A Look At The Manufacturing Economy With Guest Bart Schwartz

Foreign welcome to around the Horn in Wholesale Distribution with Kevin Brown and Tom Burton. Sponsored each week by LeadSmart Technologies. Tom, Kevin and their guests review the news of the week and dive deep into the topics impacting manufacturers, wholesale distribution, independent sales agents, and the global wholesale supply chain. Whether It's M&A SaaS and cloud computing, B2B, E commerce, or supply chain issues, we peel back the onion with our guests into the topics that impact your business the most.

Good morning.

Hey, hey, hey.

Morning, guys.

I did not know it was Aloha Friday. I apologize. I would have worn my blue and yellow aloha shirt.

No, you wouldn't have. I would have banned your camera if you would have tried to put UCLA colors up here today. So, yes, today is Aloha Friday for me and tomorrow kicks off my USC Trojans start of the college football season. So I, I did the cardinal and gold or as close as I could get to that aloha shirt today. And tomorrow is my wedding anniversary. So the lovely Mrs. Darlene is from Inkworks Marketing, who I think is with us today, and I are going to have a nice weekend. So I'm looking forward to that.

Gonna watch football.

Well, so that's the challenge, right? Is the games at 5. We're committed to spending the day on the beach. Then we're gonna go an art festival in Laguna and then dinner. But you know, one of the great things I love about my wife is she is so easygoing. We can wander a neighborhood when we're on vacation or here locally and say, that place looks cool. Let's go there. And if there's seats at the bar, she's good with it. So, so tomorrow I will be angling for seats at the bar and catch that game tomorrow evening, at least the second half. Anyways, enough of that. Bart Schwartz, thank you so much for being with us. Our esteemed guest here with us today.

It's my pleasure to be here. Thanks for inviting me, guys.

Yep, we're looking forward to that. You know, before we kind of dive in and I do our weekly, as I call it, housekeeping things and so forth, why don't you, Bart, tell us a little bit about your consulting firm and your background and so forth so we can share with our watchers listeners and so forth a little bit about your background and how you're going to feed into some stuff with us today.

Sure.

So my firm is basically we are go to market transformation consultants for industrial manufacturing companies. So we help folks that make things that go into plants and we do stuff like Helping with strategy, pricing, sales effectiveness, channel programs, things of that nature. Basically anything analytical in the front office for manufacturing companies. And we've been doing this for, I've been doing this for about 30 years now.

So you, you started with one of the big names doing that, right?

I was with Deloitte for 10 years, yeah. And I started my own firm about 20 years ago.

Fantastic. So without mentioning names, if you, if you don't want to give us maybe some example of product categories of maybe some of your target customers.

Oh, sure. A lot of metalworking in general. So cutting tool companies, fluids companies, work holding, tool holding, anything in that space. Metrology companies, let's see, abrasives, adhesives, safety, a lot of automation lately and we'll probably talk a little bit about that. But a lot of my clients make automation components. So yeah, basically, hopefully that gives you an idea. But basically everything, everything that goes into plants that's not direct materials for a large extent.

That's fantastic. So one of the things that really I'm enthused about having you with us today is, you know, we, we use the term, you know, with our, the title of our podcast around the Horn and wholesale distribution. And we took the last word of that off. That's important to think about, which is ecosystem. Right. And so I think you and I were talking earlier in the week. You know, sometimes people will think, well, you're just talking about distribution. But we really look at things from an ecosystem of, you know, the manufacturing side, the distribution side of that being the ecosystem that gets things out into the marketplace in the B2B world so that folks can make stuff for B2B companies as well as B2C companies. So your background with the manufacturing side is great. Last week's guest was more on the, on the distribution side. So this is, this is a plus to have you. So we're appreciative of that. So Tom, what are we going to talk about today before I go in and do the housekeeping?

Well, I think we're going to start again with a little bit, as usual, a little bit economic type news that's here. We'll take that into a little bit of a different spin on some AI stuff as well. Good article today about AI and recruitment and some interesting stuff I think as well in the, in the scuttlebutt. And then we're going to finish off by talking a little bit about what lucky people do.

So love that. So that is a great tee up kind of for our housekeeping that we do. So we'll kind of jump off today. We've got, I looked at LinkedIn, We've got some folks coming in for their first time and we know that each week on the podcast where we don't know who they are, we've, we know we get new listeners each week from the reports that we get. So I'm Kevin Brown. I'm here with my lifelong friend, business partner and co founder of Lead Smart Technologies. Lead Smart Technologies is a AI enabled smart CRM and customer intelligence solution. We're a vertical specific solution so we don't sell our software to law firms and dairies and other things like that. We work with manufacturers and wholesale distributors only. We bring 30 plus years of distribution and technology experience both together to have developed our platform that help companies drive revenues, increase customer experience and get great adoption from their sales teams. So that's what we do. But we sponsor and through our company Elite Smart, we sponsor this podcast around the Horn and wholesale distribution each week we do that by putting out a newsletter that goes out every Friday morning. If you do not get that newsletter and you would like to where we consolidate kind of the news of the week in the economy, M and A activities and things like that going on around wholesale distribution and manufacturing, you would like to, you can put a note, if you're live with us today on YouTube Live, Facebook Live or LinkedIn Live, you can put a note in, we'll get that. Or you can email us@helloadsmartech.com or, or we now have a website related to the podcast. It's called aroundthehornpod.com and there's an opportunity if you scroll to the bottom of the page to sign up for the newsletter there. We do this again on three live platforms every Friday morning and by mid afternoon on Fridays. This gets transcribed and put in, recorded and put into the podcast format. So if you're with us live, what you're going to see on your screen momentarily pop up is that newsletter. And we're going to talk about the articles from the newsletter. And if you're listening in and can't see us, that's what you're not seeing that we're going to be talking about. So what I miss anything?

