DC Velocity - July 2018

BY BEN AMES, SENIOR EDITOR

WAREHOUSE MANAGEMENT SYSTEMS Technology

ONE OF THE LARGEST RETAILERS IN THE COUNTRY is a 123-year-old operation with a highly exclusive customer list—to shop at this store, you must have served in the U.S. armed forces.

Despite that stipulation, the Army & Air Force Exchange Service (AAFES)—also known as the “Exchange” or “PX” (an Army abbreviation for “post exchange”)—has grown to become the 56th-largest retailer in the country, operating some 2,700 stores on Army and Air Force bases in all 50 states and more than 30 countries worldwide.

The Exchange no longer does all its business through
stores, however. In 2014, AAFES launched an e-commerce
website in an effort to keep pace with an increasingly
omnichannel world. Although that move proved popular
with customers, it created problems for the back end of
the operation. The Dallas-based Exchange quickly realized
that its existing distribution process, which was geared
toward store replenishment, would need a serious overhaul
to meet the demands of e-commerce. As the volume of
direct-to-consumer orders grew, it began investing in auto-
mated material handling systems.

Twenty-two months ago, that process shifted into high gear when AAFES CEO Tom Shull began laying the groundwork to open up the Exchange’s e-commerce business, ShopMyExchange.com, to a much wider audience. Defense officials had decided to extend online shopping privileges to all honorably discharged veterans as well as its traditional customer base of active-duty and retired service members and their families. The change expanded the ranks of potential e-commerce customers overnight to 30 million from 11 million.

To handle the flood of shoppers eager to access the site’s tax-free deals, the Exchange launched a major overhaul of its three main U.S. distribution centers, making changes at the various sites that included adding voice-directed picking technology and installing new conveyors and a put-to-light wall. The keystone of the upgrade was swapping out its 30-year-old warehouse management system (WMS)