Supply Chain Alignment'' Mapping the Future

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Supply Chain Alignment.. Mapping the Future
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For More Than 113 Years, Weve Been There
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20 November 2009
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Our Mission
Provide quality goods services at competitively
low prices
and generate earnings to support MWR Programs
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20 November 2009
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AAFES Customers
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27
43
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20 November 2009
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AAFES Impact to the DFW Community
280M-plus financial impact
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20 November 2009
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Global Retailer
20 November 2009
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Tactical Field Exchange (TFE)
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20 November 2009
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Mobile Whoppers
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Air Assault PX.We Go Where You Go
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Worldwide Distribution Centers


United Kingdom DC
Giessen DC
Dan Daniel DC
HQ LG
Korea DC
West Coast DC
Japan DC
Atlanta DC
Atlanta DC
Waco DC
Kuwait DC
Okinawa DC
Puerto Rico DC
Hawaii DC
Kuwait DCC is a deconsolidation center
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Fleet Assets

• 83rd Largest Private Fleet
• 423 Drivers
• Equipment
• 379 Tractors
• 1,773 Trailers
• 1,597 dry 176 reefer
• 21.6 Million miles driven worldwide in FY08
• 1.4 Accidents per million miles driven
• Industry average is 4.0 accidents per million
  miles
• Recently recognized Higinio Ortiz
• AAFES first 4 million mile driver

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MHE Accidents
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20 November 2009
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Wall Street JournalHow Bad Is It?
January 2009
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20 November 2009
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Navigating the Road Ahead and Winning the Future
Whats next for retail in 2009
PESSIMISTS
OPTIMISTS
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20 November 2009
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Logistics Impact on GMROI
_____YTD Sales-COGS____ avg inventory _at_ cost
on-hand
(

• Goal Increase GMROI

)
Increase Sales Improve fill rates Improve
forecasting Allocation postponement New product
speed-to-market Value-added services Improve ship
accuracy
Decrease COGS Decrease DC cost/unit Decrease
Trans cost/unit Optimize network design Outsource
inefficiencies Improve technology Minimize
write-offs Efficient merchandise pathing Minimize
returns Increase volumes (coop efforts)
Decrease average on-hand inventory Shorter
lead-times Maximize flow vs stock Improve
visibility Consistent lead-times Repack/LDU
initiative Casepack/packaging reviews
Where should you focus your efforts?

• 100 increase in sales generates 5 in additional
  earnings
• 100 reduction in supply chain cost generates
  100 in additional earnings

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Mission, Vision Strategic Goals
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Collaborative efforts will fundamentally change
the Performance Curvetogether
Transformational Ideas 65
The Future Years
Traditional Ideas 35
The Interim Years
The Early Years

• Customer Visibility
• Innovative assortment
• Re-Rationalization
• Full enterprise Integration
• Dynamic Optimization
• Automation
• Supplier Integration
• New Metrics

• Functional Optimization
• Manual processes
• Traditional Performance Metrics
• Continuous Improvement
• Leverage some synergies

• Do Better within Box
• Buy as one off
• Optimize team function
• Focus on basics

Dynamic Enterprise Integration Remove Box
Improve Regional Box
Do Better Within Box
Functional Local Team
Cross -Functional Regional Team
Enterprise-wide Collaboration
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Together we accomplish more and Quickly
Everything we do Magnified when we Communicate
and Collaborate
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Logistics Mission and Vision
Mission Provide effective and efficient
logistics to our global customer
base Vision Provide best-in-class logistical
support to our customers
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Logistics Business Plan

• Pursue cooperative efforts with other
  governmental agencies
• Share single TMS with other services
• Offer consolidation service for export
• Offer van stuffing services for all services
• All services share volumes/negotiate rates
• All services utilize AAFES fleet
• Collaborate on resale buying with all services
• Consolidate import functions
• Distribution Center neutral replenishment

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Logistics Business Plan

• Develop and/or recruit for future leadership
• Increase sensing sessions
• Properly utilize awards budget
• Develop rewards program for team/individual
• Develop cross functional internship
• Develop Industrial Engineer group as a core
  competency
• Continue associate career development program
• Continue a structured recruitment program
• Market a structured career progression program
• Actively seek, hire, leverage talents of people
  with disabilities

Putting the Best Team on the Floor.
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Logistics Business Plan

• Integrate/upgrade supply chain technologies
• Expand in-transit-visibility
• Revamp TMS for increased functionality
• Add vendors to TMS to maximize optimization
• Pursue new conveyors at WADC/WCDC
• Pursue new WMS, LMS, slotting, interleaving and
  yard management software
• Ensure DC infrastructure can accept technology
• Deploy voice picking technology
• Deploy import trade management system
• Increase flow through DCs by increasing Cross
  Dock and re-design of the CONUS DC handling
  configuration

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Logistics Business Plan

• Pursue strategic alliances with both internal and
  external supply chain partners
• LG liaisons placed in SD
• Provide economic analysis to SD
• Supply Chain Analysis Group
• Work with SD to meet delivery dates ahead of
  competition
• Implement processes to reduce expedites
• Communicate closely with the stores on LG
  performance

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Logistics Business Plan

• Leverage the supply chain to control costs
• Complete network realignment to accommodate ADC
  closure
• Challenge all modes and tenders in rising market
• Optimize fleet
• Review routing requirements and methods for
  consistent service
• Plan for OEF/OIF retrograde
• Establish warehouse or 3PL when/where
  economically advantageous
• Worldwide Vehicle and MHE program oversight

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Sustainability
"Our choices at all levelsindividual,
community, corporate and governmentaffect
nature. And they affect us" David Suzuki,
Suzuki Foundation 
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Logistics Business Plan

• Pursue energy and waste stream efficiency
  initiatives
• Support environmentally sound and cost effective
  business processes, by reducing waste and energy
  consumption
• Increase energy usage efficiency
• Increase water consumption efficiency
• Increase recycling
• Improve fleet fuel utilization efficiency

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Branding Logistics
MHE Rodeo
Driver of the Year
Logo Contest
LG Management Academy
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• Iraq Routing(Previous)
• Frequent Attacks
• Congestion/Excessive Staging

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• Western and Central Iraq
• 57 Days Transit
• 19.6M Cost Reduction

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OIF Contingency Support
GDC Northern Iraq
DDDC - Turkey
WCDC - Kuwait
DDDC - Jordan

• Northern Iraq
• 46 Days Transit
• 5.9M Cost Reduction

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Driving conditions in PAK/Afghan GLOC
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Lattabund Between Jalalabad and Kabul
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OEF Contingency Support
GDC Northern Iraq
DDDC - Turkey
WCDC - Kuwait
DDDC - Jordan
WCDC - Afghanistan

• Afghanistan
• Inconsistent Transit
• Remote Sites Extended

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OEF Contingency Routing
GDC Northern Iraq
DDDC - Turkey
DDDC Afghanistan
DDDC - Jordan
WCDC - Kuwait
WCDC - Afghanistan

• Northern Route Afghanistan
• Expensive
• 80-90 Days Transit

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Questions?