I don't think so. And good morning to Brandon. Good morning to Ron. If you're on listening, please jump in and let us know how you think USC is going to fare tomorrow. So the important question, number six, number.

Six in the country in the two top polls this week, although it means nothing at this time of the year, I'd rather be number six than number one or two going into the season. So. All right, take us away. Tom, you love talking about economics. Go ahead.

Well, you know, again, every week or each. As we go through this, each week, we seem to get data that I'm not sure is always fully in alignment. It's like, depends upon who's writing it, which one has the most or, or.

Which set of research. Right.

What's research that is done. But this first one here saying in, in this graph, I know it's a little hard to see, but in the graph, basically it's saying manufacturing sales have been flat, flat for the last six months. And, you know, B2B, E commerce still remains a priority, but overall the manufacturing sales are about flat. And, you know, Bart would love to get your take on this. You know, working with a lot of manufacturers. What are you seeing? Are you seeing things flat? Are you seeing them growing? What, what are you, what are you seeing here?

I think it depends on which of my clients I ask. So if you talk to my, if you talk to my. Yeah, if you talk to my automation clients who are, you know, automating plants, things are pretty strong, right? There's lots of demand. There's lots of plants being automated or new plants going in. If you talk to some of my folks from. Maybe in more commodity spaces, things are a little bit softer. So I think it's, it's, it's a mixed story. I think the, the summary doesn't necessarily cover what's going on individually for different clients. With respect to E Commerce, obviously that's a priority for a lot of manufacturers as well. I think it's a little bit of a misnomer in some ways. I think when people hear E Commerce, they think about the transaction somehow. And I think what we're seeing and what I'm seeing with a lot of my manufacturers is that it's really about the total customer experience I had. Just as a quick story, I had a client called me, it was last year, and said, I've got the best product in the marketplace and I'm losing share. Why is that? And, you know, I went out and do what I do, and I went out and talked to a whole bunch of engineers that buy their products and turns out that one of their strongest competitors who makes a weaker product just had a wonderful experience, not just from a transactional perspective, but also from a total, you know, research perspective. It was a whole immersion. And for the target engineers, there's a whole immersion in the experience that they were able to get drawings. They were able to see how the products would work in certain situations as opposed to press a button and I'll send you this. So I think a lot of folks just need to make sure they understand this is not just about transacting and cutting costs in your call center. It's about creating a customer experience that makes things easy for them and want, and make them want to do business with you.

All right, so Bart, we're going to go ahead and thank you for being with us today because you were, you were concerned maybe you couldn't add enough value. And that was probably, that was probably a show in a nutshell right there. That was awesome.

Can I go, Kevin, Can I take off now?

You just, you just set the groundwork for what we're expecting for the rest of the day and next time. I just, I love that and I joke, but you just encapsulated and I'm gonna, I'm gonna. Tom. I always call Tom the great distiller because Tom can see now here's the difference, right, Bart, we were talking earlier about how I'm always the butt of the jokes. Watch this. Here's the compliment. I say this all the time. Tom is a great distiller. Tom can sit in a room and listen to six or eight people talk about a bunch of ideas and stand up at a whiteboard and say, from what I'm understanding. And we bring that down to something that becomes actionable. He's really good at that. My takeaway from what you just said was you could have, whether you're a wholesale distributor selling the best product out there, or manufacturer making the best product, you could have the best thing ever. But if you're not increasing and enhancing your customers experience of understanding your offering in the way that they want to gather information, which is quickly becoming digitally, you could be quickly and easily surpassed by somebody with a lesser product but a better experience.

Yeah, and it's sort of. It's also related to the degree to which you have an advantage over your competition. So the folks that I'm. The example I'm giving you, the difference was in the product was, you know, this big. When I've got another client that leads their space and the difference between them and the next competitor is this much. And they are slow to adopt this stuff, largely because I haven't had to. But I think, you know, one of the things I've seen over the years, I do a lot of research as well. And when I used to ask about like product quality and things like that, the differences, you know, 15 years ago were enormous. Not a whole lot of differentiation as much anymore on quality and even in features and things like that, it's becoming increasingly difficult to have a value proposition that's, you know, you can actually look at and say, is this meaningfully better than someone else's from a product or even a service perspective? So that customer experience is really critical in those situations where the differences are negligible.

Well, we've said before said on the show, right. That experience is senior to brand and product. And I think you're, you know, what you're reflecting there, Bart, is real life example of that in the example that you put together. The other piece, which Kevin, I think Ian talked about this last week and it seems to also be a theme, is when we look at these statistics, we can't look at them globally across all industries. We have to look at it a more of a micro level and look at each of the industries or the situation because there's not really a big one size fits all. I think that's a lot of this data tends to be more of that one size fits all. Yeah.

