Accession Number:

ADA255738

Title:

Toward a More Efficient Military Exchange System

Descriptive Note:

Final rept.

Corporate Author:

LOGISTICS MANAGEMENT INST BETHESDA MD

Report Date:

1991-07-01

Pagination or Media Count:

111.0

Abstract:

An April 1990 DoD study recommended a full consolidation of the three military exchange systems. Although the Army and Air Force generally concurred with the recommendation, the Navy and Marine Corps challenged the studys analysis and results. An independent review of the study and of subsequent rebuttals by the Logistics Management Institute LMI leads LMI to recommend increasing cooperation and coordination among the current exchange systems and integrating some of their functions without a full and immediate consolidation. The DoD study projected annual savings of over 44 million from the consolidation. LMIs analysis showed potential annual savings of 36.6 million, with a net present value over 10 years of 104.9 million. Although those savings represent an 8 percent potential increase in annual profits, nonquantifiable issues raise the risks to a level too high to justify full and immediate consolidation. However, some of the first steps on the road to consolidation make good economic sense, whether or not the exchanges actually consolidate. They include increased management cooperation and coordination, a common chart of accounts, and a standard system of merchandise numbering. DoD should not make a decision on consolidation until at least 3 years have passed and the above actions have given decision makers a much better comparison of exchange operations and the time to reach a consensus on buying and managing strategies.

Subject Categories:

  • Economics and Cost Analysis
  • Military Forces and Organizations
  • Logistics, Military Facilities and Supplies

Distribution Statement:

APPROVED FOR PUBLIC RELEASE