• VIRGINIA BEACH, Va.
The American Logistics Association’s (ALA) Annual Conference & Professional Development Forum, held here at the Marriott Virginia Beach Oceanfront Resort, reached its final day on Nov. 5, featuring a bevvy of speakers highlighting topics concerning military resale.
Here is a summary of what was said during the final day of this in-person event.
Presentations, Meeting Recordings & Articles to Available in the Military Commerce Magazine & ALA Members’ Portal
Steve Rossetti, president, ALA
On the latest news about the government shutdown …
“The president has the Republicans over at the Oval Office this morning. He is moving, at last report, to exercise the ‘nuclear option,’ in other words, to go to a simple majority to getting the government open. I don’t know how it ended up, but that was at least the emphasis of what he was going to do this morning.
“Then last night, today, the Senate Democrats at the meeting, and there was a lot of activity as part of the Democratic caucus with pressure on Chuck Schumer to get to the table and get a deal to open up the government. These are people we are not that familiar with in our space, but a lot of the more moderate Democrat senators are getting to coalesce around a solution.”
On what the solution may be shaping up to be …
“It looks like the solution is shaping up along these lines. It will be a ‘minibus,’ which is a mini version of an ‘omnibus,’ when you take all of the appropriations bills, put them together, and you discharge them to get money for the entire year.
“Right now, the proposal on the table is packaged as a minibus, where three or four agencies with some votes on healthcare, and extension on the continuing resolution that the House has currently passed, which is Oct. 21 continuing into January, except for those organizations that are included with the minibus that are funded for the entire year, and defense should be one of those.
“Again, this is all in motion, and the good, operative word here is ‘motion,’ as we are starting to see some of the glaciers flow and the ice jams break, and we are very hopeful, urging for a quick resolution to some of the core issues associated with shutting down the government and getting this government back open so we can all sleep a little better and move forward.”
Capt. Jeff Ferlauto, commanding officer, Coast Guard Exchange (CGX/CSC)
On why it is an “exciting time” to be in the Coast Guard …
“I loved being part of the junior enlisted crew, whether it is on working on the flight deck, sports banter on the mess deck. I enjoyed being around the crew, especially the enlisted crew.
“I am right now in a position where I could affect them directly by making sure that we are maximizing our profit in the Coast Guard Exchange, and all of those profits go back into quality-of-life programs for active duty members and their families, so I am very excited to be here, and if I am not on a ship, it is probably the next best thing to do.
I took command about four months ago, and it has been going really well. We are in a historic time. I think you heard about the Coast Guard getting a big increase … our budget for the whole Coast Guard is about $13 billion, which is very small potatoes compared with the other services here.
“On July 4, the president signed a law that increased our budget to a historic leap, $24.5 billion, to recapitalize all of our aging assets, our infrastructure. So it is an exciting time for being in the Coast Guard.
“We have been charged with Force Design 28, so over the next three years, it is how we are going to transform the Coast Guard with this influx of money, on how we are going to recapitalize our aging assets, shore infrastructure, increase our active duty members by about 15,000.
“For comparison, our services have 40,000 people, and now we are tasked at getting 15,000 more on board, and that is big news for us.
“Make no mistake, it is an exciting time at being in the Coast Guard.”
On CGX operations …
“We still provide uniforms for our fleet. Our barbers provide over 15,000 haircuts. Our gas stations pumped up 5.2 million gallons of fuel over the past five years. Our 24/7 stores are catching fire and really catching on.
“Our online shopping has really gone through the roof. We have 31 Coast Guard Express and hybrid operations, and we are kind of just getting started here, and the future is great.
“Our revenue is $250 million. I know that that is pretty small compared with the other services here, but that is big for us. Our profits go right back into MWR programs for active duty members and their families.
“This is big. It might not seem a lot, but that translates to $55 per person. These junior enlisted folks don’t make a lot of money, and this goes a long way. Things are expensive … it helps the junior enlisted members to do things that they wouldn’t ordinarily be able to do. It goes a long way, and makes a big difference.
“And we have been making capital improvements. We have been putting up a full court press for our fitness centers, our pools, basketball courts, gym equipment … there are new physical fitness standards that are coming out for the services and the Coast Guard, and we want to make sure that our folks have the right tools in order for them to pass those tests.
