Preserving the Vital Resale Supply Chain

Preserving the vital resale supply chain

By Steve Rossetti, ALA Director of Government Affairs

Defense changes policy on protective gear

DoD has issued new guidance on the use of protective masks.  All DoD personnel, family members and civilian employees and contractors, are required to wear masks when they are within 6 feet of another person.  Masks can include either provided masks or cloth face coverings.  The DoD Policy is here.

DeCA has issued implementing guidance on face masks.  This guidance is here.   And, the Navy Exchange Command guidance is here.

ALA is raising the face mask issue with the Department of Defense and is seeking to identify sources of professional grade personal protective equipment, including masks to industry personnel in the supply chain and in the stores. Protective gear is in short supply as National priorities are to get it to health care workers. Currently, this gear must be paid for by individual companies but ALA is trying to get a common source available at the store level so that both industry and Government workers have professional –grade protective gear available.  Until this time, workers must fashion their own face protection from cloth.

Distributors are notifying truck drivers of the new policy which may require drivers to not only wear the protective masks, but lower the masks when clearing security upon entering the bases.

DoD working group, ALA pandemic communications group, ALA supply chain strengthening efforts 

ALA is participating in a Department of Defense working group that is examining pandemic issues, including fast tracking acquisition, use of personal protective equipment up and down the supply chain, and working with manufacturers to get more product to the system via the Defense Production Act and its associated Defense Priorities and Allocations Systems Program.

ALA established a Coronavirus communications working group on February 28 and is pushing information to resale entities on developments in both the government and commercial retail and grocery world.

ALA has been working with suppliers up and down the grocery supply chain to determine chokepoints and areas of fragility in the supply chain and relaying this information to the Department of Defense in order to remedy problems.

Senator Kaine urges Defense to move on securing the exchange and commissary supply chain

In an April 2 letter, Senator Tim Kaine, ranking Member on the Senate Armed Services Readiness and Management Support Subcommittee, wrote to the Secretary of Defense to let Congress know what authorities and supplemental funding is needed to secure the consumer products supply chain.

Kaine commended DoD for efforts to reimburse the exchange and commissaries for added costs associated with the pandemic.  He also urged support for added costs placed on the industry side of the supply chain including labor and added costs at distribution centers that he said amounted to an additional $10 million a month, saying that these costs are over and above normal operations and are needed to ensure the smooth flow of products to military families.

Noting the difficult conditions in the stores, he urged DoD to recognize industry workers and cited commercial chains that were providing additional pay and personal protective gear for their employees.  He also urged the Department to consider “utilizing aspects of the Defense Production Act or associated authority of the Defense Priorities and Allocations System (DPAS) to ensure distribution centers have adequate product allocations from manufacturers to fill consumer demand at the military stores.”

Mission essential exchange operations need support as losses escalate

Major impact on exchange programs may require appropriated fund backstop

The Department of Defense is examining the impact of the pandemic on the nonappropriated fund programs of the DoD and is considering underwriting the program with appropriations.

Already the one-time impact is north of $100 million with recurring monthly costs higher yet.  If there’s one thing we’ve learned from this pandemic, it’s that bad news doesn’t get better with age.  Just like in the private sector, food is selling, grocery stores are operating but retail is getting hit…and hit hard.  Associated with the carnage that is occurring outside the gate as large and small retailers shut down, the exchanges are doing all they can to cope and survive the pandemic.  The impact on exchanges is exacerbated by the global nature of the exchange business and the demand that they continue to operate when stores outside the gate would scale back or close.

And, for military families, the exchanges are often the only source of life sustaining consumables and services.

The exchanges normally operate without appropriations from Congress.  That’s why they are called nonappropriated fund activities.  DoD is considering what and how much to reimburse the exchanges from appropriated funds to assist in mitigating the impact.

And there’s a cascading effect.  MWR programs that the exchanges underwrite have their own set of problems with closures of programs at the base level and the Armed Forces Recreation Centers shuttered.

We’ll be reaching out to policy makers throughout the legislative and executive branches of Government to recognize that the vital food chain for our military needs to be shored-up and that the exchange programs be supported to preserve their vital capabilities to take care of our military both during the pandemic and the reconstitution that will take place after this pandemic is conquered.

Along with shoring up the vital grocery chain, ALA is urging action to include establishment of a major appropriated fund reserve to support and backstop severe financial impact being experienced by exchanges.  Providing emergency appropriations to underwrite exchanges is not unprecedented.  Current DoD policy allows emergency finding.

