November 5, 2018 / NEWS RELEASE: 46-18

NEX Distribution Centers Replenishing Ships Stores

NAVSUP LogoThe mission of NEXCOM’s Ships Store Program is to provide quality goods and services for Sailors and Marines stationed aboard Navy ships and in remote and isolated locations such as San Clemente Island and San Nicolas, Calif., and Diego Garcia.

In 2012, the Ships Store Program began researching the costs and reliability associated with the Defense Logistics Agency-supported subsistence prime vendors who provided merchandise for overseas ships stores. It was determined that product availability, fill rates and costs were not compatible with operating a profitable and customer service-friendly ships store while in a foreign theater. To that end, NEXCOM worked to understand, shape and enhance the logistics infrastructure required to provide timely and effective support.

“Our team collaborated with NEXCOM’s Distribution team to do a cost analysis of providing the most popular ships store offerings (1Q) and the possibilities of leveraging the logistics and procurement support of the NEX retail outlets in Japan and Guam,” said Gene Hoffman, merchandising branch, NEXCOM’s Ships Store Program. “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 DLA, with a significant reduction in distribution costs. The 1Q COG 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 7th Fleet, a blanket order agreement between NEXCOM and Fleet Logistics Center Norfolk, Va., was signed in 2017 to broaden the availability of the 1Q items to ships homeported or operating in the 5th and 6th Fleet areas of responsibility. Once the contractual framework was in place, NEXCOM ensured distribution and information technology requirements were satisfied and an adequate pipeline and inventory position 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 5th Fleet would be provided via the NEX Bahrain distribution center with 6th Fleet support provided via the NEX Naples, Italy, distribution center. In the end, a simple and transparent process was created allowing the ships store to operate no different than in continental United States.

“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 EDI process,” said Frank Scott, logistics manager, 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 Ships Store Program updates the contract in ROM the first of each month. The merchandise listed on the contract is a cross section of high demand items already carried in NEXs.

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 percent accuracy on each order. The pallets are then wrapped and tagged for delivery to the ship, either pier side 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 1155s 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.

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 was smooth and the crew enjoys the items provided for their health, comfort and morale.”

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.

 

About NEXCOM
The Navy Exchange Service Command (NEXCOM) oversees 100 Navy Exchange (NEX) facilities and nearly 300 stores worldwide, 39 Navy Lodges, the Ships Store Program, the Uniform Program Management Office, the Navy Clothing and Textile Research Facility and the Telecommunications Program Office. NEXCOM's parent command is the Naval Supply Systems Command. NEXCOM’s mission is to provide authorized customers quality goods and services at a savings and to support Navy quality of life programs for active duty military, retirees, reservists and their families. NEXs and Navy Lodges operate primarily as a non-appropriated fund (NAF) business instrumentality. NEX revenues generated are used to support Navy Morale, Welfare, and Recreation (MWR) programs. In FY15, $2.5 billion in sales were generated with $22.3 million in dividends provided to Navy MWR programs.