Navy Exchange Service Command’s Distribution Centers Replenish Ships’ Stores

By Scott C. Gray, Vice President, Afloat Operations/Ship’s Store Program, Navy Exchange Service Command

The mission of the Navy Exchange Service Command’s (NEXCOM) Ship’s Store Program is to provide quality goods and services for Sailors and Marines aboard Navy ships, and in remote and isolated locations such as San Clemente and San Nicolas Islands, California, and Diego Garcia.

Inventory Control Clerk Maryann Tabafunda scans merchandise in the
warehouse.

“Our team collaborated with NEXCOM’s distribution team to do a cost analysis of providing the most popular ship’s store offerings (1Q) and the possibilities of leveraging the logistics and procurement support of the Navy Exchange (NEX) retail outlets in Japan and Guam,” said Gene Hoffman, of NEXCOM’s Ship’s Store Program merchandising branch. “We determined that the NEX could provide all of the top-selling items on the 1Q list at prices equal to or below those through [Defense Logistics Agency], with a significant reduction in distribution costs. The 1Q cognizant code for ship’s store products Japan/Guam initiative has saved the Navy $2 million over a five-year period by using the NEX to purchase merchandise.”

Recognizing the significant savings and better fill rates achieved in the U.S. 7th Fleet, a blanket purchase agreement (BPA) between NEXCOM and Naval Supply Systems Command (NAVSUP) Fleet Logistics Center (FLC) Norfolk was signed in 2017 to broaden the availability of the 1Q items to ships homeported or operating in the U.S. 5th and U.S. 6th Fleet areas of responsibility. Once the contractual framework was in place, NEXCOM ensured distribution and information technology requirements were satisfied, and adequate pipelines and inventory positions were established in Souda Bay, Greece, and Bahrain.

Internal processes were also retooled to provide flexibility in dealing with surge demand, customs issues, and financial complexities associated with bill payment and invoicing. It was determined support in the U.S. 5th Fleet would be provided via the NEX Bahrain distribution center with U.S. 6th Fleet support provided via the NEX Naples, Italy, distribution center. In the end, a simple and transparent process was created allowing the ships’ stores to operate no different than in the continental United States.

Giuseppe De Vito and Salvatore Arena load merchandise onto a truck bound for NEX locations in Europe.

 

“Because NEXCOM is a non-appropriated fund activity, all orders sent are processed as if it was a stateside vendor by using the warehouse management system and the electronic data interchange (EDI) process,” said Logistics Manager Frank Scott of the NEX Bahrain Distribution Center. “The items available for purchase are listed in the automatic contract bulletins for each location. For ships using EDI to order, the dollar amount per purchase order may be up to $100,000.”

In the spirit of the NEX mission, all 1Q catalog merchandise items are sold to ships stores at the NEX cost price; no additional surcharges or taxes are applied. NEXCOM’s Ship’s Store Program updates the contract in the rough order of magnitude the first of each month. The merchandise listed on the contract is a cross section of high demand items already carried in NEXs.

Inventory Control Clerk Shabeer Kolekkara scans merchandise prior to fulfilling an order.

 

When a ship places an order, the NEX 1Q coordinator receives and processes the order through the NEX warehouse system. The order is then allocated and picked by a NEX warehouse associate. Once the pick is completed, NEX loss prevention/safety ensures 100% accuracy on each order. The pallets are then wrapped and tagged for delivery to the ship, either pierside or at sea. Payments to the NEX for the merchandise are done via the Defense Finance and Accounting Service. This electronic process eliminates the need for submission of a purchase order form, or order processing and payment by a government purchase card holder.

“Ultimately, the ship gets fresh products, limited substitutions, and improved fill rates at a price comparable to products sold by vendors in the continental United States,” said Capt. Darrell Mathis, deputy commander Military Services of NEXCOM.

Associates from the NEX Bahrain Distribution Center coordinate merchandise shipments to ships’ stores. From left to right: Frank Scott, logistics manager; Harli Thomas, 1Q coordinator; Padinjakkara Mohammed, lead storage; Sreejith Murapaly, warehouse management system; and Joaquim Vaz, lead shipping. 

 

To date, fleet feedback has been extremely positive. “The new 1Q program offered via Bahrain is a helpful option to ensure we can provide the crew with an assortment of day-to-day items to make deployment easier,” said Ens. Stefan D. Sookoo, sales officer, USS Essex (LHD 2). “The process is easy to use from order to receipt, ensuring no unmatched expenditures or not-in-stocks. Overall, the process is smooth and the crew enjoys the items provided for their health, comfort, and morale.”

Padinjakkara Mohammed and Sohale Anwar prepare to load merchandise for shipment.

 

Considering the success and cost savings over the past six years in Japan and Guam, and the successful launch in Bahrain and Naples, further expansion of this program is under consideration in Rota, Spain, and Pearl Harbor.

–photos by NEXCOM Public Affairs

Summer 2019