DeCA Update - Achieving Excellence in Commissary Operations

1. DeCA Update Mr. Philip E. Sakowitz, Jr., Director & CEO

2. Topics Today • Balanced Score Card • Partnerships • Communications • Initiatives • “Every Day is Mom’s Day” Program • Single Soldier • 2008 Physical Activity Guidelines for Americans Program • Installation Access • Infrastructure • The Future

3. DeCA Balanced Scorecard Financial Perspective Internal Business/Process Perspective Facility Condition Index (FCI) Major Construction Project Execution Commercial Services Management) Internal Controls Over Financial Reporting Audited Opinion of Financial Statements Resale Stocks (Sales) Commissary Operations (Costs) Surcharge Obligations Customer Perspective Learning and Growth Perspective Commissary Customer Service Survey American Customer Satisfaction Index Sustain Customer Savings Corporate Development – Succession Planning Workforce of the Future Above Store Level Reengineering

4. Balanced ScorecardFinancial Perspective • Resale Stocks (Sales) • FY 2008 Sales Actual: $5.81B (+ $276M) (+5.0%) • FY 2008 Sales Projection: $ 5.81B • Commissary Operations (Costs) • FY 2008 Costs Actual: $1.263.2 (99.6% Execution) • FY 2008 Costs Goal: $1.267.7B

5. Balanced ScorecardInternal Business/Process Perspective • Commercial Services Mgt (formerly Competitive Sourcing) • DeCA is prepared to begin A76 studies when the DeCA A76 study moratorium ends, however we also plan to pursue these other Commercial Services tools like Business Process Reengineering (BPR) • We will continue to strive for Continuing Process Improvements through initiatives like BPRs and Lean 6 Sigma Black Belt projects. • Internal Controls Over Financial Reporting • Highest score in DoD for FY 2007 Statement of Assurance for Internal Controls—2nd straight year • Audited Opinion of Financial Statements • Clean Audit Opinion: 6th straight year (Anticipating 7th this year)

6. Balanced ScorecardCustomer Perspective • Commissary Customer Satisfaction Index (CCSS) • Patron Satisfaction • 4.60 (out of 5.0) • American Customer Satisfaction Index (ACSI) • National average for commercial grocers: 76 • DeCA’s score: 77 • Sustain Customer Savings • Benefit Value • Target: 30% • Actual: 31.9%

7. Employee Satisfaction • DeCA scores increased in all 17 dimensions • (e.g. Leadership, Training/Career Development, Innovation, Customer Orientation, Work Environment) • Highest Score ever in “Customer Orientation” set a new Department of Defense benchmark • Customer Orientation" benchmark is a significant milestone and truly gratifying given the business we are in supporting service members and their families with our daily, worldwide operations

8. Balanced ScorecardLearning and Growth Perspective • Corporate Development – Succession Planning • 21st Century Leadership • Leadership Development • Workforce of the Future • Military Family Members • Wounded Warrior Program • NSPS

9. Partnerships

10. Partnerships • Military Resale Industry • American Logistics Association • DoD / Military Services • TRICARE • Military OneSource • DoDDS • Mental Health Self Assessment Program (MHSAP) • 2008 Physical Activities Guidelines for Americans • Obesity Program • Military Associations • Non-Profit Organizations

11. Partnerships: Military Exchanges • Joint Communications • Customer linked to AAFES/NEXCOM/MCX via www.commissaries.com • Mailers, weekly ads, radio, catalogs • Joint Construction Projects • Joint Business Processes • Exploring and leveraging promotional affinities • Senior Leadership Advisor Summit at HQ DeCA From Competition to Cooperation

12. Communications

13. Communications Mr. Sakowitz CSM Garcia

14. Media Communications

15. Communications

16. PrintMedia Energy Recognized Leader In the Grocery Industry!

17. PrintMedia Energy Recognized Leader In the Grocery Industry!

18. Social Media

19. Social Media … It’s Changing Everything. Are You Ready?

20. Social Media “SocialMedia is People Having Conversations Online”

21. Social Media Your Text here 1.5 Million Residents 200 Million Blogs Over 100 Million Videos Over 4 Million Articles

22. Social Media 55% Have uploaded photos 73% Of active users have read a blog Social Media Title 83% Have watched video clips 45% Have started their own blog 57% Have joined a social network

23. Social Media 34% 36% 32% Post opinions about products & brands on their blog Think more positively about companies that have blogs Trust bloggers’ opinions on products & services PEOPLE ARE TALKING ABOUT YOUR BRAND. RIGHT NOW.

