Mr. Joseph H. Jeu, Director & CEO

Mr. Joseph H. Jeu, Director & CEO

Our mission:

Deliver a vital benefit of the military pay system that sells grocery items at cost while enhancing quality of life and readiness

Our Vision:

Understand our customers and deliver a 21st century commissary benefit

Non-pay Compensation Benefit that Improves Quality of Life for Uniformed Service Members

Non-pay Compensation Benefit that Improves Quality of Life for Uniformed Service Members

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The Honorable Jo Ann Rooney Acting Under Secretary of Defense

Personnel & Readiness

Lt Gen Darrell D. Jones, USAFChairman

Board of Directors

Mr. Fred VollrathPrincipal Deputy Assistant Secretary of

Defense (Readiness and Force Management) Performing the duties of

Assistant Secretary of Defense (Readiness and Force Management)

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Sales and Transactions

Sales FY 2012 thru March

FY 2011 thru March $ Change % Change

DeCA Total ($ Millions) $3,084.56 $2,962.83 $121.73 4.11%

Transactions FY 2012 thru March

FY 2011 thru March # Change % Change

DeCA Total (Millions) 48.84 47.58 1.28 2.70%

Sales per Transaction FY 2012 thru March

FY 2011 thru March $ Change % Change

DeCA Average $63.12 $62.27 $0.86 1.38%

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DeCA’s Projected $6B in Sales

September 2012Sun Mon Tue Wed Thu Fri Sat

12 3 4 5 6 7 89 10 11 12 13 14 15

16 17 18 19 20 21 2223 24 25 26 27 28 2930

2nd time in DeCA’s History1992 – 411 commissaries2012 – 247 commissaries

Moody AFB, GA

Fort Riley, KS

Fort Campbell, KY

Fort Carson, CO

Portsmouth NNSY, VA Quantico

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• Estimated live launch: September 2012

• Commissary Rewards Card compliments and extends current savings through use of digital coupons

• Cards will be distributed in-store & registered via a link within the commissary website

• Digital coupons loaded directly to the patron’s account

• Future capabilities unlimited (i.e. mobile apps, partnering opportunities with exchanges etc.)

• DeCA Point of Contact: Marye Carr, 804-734-8000 ext 52781

Impactful Initiative – DeCA Team to be Enthusiastically Engaged!

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• Congressional Interest

• Re-vitalized program

– Two locations approved (Fairbanks AK and San Diego CA)

• Right thing to do

– Social benevolence

– Reduced solid waste

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• Measures important to identify challenges and help improve performance

• Concentrate initial effort on the following metrics:

– Manufacturer and Broker Store Support

– FDS Manufacturer/Distributor Fill Rates

– In-Stock Effectiveness

– New Item Speed to Shelf

– Promotions Effectiveness

• Will Collaborate with Commissary Council to finalize standard and

reporting

– Goal is to begin tracking NLT July

• Long term plan is to automate reporting as much as possible

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Together We Will Drive Effectiveness & Efficiency!

• Consolidation of Services Commissary Systems – ($50M/0 FTE)

• Military Conversion to Civilian – ($36M/521 FTE)

• Restructure Above Store Functions – ($296.7M/911 FTE)

• Operational Efficiencies – ($152M/0 FTE)

• G&A Efficiencies – $91.1M/0 FTE)

• Workforce Restructuring – ($76.1M/1009 FTE)

• BRAC/Closures – ($200.6M/4,181 FTE)

FY 1992 – 2011

($903.1M/6,662 FTE)

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• Customers– Sales near $6B in FY11 – 96.2 million transactions– Customer Savings 32% - $2.8 B Savings to Customer– Exceptional Customer Service Scores

• Commissary Customer Service Survey (CCSS) 4.72• 2012 American Customer Satisfaction Index (ACSI) 81

• Workforce– Leader in Military Related Employment – 63% of Workforce– 2011 DoD Award Winner for Employing People With Disabilities– 2011 DoD Award Winner for Employing Veterans With Disabilities

• Stakeholders– 10 Unqualified Audit Opinions– Gold Standard in DOD for Internal Controls– Information Technology Security (FISMA) Scored as “A”– ROI > $2 for Customer Savings to $1 Appropriated Costs– Small Business Contracting Award Achievement Outpaces DOD Goal

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• Pace of change is accelerating

• Internet empowers consumers to shift demand rapidly

• eCommerce is a serious threat to brick and mortar

• Mobile retailing and social media provide new ways to shop

• Customers value social opinion – can share thoughts instantly

• Important to build and maintain strong brand

• Informed consumers require retailers to meet their service expectations

• Workforce needs access to information equivalent to customers – solution specialists enabled to enhance shopping experience

Reliable Relevant Responsive

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• Study shopping trends to gain customer insight −Gain knowledge of our customer segments and shopping trends

• Explore electronic and mobile commerce to implement a 21st century business model– Examine e-commerce shopping capabilities– Study m-commerce shopping capabilities– Test non-traditional grocery store models at selected locations

• Employ new efficiencies to continue as best in class government agency– Analyze alternative construction concepts to reduce costs– Streamline technology solutions to support the business– Implement operational initiatives to improve core commissary model

• Establish aggressive Agency performance measures

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DeCA Vision Team

Building a New Paradigm

A New View to Old Issues

“How Do We Get There From

Here”, If We Don’t Know

Where “There” Is, Yet?

