The July 2000 plan also called for transferring the management of 25 stores located in the Eastern Region to the Midwest Region. Conclusions

While the Defense Commissary Agency has not fully refined its cost and savings estimates, it appears that, by eliminating the Eastern Region’s area offices and consolidating those regional operations at its Virginia Beach location, the Agency will produce savings and improve operations. However, with the implementation of the plan comes a loss of operational expertise in the closing offices that could potentially disrupt operations and customer service. Whether the Agency’s proposed regional reorganization is the best approach for achieving efficiencies is unclear because the Agency did not assess alternative structural approaches to improving regional operations and creating efficiencies. The plan is limited because it considers only the Eastern Region and not the totality of the regional structure, which is to be considered in the Agency’s follow-on study of the current reorganization plan. While the closure of the area offices is likely to improve efficiency, the planned study to determine the optimum number of stores for the Agency’s regions provides an additional opportunity for achieving additional streamlining and improved regional operations and efficiencies. In this regard, experience from commercial-sector retailers may provide useful insights into determining how to shape the Agency’s future regional structure.
What GAO Found

In July 2000, the Defense Commissary Agency proposed changes to its regional management structure that it expects will generate savings, improve efficiencies, and provide more effective management of commissary operations. The plan calls for eliminating the two area offices within the Eastern Region and consolidating most of the Eastern Region's operations at the region's headquarters at Virginia Beach, Virginia. Although the agency has not fully refined its cost and savings estimates, it appears that these proposed changes will yield savings and improve operations. However, with the implementation of the plan comes a loss of operational expertise in the closing offices that could potentially disrupt operations and customer service. Whether the proposed regional reorganization is the best approach for achieving efficiencies is unclear because the agency did not assess alternative structural approaches to improving regional operations and creating efficiencies. The plan is limited because it considers only the Eastern Region and not the overall regional structure, which is to be considered in the agency's follow-on study of the current reorganization plan. Although the closure of the area offices is likely to improve efficiency, the planned study to determine the optimum number of stores for the agency's regions provides an additional opportunity for streamlining and improved regional operations and efficiencies. Experiences from the private-sector may provide useful lessons into how best to shape the agency's future regional structure.