Well, we're going to talk more in a moment about some other data that came out late last week in just a minute. But you know, I do it wanted to kind of use an example though. I got an email earlier this week and Bart, I don't know if we've talked about this in our past conversations but you know, my background is I started right, pretty much right out of school working for a large national distributor and then I was a manufacturer's rep for 10 years and then later invested in a manufacturing company. And then before Tom and I founded Lead Smart Technologies, I worked for about six, seven years doing some contract executive work as well as some consulting work with some large manufacturing companies. And a lot of that was in the industrial safety arena. And it was interesting. I still consistently get typically foreign manufacturers that are wanting to jump into the US market, you know, not get a clarity of the advising work I'd done versus thinking I might still be involved in distribution and want me to look at their offerings. So I got an email from a foreign company earlier this week. You know, certainly nothing I'm working on now, but they go head to head with some, some, some people that are actually here typically on our show as well, listening in. Never heard of the company before. They sent me three PDFs with their product offering. The product offering had some stuff in the PPE world that I'd never seen before that was just it it wasn't that. It was, it was a category of products. They were just doing some really cool, unique stuff. And what went through my mind was, and I don't really consult anymore was these guys could go do some digital work and go nip at some heels of some very, very large manufacturers who aren't doing some of this cool stuff they're doing. And they could do it for a very reasonable price by doing it digitally.

Yeah, maybe. I mean, it depends on how those particular types of products are consumed and how visible safety products are to different purchasing managers. I mean there's purchasing managers that don't care. I'm going to go buy some glasses for everyone. And it doesn't really matter. I just want the best price, you know, versus some of the other categories I've been exposed to. Where, you know, functionality and quality are, you know, paramount. But yeah, it's certainly possible. It's certainly possible.

Yeah. Well, that's a great point. I, I'll throw something back towards that is what we're. You know, I saw this a lot when I was a manufacturers rep because my role as a manufacturer's rep representing, and we represented some major brands like dupont and some companies like that, you know, our role became, and this is even more so today, was influencing the end user versus just the distributor. And so where my team focused was at the end user of getting not the buyer but the worker to want the equipment.

Right.

And when you can. And that's where I was referencing this foreign company. Right. If you could come out and do some media attacks and blitzes and some great experience on Amazon and some other places, a foreign manufacturer. Right. Where you get to the person that wants to wear the equipment, not the guy that's just going to buy then that, that's that reverse in. Right. We get that pull through on that and it can become very attractive now. You know, sometimes the distributor partners didn't always like it if they weren't carrying my product, but that's how we got got them to carry our product because we got the end user to say, hey, my guys saw this item and want to wear this item or use this item. So anyways, I just round about in closing out this particular topic is I think there's a lot of opportunity at that digital level.

Absolutely.

All right. Mid Atlantic manufacturing increases.

Right.

So Tom, you started off by saying, boy, we get conflicting reports and. And now we've got the Fed chairman this morning in Jackson Hole acting hawkish still. So you want to throw a couple ideas out on this report. Tom and I'll jump in later or what's best for you.

No, I don't, I don't really have a lot of take on this. It's, you know, again, this, I think this ties back to what Bart was just saying is that you have to look at it by industry, but you also have to look at it by region. I don't know that you can say globally, geographically or even industry wise, everything is the, the same. So I think this just plays right into that, is that, you know, manufacturing in the mid Atlantic region for whatever reason is growing probably based around some of the industries and things that they're serving there.

Right. So this is, this is data coming from the Philadelphia Federal Reserve. Right. So this is a benchmark, right. That's being used in other areas to look at what's, what's going on. And, and, and in theory, right. This should trickle out. What, what triggers for me about this increase. Right. Is, is where we're sitting. And you know, I was, and I know Bart, if you've heard this banter on this before, I listen to too much news, according to Tom, because Tom doesn't think we could should listen to the news at all. But you know, I was listening to CNBC yesterday and about this, Jack, was it Jackson Hole I think is where the big economic summit is this week. And they were talking about, you know, maybe it's time that at 2 and a half or 2 and 3 quarters inflation is that that should be the number versus 2 and we're seeing this soft landing maybe is already happening and maybe the Fed should just back off a little bit and they were hoping that there would be some so called dovish words about at least flat versus continuing to raise. And I think these things are pointing to that. And again I'm sure there's economists that could argue this statement, but I said this last week and I've said it multiple times in the past is I just think some of what we're looking at right now when we get the feel for, when we talk to wholesale distributors, business is great, right? And we talk to wholesale distributors through our business every day and we talk to manufacturers every day. Everybody is doing well right in this segment. And then we're looking at these economic factors of what the government says, well we have to do these things to compress and so forth, which I just don't know that that's healthy anymore in the, in the digital world. And the, you know, what is the Friedman's book from years ago. The world is flat. You know, how we do business is different than it was when we developed these theories.

And Bart, do you have a take on that? I have a little bit of a take, but I wanted to hear if you have a thought on it.

I don't. I'm. I consider myself more of a micro economist than a macro economist. And I think these are, these are complicated, you know.

Yeah.

Talk about M1 and M2 and adding all this stuff up and looking at rates. It's a little complicated. But. No, go ahead, Tom.

I know we need to move on here a bit, but I think my personal take on why, and, you know, I haven't heard what the comments were today. I think Powell was speaking today and they were concerned that would be talking about, hey, we're going to continue to raise rates.

He just, Tom, he just said this morning is we're, we're going to hold the line on 2%.