On controlling costs yet providing necessary services …
“Our revenue is about the same as last year. Our earnings are up a little bit, 1.6 percent, but our expenses are down, which is a good thing. We are cutting our costs by controlling our expenses, managing markdowns much better, and we project a robust year with dividends for MWR programs.
“Our personnel expenses are down 2 percent, primarily through efficiencies in store operations. Over the last few years, we have engaged with professional retail consultants to find efficiencies and it is paying off.
“We have the right inventory at the right price at the right location. Our financial planning team is planning better, and I am excited at things coming down the road.
“The exchange is a big part of what we do, and goes to funding our MWR programs, and we are making sure that we are generating revenues that support programs for active duty members and their families.
“We make a lot of our profits through alcohol and tobacco sales, and for us, the Coast Guard, specifically in Puerto Rico, but we are not so sure how sustainable that is. So we are looking at other streams of revenue to supplement that profits we have made from alcohol and tobacco. They are still big moneymakers, but we are looking at other ways to do it.
“Consumables — snacks, food and drinks — we are crushing it there, apparel has come a long way, shoes and accessories, fragrances are up almost $3 million. Our uniforms, logo and apparel are up $11 million, tickets … it is not out of the ordinary for people to go to our locations to get tickets for Disney, Busch Gardens … for a family of four, it is pretty expensive, and our online sales are really picking up, and our Expresses, where people can come in any time of day, swipe their card and get soft drinks, soda. Everyone wants a Coast Guard Express now.”
Ed Cutshall, director and chief executive officer (CEO), Marine Corps Exchange (MCX)
On being the tip of the spear …
“Our commandant’s mission for the Marine Corps is to have three expeditionary units around the globe at one time. We are the tip of the spear. There is nothing like having 2,500 Marines on the coast of whatever … and when he does that, Marines are going to be forward deployed and gone. Their families are back at home, so we have to take care of them.
“Plus, those Marines are out on the forward edge, they do go ashore, and they need supplies. We know Marines run off of caffeine and nicotine, that’s what they do, that is important to them, plus all of the other goodies … there is nothing better when you get back than putting on clean, dry, no-holes-filled socks. Clean socks are morale.
“Marines never deploy out with that. They take the minimum. If you pack it, you have to hump it, you have to carry it, so they need that resupply, and that is where MCCS comes in.
“The commandant recognizes how important quality of life is. We might be at the bottom of page 2 of his directive, but quality of life is important.
“’We recruit the Marine, but we retain the family.’ That is the key concept of the Marine Corps. Total balance. Yes, we want to recruit that Marine, but we know, there are the spouses, there are the children, and if I can take care of them, and I can employ their spouse, then I can keep that in the Marine Corps, retention, stay a Marine.
“And when you spend that dollar on base, the money stays on base, and contributes to quality-of-life programs on your base. The funds that are generated take care of their needs and the needs of their families.
On the shutdown …
“The government shutdown is impacting everybody from a NAF perspective, at MCCS, we do it all. We have done some numbers, and we are good through January.
“We are hoping the shutdown doesn’t go any longer than that, but our 11,000 NAF workforce has been paid every day and getting taken care of, so we are happy that we can get through that.”
On business operations …
“We are not as big as some of the others, but the $1.7 billion in total revenue … that does not include our lodging operation, that is about another $70 million.
“We have 11,000 employees, 2,000 store-level retail associates across the MCCS enterprise, and one-third of those are spouses. I am a big proponent on military spouse hiring.
“We just started a Military Spouse Preference Plan, so we are doing that with NAF spouses, and with relocation. We are giving spouses 180 days of leave without pay, so they can relocate and get another job with MCCS and transfer, so you stay an MCCS employee, you don’t reset your 401K. you stay with us — ‘stay a Marine, retain the family’ — and we keep them in the cycle of the Marine Corps.
“That is why I am against privatization, because the privatization retailer is not going to commit to what we do for families.
“We have our market basket savings spread across stores, 82 Marine Corps 24s, and it is growing like everybody else has mentioned during the past two days.
On new innovations …
“We have our Vision Merchandising System. This is the heart and soul of our organization. Over the last year, a couple of years now, we are in a major digital transformation at MCCS.
“What’s in it for you? Why am I telling you about this? This system, which we are going to go live with on March 10, it is all cloud-based, eye-level for a security environment, and it is going to be the heart and soul of our entire business going forward.
