WAYNE L. WEBBCAO Project Manager

• Automated order forecasting and generation system

• Utilizes historical sales data

• Limited human intervention

• Seeks to achieve just-in-time inventory management

CAO Concept

• Overall average score for CAO stores

– 2002 – 4.20– 2003 – 4.25– 2004 – 4.36– 2005 – 4.38– 2006 – 4.48– 2007 – 4.49– 2008 – 4.50

• Steady increase since CAO deployment in January 2002

Year-End Customer Satisfaction Survey: “Well-stocked, Full

Shelves”

• Increased customer satisfaction

– Higher in-stock rates

– Increased Commissary Customer Service Survey (CCSS) scores

• Reduced inventory levels

– Higher inventory turns

– Loss theft indicators

• Informed decision making

• Improved shelf space allocation

• Increased sales

CAO Benefits

Good communication = success• Manager / Supervisor / Merchandiser

• Other CAOSs

• QAEs

• Admin office – VCMs

• Distributors

• Industry / sales representatives

• Vendor / contract stockers

• Cashiers

• Receiving personnel

• Janitors

Communication

RecommendedOrder

Sales Data BOH

ShelfMaximums

Order Requirements

• Sales data

– Average weekly sales

– Projected weekly demand

– Day of the week index

– Forecast error safety

stock

Order Requirements

Sales Data

• Balance on Hand (BOH)

– On-hand inventory of

shelf and backroom

• Sales Promotion System

(SPS) Reserve

– Inventory on hand for

future promotions

• Quantity available

– BOH minus SPS Reserve

Order Requirements

Sales Data BOH

• Shelf maximums set based on:

– Existing shelf space

– Set higher for never-outs

– Set lower for low demand

• Shelf minimums not part of

order calculation when shelf

max is in place

• Facings are informational only

Order Requirements

Sales Data BOH

ShelfMaximums

RecommendedOrder

Sales Data BOH

ShelfMaximums

Without all three being completed with correct information, the system does not function correctly

Order Requirements 3 Vital Factors

Control Ordering

• If demand exceeds shelf maximum, CAO will order to fulfill

demand and safety stock requirements

• A report generates detailing these items and can be used:

– To expand shelf space

– As a pull sheet

• Phased out/deleted items

– CAO continues to order phased out items until item is flagged

as deleted – once deleted, the item will be automatically

deactivated

Order Requirements

66% of the active items

at Langley AFB Commissary

sell less than 21 units per week

less than 3 units a day …

As of 8/11/06

Fact

Velocity Codes

A B C D E F

Range of Velocity Codes

5% 10% 20% 30% 20% 15%

Safety Stock Percentage

30% 15% 10% 10% 0% 0%

Case Rounding Factors

85% 85% 90% 90% 95% 95%

• Safety Stock– Velocity Code Safety Stock

• Safety Stock Based on an Item’s Velocity Code (A thru F)

– Forecast Error Safety Stock

• Additional safety stock calculated based on a comparison of the order forecasts of the last 2 weeks to actual sales during that period

Other Elements of the Algorithm

• Lead time

– The number of days between the date of the order

creation and the required delivery date (RDD)

• Period to Order For (PTOF)

– The number of sales days that the order being

calculated is to cover

Other Elements of the Algorithm

• Order builds on Wednesday, RDD on Friday, PAD on Saturday

• Shelf maximum: 48

• UPK: 12

• Velocity code B – case rounding factor = 85% (10.2 units)

• Starting BOH: 36

• Due-in: 12

• Lead time demand: 12 (Wednesday-2, Thursday-4, Friday-6)

• Put away demand (Saturday): 9

• 36 + 12 – 12 = 36 (Virtual BOH, Friday night)

• The difference between virtual BOH and shelf maximum is greater than 85% of UPK, so one case will be ordered

• Shelf maximum (48) minus virtual BOH (36) = 12

Other Elements of the Algorithm Ordering Scenario

• Store manages their own order / distributor schedule

• Accommodates holiday store closures, distributor

closures for inventory, etc., using an override

feature

• CAO will recalculate projected orders based on the

new schedule

• Can create multiple orders with multiple RDDs

Store Ordering Schedule

• Shippers, floor stands / pallet modules

• Items received via the Case and Truckload Sale (CATS)

system

• Demos

• VCMs – merchandise returned to vendor

• Mis-picks

• Unidentified shortages

Factors Impacting BOH Accuracy

• Store runs CAO Facility New Item Report

• Generates distinct pull once a week using FDS

• Upon receipt, merchandise to shelf

• Activate and establish shelf maximum

• CAO orders to fill shelf

• Ordering initially based on replenishment

• Forecast developed when there is history of sales

New Items

• Maintain orders

–Edit current order

–Review two-week order history

• Manage counts

–Establish / correct BOH

–Process salvage

–Transfer items

–Flagged Item Report (NIS, highs, and lows)

RF HHT Functionality

• Manage items

– Set shelf maximums and facings

– Activate / deactivate items

– View CAO Item Detail

• Reports

– Salvage

– Transfer

– Flagged Item Report

RF HHT Functionality

• Lists items and average weekly demand unique to store

• Can be created and released in advance

• If released in advance, due-ins put into reserve

• If received in advance of promotion start date, BOH put

into reserve (SPS Reserve)

• SPS Reserve enables CAO to continue to order for shelf

• Once promotion starts, CAOSs must order manually to

keep displays full

Sales Promotion System (SPS)

• Flag local promotions in CAO

– RF HHT used to capture items promoted outside MBU

window to prevent over-ordering after promotion

– Can be used to flag items heavily demo'ed,

couponed, or advertised

Managing Sales History

• Two functions – markdown and (store / vendor)

throwaway

• Process streamlined by requiring fewer key strokes

• Automatically computes markdown price

• Saves item information for 2 months plus current month

• Salvage report has various sort options, enabling user

to print by vendor number, PIIN number, distributor,

and department

Salvage Program

• User defined date range – applies to sales days

• Will temporarily modify shelf maximum factor

value for date range specified

• User will define shelf maximum factor percentage

(+/-) for various combinations of D/C/G, distributor,

and velocity code

Order Ramp Factor

• Identify non-MBU promotions

• Give advance notice of heavily couponed items

• National advertising

• Spot BOH discrepancies

• Reduce mis-picks and shortages

• Follow-up with vendor stockers

What You Can Do to Help

• Past

– Payday demand - based on last 8 payday weeks

– Non-payday demand - based on last 8 non-payday weeks

– Override schedules

– Shelf max

– Visibility of 856

• Future

– Daily forecast

Enhancements

Item Movement

Review Item Movement Data

Weekly Demand / Promotions

Check Average Weekly Demand

Check Date Last Promoted

Sales History

Review 60 Weeks Sales History

DeCA Help Desk 1-888-551-1598 or 804-734-8000, ext 48140

(Functional, technical, C-Move or RH-HHT issues)

HQ DeCA Ivy Beres 804-734-8000, ext 48211Bob Crecink 804-734-8000, ext 48983Robert A. Robin 804-734-8000, ext 48672Wayne L. Webb 804-734-8000, ext 48854Gary Williams 804-734-8000, ext 48731

For Assistance