Navy Exchange Service Command’s Worldwide Distribution Services

By R. Gregory Kilduff, Logistics Analyst, Navy Exchange Service Command Distribution

Navy Exchange Service Command (NEXCOM) Distribution manages the distribution and transportation functions for the NEXCOM enterprise. During 2018, the department launched several initiatives targeted at opportunities to reduce costs and improve operational efficiency.

In November 2018, the Northeast Distribution Center (NEDC) in Suffolk, Virginia, stood up a fashion processing facility within the existing distribution center. Previously, most of the fashion merchandise flowing out of the New England area was trucked down to NEXCOM’s Southeast Distribution Center in Pensacola, Florida, for processing. A significant portion of those goods were then trucked back up to Virginia for distribution to Navy Exchange (NEX) locations in the Mid-Atlantic and Northeast regions.

By adding the capacity to process fashion at the NEDC, NEXCOM expects to generate ongoing transportation savings of $667,000 annually, recovering its initial capital investment in less than two years.

Another on-going initiative involves the adoption of floor-loading as a means of reducing out-bound transportation costs. Previously goods were shipped from NEXCOM distribution centers to NEX locations as well as sister distribution centers on pallets, sub-optimizing the fill percentage for any given load. However, by employing a flexible, manual conveyor to move product from the automated sortation system into out-bound trailers, and then stacking product directly onto the floor of those trailers, NEXCOM’s distribution centers are shipping more goods on fewer trucks, reducing transportation costs by an estimated $628,000 each year.

As a further enhancement to this program, NEXCOM has invested in a powered conveyor to move goods from the sortation system to the truck without requiring associates to push the boxes along, offering further additional labor savings.

In the spirit of collaboration, NEXCOM and Headquarters, U.S. Marine Corps, Business and Support Services Division (HQMC MR) are finalizing a formal memorandum of agreement, covering the terms by which NEXCOM will provide procurement and distribution support to HQMC MR on both the East and West Coasts. Under this agreement, approximately 35% of the goods moving through the Marine Corps third-party logistics provider are sourced from NEXCOM. In addition, NEXCOM’s transportation team will provide booking services for international container shipments to HQMC MR’s facilities in Iwakuni, Japan, and Kaneohe Bay, Hawaii, saving the Marines an estimated $800,000 in appropriated funding annually.

Finally, the summer of 2018 saw the expansion of NEXCOM’s 1Q COG program servicing NEXCOM’s Ship’s Store program. Previously, NEXCOM Distribution had supported ships’ stores from its distribution centers in Japan and Guam, but there was no provision for servicing ship’s store needs in Europe and the Middle East. NEXCOM distribution worked closely with NEXCOM’s Ship’s Store Program, as well as NEXCOM buyers, to put together the logistical support necessary to get ship’s store merchandise to distribution points in Souda Bay, Crete, and Bahrain. The expanded program has been well received by ships afloat. To that end, NEXCOM distribution remains committed to delivering exceptional service to ships’ stores and their patrons.

Summer 2019