Pandemic impact mirrors what is taking place outside the gates.  And, the Administration and the Congress have moved to backfill employees and businesses.  We don’t want the exchanges to fall through the cracks.  And these are some big cracks.

Exchanges are seeing major sales declines and their workforce and operations are paid with sales.  Yet, exchanges can’t close as most commanders depend on them to sustain their military operations.   The exchanges are struggling to adapt, closing concessions and scaling back food operations to take-out only.   Some retail outlets are closing and scaling back hours.  Base access policies are changing, limiting sales from off-base patrons.

And, sales declines reverberate across all exchange operations, with financial impact on logistics, real estate, financial, credit, and information technology.  Also, there are major costs due to the need to keep the workforce on board to man on-going operations.

Exchanges have operated for years sustaining mission essential programs for the Department of Defense, often using dollars generated from the troops to underwrite the Defense mission.  As the pandemic impacts exchange operations, it is time for the American people to reciprocate with funding to support these programs so that they can continue to support the Defense mission after the pandemic has passed.

VCS and CGX heavily impacted

The Veterans Canteen Service is unique in that it operates in hospitals.  VCS retail has been heavily impacted and management reports they can’t close down operations because of the vital VA hospital mission and the need for VCS to operate food service for patients and staff.

The Coast Guard Exchange has been heavily impacted as it copes with store closures, limitations on base access and limitations placed on patronage by base commanders.    The impacts on workers are growing as the pandemic stretches on.  Management reports that they are working to keep employees on despite major reductions in hours and sales.

Pandemic commissary closures, need for more manufacturer allocations, and Federal funding to underwrite added industry costs

DeCA employees are getting paid and the commissary program is intact…something that we never have and shouldn’t take for granted.  Just over the weekend we are aware of a commissary closure caused by virus exposures in Osan AFB and exchange and commissary closures at Whitman AFB in Missouri.  ALA is advocating for funding to shore-up the supply chain, including come non-traditional Federal funding to shore-up the supply chain at commercial distribution hubs to include payments for extra employees and equipment expenses not reimbursed, additional hazard pay for some workers, and personal protective gear.   ALA and DeCA are urging major manufacturers to come forward with additional product allocations for the military because of the long-lead times for shipment and the isolation of military families.  This builds on the March 20, “One Family, One Mission” message signed by all Defense exchange systems and DeCA.  Right now, distributors are getting less than 50 percent of what they need to ship to stores.

Speaker of the House gives a peek into Stimulus 4 and even Stimulus 5

The current stimulus bills provide $11 or $12 billion to the DoD and ALA is urging a portion of that funding be provided to relieve the strain on commissary and exchange operations and the supply chain that supports them.

In addition to asking the DoD to support resale programs with existing funding, ALA is planning to support relief in upcoming Stimulus packages that are in early stages of development in the Congress.

Most of the pandemic relief legislation originates in the House of Representatives and Speaker of the House Nancy Pelosi has called for another pandemic stimulus package in addition to the $2 trillion package that just passed Congress.

She backed away from House Democrats’ plan to include hundreds of billions of dollars in infrastructure funding in Congress’ next coronavirus relief bill, instead calling for a simpler package that further extends unemployment insurance and small business support.  She called for more rounds of employment support.

“Right now, we need a fourth bipartisan bill. And I think the bill could be very much like the bill we just passed,” she added, including more unemployment benefits and extension of relief measures for business.

Republicans are lukewarm to another stimulus bill so quickly after the last one, but the fast moving pandemic and the severe damage to economy could cause a shift in Republican attitudes.

Pelosi suggested such a relief package could move quickly through Congress. Both chambers plan to return to Washington on April 20.  “We don’t need a long time to figure out what we need to do next,” she said. “We know. And we have a model.”

ALA Executive Briefing

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Commissary Store Restrictions as of April 6, 2020

Many ALA members have been asking for a list of commissary store restrictions due to the Covid 19 pandemic.  DeCA has provided a consolidated list, but cautions that the list is VERY fluid document and statuses may change throughout the day.  An updated file will be posted daily. Each individual commissary web page will also have the most current operating status for that commissary.

Current List of Commissary Store Restrictions Due to Covid 19

Shull Sends Message of Support to Exchange Patrons

AAFES CEO Tom Shull issued a message today to all patrons of The Exchange detailing efforts to ensure a safe shopping experience.  AAFES is supporting not only military communities around the globe, but AAFES associates as well.  Read Mr. Shull’s entire message here.