24. Social Media IT’S NOT A FAD… It’s A Fundamental Shift In The Way We Communicate

25. Strategic Initiatives

26. Every Day is Mom’s Day Program • EVERYDAY is Mom’s Day at Your Commissary… • Mom’s Day is not just in May anymore • The Commissary cares • January 5 kicks off in-store campaign • Take advantage of promoting your products for Mom’s, January – May • In-store displays, samples, and special discount coupons • The Commissary is also your gift destination for Mom; not just your typical grocery store MOMS – TREAT YOURSELF TO THE BEST!

27. Single Soldiers

28. 2008 Physical Activity Guidelines for Americans • The first comprehensive guidelines on physical activity ever to be issued by the Federal government • Provides science-based guidance to help Americans aged 6 and older improve their health through appropriate physical activity • The Guidelines will be widely promoted through various communications strategies, such as materials for the public, Web sites, and partnerships with organizations that promote physical activity

29. Childhood Overweight and Obesity • DeCA is partnering with TRICARE, HHS, AAFES and Military OneSource • Create awareness of childhood obesity to military families through Public Awareness Media Campaigns • Childhood obesity has become a major medical issue in the United States and it affects the children of our uniformed service members as well • DeCA has a URL linked to www.commissaries.com with topics: • Dietitian articles promoting The Surgeon General’s “Take the Pledge”, Campaign to increase physical activity and healthy eating habits • Widget promoting TRICARE “Get Fit” Campaign • USDA Food Guide Pyramid, “My Pyramid” for kids on front page • Pentagon Channel • Making healthy choices while shopping in the Commissary

30. Installation Access Control • USNORTHCOM is working to establish baseline standards for a Joint Installation Access Control System • Related they plan to issue policy in a Directive Type Memorandum (DTM) format, which they have in the final stages of coordination. This DTM is expected to specify three physical access cards • The first is the Command Access Card (CAC); • The second is an alternate card to the CAC; • The third is a standard installation visitor pass system. • USD (I) is the DoD policy proponent for both Personnel Security (background investigations) and Physical Security (access control) • American Logistics Association

31. Initial Estimate FYInstallationScope($000)Remarks 10 Ramstein Upgrade $31,975 10 Ft Carson MILCON Equipment $6,956 Construction MILCON Funded 10 Gunter Build to lease $1,530 Build to Lease being investigated 10 Portsmouth NNSY Replace $20,029 Total $60,490 11 New London Replace $20,478 Possible Joint with NEXCOM 11 Ft Lewis MILCON Equipment $8,490 Construction MILCON Funded 11 White Sands MILCON Equipment $3,499 Construction MILCON Funded 11 Mitchell Field Replace $9,538 11 Annapolis Replace $16,934 Joint with NEXCOM Total $58,939 12 Ft Myer Upgrade $24,417 12 Newport Replace $18,568 12 Moffett Field Replace $23,131 Total $67,116 Proposed POMFY 2010 – FY2015Surcharge Major Construction Program

32. Proposed POMFY 2010 – FY2015Surcharge Major Construction Program Initial Estimate FYInstallationScope($000) 13 Ft Belvoir Replace $43,981 13 Kadena Upgrade $24,193 Total $67,174 14 Ft Eustis Upgrade $21,541 14 Patuxent River Upgrade $15,173 14 Vilseck Upgrade $15,247 Total $51,961 15 Ft Polk Replace $22,439 15 Ft Rucker Replace $18,457 Total $40,896

33. The Future Together, We Will Meet Every Challenge! DoD Budget Scrutiny Change in Administration The Economy The Relentless Pursuit of Excellence Competition Relevance

34. Military CustomersDisciplined Shoppers Made & brought a shopping list Brought manufacturer coupons & used them Checked their pantry & refrigerator Are the Highest in Customer Commitment Asked other HH members what they wanted

35. The DeCA Seal

36. “The Commissary It’s Worth The Trip”

37. Questions?