Alliance Cost Containment is actively monitoring indirect supply chain issues across more than 30 expense categories to provide insights into how these issues may impact your vendors.

Our team is ready to assist with the procurement challenges you’re facing. Feel free to reach out if you have any questions or would like input on your indirect or non-essential expense matters.

Payroll Processing

Information regarding Payroll Protection Program

  • Merchants are looking to protect their customers during COVID-19 and implementing touchless commerce does just that,” said Chris Kronenthal, President & CTO of FreedomPay. “Touchless methods give customers complete control of their checkout experience as well as their payment data. With touchless commerce being fast, safe and easy, we will continue to see merchants transition to fully online and mobile solutions.
  • After $342 billion in initial funding ran out in under two weeks, Congress approved an additional $310 billion the week of 4/20
  • Small Business Administration said that “unprecedented demand” was slowing the portal’s response
  • Qualifying employers can receive forgivable loans to cover eligible payroll costs
  • For businesses with 500 or fewer employees
  • Loan amount based on 250% of borrower’s average preceding year monthly payroll cost
  • Provisions for seasonal employers included (up to $10 million)
  • Collateral requirements waived
  • Loans forgiven if the money is used for payroll costs, mortgage interest or rent / utilities
  • The amount of forgiveness will reduce if employers cut their workforce compared to prior periods or cut salary / wages by more than 25% during the covered period between February 15 through June 30, 2020
  • If employers re-hire all employees laid off back to February 15, or increases previously reduced wages before June 20, the loan can be fully forgiven
PPE

Personal Protective Equipment

    • ACC has sourced and negotiated competitive pricing on many PPE products essential to getting companies back to work (masks, gloves, hand sanitizer, personal barriers, thermometers, and more); order KN95, 3-Ply Masks, Disposable Gloves, Hand Sanitizer HERE – N95 Mask inquires, email cdavis@alliancecost.com
  • In a move to increase the supply of masks, new legislation protects 3M, Honeywell and other respirator manufacturers from lawsuits when selling masks to healthcare workers
  • Prices across the industry are fluctuating drastically and frequently as supply ebbs and flows
  • Many MRO distribution centers remain open
  • Check for modified hours due to COVID-19
  • Some vendors suspending after-hours emergency call services (ACC vendors available emergency work, contact cdavis@alliancecost.com)
  • Additional info on COVID-19 sanitation services, as well as personal dividers and emergency plumbing / electrical work available here
  • Inventory positions remain strong in categories not directly impacted by the pandemic
  • Personal plexiglass divider installation available from ACC suppliers (more)
  • Ideas on how to source PPE during the pandemic to keep your essential business running (here)
Telecom

Wireline, Wireless, VoIP, Internet, Cloud Services

  • The Telehealth Services industry is experiencing a significant increase in demand and revenue as people are seeking out telehealth services to avoid going to healthcare facilities and potentially spreading or contracting COVID-19
  • Providers working 24/7 with clients in government like Homeland Security
  • Increased demand on home internet capacity and wireless networks is challenging some providers
  • Healthcare companies requesting emergency supply of service / iPhones
  • Some Apple iPhones in limited supply due to halted manufacturing
  • Credits for lines not needed should be requested through your telecom management provider
  • Credits will be issued back to origination dates
  • ACC Telecom providers operationally efficient with VoIP systems and employees working from home
MRO (non-PPE)

