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Welcome to the Hampton Roads Chapter

AMERICAN LOGISTICS ASSOCIATION



8/19/2016: When Plans meet Reality it is time to Reboot:

When Plans meet Reality it is time to Reboot:

"No battle plan survives contact with the enemy." - German military strategist Helmuth von Moltke

"When your plan meets the real world, the real world wins. Nothing goes as planned. Errors pile up. Mistaken suppositions come back to bite you. The most brilliant plan loses touch with reality." - Lexician

A number of reforms, budget reduction, and revenue generating targets are being advanced by the Department of Defense for exchanges and commissaries. We were gratified to see that the DoD had taken the approach to put any resale reforms ahead of budget reductions. That's the right thing to do. But, this policy is in danger of being compromised by unrealistic and unattainable timetables. Faced with the reality of resale transformation running into marketplace and bureaucratic reality, the normal and rational reaction in a strategic thinking environment would be to relook at priorities and realign the execution timeline. However, when operating in a radioactive and highly constrained budget environment the decisions run the risk of being made based on untested assumptions and generalities about marketplace behavior.

At DeCA, decision-makers need to challenge and test the assertions of outside experts and measure their recommendations against the reality of the resale marketplace. In the complex Government regulatory and contracting environment, progress is often slow and results are impactful, reverberating across Government and industry in ways that cannot be completely forecast even by the wisest planners. If it looks too good to be true, it often is. An untested and unvalidated execution grid portrays miraculous measurable results almost immediately; while industry experts including those well versed in the tradecraft of military resale continue to warn that this is a long, slow and precarious process ... . With multiple dimensions. Decision makers in DoD have to realize that there is a difference between a sterile, and academic projections and the hard reality of bending a working, breathing system to fit the theory. Certainly, there always are savings to be achieved and progress to made toward an even better commissary program. But, these expectations for transformation must be tempered by the uncertainty of execution before the funding rug is pulled out from under the system. DoD needs to recognize the reality of the marketplace, the criticality of stabilizing the commissary benefit and give credit to DeCA for the hundreds of millions of dollars in cost reductions that already have been squeezed out of the supply chain. They also need to recognize that, as in physics, there is an equal and opposite reaction to every action and that the industry will react to changes to the system just as they would react if these same changes were occurring in the marketplace outside the gate.

ALA member companies are prepared to roll up their sleeves and work with the DeCA leadership to achieve the dual goals of saving taxpayer dollars while delivering the same level of benefit. We are engaging on a broad front to make sure that at the end of the day, DeCA lands on its feet with an even better, more market responsive, and efficient patron offering.

Similarly, enormous stretch goals are being placed on the military exchanges which, by their nature, have cut costs and creatively powered revenue within the bounds prescribed by DoD policy and law.

One dangerous off-ramp being contemplated is to place an additional burden of reductions and revenue generating pressure on the Exchanges. This is a dangerous proposition. The misguided proposition is that the Exchanges can just "make more money" and this will buy time for any long term transformation initiatives. The problem is that the Exchanges are between a rock and a hard place as it stands being stressed for more dividends to meet reductions in MWR appropriated funding as demonstrated by a near 25 percent reduction for the Army alone this coming fiscal year. What started out as a DeCA transformation initiative has evolved into an Exchange "earnings" problem and for the sake of military resale, this cannot be the way ahead. DeCA transformation must continue, we must support it ant it must be successful. But, here again, exchanges need to be credited for the remarkable savings they have achieved and the tremendous contributions they consistently make and not have the goalposts moved each time they gain a yard or two — or ten.

There continues to be a dangerous confluence of challenges to the exchanges: tobacco, alcohol, and other product restriction policies not experienced outside the gate; requirements to operate marginal operations at remote outposts; risk of a decline in commissary-generated patron traffic; direct mission support requirements; demands for more dividends driven by appropriated fund reductions to MWR, strategy-driven troop population shifts; and intense and mounting competition outside the gate and on in cyberspace. Then there's the inherent disincentive associated with taking siphoning off dollars to other purposes faster than the system can generate them. And, limiting the exchange capability to plow earnings back into capitalization threatens to eat the seed corn needed for any future revenue initiatives to be harvested.

No one said it was going to be easy and the natural reaction is to put the hard stuff off and find someone to pay the bill. This is not the answer. It is time to reboot the plan and timeline and put reality back in the equation. ALA and its member companies want to engage constructively. We want resale agency managers to succeed. We're not only supporters of the system, we are part of the system. Tens of thousands of dedicated exchange and commissary managers and associates, along with millions of patrons are watching.

The resale system does too much good for too many for so little to test where the tipping point might be.




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