Okay. So I, I think that what, I think what's happening, I think what they're looking at, and I tend to agree, honestly, is that the real effect of the rate hikes have not really kicked in yet. A lot of people have debt that they got prior to the rate hikes that were, you know, at low, low rates. Some of that debt's going to be refinancing here sooner than later. You're going to start to see a lot of things that are starting to trickle ahead. Right. So I think what they're looking at is, hey, let's not get too far ahead of our skis here on this. Let's see how this plays out. And let's not get in the situation where we go, oh, just kidding, and, you know, end up having to reverse again. So I don't think I agree with that. I don't think we have seen the ramifications of the rate hikes yet. And, and that's coming. I think it's coming probably next year. We'll see what the degree of the ramifications are. I don't know. But I do know that a lot of, you know, there's a lot of debt that's going to refinance. There's different parameters that existed that existed three years ago or two and a half years ago. So anyway, I'm not a macro economist either, Bart, but I think if I just look at what's going on and I just listen to a lot of the things that our customers are saying, I think those things could happen. But.

Yeah.

Well, let me just make one last comment that I. This is an article from Reuters, and it said and this is what kind of piqued my interest on this. Right. It says resilient spending because this whole article was that this mid Atlantic region had 16 month highs in manufacturing. Right. So back to your point earlier, Tom. We have highs, we have lows through all of this obviously. Right. But this particular, they closed this out and said resilience spending adds to the growing body of evidence that the economy could avoid a recession. So it kind of feels like we're, we're at that place. But I. Interesting point. Your take on that is that, okay, well, you know, let's, let's maybe not get too far ahead and then have to come back later and, and solve some other problems. I'm just ready to be out of this problem. So maybe I have rose colored glasses on.

All right, so we go on to next one.

This is Supply Chain Digest posted a great article about onshoring and near shoring ready to take off. And we've talked about that quite a bit. But this article had some really good information as well as some charts in it that I thought were pretty darn helpful. I really want to kind of before I share my thoughts on this, you know, Bart, with your work with manufacturers on are you hearing and what's the rumbling or the groundswell? Is there a groundswell building on reshoring or near shoring?

I think so. And actually, I actually read the article too obviously, and I think this is going to happen a lot faster than a lot of people think it's going to going to happen. I think there's, you know, a few factors driving that. You know, one would be, I think what we saw during COVID was the risk associated with having, you know, having to have your product on the water and the whole supply chain risk of not having, you know, production capabilities here. The one thing I would say though is a lot of this is going to come back, but I don't think it's going to bring jobs back. It's going to be a lot of automation and AI and that's going to facilitate the ease with which we can bring some of this stuff back. But it's, it's not going to, you know, have this big boon of manufacturing jobs. It's going to be a lot for, you know, for my clients to be able to mitigate their risk and control their costs a little bit better.

Interesting take. We saw an article last week or the week before I think it was, that was mentioning that they anticipated before the end of next year that there would be 485,000 new jobs related to this. And, and I was astounded by that number. Your take is it's not going to be that. It's not going to be that heavy actually.

Let me clarify. Unskilled jobs, it's not going to be unskilled labor jobs is what I, I may misspoken. But it's, it's going to be, you know, it's going to be engineers and you know, skilled machinists and you know, all the other folks you need to, you know, finance folks. You need to run a plant. It's not going to be someone moving a box from here to there.

Automation is going to do that.

Yeah. And AI and automation are going to figure out a lot of this stuff, but it's going to be skilled job and 400,000 might be, I don't have any idea what a good number is. It's not, I don't know. I do a lot of plant tours and especially for my automation clients. You just look around you, there's nobody here. It's like on the shop floor. There's plenty of people in the office. But you know, it's a different kind of thing now so. But yeah, that number could be right. It's great feedback. Yeah.

And who knows, it could be half, it could be double. We'll see. But I love that your clarification on that because, you know, right. Trying to remember the name of that company. But it's been four or five years now that Amazon bought that company with the little orange robots, right. That just move right around every plant and, and are moving boxes and you know, the days of, of seeing, you know, a 100,000 square foot warehouse with, you know, 12 forklifts in it and you know, two people running around with each one of those is, there's far less of that now.

So they're going to be able to go lights out in the not too distant future.

Yeah, well, and you know, and with this, right. With this particular article, there's great chart in there and it just, it shows the convergence of, of you know, when we went in, what would it have been? The 80s, late 70s, probably 80s, we started pushing a lot more to China and when we mentioned this last week, I think we were talking about it is, you know, at that point in time there wasn't a middle class in China. And this in particular, any other parts of Southeast Asia too is in what our offshoring did, right was change things in those countries and economies so that they started to develop something of a middle class, higher level of expectation of wages. And now we see these two lines converging or nearly converging. And you put that together. Bart, to your comment earlier about, you know, look what happened with COVID and we could, you know, China shut down.

Right.

If you're a U. S manufacturer, you had no knowledge, understanding or anticipation of what the Chinese government was going to do with COVID restrictions. Right. You had no ability to impact when ships could leave Shanghai or Shenzhen or wherever. Right. You didn't have any impact on this. We learned from COVID And then now we look at this price desperate prices are now converging. And then you look at the economic factors of US China tension. What happens if China does invade Taiwan and you are manufacturing in one of those spots or maybe Macau or one of those spots that would keep me up at night if I'm a CEO of a manufacturing company.

You're going to need, I mean some of the things we're going to need though to. I think we lack like for in tool making capabilities. We've lost a lot of things like that that are required to really, you know, manufacture. Well. So I mean, I think we're only going to get in our own way of making of reshoring. I mean it's. We'll be able to reshore as much as. As much as our technical capabilities allow us to do. And that'll probably be one of the bottlenecks.

Yep.

I have a question. Are you guys getting feedback from me.

Every once in a while?