Covid 19 and Supply Chain Update

Keeping the resale supply chain open during the pandemic

Protecting and taking care of employees and patrons

By Steve Rossetti, ALA Director of Government Affairs

Fault lines and supply chain fragility and vulnerability are being exposed, triaged and remedied in the vast and complex supply chain that provides life-sustaining food and other consumer products to the military.…at many locations the only lifeline for our dedicated military.  It’s a supply chain that leaders and officials can’t and shouldn’t take for granted during a horrible pandemic.  Already, many retail services are being curtailed or closed, including many concessionaires for exchanges.  So far, main stores remain open and DoD has declared commissaries as “mission essential” and thereby eligible for extensive support from the military command structure.

I’ve been reporting on how a breakdown in the weakest link in the supply chain can cripple our ability to sustain the force and efforts by industry and the Government to have a safe, secure and responsive chain.

Your Association is engaged up and down the chain, inside and outside Government, to do our best to ensure all of these moving parts keep moving.

Today, we’ll focus on a key ingredient in the resale supply chain recipe—personal protective equipment and other measures being taken to keep the chain from being contaminated and thereby having to come to a calamitous halt.

Grocery and consumable products and transportation deemed “essential”

While most of the American public is hunkering down and sheltering-in-place, certain organizations in the Government and industry simply have to have people showing up for work.  Those that are considered “essential” for the Nation to keep functioning are described in the Bible for essential infrastructure guidance that is produced by the Department of Homeland Security, specifically the Cyber Security and Infrastructure Security Agency.  This guidance was updated on March 28 and appears here.  This includes transportation and grocery operations.  Simply put, this allows trucks to travel in “hot zones” or quarantined or locked-down areas.

That’s only the beginning.  Once these functions are established as critical to the Nation functioning at a basic level, the real work begins.

As resale swims in two oceans, commercial and government, the equation is ultra-complex.

In order to feed military families, first the products have to get to the distributors from the manufacturers.  ALA has been working with major manufacturers to highlight the uniqueness and light of the military and appeal to them to give priority on scarce food and other consumables to the military.  ALA is working with the Acquisition and Sustainment officials at DoD to keep them apprised of the availability and “allotments” that major manufacturers are making to the resale system and the commercial side in order to determine measures that need to be taken to ensure the flow to the resale agencies.  Within that manufacturing community, major CPG companies are taking extraordinary efforts to keep products flowing to the distribution hubs.  Commissary distribution is mostly operated by commercial companies, most of which provide products to both commercial grocery stores and commissaries.  Exchange distribution is structured differently and is more of a combination of commercial and organic (Government) distribution capability.

Decontamination and personal protective equipment & premium pay – Distribution centers

In both scenarios, de-contamination and protecting the workforce is critical.

The main commissary and exchange distribution houses are taking extraordinary measures to prevent contamination of products, equipment, and workers.

Ginger Rodgers, the partner of the famous dancer Fred Astaire said she did everything he did but “backwards and in high heels.” These distributors are not only handling twice the volume, they are having to do it while taking extraordinary measures to keep the facilities decontaminated and open.

This includes spraying, wiping down equipment, and social distancing.  An example of the extraordinary efforts being taken by distributors is Coast Pacific Food Distribution’s program that appears here.

Military retail outlets

For retail outlets in both the commercial and government world, guidance and practices are mixed and evolving.

A March 25 item by The Brookings Institution “Grocery Workers are keeping Americans alive” here described the necessity and efforts being taken in the commercial world to ensure grocery workers stay on the job, are safe and paid for their sacrifice.

DeCA is moving to increase worker safety and a description of their latest efforts is here.  Measures include Plexiglas shields for cashiers, wiping down stores, washing hands and veterinarian food inspections.  This in a statement by DeCA:

“We are always vigilant to ensure our workforce follows the strictest precautionary measures including routine hand washing and other basic sanitation measures to avoid spreading germs. Our stores continue to undergo daily sanitizing, disinfecting and cleaning.  We have cancelled all events in our stores until May, an overabundance of caution is being used for the safety of our patrons, employee, and industry partners.

It is important for our valued authorized patrons to know that the sources of the product sold in the commissaries go through an extensive assessment process conducted by food safety experts in the Army Veterinary Corps before they are deemed as an approved source. We have military veterinarians and store food safety specialists inspecting food sources, deliveries and products on the shelves to help ensure they’re free of potential contaminants.”

OSHA has issued guidance on workplace safety during the pandemic and this guidance is here.