Maintenance, Repair, and Operating Supply

  • Experiencing significant shortages in Personal Protective Equipment (PPE) with 1000+ items affected
  • All manufacturers / distributors / suppliers providing PPE items severely impacted
  • Began prioritizing government and health care clients in January
  • Government triggered Defense Production Act to stockpile medical and PPE supplies
  • Manufacturing and commercial clients will not have access to most PPE items for the foreseeable future
  • Grainger is considered essential; operating remotely at full staff
  • Approximately 40% of clients discontinued onsite services; % rising quickly and could soon see 90%
  • Curbside service available from many national MRO providers at physical locations
Freight
  • FMCSA issues intermodal chassis inspection waiver: Regulators are giving intermodal chassis providers a three-month reprieve from required annual inspections for recently expired equipment to help alleviate disruptions caused by COVID-19.
  • Trucking industries are particularly fragmented and smaller operators, often single nonemployers, demonstrate thin profit margins. The average age of truck drivers in the United States is over 55, which may emphasize the impact of the virus as a greater portion of drivers pause or reduce their services.
  • Truck transportation, which is the largest U.S. employer in the sector, is experiencing reduced demand for services as global supply chains are disrupted.
  • In Q2 2020, shipments index declined 9.2% and the expenditures index dropped 8.2%
  • Excessive oil price volatility occurring this year is also likely to impact revenue and operating conditions. Truck transportation accounted for 28.1% of sector revenue in 2019.
  • Account managers reaching out to customers regarding outbound and inbound (receiving) changes & policies
  • ACC’s national freight suppliers currently working with full staff
  • Every shipper / receiver has sanitation products available to minimize risk
  • As carriers scale back or close operations, layoffs & furloughs likely
  • As carriers operate with limited capacity, services may be redirected or prioritized to serve essential businesses (grocery, hospitals, etc.)
  • Major cities seeing biggest impact as roads, air freight and ports close
  • ACC recommends a robust TMS platform that allows for virtual business management
Express Mail
  • UPS will begin adding peak surcharges on June 1 for high-volume shippers amid a surge in e-commerce orders. The fees, which are typically implemented during the Christmas holiday rush, will primarily affect larger online sellers such as Amazon and retailers such as Best Buy and Target. Reuters
  • Staff scaled up to accommodate growing demand
  • Experiencing severe delays due to increased shipping demand and social distancing guidelines
  • Using all recommended precautions to avoid virus spread
  • Main industry concern: fulfillment workers become ill / unable to fill orders or could infect others
  • Temporarily suspended signatures typically required on delivery
  • ACC recommends clients move to automation shipping software
  • Prior to shipping, check if recipient is open, as many commercial businesses are now closed
Safety

Supplies + Mats / Uniforms

  • High-demand products in short supply (hand sanitizer, cleaning concentrates, gloves, masks, personal barri etc.)
  • ACC has sourced many PPE products; contact jfarish@alliancecost.com for order inquiries
  • Demand for safety (gloves, masks, toilet paper, hand sanitizer) beyond what manufacturers can sustain — many U.S. suppliers are completely sold out; most supply coming from China
  • Existing customers and health care receiving precedence on high demand items as they become available
  • Providers of Mats / Uniforms noted closures across verticals
  • Credit codes created to assist customers who need to delay services
  • Contact your provider for assistance with cancellation credits
Travel
  • Air Travel: Passengers per flight have increased 4 times compared to April numbers. In late May, the TSA reported the highest number of screenings since March (but still 88% way less than last year).
  • On road travel, requests for driving directions have returned to January levels (though public transport is still abysmal).
  • Travel Industry reeling from cancellations refunding, tracking, credits, meetings rescheduled, etc.
  • Some national agencies have furloughed 60%+ of workforce
  • Boeing will lay off nearly 7K workers in Q2, for a total of 12K job losses, but it’s also re-starting 737 production
  • CBRE has forecast that hotels and motels will dee revenue loss of 80.0% for the second quarter of 2020
  • Reduced schedule for corporate employees
  • Revenue is declining despite busier activity than usual
  • Virtual conferencing tools are critical as businesses seek to maintain a communication without live, in-person connections — many travel providers can provide strategic planning and remote group meetings capabilities
  • Check with travel providers for airline credits, to cancel / reschedule flights, meetings, hotels
  • Expect delays in customer service
  • Many operators in the Travel industry, as well as the Museums industry, the National & State Parks industry, the Sports Franchises industry and Concert & Event Promotion industry have introduced online offerings such as virtual tours, online classes and streaming services
Payment Services
  • In Q2 20, PayPal rolled out QR codes in 28 markets around the world, permitting buy or sell transactions “in a health-conscious, safe, and secure way.”
  • New services around ACH, Virtual Checks allow clients to send complete payment files remotely as needed; providers will then pay suppliers; contact ACC for details
  • Partners reviewing all clients to understand exposure / changes
  • Priorities are to ensure team safety and customer service
  • Uninterrupted service to existing clients
  • Working toward solutions to help with new realities and add convenience to consumers
  • Will continue to communicate / be transparent about challenges and provide updates as they become available
Contingency Workforce
  • Pandemic causing short-term lay-offs/outages of traditional talent
  • Businesses re-considering 18-month plans; leveraging project-oriented / freelance work
  • Companies across verticals will need to do more with less to survive, including relying on remote workers & freelance talent
  • During downturns, businesses develop stronger relationships with “known” talent: freelancers, contractors, retirees, etc.
  • Contract workers provide a means of aligning short-term needs with top available talent
  • Businesses should look to both existing teams and external talent to overcome COVID-19 challenges