Yeah, I'm not sure why. Let me make a little adjustment here. I'd like Bart in particular your take on this, but Tom, your thoughts as well is the latter part of this article about onshoring versus near shoring. Right. And BART is I think as you were referencing it, correct me if I'm wrong, but you know, your. Most of your manufacturers are either doing US Manufacturing or probably Asian manufacturing.

Yeah.

Yep. I was gonna. That's what I was gonna throw in there. So there's a. And this is the interesting take as this article closed.

Right.

There's a difference here between the benefits to the company and the country because you know, we have all kinds of incentives from the government right now and we have some of the Biden programs and so forth that are getting things built and manufacturing in the US and there's some great programs out there. But if I'm a manufacturer, I'm probably looking at all of that. But I'm balancing is what's my labor rate with Maquilia doors across the border in Mexico or other Parts of Latin America, if it's going to Latin America doesn't have the same impact on the U.S. economy.

Right.

Or creating jobs or whatever it might be. So the closeout of this article I thought was an interesting point. Right. It was company versus country. And I'm pretty sure these companies are going to be choosing company.

Yeah.

Right.

As they should. Right. I mean, that's the responsibility to their shareholders to do that. Yeah. I mean, labor is becoming a smaller and smaller portion of cost of goods sold. So to the extent that their labor differences, if they're relevant, people will consider them. Right. It's also, you got unionization issues here that make that create some complexity for certain manufacturers and probably less so, you know, in other countries. Like I don't know the exact situation in Mexico, but I think it's a little bit easier. You know, it's, it's like anything. It's a, it's, it's a multi, it's a multi variable decision that you've got to, you know, kind of play through. But certainly the labor, labor, labor, the differences in labor have gone down and labor's become less relevant people piece of the whole manufacturing puzzle. So, you know, the problems we were, the, the equation we were looking at in the early 90s is a completely different equation than what we're looking at today.

So I guess in closing on that, I have no idea how you're getting any feedback from me. So Tom, if you have any suggestions, message me on that. Apologies if you get a little bit of that. But Bart, in closing, is it safe to say that the majority of your manufacturing clients either have worked through this or are it's a significant agenda item.

I don't know about a majority. Some of them are working through it. I mean, you've got some situations where people are manufacturing, especially in Germany, where that's just not going to change. Like there's certain level of engineering and you know, engineering expertise and not just in the country, but in the particular company that isn't going to, that's just not going to change. So there's a lot of folks that just saying we're just, that's not going to happen to us. Certainly folks that are folks that are manufacturing in Asia, Southeast Asia, like. Yeah, they're looking at that.

It's great.

Yeah.

Well, you mentioned us Germans there. So let's move on to the next topic, Tom, and talk about Germany's plans to double AI funding to, as they call it, in a race with China in the US you want to take us away on that, Tom and I will.

I wanted to hit Ron's comment, though, real, real quick. We kind of move into this. He said, you know, that. And this kind of comes back to what we were talking about a minute ago about experience. But some of the things that are now setting up the differences is the level in details and I think quantity and level of details that feed so much in the buying process. AI, algorithms, SEO. This goes back to our data discussion from, you know, a couple weeks ago. This goes back to that experience piece that we're talking about. But as you get more and more data on product, and not just, you know, spec data like size and weight and all of that, but really multi dimensions of data, and you feed that into these AI algorithms, right. It allows you to create a whole different type of experience. And I assume, you know, Bart, you're seeing that with your clients at least looking at that, going, how do I use more of this data to create that better experience?

Yeah, I mean, I think a lot of my clients are, you know, I work with. I don't. It's not all, you know, $10 billion manufacturers. A lot of them are, you know, 50 to $500 million manufacturers. So a lot of them are just trying to figure out how do we use AI in some of these cases. I think we're at the beginning of a lot of this stuff. I mean, certainly people are thinking about that, but we're really at the beginning. I don't know that a lot of my clients have a ton of AI built into, you know, their.

Any.

Any aspect of their customer experience or how they present themselves yet, but doesn't mean they're not thinking about it to your point, Tom?

No, they will.

Yes.

So on the Germany, on the Germany thing here, I found this one really interesting. So, Kevin, as you know, I lived and worked in Europe for three years, predominantly in. In Switzerland and German and the German area of, of Europe. And companies there are very culturally different than what we have here. Much more conservative, much more deliberate, much more focus on doing things in the. Not, you know, less wild, wild west than we have here. And when I read this article about the Germany piece about doubling down on their AI funding, I really. And they even talked a little about this in the article. I see Germany trying to possibly take the lead of being, hey, if you want to, you know, work with companies or work with, you know, talent that understand AI, but are also doing it in a more deliberative and a more conservative, in a more secure potential way, we're the place to go. It's almost like when you think of German automobiles, right. There's a certain idea that comes to your head compared to say a Japanese.

Or even an American or even German company executives.

Right, right. So I think, and it's interesting because there is so much polarizing opinions on AI with a lot of people. A lot of companies are like, hey, let's go for it. And then a lot of companies are like, oh my God, what or what are you getting into? Right. And I want to move a bit more deliberately. So I think the whole German thing about trying to build a bit of a different culture around AI, especially for the European Community, is very interesting and very intelligent. And we're going to start to see sort of these cultures, if you will, of AI viewpoints and approaches as we go forward, which is what I took out of this article.

