Defense Commissary Agency

1. Defense Commissary Agency Keith C. Hagenbuch Executive Director, Store Operations

2. Mission Deliver a vital benefit of the military pay system that sells grocery items at cost while enhancing quality of life and readiness Vision Understand our customers and deliver a 21st century commissary benefit Our Mission and Vision Non-pay Compensation Benefit that Improves Quality of Life for Uniformed Service Members

3. DeCA ‘s Oversight Commissary Board of Directors USD/P&R Operations Oversight Policy DeCA HEADQUARTERS Field Operating Activities Fort Lee, VA

4. DeCA Board of Directors • Provides advice regarding the prudent operation of the commissary system and assists in the overall supervision of DeCA • Serves as Military Services’ representation on all commissary matters • Recommends policy changes • Determines the level of customer service to be provided in balance with available resources • Promotes knowledge and understanding of the commissary benefit within the military community • Monitors DeCA’s performance • Reviews and recommends approval of: • Commissary establishments, continuations and closures • Capital investment programs • Annual budget • Strategic and performance plans • Annual report

5. DeCA Board of Directors • Three Service Logistics/Installations Deputy Chiefs and one Personnel Deputy Chief (Air Force) • Three Personnel/Manpower Deputy Assistant Secretaries • Four Service Senior Enlisted Advisors • Chair rotated among Service Senior Uniformed Officers; Committee Chairs on same rotation schedule • DeCA Washington Office serves as executive secretary • DeCA Director provides information, advises and recommends

6. DeCA Board of Directors Chair • Represents Board in advising USD(P&R) on commissary policies and operations and on delivery of the benefit • Recommends selection of DeCA Director • Supervises and rates DeCA Director • Recommends next Chair to USD(P&R) • Designates Board Executive Secretary • Convenes and conducts meetings

7. Defense Commissary Agency Previous Organizational Chart *DIRECTOR/ CHIEF EXECUTIVE OFFICER OFFICE OF INTERNAL AUDIT CSM/SEA OFFICE OF GENERAL COUNSEL** OFFICE OF INSPECTOR GENERAL *CHIEF OPERATING OFFICER/ DEPUTY DIRECTOR DeCA WASHINGTON OFFICE *CHIEF OF STAFF HEADQUARTERS SUPPORT OFFICE SALES DIRECTORATE PERFORMANCE & POLICY DIRECTORATE RESOURCE MANAGEMENT DIRECTORATE HUMAN RESOURCES DIRECTORATE *DIRECTOR DeCA WEST (MCCLELLAN, CA) *DIRECTOR DeCA EUROPE (KAPAUN AS, GE) *DIRECTOR DeCA EAST (FORT LEE, VA) ZONES (12) ZONES (4) ZONES (11) CORPORATE COMMUNICATIONS DIRECTORATE INFORMATION TECHNOLOGY DIRECTORATE CORPORATE PLANNING DIRECTORATE PUBLIC HEALTH & SAFETY DIRECTORATE STORES ( 111) STORES (40) STORES (96) CONTRACTING DIRECTORATE EEO DIRECTORATE WORKFORCE DEVELOPMENT DIRECTORATE * Denotes SES position **DeCA General Counsel is part of the Defense Legal Services Agency

8. Secretary Gates’ memorandums directed initiatives to Reduce duplication, overhead, and excess Instill a culture of savings and cost accountability across DoD Restructured to a flatter, more corporate structure Reduced overhead and supervision Eliminated areas of functional overlap Integrates decision-making and increases agility in execution DeCA Reorganization

9. Defense Commissary Agency Director / Chief Executive Officer Senior Enlisted Advisor General Counsel Inspector General/Security Deputy / Chief Operating Officer Internal Audit Washington Office EEO Executive Services Division Executive Director Store Operations Executive Director Sales, Marketing & Policy Executive Director Logistics and Engineering Executive Director Business Enterprise Operations & Policy Engineering Requirements and Strategic Integration CONUS and OCONUS Stores Sales Acquisition Management Corporate Communications Store Support Health & Safety Corporate Planning Logistics Resale Contracting Resource Management CDC and CMPP Human Resources Blue blocks - ALL assets at Fort Lee Yellow blocks - ALL assets geographically dispersed Information Technology Green blocks - assets located at Ft Lee & geographically dispersed