Commercial employees work side-by-side with Government workers in commissaries and exchanges.  Commercial workers include some 14,000 shelf stockers in commissaries and many manufacturer representatives.  So far, no determination has been made to provide either government workers or commercial workers with personal protective gear including masks and gloves.  ALA is working with the government to determine if and when this protective gear is recommended and, if so, how it would be purchased and deployed.  AFGE, the Government employee union has sent a letter to the DoD on the matter and this is here.

Because of the difficult conditions that workers are having to endure, premium pay is being offered up and down the supply chain, including in retail outlets with considerable pay bumps.  Strike outbreaks are taking place in both grocery retail outlets and other segments of the supply chain as the pandemic spreads and employee concerns rise.  ALA is consulting with Government and working to examine methods for getting premium pay to commercial workers in the resale supply chain as well as monitoring and examining the need for increased protective measures to include the provision of personal protective equipment.

Special thanks to Emily Singer of the Singer Group for providing valuable research for this item. 

Keep up to date on resale pandemic developments on Twitter @resalereaction.

Quote of the Day

“Fortunately, millions of courageous Americans are doing their part. Medical and first responders, agricultural workers, food processor workers, distribution center warehouse employees, truck drivers, gas station attendants, grocery store employees, teachers who are adapting to distance learning, and so many other dedicated Americans are all holding our nation together in this time of crisis.” — Larry Hogan, Governor of Maryland

 

 

This System Must Stay Open; Loans for Small Resale Businesses

There is no choice; This system must stay open

The supply chain for the American military has always been a critical lifeline, especially in far-flung remote areas…from source to shelf.

This chain is comprised of a combination of resale and Government agency distribution and retail points and commercial distribution points.

As with any other chain, it is only as strong as its weakest link.  Because the resale chain does not have an overall and monolithic master, real-time communication is absolutely critical among all involved during the pandemic.

These stores must stay open.  And, we need to do all we can to keep them open.  The chain that supplies them must stay open.  We need to do all we can to keep that supply chain secure and responsive.

That’s why ALA is focusing on all aspects of the chain, working to identify strengths and weaknesses and communicate with the Government when we fear or detect that any link is weakening.   With rapid fire developments both on a policy and operational level, we are working to keep you up to date on issues and challenges for the system to remain viable.

ALA members should keep ALA HQ informed of efforts to shore-up this chain and send comments to srossetti@me.com.

Heroic efforts up and down the chain

From the headquarters executive suites of resale agencies and industry partners to the trenches in the stores and trucks where associates and industry partners are working overtime under difficult circumstances, this must be our finest hour.

It has been said that America’s military represents one percent of the population but has borne the greatest burden of protecting America.  This pandemic is expanding that one percent to include other heroes on the front lines of the pandemic.  In other words, during this pandemic, the one percent has grown to 100 percent.  In order to beat this virus and save the Nation, all must rise to the task.  Every American must work to stay healthy and free up the health care system to care for the sick and most vulnerable.  Some, including military and health care workers, are doing more than others.  But now, grocery cashiers, shelf stockers, in-store associates and industry reps, and employees at key points in the distribution chain are also on the front lines.  We must do all we can to recognize their service and give them all they need to carry out their critical tasks.

We salute this sacrifice and pledge to do all we can to honor and support this service.

VCS is rising to the call

One agency undertaking Herculean efforts is the Veterans Canteen Service led by Ray Tober and Jim Leahy.  As a business operating in hospitals, this organization is coping with an onslaught of challenges.  Cafeterias and retail stores are having to scale-back operations but cannot close because of the need to care for the needs of patients and health care professionals. We urge our ALA members to increase their support for this heroic VCS team during these difficult times.

Small businesses serving military resale are necessary but many are vulnerable during the pandemic

ALA has been actively engaged with DOD policy-makers during the pandemic and has been reporting on developments.

On March 27, ALA participated in a call with key DoD officials responsible for the small business programs of the agency.

We heard from and spoke with Ms. Amy Murray, Director for the Department of Defense Small Business Programs in the Office of Industrial Policy for DOD.   Ms. Murray has a network of some 700 small business advocates throughout the Department, many whom were on the phone call.    62 percent of small businesses serving the Department of Defense are reporting disrupted cash flow during the pandemic and over 50 percent are reporting difficulty in working on contracts because of shelter-in-place orders.

We relayed our concerns about the plight of small business during the pandemic.

This is not business as usual.  We all must do all we can to help small business pull through the pandemic.

Last week, in preparation for our conversation with small business program managers of the Department of Defense, we sought input from ALA member small business companies.  We received many comments and requests from these businesses which are fearful for their survival.