Well, I think that's, that's a great point. And you know, Bart even, you know, referenced this when we were talking about the previous topic. Right. Is there's, you know, you've got German manufacturing going on and it's, you know, stoic and structured and we do things this way. And you know, that's my heritage with my mother being German and, and my older sister being born there is that's, that's just the way things been. But with this article, I thought made a really interesting point, right. Is that the German auto manufacturers, which is, you know, one of the major industries that Germany's known for with the engineering that goes with that, has had to play catch up with AI or with electric vehicles, I should say. And, and so. Right. That hit them. It was like, well, wait a minute, you know, we got this American company that led the way in something that the Germans are supposed to be leading the way. And excuse me, it's not just an ego thing of, hey, we're Germans and we're supposed to lead automotive engineering. It's more of a what happened on a technology standpoint because we have bright scientists and now they're looking at, you know, it and what they're describing here about their, you know, mass expansion. I think they want 150 new university programs over the next few years with AI research with them, you know, doubling that funding. It's still, you know, a small percentage compared to what the US is doing and then what China is doing. So this is a bit of catch up. But I think with doing this, what the Germans may do from it, based upon past experience with German engineering, might be pretty cool.

Yeah, no, I think they'll be bring a very different element to it, which for a lot of company, and who knows, right? I mean, we will have to see how this plays out. Is slow and steady, you know, a bit of a better strategy? Or is it more like, hey, throw caution to the wind and jump in? I don't know. It's gonna. We're. We're gonna see a lot of how this plays out.

You know, one. One last thing that just came to my mind related to that, too, is I was on the way to a conference in Germany, 2017, 2018, and I was actually talking to a gentleman on a plane, and he was going to. He was German. That was one of the guys that was running the John Deere technology center in Germany, and he had been here in Iowa, I guess, at the John Deere headquarters. So it's not just those German companies, it's American companies that are doing a lot there with German engineering, German technology. It just totally slipped my mind. And that popped in a moment ago is there's a lot of crossover with all of this, too. The last part of this is, you know, the EU is way ahead of the US on figuring out some regulatory issues and. Or at least standards to go with AI, And I think the Germans are saying we're gonna. We want to help be on the forefront of that, too.

Yep.

So, all right, we'll jump ahead and talk about. Talk about Mr. Shatner.

Yeah, I mean, we can cover this quick. You know, I thought it was interesting is that he's. Basically, there's these. You know, we've probably all seen or used an AI chatbot by now, even if just chat GPT, but even on business websites, you're starting to see them pop up or on consumer websites. But, you know, what he was talking about is maybe the next generation of some of these chatbots and how they have sort of this maybe emotional element to them. So it's not just regurgitating data back to you in a. In a way that's come together, but. And really, how are those going to, you know, provide the outcomes? And so, anyway, I thought it was an interesting article, is that he kind of was like, you know, going back and forth with these chat bots and was kind of like, whoa, what's happening here?

Well, I thought it was interesting. Right. And so if you're listening and not watching us again, we're live this morning on LinkedIn Live, Facebook Live, and YouTube Live. If you're listening on the podcast later in the day or in the future, what we're looking at is a newsletter that we Publish each week called around the Horn in wholesale distribution. And that goes out. If you don't get that and you would like to. You can get that from us through our email address, which is helloadsmartech.com or at the website www.aroundthehornpod.com. i'm reminding people, Bart, as I do each week, because if you were listening on the podcast on Spotify or Apple podcasts or whatever, people may not remember right away that we're looking at something different on the screen. And so what we're looking on our screen today is a picture of William Shatner from Star Trek who will, by the way, I've worked with him on a project years ago, will be happy to sponsor anything or, or do a video on anything for the right dollar amount. And so. But this is a Tom, what would you call that? It's a physical, I don't want to say device, but it looks like a 4 foot big cell phone or iPhone that has a AI bot there that he's having a. Much more than a. Give me an answer to a question. It's more of an emotional or intellectual conversation with.

Right.

Yeah, it's like a hologram that they're using to.

Yeah. And it looks like. Is it safe to say, guys, it looks like a, you know, maybe a four foot tall iPhone?

Probably.

Yeah, something like that.

Yeah.

So the reason I added this article in is we've talked a number of times recently about the opportunity to have, whether it's 2x of our ability to get things done or 10x coming because of AI. We've talked quite a bit about digital twins and we've talked about digital twins in manufacturing where you might be able to run analysis and tests on a tool or a warehouse configuration and doing that digitally.

Right.

But what came to my mind was just a, you know, kind of a simple example and maybe this is too rudimentary, but it just got me thinking about, you know, so many distributors do vendor managed inventory, right. And they've got a tool crib that they manage and they stock. But what if I'm Kevin and I work for XYZ distributor and I've got a VMI program, but in that VMI program is this four foot iPhone that has my Persona on it and it can wheel around and it can be checking inventories and it can have dialogue with the guy coming into the tool crib and then it could be smart enough to know, you know, what human Kevin should be involved in this. And next thing you know, I'm four plants down the street taking care of something and I can pop up on that screen and have the dialogue and then that bot can go do the rest. So I don't know, is that crazy or what are your thoughts?

Yeah, I mean it's a couple thoughts I guess on both of these articles. Like one is I think you really talked, the first article we talked about on AI kind of referenced the idea of putting limitations and controlling some of this stuff while at the same time, you know, you're talking about thinking out of the box and what kinds of, you know, cool things could we do with this stuff. I think it's going to be really interesting to see, you know, A, what people come up with, B, what legislatures decide they want to try to limit and then see what is even possible to limit once we let the genie out of the bottle on some of this stuff. But going back to your example, I mean, yeah, that makes, makes a ton of sense. And you could be sitting, you know, there in California on the beach while you've got four Kevin's out there doing VMI and when you're needed, you pop on and otherwise you just, you know, sipping and sipping a mojito.

