Around the Horn in Wholesale Distribution Episode 142

Dancing is dangerous.

Yeah, well, you can end up.

You can end up falling on the floor and. And hurting your chin or something.

I don't even believe it. You're right. Yeah, exactly. Or. Or just for the first time.

And don't get in a fight with the. With the housekeeper or whatever.

Yeah. So here I am at Denver, Colorado, or Inglewood, Colorado. Been here since Tuesday. First time in probably 20 years. I got in a fight with my razor this morning.

It was a new blade or something.

It was. Yeah, New blade. And I don't. I just literally, I remember my dad used to do this all the time. And not all the time, but I remember him doing it. And here I'm sitting, like, bleeding like a stuffed pig, so. Good video.

Yeah.

We'll.

We'll focus on the news today.

I'm sure nobody would have ever noticed.

Yeah.

So I just. I think as we were talking about before we went live, it's just the perils of. Of life, right? We just. What is that old thing? The show must go on. So. So anyways, good to see you.

Your makeup crew and stuff couldn't have handled that.

Yeah. With such a. Such a high production value that we have people behind, behind the scenes. I've got, you know, here in the hotel room, I've got a whole staff. You can tell by the lighting, and it's just all wonderful.

So a roll of toilet paper, you're good to go.

Yeah, perfect.

So focus on the news here and no one will. No one will care.

Well, I'm. I'm happy to still be here. I've got a great meeting this morning with some good colleagues at big distribution company here in the Denver area that I'm meeting with and before I fly home and had a great. A great three days, two and a half days with the modern distribution management and national association of Wholesalers and Distributors, folks at their shift event here, just some really, really good content. But, you know, I know I've shared with you a lot. I said, you know, I go, I don't know. I think I have 12 or 13 events left to go to this year. And the stuff that happens in the hallways, you know, and on the way to lunch things is just phenomenal. The number of new people to meet, just great, great, solid folks just across the board that are, you know, making making America run with getting stuff out on people's tables. I'll tell you real quick, because we've been talking about tariffs and we're talking about interest rates and all the different stuff we talk about with supply chain and so forth on an ongoing basis is I heard a great comment about. And I can't remember who made it in one of the talks. It was somebody new to me. And they were talking about they've spent their whole career, you know, at dinner parties or whatever with their wives going, you got to figure something better out. Because they can't explain what being in wholesale distribution means to somebody. And it might. Might have even been Eric Copland, now that I think about it, from a CEO of new, in his opening speech, but said now all of a sudden, with tariffs and the risks of things going on. And he said now all of a sudden it's. He's able to just tell people, you know, all the threats you've been hearing about the store shelves being empty. That's distribution. Right? Right. When your shelves are. If the shelves are empty, it's because the world I work in stopped.

Right. And if they're full, we're doing our job.

That's exactly right. So I thought that was kind of a unique thing. So, anyways, let's get ready to dive into the news. We'll do the quick kind of housekeeping thing here we do each week. I'm Kevin Brown. I'm here with Tom Burton. Don's not bleeding. I am. And we get together every Friday morning. I question whether we should have today because we always say, if somebody's not in the hospital, on an airplane or on a planned vacation, we're going to do the show. And here we are today. But this, this one is a little bit harder. But what we do is we get together, we review the news, we publish a newsletter every week. That newsletter is called around the Horn. In Wholesale distribution and Manufacturing, what we do is try and consolidate a lot of what's gone on around the week around the US and around the world related to distribution and manufacturing. And we kind of try and break that down in those topics related to M and A supply chain, AI technology, robotics, cybersecurity, sales, marketing, digital transformation, all of those things and kind of break those down and how they impact wholesale distribution. So we've been doing this today is 142. Is that right, Tom?

142, yes.

Yeah. So we've been doing it a while now and we've got a wonderful audience that joins us. I saw upcoming guest Mark from Enable, who's going to join us. Mark's normally with us from the uk. He gave me the sad information the other day that he is moving here to the US so he won't be One of the group of the people from the UK that listen in on an ongoing basis. So. But it was good to see Mark as well. He'll be a guest with us next in July actually, so that'll be great. But the reason we share that newsletter out each week, it goes out to about a little over 10,000 people. If you don't get it and you would like to, we'd love to send that to you. You can reach us@helloadsmarttech.com we have a LinkedIn page for the show and that's around the horn in wholesale distribution podcast as well as a website for the podcast which is aroundthehornpod.com. you can sign up for the newsletter there if you don't already get it. We'd love to do that. If you're listening on Spotify, Apple podcasts, any of the other podcast formats, whatever it might be, we are happy to have you with us. You won't be seeing the newsletter, which is going to be up on Tom's screen here in just a minute. So anyways, we're kind of ready to dive in, Tom. The only thing we missed was the company that Tom and I work for, Lead Smart Technologies, is who sponsors our show each week. We're happy to have them doing that for us. We've got some people, a couple people behind the scenes that produce and edit all of this and organize it. And Lead Smart is a company that has developed what we describe as an AI enabled smart CRM and customer intelligence platform solely developed for wholesale distributors and manufacturers. What we do is we bring silo data from across your organization. We bring it onto our platform where we're able to get intelligent insights into that data which can help you make great business decisions. It can help guide and direct through push notifications to your team what's the most important things that they should be working on that day. That is customers who are no longer buying a certain type of product. Customers are buying a lot of something. Open quotes that need closing leads certainly cross sell upsell opportunities. And we do that by looking not just at ERP data, but across your organization, at your customer journey through their partnership with you. So if you're digitally transforming, like to learn more about what we do, we'd love nothing more than to share that with you. All right, Tom, ready to dive in now?