Across DoD, the word has gone out to help small businesses.  Examples include improving cash flow by increasing the progress payment for appropriated fund contracts to 95 percent and changing the places of performance and delivery.

Also, in the DoD acquisition world, officials are encouraging companies that are not getting paid to contact the agency small business advocates.

For the resale world in particular, agency buyers and contracting officials need to be sensitive to the difficulties and plight of small businesses.  They need to be flexible on terms.

Exchanges are reporting sales increases in consumables, but soft lines, apparel, souvenirs and other categories are seeing a slow-down, with apparel “low on the totem-pole of consumer preferences” according to one industry analyst.  In the commercial retail world, buyers are reportedly working with vendors to extend payment terms and accommodate the massive fluctuations on inventory requirements.

In commissaries, many small businesses that rely on manufacturer funding for their revenue have seen a decline over the years from tighter margins brought about by a tougher negotiating stance by the commissary agency.  This has tightened up manufacturer funding flow to brokers, advertising companies and others in the resale supply chain.  And, because of the run on stores in the past month, the system is prioritizing high volume SKUs over low-volume SKUs, placing added pressure on small businesses.  One small business owner serving the commissary market said that “the cumulative effect” of DeCA policies over recent years tied to pandemic impact is placing tremendous pressure on survivability.

ALA urges the resale agencies to be sensitive to the plight of small businesses and work with contracts and payments to ease their paid.

Resale small businesses should tap small business aid in stimulus bill that just passed

ALA has been tracking all three bills that have passed Congress since the outset of the pandemic.

This relief is real and unprecedented.  Download a comprehensive Q&A on the small business relief and an easy to read chart on the major components of the in the latest CARES Act…the $2 trillion bill that just passed Congress.  This bill is being implemented and the major small business provisions will be rolled out this week.

 

Here is What ALA is Doing to Ensure Continued Viability of the System

Here is What ALA is Doing to Ensure Continued Viability of the System During this Crisis

The ALA has been working to ensure the continued viability of the commissary and exchange program during the pandemic.  This interaction with officials in the Administration, Congress, and the commercial industry companies and associations is aimed at ensuring that commissaries and exchanges remain open and viable and that the entire supply chain supporting them (from source to shelf) is equipped with the necessary policy tools to ensure that this lifeline continues during the pandemic military personnel and their families.  This chain, both commercial and government, is a complex, matrix where indeed the weakest link can bring it down.  Below are the latest developments.

Defense designates commissaries mission critical—calls upon all Defense assets to brought to bear.

  • The Department of Defense has designated commissaries and support facilities as mission critical, per this memorandum issued by the Acting Secretary of Defense for Manpower Affairs, Ms. Vee Penrod.  The mission critical designation calls for commanders to support commissary operations with uniformed military and assets, if necessary to maintain operations.  It calls for access to bases for resupply trucks and commissary-related services.

Defense expands patronage authority during pandemic

  • The DOD has issued a policy memo that adjusts patronage policy to the pandemic.  It broadens who may use the stores including DoD civilians employees, Federal response folks, contract employees and others.

Department of Homeland Security declares transportation and food and beverage retail as “essential”.

  • On March 19th, the Cyber and Infrastructure Security Agency of the Department of Homeland Security, already designated (see memo here) the grocery industry transportation and logistics along with “workers supporting groceries, pharmacies and other retail that sell food and beverage” as critical infrastructure.

States declare transportation and grocery as “essential”.

  • In addition, there are 13 state declarations designating grocery supply workers as essential.    They include: California, Connecticut, Illinois, Kentucky, Louisiana, Maryland, Michigan, Nevada, New Mexico, New Jersey, New York, Ohio and Washington State.  Thank you to ALA member Top Gun Services for compiling this list and making them available to the Association.

Military food outlet supply chain vulnerabilities highlighted for policy makers.

  • ALA is using this supply chain description in various forums (including the Department of Defense Acquisition and Sustainment supply chain working group) to educate policymakers in the Administration and the Congress in order to gain support for continued viability of the total commissary and exchange supply chain during the pandemic.

Congress takes action on shoring up the economy and the Federal government to handle the pandemic.

  • The Congress has passed the latest of three Coronavirus and stimulus bills.  It provides $2.2 trillion for a broad range of programs to aid businesses and workers and provide public health services.  The text of the bill is provided here.

Up to minute developments in the retail industry and the Government that affect commissary and exchange programs are being posted on the ALA Twitter feed @resalereaction.

Questions and comments on commissary and exchange supply chain preservation efforts should be directed to Steve Rossetti, ALA Director of Government Affairs by email at srossetti@me.com.