1 Mr. Philip E. Sakowitz, Jr. Director & CEO Defense Commissary Agency Richmond May 2009 Richmond May 2009.

1

Mr. Philip E. Sakowitz, Jr.Director & CEODefense Commissary Agency

RichmondMay 2009

RichmondMay 2009

2

3

4

• Sustain Customer Savings

– Benefit Value

– Mandate: 30%

– Actual: 31.1%

5

• Commissary Customer Satisfaction Survey (CCSS)

– Patron Satisfaction 4.61 (out of 5.0)

• American Customer Satisfaction Index (ACSI)

– National average for commercial grocers: 76

– DeCA’s score: 76

• FDA Recalls

– Above average for commercial grocers

6

AreaCustomer

TransactionsPercent Change

East 40.1M + 1.5%Europe 10.8M - 1.2%

West 42.0M + 2.5%Total 92.9M + 1.6%

7

AreaCustomer

TransactionsPercent Change

East 25.1M + 2.3%Europe 6.9M + 3.2%

West 26.2M + 1.8%Total 58.2M + 2.0%

Data as of May 14, 2009

8

AreaDollar Sales

Percent Change

East $2.7B + 4.8%Europe $487M + 2.7%

West $2.6B + 5.6%Total $5.8B + 5.0%

9

Area Dollar Sales

Percent Change

East $1.8B + 6.0%Europe 286M + 5.3%West 1.7B + 4.51%Total 3.7B + 5.2%

Data as of May 14, 2009

10

• Audited Opinion of Financial Statements– Clean Audit Opinion — 7th straight year

• Internal Controls over Financial Reporting

– In top three in DoD for FY 2008 Statement of Assurance for Internal Controls

• Commercial Services Mgt (formerly Competitive Sourcing)– "The Omnibus Appropriation Act prohibits funding A-76 during FY 2009."

• Constant Dollar Decline!!

11

800

900

1,000

1,100

1,200

1,300

1,400

Cost (Then Yr $) 1,019 1,011 1,053 1,094 1,123 1,165 1,203 1,202 1,263 1,280

Cost (FY 2000 $) 1,019 980 983 990 985 982 978 920 912 870

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

FY 2000 Constant Dollars ($M)

12

“The commissary benefit, administered by the Defense Commissary Agency (DeCA), enhances military families' quality of life by providing them high quality grocery and household products at significant savings.

DeCA continues to meet or exceed its performance goals, including increased sales without increased non-inflation costs; superior stewardship of funds; independent customer satisfaction ranking second among the U.S. largest private sector supermarket chains; and grocery savings of at least 30 percent compared to civilian supermarkets.

Military Personnel and families consistently rate the commissary among their most highly valued non-pay benefits. The FY 2010 budget request for DeCA is $1.3 billion and supports the delivery of the commissary benefit as an integral part of the total compensation package for Military Personnel”.

13

Highlights:• Sustains commissary benefits for military members and their families • Procures two T-AKE auxiliary cargo ships• Fuel based on crude price of $60.98/barrel

– Lower than recent years• Supports warfighter supply, depot and transportation needs at wartime optempo• Provides transformational Global Information Grid access for increased bandwidth needs• Supports continued progress as Pentagon Renovation project nears completion• Enhances anti-terrorism/force protection at Pentagon Reservation

14

15

Groundbreaking: June 24, 2008

16

Richards-Gebaur, MO

Dyess AFB, TX

Robins AFB, GA

Livorno, Camp Darby, ItalySaratoga Springs, NY

Fort Drum, NY

Opened Apr 14Grand opening: June 5

Opened Jan 27 Grand opening: May 28

Opened Apr 21Grand opening: June 30

17

FY Location Contract Award Opening

2007 Chievres, Belgium Sep 2007 Oct 2009

2008 New Orleans, LA Sep 2008 Oct 2010

2008 Eglin, FL Oct 2008 Dec 2010

2009 Fort Bliss, TX (BRAC) May 2009 Jul 2011

2009 Fort Riley, KS (MILCON) May 2009 May 2011

2009 Moody, GA Aug 2009 Jul 2011

2009 Quantico, VA Sep 2009 Aug 2011

2009 Fort Campbell, KY Sep 2009 Oct 2011

18

• 2008 Physical Activity Guidelines for Americans

– The first comprehensive guidelines on physical activity ever to be issued by the Federal Government (HHS)

– Provides science-based guidance to help Americans aged 6 and older improve their health through appropriate physical activity.