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• Understand Our Customers

– Shopping habits, service expectations

• Know Our Business

– Real time data/analysis to make risk-balanced decisions

• Consistency in Service

– Standardized service levels at every commissary

• Build Our Brand

– Strong brand – identifies who we are and what we represent to our customers

• Increase Accessibility to the Benefit

– E and M commerce

• Business Enhancements

– Systems, programs, processes that support more efficient delivery of the benefit

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Working the issues related to a surcharge shortfall

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• Study and support customer shopping trends - leverage social media to gain insight into our evolving customers

• Explore concepts such as electronic and mobile commerce and other business model improvements

• Employ new efficiencies in construction, technology and operations

• Establish aggressive Agency performance measures

Key Strategies:

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Understand our Customers and Deliver a 21st Century

Commissary Benefit

• Enterprise Business System is the overarching program for incremental modernizing our core mission processes– Time and Attendance System DoD IRB approved– Resale Supply Chain Management

• Promotions & Cataloging• Plan-o-gramming• e/m Commerce• Ordering/Receiving/Inventory Management• Non-resale Asset Management

• Point of Sale replacement system in each Commissary to process customer transactions and interfaces with DeCA’s business system

• Commissary Level of Authorized Standard Services (CLASS)

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MissionDeliver a vital benefit of the military pay system that sells grocery items at cost while enhancing quality of life and readiness

VisionUnderstand our customers and

deliver a 21st century commissary benefit

ValuesWe have Passion for what we do!

P We PURSUE EXCELLENCE

A We are ACCOUNTABLE and FISCALLY RESPONSIBLE

S We have a SENSE OF URGENCY

S We SET HIGH STANDARDS

I We value INNOVATION

O We take OWNERSHIP of our PERFORMANCE

N We are NECESSARY

One Vision, One Team, One DeCA!21

• Total “Order of Magnitude” 10-year requirement: $4,737.4M:– Sustainment (minor construction) projects at 10 and 30 years: $352.5M– Major Addition/Alteration requirements at 20 years: $1,322.8M– Replacement stores at 40 years: $1,710.0M– Central Distribution Center requirements: $175.7M – Current MILCON requirements (likely to ultimately be surcharge): $170.4M– Inspection contracts: $41.3M– Maintenance and repair: $909.2M– Energy Program: $55.5M

• Projected surcharge facilities 10-year budget: $2,200.0M• Projected 10-year facility surcharge shortfall: $2,537.4M

• The Facilities Project Prioritization Model (FPPM) provides a detailed analysis of each location’s condition, operational and long-term market assessments, to identify specific projects for execution within the available budget, each fiscal year

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• Enables Financial Readiness in the Military Community

– Savings of 32 percent in FY 2011

– Return on investment of $2.08 savings for every $1.00 appropriated cost in FY 2011

– Ancillary Support: Industry contributions to installations, giveaways, scholarship program totaling $244M

– Significant employer of military family members and other military-related persons

• Solidifies Nation’s Commitment to Keep the Faith with our 21st Century Joint Force

− Supports readiness, recruitment, and retention

− Offers American products worldwide while ensuring a safe, secure shopping environment

− Maintains a sense of community for military and families

• Cost Avoidance

– Defense Transportation System: a leading peacetime shipper of military goods overseas

– Cost of Living Allowance: reduced for commissary presence

• Socio-economic Support

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• Cooperative Efforts Board (CEB)– Formed to facilitate cooperative efforts between commissary, exchanges, and Coast Guard

• Cooperative Construction, Purchases, Distribution– Joint exchange and DeCA construction projects– DeCA sales to exchange/MWR average $28M annually– DeCA purchases from exchanges average $125M annually– Exchange/MWR reimburse DeCA for overseas transportation $650K– Started in FY11 the sharing of sea containers saved $100K, with FY 12 savings projected at

$500K

• Collaborative Events on Installation– Family Fun Fitness Festival– Annual Farmer’s Market Sales – Back to School campaign

• Collaborative Marketing and Outreach– Joint messages in print, radio, store flyers, catalog mailers – Joint “online” Holiday Family Favorite Recipe Contest – Exchange participation with DeCA’s Guard/Reserve on-site sales

• DVD Vending Machines at Commissaries

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• Congressional Interest

• Re-vitalized program

– Two locations approved (Fairbanks AK and San Diego CA)

• Right thing to do

– Social benevolence

– Reduced solid waste

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– Decision process that enables uniform delivery of services provided by all stores within available funds

– Focuses resources that drive the quality, consistency, and predictability of programs and services

– Customers will know what level of service to expect at every commissary they visit

– Employees will know what level of service they are expected to provide

– Employees will be trained to a standard to produce better overall operational execution and standardized customer service

– CLASS will be deployed to all commissaries by June 30, 2013

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Peek into the Future

Personalized ShoppingConvenient Point of Sale

Social BusinessReal Time Analytics

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• Total Eligible Households 5.3 Million

– Active Duty 1.5 M– National Guard and Reserve 1.3 M– Retired Military 2.1 M– Other* .4 M

*Other includes overseas civilians, contractors, Disabled Vets, Medal of Honor, DoD Beneficiary sponsors and others not specified

Source: Defense Manpower Data Center – August 2011

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