10. Command requested review/revision of organization Driving forces behind review: Focus on performance and results Restructure to balance loss of 4th Group SES Realign resources to achieve Vision & strategies Future capabilities key factor in achieving the Vision business systems – e-commerce social media = engaging our customers format changes streamlined, less expensive processes Reduce duplication, overhead, and excess Instill a culture of savings and cost accountability across DoD Restructured to a flatter, more corporate structure Reduced overhead and supervision Eliminated areas of functional overlap Integrates decision-making and increases agility in execution Organizational Refinement

11. Organizational Realignment Director / Chief Executive Officer Senior Enlisted Advisor Resource Management General Counsel Deputy / Chief Operating Officer Human Resources Inspector General Washington Office Strategic Planning Chief Performance Officer (PAO, CPI and ESD) EEO Executive Director Infrastructure Support Executive Director Store Operations Executive Director Sales, Marketing & Policy Logistics Operations & Policy CONUS and OCONUS Stores Business Requirements Cell CDC and CMPP Sales Equip/Property Acct & Environmental E-Commerce Store Support Business Development Shopper Insights Information Technology Health & Safety Program Management Resale Contracting Engineering Blue blocks - ALL assets at Fort Lee Yellow blocks - ALL assets geographically dispersed Acquisition Management Green blocks - assets located at Ft Lee & geographically dispersed

12. Store Operations Group Executive Director Store Operations Store Operations Support East Area Central Area Europe Area Pacific Area West Area Zones – 4 Stores – 40 Zones – 7 Stores – 68 Zones – 4 Stores – 43 Zones – 5 Stores – 47 Zones – 6 Stores – 49 Fort Lee, VA Kapaun AS, GE McClellan, CA

13. New Store Openings Fort Carson, CO – May 9 K-16, ROK – May 17 Fort Campbell, KY – June 13

14. DeCA Profile • DeCA sells groceries at cost plus 5% surcharge • Savings over 30% vs. commercial stores DeCA-wide • Family of Fourcan save over $4,500 annually • Family of Three can save over $3,500 annually • A Couple can save over $2,800 annually • Singles can save over $1,500 annually • Savings over 48.5%vs. commercial stores in Hawaii

15. Defense Commissary Agency • By the numbers: • 248Commissaries • 13Countries • 2 Territories • 17,000+Employees • $5.96Billion annual sales • 32%Average savings • Ranked 18th in Grocery Retail* Your Commissary … It’s Worth the Trip! *Progressive Grocer’s Super 50 for 2011 15

16. We Go Where the Troops Are! 134 small stores (54%) in remote or overseas locations deliver only 20% of sales 134 16 (6%) of the largest stores generate 20% of total sales 46 30 22 16 Data based on FY 2012 Sales thru June 2012 for 248 Open Commissaries

17. Commissary Operational Efficiencies FY 1992-2016 Baseline had no efficiencies been achieved Actual Costs w/Reductions Efficiencies FY1992 – FY2016: $702M Inflation FY1992 – FY2010: $759M Cost (FY 1992 Constant $) *Savings from BRAC & OCONUS CFE are not included in above

18. Military Related Employment As of 03-31-2012* • Military Spouses – 4095 or 26.94% • Dependents – 1818 or 11.96% • Sponsors: • Retirees – 1695 or 11.15% • Guard and Reserve – 287 or 1.89% • Other Veterans – 1847 or 12.15% • *Population – DeCA U.S. Civilian Employees - 15198 64.09% June 25, 2012

19. DeCA’s Environmental Policy • DeCA is committed to: • Pollution Prevention • Compliance with Legal and Other Requirements • Continual Improvement • Environmental Leadership • Awards • 2010 Federal Electronics Challenge Bronze Level Award • 2010 Federal Energy and Water Management Award

20. Fiscal Accountability & Internal Controls • FY 2011 Clean Audit Opinion for the tenth straight year • Internal Controls over Financial Reporting • DeCA declared “Gold Standard” throughout DOD for FY 2011 Statement of Assurance for Internal Controls • For every dollar of taxpayer funds invested in the • commissary benefit, authorized shoppers received • $2.08 in savings Great Stewards of Taxpayer Dollars!

21. Customer Service • American Customer Satisfaction Index (ACSI) • ACSI Supermarket Industry Average: 76 • DeCA’s ACSI: 81 • Commissary Customer Service Survey (CCSS) • Patron Satisfaction • 4.72 (out of 5.0) Customer Service at All Time High!