– “Eat Healthy and Be Active Your Way” Proclamation signed May 5

– Navy Lt. Andy Baldwin, MD, promoting physical activity in DeCA

– 150,000 copies of the guidelines distributed in 110 commissaries worldwide

– DeCA participating in the President's Challenge May 1 - July 24 with more than 3,500 employees registered

19

• Production & Distribution of “How to Conduct a Commissary Tour” DVD

– Distribute DVD to DeCA regions, military and civilian dietitians

• Continue to work with the DoD Nutrition Environment Enhancement Team for

health promotion and promotion of the benefit.

• Target dietitians in the War College

– Outreach about the benefit and health promotion

– The Navy Health Promotion Course

– The Air Force Health and Wellness Centers

• Kit will be available on www.commissaries.com

20

• DeCA is a federal partner in promoting USDA’s initiative to DoD community

• DeCA and its industry partners to promote healthier eating habits in commissaries

• Children, military members, seniors targeted for reminders on healthy eating options

21

Your Text here

• Efforts to Improve– Re-commissioning at Mayport Commissary to reduce energy

use by optimizing refrigeration and air handling controls– Preparing to conduct DeCA-wide equipment assessment to

meet FY 2015 energy and water goals• New Initiatives

– Initiating Web-based refrigeration monitoring– Low ambient “layered” lighting and daylighting at Little Creek

NAB Commissary • Successes

– Energy reporting Web site– Annual worldwide Facility Energy Supervisor energy

efficiency training

Your Text here

22

• FY 2008: 104 on-site sales generated – $4.5M in sales– 41,347 Guard & Reserve customers

• FY 2009: 179 on-site sales scheduled (150 goal)

– 94 events have been accomplished– $ 5.6M in sales – 52,599 Guard & Reserve customers

23

• DeCA’s new Point-of-Sale System supported by IBM

– 255 stores deployed = 100% of the total sales volume

– All stores deployed by summer 2008

– Meeting contract goal of downtime

– Exceeding Help Desk calls target

– Tremendous shift toward Self Check-Out (SCO) Technology

• SCOs account for 29% of the total lane count

• DeCA overall SCO % of store transactions average is: 31.75%

24

25

Your Text here

Your Text here

• Our Options?

– Three legislative authorities are available for Public-Private Ventures

• Military Housing Privatization Initiative (MHPI)

• Enhanced Use Lease (EUL)

• Build to Lease (BtL)

– Only Build to Lease applies to DeCA – and ONLY if off-installation

• What are we doing in this arena?

– DeCA is currently studying the merits of pursuing legislative change

26

• Current label operations are labor intensive

• Technology has not decreased the price as expected

• Automatically installed with all new commissary construction

• We will replace all commissary labels with ESL with a 1/5 year ratio

27

Your Text here

Your Text here

• Working in partnership with Industry– Conduct meaningful dialogue and interchange of best business

practices and processes – Synergistic effort builds supply chain alliances and provides

vehicle for developing collaborative innovations

• Developing Industry Interchange Training Program– Excellence through integration of government/commercial

processes to drive new business models– Facilitates integrated multidisciplinary training opportunities

across core functional areas with international companies– Key element of our Talent Development Program

• 10 Industry Partners; 6–12 month assignments

28

ENTIRELY RETHINK ITENTIRELY RETHINK IT

THE ONLY WAY TO IMPROVEUPON A MASTERPIECE?THE ONLY WAY TO IMPROVEUPON A MASTERPIECE?

