Shoring Up Supply Lines

As a multi-channel retailer that caters exclusively to U.S. military men and women and their families around the world, the Army & Air Force Exchange Service (AAFES) brings the world of retail to the troops, whether it’s a pair of shoes from a big-box store on a base in Florida or a bag of chips and a soda from a convenience store in a heavily-guarded military installation in the Iraqi desert.

While its mission is different, its aims – reducing expenses and boosting service – are similar to those of most retailers. AAFES recently enlisted RedPrairie to implement a new warehouse management system that specializes in getting products from warehouse to consumer with optimal efficiency.

And when you operate 174 main big-box stores, 279 convenience stores, 197 military clothing stores, 1,384 fast-food restaurants and 75 BX/PX (military department store) locations in 49 states and 30 countries, efficiency is critical. A troop surge in Iraq or Afghanistan, redeployments from Korea or a drastic change in a conflict or military operations can all affect how, where and at what volumes AAFES must operate.

AAFES also has a unique set of stakeholders because it generates non-appropriated earnings as a supplemental source of funding for military morale, welfare and recreation (MWR) programs. Two-thirds of AAFES earnings go to the MWR programs — a total of $272.7 million in 2007 and more than $2.4 billion over the past 10 years. MWR programs include youth services, Armed Forces Recreation Centers and post functions.

Because its bottom line directly affects the morale and well-being of the troops, profitability is especially important to AAFES, says director of warehouse management George Carpenter. As a result, “optimization at every level is something that we’re very focused on.”

Most recently, emphasis has been focused on replacing the warehouse management systems, and a competitive selection process led AAFES to Waukesha, Wis.-based RedPrairie’s E2e Business Process Platform.

The first RedPrairie solutions will soon debut at AAFES’ Waco, Texas, distribution center and are scheduled to be implemented at all 11 of the service’s DCs by mid 2011. Along with regular warehouse management solutions, it will implement labor management, slotting, yard management and a collaboration portal piece, all designed to give AAFES a single centralized platform that meets all of the needs of its distribution network.

“The benefits we expect to gain include efficiencies in personnel, outbound container utilization, efficiencies in time in reducing inventory [and] handling costs,” Carpenter says. The entire system is expected to reduce operating costs by more than $11 million annually and cut inventory cycle time by two days, saving another $2 million.

Work efficiency
AAFES’ primary objective, says RedPrairie retail account executive Janine Renella, was the overall improvement of work efficiency by reducing labor costs and increasing capacity through directed work, improved user accountability and task prioritization.

The E2e Business Process Platform has a number of features that allow it to prioritize, schedule and direct tasks in a way that increases worker productivity. Whether it’s a hand-held or vehicle-mounted device, voice operations and commands can direct DC workers where to go next, and the WMS tracks everything in the warehouse to determine the most efficient routes and sequences.

“We are seeing anywhere from a 10 to 15 percent jump in productivity throughout our customer base with the workforce management system,” Renella says.

Create a repeatable model
AAFES is seeking to create “an environment where anybody that needs to see or interact with the data they are using to carry out the logistics mission can have a single place to go and do that,” Carpenter says.

During the design stage, RedPrairie took a global view of AAFES’ operations. By creating a repeatable model, it will be able to easily implement it in new distribution sites as they come online. The E2e Business Process Platform also provides a base from which AAFES can further automate its facilities. Whether it’s a highly mechanized operation with voice picking or simply a new warehouse addition, it will allow the retailer to build and grow its IT infrastructure from a single application.

“Optimization really became key as we expanded the mission to serve our customers in so many different places,” Carpenter says. “The bottom line is very important to the military leadership, to supply a dividend and generate earnings to support quality of life programs in military installations.”