22. Commissary Customer Service Survey

23. Commissary Customer Service Survey

24. Agency Initiatives • Feds Feed Families • Scholarships for Military Children • Commissary Levels of Standardized Service • Throw Down Merchandising • Comparison Boards • Meat and produce focus

25. Feds Feed Families • Background - DeCA is participating with DoD in the OPM sponsored 2012 Feds Feed Families Campaign from 1 Jun to 31 Aug - Children and families across the US are in great need of donated food due to food bank stocks being depleted by the economic downturn and natural disasters • DeCA Participation - 180 Commissaries in 46 states and one territory (Puerto Rico) are collecting donations on their installations • DeCA Total : As of 31 Jul 12 - 137,000 - DoD Goal: 1.5M lbs - Total DoD Donations: As of 31 Jul 12 – 576,000

26. Scholarships for Military Children • Program is funded by donations made by DeCA business • partners • Fisher House Foundation, Inc. administers the program • Program is in its 12th year • Total Recipients: 6,742 • Total Scholarship Grants Awarded: $10,321,000

27. “CLASS” A decision process that enables uniform delivery of services provided by all stores within available funds Ensures authorized patrons receive equitable, predictable, and consistent levels of service at all Commissaries worldwide Focuses resources that drive the quality, consistency and predictability of programs and services ‘Right Level of Service at the Right Cost” Equitable funding to all commissaries Commissary Levels of Authorized Standard Services (CLASS)

28. “CLASS” 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 Management will know funding is adequate to provide those services Leadership will know what level of service all stores are providing Commissary Levels of Authorized Standard Services (CLASS)

29. CLASS Update • CLASS will be deployed to all 248 Commissaries • Joint effort SO, HR, IT and RM • Deployment • Began April 23, 2012 in Zone 28 • 60 store operations and store personnel trained to deploy • Completed deployments • As of Aug 17 – 87 stores • Currently 6 teams on-site in 6 zones • Projected Completion Date • June 2013

30. Throw Down Merchandising • Replaces all former Merchandising contests • No more scrapbooks • Placement based solely on percentage of growth/lift versus last year on targeted commodities • 2012/2013 contest targets Perimeter or Perishable growth/lift • Zone Managers are contestants • One winning zone manager for each category: Produce, Meat and Grocery Chill/Frozen • One overall winner for greatest growth in all categories

31. Comparison Boards

32. FY 2011 Agency Sales 5.96 $ Billion!

33. DeCA Sales ComparisonFY 2011 vs. FY 2010

34. DeCA Sales Comparison FYTD 2012 (thru June 2012)

35. Customer TransactionsFY 2011 vs. FY 2010

36. Customer TransactionsFYTD 2012 (thru June 2012)

37. DeCA Percent of Sales by Areas FYTD 2012 (thru June 2012)

38. Facility Inventory • 248 Commissary Facilities • 14.9 million gross square feet • 6.7 million square feet of sales area • Average age is 25.6 years • 12 Central Distribution Center Facilities • Korea, Guam, Japan, Germany • 1.7 million gross square feet

39. Pacific Area Profile

40. DeCA Pacific Sales ComparisonFYTD 2012 (thru June 2012)

41. Pacific Area Customer TransactionsFYTD 2012 (thru June 2012)

42. Guard and Reserve FY 12Pacific Area • On-site sales events 6 • Patrons served 4,428 • Sales $866,808

43. Containers Departing Oakland, California

44. DeCA Overall • CY 2011 Total Containers Shipped • 20,203

45. Total Containers Shipped to Pacific Theater - CY 2011 • 9,833

46. Containers by Port CY 2011 Total Shipped to Pacific Theater

47. Pacific Area Projects

48. Best Commissary Award Winners • Fort Bliss, Texas • Director's Award Best Superstore • Malmstrom AFB, Montana • Bill Nichols Award Best Large Commissary • Osan AB, South Korea • Dan Daniel Award Best Large Commissary Overseas – 2nd Consectutive Year! • Camp Casey, South Korea • L.Mendel Rivers Award Best Small Commissary Overseas – 2nd Consecutive Year • Camp Merrill, Georgia • Richard M. Paget Award Best Small Commissary .

49. Camp Merrill, Georgia Richard M. Paget Award Best Small Store

50. Camp Casey, South Korea L. Mendal Rivers Award Best Small Store Overseas