29

Focus Items

• Corporate Communications Outreach efforts • Workforce Development• Guard and Reserve on-site sales • Partnerships/cooperative efforts • Business transformation • Commissary construction/Build to Lease initiatives• Going ‘Greener’

A model government organization providing the marketplace of choice for the military family

30

Transitioning from Opportunities to OutcomesStrategic Opportunities

• Enhance the benefit in a challenging economy

• Strengthen the benefit and its link to recruitment, readiness and retention

• Develop a consistent and standard approach to our business processes

• Create a corporate culture of “One DeCA”

• Seek the right metrics to drive improved performance across the enterprise

Strategic Outcomes • Standardized, compliant and

documented processes• Business priorities that drive

all solutions• A culture of innovation• Investments for the future• Leadership and workforce –

ready and able• Infrastructure (facilities and

IT) – improve to be consistent with our business needs

31

32

39% subscribeto an RSS feed

TitleSocialMedia

83% Have watched video clips

55% Have uploaded photos

58% Have joined a social network

77% Of active usershave read a blog

45% Have started their own blog

33

Your Text here

Your Text here

• Increased Focus on the Commissary Benefit Awareness

– DeCA personnel

– Industry partners

• All outreach must be successful

• Must be a good steward of taxpayer dollars

34

35

Your Text here

Your Text here

• Equitable, predictable and consistent levels of service at all stores

• Capability to predict resources needed to meet changing requirements

• Budgets based on unquestionable data and sound analysis

• Cost and performance baseline from which to identify improvement opportunities

• Right level of service at right cost

36

Your Text here

Your Text here

• 70 Team Members - Stores, Regions and HQs

– Six core business drivers:1) Grocery

2) Meat

3) Produce

4) Customer Service

5) Admin/Management

6) Specialty Departments

• The teams developed 69 ‘One DeCA’ standards”

37

Phase Description

Phase I - Preparation

Service Analysis Teams (SAT) selected as experts in six services

The Champions were selected for leadership.

Communities of Practice, using forums on OneNet.

Phase II – Identify and Capture

Teams met for a week long session April 20-24.

Team Champions prepared recommendations April 27 through 1 May.

Phase III – Select and Model

May 13, 2009 “One DeCA” metrics are submitted & vetted-Region deputies-FPO-ESC

June-Oct. 09 Validate workload requirement to accomplish the duties, time and work studies.

Phase IV – Solve and Deploy

Jan. 2010 Teams determine priorities within SSPs, Teams and Contractor develop management tool.

Feb. 2010 Cross Leveling of FTE’s

Phase V – Rollout

Implement by October 2010.

Target Completion Date

30 April 2009Completed

01 May 2009Completed

October 2009

February 2010

October 2010

38

Your Text here

Your Text here

• Customers: Why should I shop the Commissary?– They’ve got CLASS!

• Employees: What can I use to advise me on my performance objectives?– We’ve got CLASS!

• Industry: How do I know what business model to use with the Commissary?– They’ve got CLASS!

• Leadership: How do we validate a return on investment of the Commissary Benefit?– They’ve got CLASS!

39

Together, We Will Meet Every

Challenge!

The Relentless Pursuit

of Excellence

The Relentless Pursuit

of Excellence

DoD Budget Scrutiny

The Economy

Competition

Relevance

40

Your Text here

Your Text here

• Thanks for your Outstanding Support:– Every Day is Mom’s Day Campaign

– ‘The Commissary – It’s Worth the Trip!’ Campaign

– Commissary Commando Competition – May ’09

• Upcoming Programs & Events:– Lil’ Heroes Baby Program – Summer ‘09

– DeCA’s $6 Billion Mark celebration – Sep ‘09

– Army 10-Miler Outreach Event – Oct ‘09

“Working Together for Synergy of Service to our Military Patrons”

41

42

Your Text here

Your Text here

43

44