I'm out, I'm done. But you know, that was, that was kind of my thinking.

Right.

If this is just a simple singular use case. But that's what triggered in my mind quickly when I was reading this article and saw that, you know, unit, you put that unit on wheels that can be scanning inventories and when wandering a plant or, or even go up, you know, next to a bart, we've had use an example from the past where during COVID there was a tool manufacturer that was sending out VR glasses out to manufacturing companies so their inside engineers could visually see. Right. Real time and communicate with plant engineers about how tools were being used.

Oh, that's cool.

They couldn't get it on site. Right, right. We start thinking about this. If I could have, you know, like this device that we were just looking at in this particular article. If that could be on wheels and could be, you know, we could have two or three of those in a plant. One of them is a manufacturing engineer that's going to support the plant. That came from XYZ Abrasive company. They're funding that because their business is so strong and the distributor has one of these bots there that is really their sales guy. That's their 247 monitoring inventory and answering AI driven questions. If I could do that, who knows what the cost of this will be. But if I'm A distributor. And I could say if I could, for 20 grand or something like that, buy, you know, three of those and put those in these plants rather than hiring another salesperson. And I've just got Kevin that's in three places. Some interesting stuff there.

Yeah. I mean, they all bought vending machines and gave them away for free.

Right, right.

It's not really all that different of a concept. This is something that helps us sell our product and it's, you know, sunk cost investment that we think is going to pay off in volume at some point in time.

That's good.

So, need a discussion?

Yeah. You continue to echo every now and then.

So it's not, it's not me. I just have a single. I had my phone connected, so it's not me.

I've had a couple text messages that there's been some LinkedIn problems today that some people had their, their screen freeze and stuff. So hopefully we're still going. Okay.

Yeah, I've not noticed that. Just that echo here and there and it's. I've heard it on your side a few times and on Bart's side once or twice and on my side a couple times. So not sure about that.

Digital twins or. It's our digital twins. That's all.

It's our digital twin. That's right. We have no idea where they are. So each week, one of the features we have in the newsletter that goes out is called Tech Talk. I thought that this was just an interesting article. There was some good comments. We don't need to spend a lot of time in there, but there was some challenges talking about using AI and recruiting in hr. They talked about bias, data security and ownership, data governance, candidate experience and pressure to use AI. So did you guys have any takeaways from that? We can move kind of quickly on this one. We're not a big HR show here.

Well, I think the, the biggest risk when you're doing recruiting. Right. Is AI still does hallucinations. It comes up with, with stuff that's maybe not accurate. So do you want to be, you know, somebody who is being evaluated in recruitment situation and all of a sudden AI is filling in some false information and stuff like that? I mean, that's a great point. We're not quite there yet.

I don't think I can see the lawsuits. I didn't get the job because it hallucinated.

Right? No, but. And it could be true discrimination or anything like that. So yeah, there was some good, good conversation there. I think that as the AI gets more reliable and there's again more ways to have that audit trail of the reliability. Then I think there's some real opportunity but I think we're probably a little early. I think there's some risks I guess from, from at this point from that.

I think that's powerful. Let's, let's jump ahead to. We've got two more sections to cover in a short period of time today. So each week we have our industry scuttlebutt where we kind of talk about a little bit about M and A and different things going on. I made a comment or posted an article here about the Lawless Group which is a manufacturer's rep agency, very well known, started in I believe either Houston or Dallas. I've done business with them years and years ago and they are quickly becoming a national entity. What's interesting is they've done it through acquisition and they just did another acquisition that benefits them in the kind of north central part of the US in this expansion where that you know, when you talk about kind of industrial related products with manufacturers reps, there's been a couple other rep agencies have done this through their just own organic growth. But this one's been interesting to watch through through acquisition. Bart, have you much experience working with manufacturers reps?

I do, I do, yeah. A lot of my, some of my clients work with reps, some have their own salespeople. You know, there's a very specific, you know, set of circumstances that make it really smart to work with with you know, manufacturers reps. But you know, oftentimes it makes more sense to work with your your own folks and have better control over things like that.

What I found when I owned a rep agency for 10 years was that that hybrid approach was great right when there was, you know, three to six people on a regional basis around the country that were manufacturers team that would support us. Right. And so we knew more than the distributor knew about the product and those regional people knew more than we did and we could tag team on deals. So I don't want to spend a lot of time on this. It was just an interesting approach and congratulations to the Lawless Group, Modern Distribution Management, our friends, I think Mike Hockett's with us today from MDM and team over there with Tom that worked with Tom Gale. They published kind of a cool article about where do industrial, commercial and construction distributors rank on this year's Inc. 5000 fastest growing company. So if you don't again don't get the newsletter and you'd like to, you can let us know to get this. Or you could just check that out on MDM or Modern Distribution Management's website. Kind of an interesting article there to see where some people ranked in there. Interesting though, article about Amazon resuming this in house shipping service.

Right.

They got started a lot during the pandemic and then pushed pause a little bit with it and now they're know, working on. I think one of the things we don't realize is there's a whole fleet of aircraft that Amazon owns and their trucking fleet and their door to door a parcel delivery service is getting ready to potentially even challenge ups and FedEx.

Here come the drones. Here come the drones.

