Consumables: are SERVMARTS cost effective?

Abstract

A study is presented of the current Department of Navy's (DoN) method of supplying consumable type material through its retail outlet (SERVMART) in Alameda, CA. to the fleet and supporting shore facilities e.g. USS Abraham Lincoln CVN-72 and Naval Air Station Alameda, CA.). It focuses on the initial purchase price, General Service Administration (GSA) surcharge, and labor and non-labor costs of the SBRVMART operation at FISC Oakland. The research compares the total costs of buying and managing the 212 highest selling items (top 20%) inventoried at the SERVMART to similar items sold by commercial vendors in the Oakland area. The research results show that these items are less expensive to the customer when purchased at SERVMART. However, direct purchases of paper products and cleaning supplies from the GSA depot in Stockton were found to be cheaper than buying from the SERVMART. In addition, a customer survey indicated that the SERVMART customers are not satisfied with the selection, quality, availability, and customer service levels present at SERVMART Alameda. As a consequence, the recommendation is made to eliminate the SERVMART Alameda operation and allow the SERVMART customers to use a combination of GSA Stockton for paper products and cleaning supplies and local vendors for rest of their non-military consumable item needs.