“What does that do for you? Faster, easier EDI, electronic document transfers, you can get visibility of inventory, the MCCS app will be able to have real-time inventories so that you can shop on your phone with the exchange, and you will know if I have five on the shelf or there is five in the backroom, and the shelf is empty. Buy online, pickup in store.
“It is a game-changer, and it will elevate us to be able to do many things to connect with the family overall.
“As far as data governance is concerned, we have a ton of data with very little insights. It is a problem all of you face. Part of our cloud strategy, we’re already implementing it, and it is all happening in the next six to eight months, we’ve come a long way.
“We going to have one big, massive data link, we’re working with a vendor, but we will have that link with a semantic on top, sky enablement … I have multiple points of sale … I have a retail point of sale … I have a food point of sale … I have a lodging point of sale, and I have a recreation point of sale, because I do all of those services.
“None of those talk to each other. We work off Excel. I takes a couple of days when we need something to pull this data together and do some aerobics with it.
“But coming next year, we will just be able to talk … ‘tell me what are sales of this item, at this store, at this time of day.’ We will be able to get you that type of analytics, for you, the sellers of that product, who want that information.”
John Hall, director and chief executive officer (CEO), and his team, Defense Commissary Agency (DeCA)
DeCA Director John Hall
On increasing in-stock rates …
“We have grown from 94 percent in-stock rates a few months ago, close to 98 percent, and now, I expect it reflect in sales increases. We haven’t seen those sales increases, but this new category management thing will help us to get closer to where we need to be.
“Our Guam in-stock rates are at an all-time high, at 96.5 percent. Anderson is actually at 98.2 percent. These are really incredible numbers given that Guam is the hardest place to resupply in all of DeCA.
“We are really doing well there, and we are still working on supply chain transformation.”
Jim Flannery, acting executive director of Sales, Marketing and eCommerce
“This transformation still remains a very active and important priority for the agency. The timeline has been impacted by things that are generally out of DeCA’s control, but the timeline delay should not be confused with a lack of energy and intent on the transformation.
“The intent and the success criteria for this transformation remain the same. Our intent is to eliminate the non-valuated costs inherent in our unique supply network today. It is an end-to-end network from the time it leaves your dock until the product crosses the point of sale and the cash process is complete.
“That is a unique system. It is inherent in inefficiencies that you don’t have to deal with in commercial grocery. For every 1 percent of cost we can get out of the system, that is $50 million in cost savings.
“We believe that there are work processes that can be changed, accountability that can be brought to bear that can eliminate these non-valuated costs.
“For DeCA, we believe that if we do this, the cost of goods is going to go down, that will either result in a reduction of retail price and increasing savings, or reducing the appropriation that we need to run our business. We won’t do this if we feel that the cost of goods will go up, which will impact those patron savings.
“If this is going to work, the cost to you, the supplier, must go down. Those costs that you are seeing today are coming to you via the unique work around processes that you have in place to manage DeCA. Hopefully, you take those cost savings and invest them back in our business. That is what drives the savings and the increased revenue.
“And for our intricate partners, whatever we do, their profit dollars cannot go down. If it goes down, then it is not a sustainable change.
“This will only work if we identify the things in the system that are driving these non-valuated costs, we change the processes, we build the accountability, and we eliminate those costs. If we can execute this, we will have a workable program. … and I have no predicted timeline.”
OTHER SPEAKERS
Others who spoke during this day’s meeting included:
- Keynote Speaker: Johnny “Joey” Jones, combat-wounded U.S. Marine, Fox News contributor, best-selling author
- Legislative and Regulatory Compliance Update: Mark Cancian, senior advisor, Defense and Security Department, Center For Strategic and International Studies
- Future of Convenience: Thomas McElroy, Deloitte
EVENT SPONSORS
Sponsors of the three-day event included Advantage Military; Acosta Group; Alder Foods; Aramark; Coastal Pacific Food Distributors; Coca-Cola; Deloitte: Elite Brands; EURPAC; Fairlife; Flora Food Group; Lactalis USA; Mars Petcare; Mars Wrigley; McLane; National Industries For the Blind; Nestle Purina; OSCWebco; Procter & Gamble; Red Bull; S & K Sales; Shabo; J.M. Smucker Co.; SpartanNash Military; Spyrt Worldwide; Top Gun Services; Tyson Foods; and Unilever.