Well, I, I just saw an article about that earlier in the week. I did not include it, but it was talking about. Because you know how I hate that concept of drones being everywhere. But it was talking. I wish I could find that really quick. But it was talking about robots being a much bigger push robotics and then drones and the drones may not, may not turn out to be what we thought. But that's. That, that appealed to me because the idea of I live right near a major interstate and then a coastal. In between that and a coastal highway and air traffic's bad enough already. Well, all right, that was an interesting article just on, on Amazon's growth there. So in final, we do each week what we call a good read. And that is sometimes might be from Inc. Magazine or something related to HR or something related to personal development or whatever it was. But this week we talked about.

The.

Science behind being lucky. And I don't know that is necessarily science, but do you guys have any take on that?

No, I think it's. But I do think it ties in to even a lot of the stuff we've been talking about over the last few weeks. Right. About which, you know, if you look at businesses then you say, God, they got lucky or boy, how did they capitalize on this opportunity? And what that, what this article says is you got to jump on it. Right? You can't wait for things to come to you. You have to spot and seize opportunities. So I think this article was written more from maybe an individual perspective.

Yeah, absolutely.

Can be applied at a company level. And I think, you know, and Bart, I, I'm sure this is a big part of what you end up talking to a lot of your clients about, right. Is hey, come on, we got to move. We got to do something here. We got to jump on this. We got to seize the opportunity before, before somebody else does.

Yeah, that's, that's probably Half my job first coming up with the solutions, but then getting people to go get it done, right, let's get it done. But I think that, you know, I. Not necessarily related to the article, but I forget who said it, but there's some, there's some old quote where someone said the harder I work, the luckier I get.

That's right, like that. There's another one that goes with that, right, that says, what is it? Luck is where hard work and opportunity meet.

Something like that.

Yeah. What I liked about this article is it said three specific things, right? Start meeting more people now. I mean, I could talk for 20 minutes on this, right? If, if you're not involved in your industry, right, why would you expect you're going to have success, right? If you're, whether it's in a, you know, and, and listening in on or contributing to broadcasts like this or trade shows or writing some thought leadership articles, Being involved, right? To meet more people. And it doesn't matter if you're a realtor or you're, you're an abrasives manufacturer, the more people, you know, the broader, the opportunities are going to arrive. They said, start trying more things, right? We tend to stay, you know, myopic sometimes in what we know and we don't try new things or risk adverse. And the other one started trying to, talked about, start asking, right? Asking for help, asking for, asking for an order even, you know, asking people to be involved. And it's, it's interesting because it's truly, you know, astounding to me. Our, we operate and run Lead Smart using eos or the entrepreneurial operating system. And we do that through a coach. And our coach was commenting to me a while back and he works with us quarterly and he was saying, you know, Kevin, he says you need to start asking people for help. I was like, oh, you know, Will, that's, that's hard, right? He goes, when someone asks you for help, what does it make you want to do? I said, well, help him, of course, because people want to help. And so that was the third pillar of this article was start asking, right? So anyways, we always try and do this. We call it a good read. It's could be personal development, it could be health, it could be hr, it could be whatever. But that this week, that was our good read. So start meeting more people, start trying more things and start asking more. And evidently you'll become more lucky.

So if you start, want to meet more people, look at all these upcoming events.

That's right. Thanks for adding those so we.

Wow.

Here's my challenge with this list, Bart. I'm going to about a third of those. Oh, wow. So, yeah, well, I shouldn't say a third, probably a quarter at the most, because these are a lot of them. But it is starting the week after next. It is packed the rest of the year. So I'm going to get out there and start meeting more people and see if I can get lucky and ask that. Yeah, I'm going to get out and start meeting more people and see if it can improve my business outcomes.

And. And. And see if you can. Yeah. You shouldn't be saying to go get lucky when it's your anniversary tomorrow, but. But also ask them for help.

Exactly right.

All right.

On that note, well, hey, this has been great, Bart. Was it what you expected?

Oh, it's great. Thanks for having me, guys. I appreciate it. I enjoyed it. It was great.

Good. We'll get you. We'll get you back on the list to have you added in. We've got, I think through the end of the year, we've got seven or eight more guests already booked. They're all good folks, too. We'll get you back. If you join us, you're a great contributor today. Some really good feedback early, early on and throughout the broadcast. So on that note, Tom, any closing thoughts?

No. Have a good weekend.

Yeah.

Anniversary.

Thank you. I appreciate that. I'll tell Darlene that you've got the present on the way and expecting some expensive French champagne.

The drone should be bringing it any minute now.

There we go. Very good. So on that note, Bart, Tom, have a fantastic weekend. All those listening in, whether you're live or on the podcast, we thank you for being with us. We wish you a great weekend. Do good things, be kind and be safe.

Thanks. Thanks, guys.

We hope you enjoyed today's episode and our guests. Each week we try our best to dig into the topics that are impacting your business. So please reach out to us and let us know how you think we can make the show better or topics you'd like for us to tackle or talk about more often. And even guests you'd like to see join us. We're looking forward to bringing you next week's session and hope that until then, you stay safe, stay focused, and do great things. If you haven't already, please subscribe to the podcast. Subscribe and leave a review to help others in wholesale distribution get access to the conversation. And finally, please check out our sponsor, Leadsmart Technologies, and their manufacturing and wholesale distribution industry, CRM customer intelligence and channel collaboration platform. That's Lead Smart Technologies@LeadSmart Tech.com.