or Pallet.

Out-of-date or inaccurate information can result in a $1000 offset per item.


Suppliers selling items considered regulated or containing hazardous materials either in-store or online must comply with internal and external regulations/review before product approval. Based on the product inputs provided in IDM, further classification of the product may be required.

Failure to comply can result in a $1000 offset per item violation.

Disputing Data Quality Compliance Offsets

All disputing for this compliance is very similar to the others. It is done through Supplier Hub - SPM. Under Data Quality Compliance Program, and offset type, there is a link to "Dispute Form" in the top right. The Dispute Form will redirect you to a Zendesk form with prefilled Issue and Organization fields. The issue field should be filled as "IDM Data Quality Compliance Dispute Form".

Suppliers can then fill out the form, selecting one of the 3 provided dispute reasons. A formatted excel file is available on Zendesk form for download. Suppliers should fill in appropriate fields and attach files with the Zendesk ticket. Any additional supporting documents should also be attached.

RDC/DFC Compliance

At Home Depot, Rapid Distribution Centers (RDCs) and Direct Fulfillment Centers (DFCs) are the primary means of supplier distribution to stores.

RDC and FDC Compliance reports will become available to suppliers on the second Tuesday of the following fiscal month. Suppliers will only have data to view in SPM if they did not meet the threshold for that specific metric for the fiscal month. SPM will not show line level data for metrics if suppliers exceed the threshold.

For RDC and FDC Compliance, all offsets must be disputed within SPM with appropriate proof documentation. Disputes for RDC and FDC offsets submitted outside of SPM will automatically be denied.

After submitting disputes, Home Depot will have the next fiscal month to review before making adjustments to supplier performance. If offset is still required after review, then the debit will be taken after the dispute period has closed.

There are four major subsets/defect types of the RDC/DFC compliance program: 

  • Fill Rate

  • ASN Timeliness

  • On Time

  • Fluid Receiving

Fill Rate

Fill rate is determined if all SKU quantities on a PO are filled and received at the final destination (DFC or RDC). Suppliers are subject to financial offset if received quantities fall below the ordered amount..

Home Depot has a 98% threshold for this metric, and suppliers incur a 10% offset of items not received if not met. Detailed Packing Slips, Pack Size Validation, or Spike Order Quantity Validation can be provided to dispute offsets.

ASN Timeliness

Home Depot expects ASN (EDI 865) transmission to have the correct TMS shipment ID and to occur before the shipment arrives.

If an ASN is not received before KeyRec, then this is considered a Missing ASN. If an ASN is received after drop, but before KeyRec, the the ASN is considered late. Incorrect TMS Ship ID will also result in offset.

The ASN Timeliness threshold is 100% accuracy. Missing ASNs are subject to a $1,000 offset per ASN, Late ASNs are subject to a $250 offset. Incorrect or missing TMS Ship ID results in a $100 offset per ASN. Incorrect or missing TMS Ship ID, in addition to Late ASN, results in a $350 offset.

On Time

Prepaid shipments are considered On Time if the PO is received on or before the expected delivery date. Collect Shipments are considered On Time if the supplier has marked the PO as "ready to ship" in TMS by 11:00 AM local time 2 days before the pickup date.

Home Depot requires a 90% threshold for On-Time accuracy. Failure to comply will result in 10% of items not shipped for the late shipment.

Fluid Receiving

Fluid Receiving is specific to RDC shipments only and is not a metric measured against for DFC shipments.

Home Depot's Fluid Receiving Program requires that all suppliers have the correct labeling specifications to ensure efficient and timely receiving at RDC's. If cartons cannot be read by Home Depot's scanners, this will count against the supplier's Fluid Receiving metric.

Home Depot requires labels that comply with GSI specifications. This metric is calculated by the total number of rejected cartons over total shipped.

Suppliers are expected to stay below the threshold of 1% rejected cartons. If the number of rejected cartons exceeds 1% but is less than 2% of total shipped, then suppliers are subject to a $5 fine per carton.

If suppliers exceed 2%, they will be subject to a $10 fine per carton. These fines cannot be disputed within SPM. If suppliers feel fines were taken in error, a support ticket via Zendesk form can be submitted.

Disputing RDC/DFC Compliance Offsets

For both RDC and DFC programs, disputing can be done through the SPM app in Supplier Hub.  Disputing is done within the app, unlike other programs requiring a Zendesk ticket (excluding Fluid Receiving metric for the RDC program).

Suppliers can select one or more Non-Compliant lines to dispute. Dispute reason, comment, and attachments must be provided. Disputes are submitted per metric per program.

DTS (Direct to Store) Compliance Fines

Direct to Store compliance function similarly to RDC/DFC compliance fines. But instead of the four, they only have two defect types: On Time and Fill Rate. These can be researched and disputed in the same manner as RDC/DFC On Time and Fill Rate sub-defects are. 

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Written by Annalee Foley

About Annalee Foley

Annalee is a Product Manager at SupplyPike. She helps our team build quality products for our customers by driving efficiency and optimizing processes.

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