Source: Ardent Partners and https://cporising.com/

Waste & Recycling
  • No service delays expected at present
  • In many cases, services suspension available for temporary business closures
  • Ideally, identify closures to providers ASAP so credits can be issued
  • If closures continue beyond April, service suspensions may be extended
  • Many providers have emergency teams in place across the country if needed
  • If companies do not need pickup, haulers may remove containers and re-deliver once re-open
  • Service level adjustments available through your waste providers
Office Supplies
  • Product availability changing daily; safety, cleaning products and toilet paper routed to health care providers first
  • Many janitorial paper products pulled from online to allow corporate customers to order, though supply is diminishing
  • General office supplies in stock
  • No deskside delivery in hospitals or healthcare facilities
  • Distribution expected to continue despite lockdowns
  • Ability to set up residential delivery for remote workers business to order business products
  • Internal resources up and running; no disruption to ACC clients
  • Large suppliers offering free delivery, no minimum required
Energy

Gas / Electric

  • Current storage levels are over 3.3 Trillion Cubic Feet (Tcf), which is 22% higher than this time last year.
  • A portion of this surplus could be reintroduced into the market in the event that routine production tapers off.
  • Natural gas demand from the industrial sector has crept up to 21 Bcf/d, which is above the 5-year average level, but below 2019 levels. Should this trend continue, industrial gas demand will be as strong as ever toward the end of 2020, adding to the overall demand picture and thereby boosting net demand.
  • Residential demand increasing exponentially
  • Abnormally warm weather reducing late-season heating demand
  • The drop in travel and overall economic activity suggests the largest one-year decline on record
  • Some good news: these factors will result in a strong start to injection season, rapidly expanding the current 16% surplus to the five-year average
  • Injection pace is expected to slow in summer as energy production levels decline in response to low crude and natural gas prices.
  • Storage levels are now expected to flip to a deficit in October, four months later than a pre-coronavirus forecast
  • Expect substantial delayed recovery in gas prices
  • If nation goes into recession, commercial & industrial demand may see more prolonged declines / greater market uncertainty

Sources: https://business.directenergy.com and North American Weekly Energy Outlook, April 2020, issued by Schneider Electric Global Research & Analytics.

Pest Control
  • Pest control is deemed an essential industry at the federal level
  • The Centers for Disease Control and Prevention has warned that, as restaurants and other businesses have closed, rats may become more aggressive as they hunt for new sources of food
  • Many companies diversifying services with new sanitation offerings
  • Efforts underway on the state / local government level to deem essential
  • Companies taking precautions to ensure employee and customer safety
  • Service focus on exterior of homes and businesses
  • Services can be completed with little human interaction
Natural Gas

Gas / Electric

  • US pipeline exports to Mexico trended lower throughout April as COVID-19 lockdowns dampened Mexican demand; exports in the first week of May were down 21% compared to late March.
  • Feedgas demand is at risk for further declines this summer, as European and Asian gas prices trade near all-time lows, erasing margins for US LNG exporters.
  • As of 5/25/20, more than 20 cargoes have been cancelled for June loading, which will likely keep feedgas demand suppressed.
  • Crude oil, coming back from record lows, have affected natural gas prices and electric power prices.
  • NYMEX natural gas and global crude prices do have a relationship, albeit a long-term one.
  • US oil production changes are guided by the price of oil.
  • With nearly one third of US natural gas production coming from oil-focused shale basins, a decrease in oil production in those regions will indirectly trigger a decrease in natural gas production.
  • Under current conditions, low oil prices trigger declines in oil production, in turn reducing natural gas production (independent of natural gas prices).
  • Ultimately, due to the impact from lower gas production, reduced oil prices in the near-term are likely to cause higher gas prices long-term.
Print / Promo
  • Overall, print and advertising spending is anticipated to take a hit
  • As businesses pull back on nonessential services and events are canceled, the industry is acutely impacted
  • Some areas are still experiencing demand, for example, signage directing social distancing and CDC guidelines
  • Digital promotional services that give the ability to collaborate online, organize projects and support business infrastructure are expected to increase as businesses are forced to operate remotely.
  • Physical promotional items have seen a sharp decline as companies look to optimize non-essential procurement spending