All right. Are you holding up okay?

You're just sitting there giggling at me, which is. I don't know, man.

Anyway, I'm, I'm going to refrain from, from.

No, go ahead, make it Better make it better with Mock me a little bit. Go ahead.

No, no, we. Let's focus on the news. So by the way, I think we should let everybody know here. This is actually, we're recording this early. And so when you're seeing this live, we're not going to be able to respond to the comments. So it doesn't mean that we're ignoring you. It means that we're recording this so that Kevin get to his meeting. Maybe if he has to go to emergency room or whatever along the way, he has time to do that and we're all good to go. So anyway, hopefully that made sense.

Yeah. So when you, when you see this, unless you saw that we were going live on, on your newsfeed on LinkedIn this morning, then you'll be seeing this recording and I will either be no longer bleeding or. Yeah. Finding a methodology to figure out how to stop the. Stop the carnage.

So, yeah, we're gonna have to get on chat GPT and figure out what they recommend.

You know, I actually asked perplexity already. Isn't that funny you say that, said hold pressure on it.

Okay.

I did that for 45 minutes. Yeah. So it talks about those old septic sticks. I don't carry one of those because I haven't done this in like 20 years.

Yeah. All right, let's talk about economy and supply chain.

Yeah. So that's the first segment we talk about each week. So we had a little last with Saturday in Switzerland. The Chinese and the US Got together and they actually, I think, you know, while it wasn't anything definitive, they actually accomplished, I guess I would say, more than we were kind of anticipating when we talked last Friday. I think we both kind of thought it would be more a generic meeting and nothing significant coming out of it. But we got a pause on things for another 90 days and some reductions and so some good things came out of it. To get started with, I was going to tell you, Tom, I, I had CNBC on here in the hotel room this morning, and they were going through the University of Michigan consumer sentiment numbers for last month. And it's one of the things that bugs me about media. But they went through this whole thing of the doom and gloom of it, all right. And how consumer sentiment from that report was as low as it had been since, like 1953, I think is what they said. And through all of that, they went through the, you know, like I said, the doom and gloom side of it. And then the next reporter comes on and says, well, but the other side of that is that was before we heard the announcement of the tariff adjustments. Right. And we got some good news that there may be in the, the UK deal done on tariffs and so forth. So, you know, I think those sentiment numbers you can kind of throw out the window assuming these things get negotiated fully and really start to hold.

I mean, sentiment is way better. But, you know. Yes. And not only did we, I think, underestimate what was going to take place over the last weekend, but most everybody else did too.

Yeah, yeah.

And I think everybody went in with, I don't know, I won't say low expectations, but conservative expectations. What this tells me, you know, if you kind of again read between the lines, is I think this whole tariff thing worked too well. And what I mean is it worked too well in a sense that it stopped basically ship, you know, it's shopped, it stopped the commerce between the US And China. And obviously that's not going to, that is not a winning situation for either country. And so I think either, both countries, you know, needed to come together and save face and so forth, but they knew they needed to do something I think that we didn't even recognize was more drastic to before really before real damage was actually caused. And so I think it worked too well. But I think there's two parts of that equation, right. You know, we can blame China for everything they're doing, but then we have to blame ourselves for how much dependency we have on Chinese, Chinese goods. Right. So, you know, it's, it's both sides, we have a dependency and they have a dependency on their side, both sides. And I think both sides were affected a lot more drastically than, with a lot more repercussions than anybody thought. And also it was affecting, the fact is it was affecting the voter base, you know, Trump's primary voter base as well. The rank and file blue collar worker was really starting to be affected by this as well and he was getting a lot of feedback in that way.

How do you think they were starting to be effective, really?

Well, I just think about, I mean the, the ports. Right. Is a perfect example.

Okay.

But there was, you know, a lot of, I mean, think about that, I mean just think a whole supply chain and all of that. And yeah, there was, there's been a few articles that have come out that is, you know, a lot of his voter base and the people that, you know, he's been really talking about middle America supporting. We're now really starting to be, feel the pain from this, whether you're a truck driver, whether you're at the ports whether you're, and, or at least there was a foreshadowing of a lot of pain coming along the way.

You don't think that ties into what the administration was saying all along is that we're going to go through some short term pain to get to the promised land, so to speak?

I think so, but I think they underestimated the pain and the trickle down effect of the pain and the ramification of the pain.

Okay. Yeah, right.

It worked too well.

Well, I, so I'm going to shift gears on this a little bit. Just, just so everybody knows what we're referring to here is this is an article from cnbc. It was about the, the strain on this global supply chain. We've got another article tied into this. US and China agree to slash tariffs for 90 days in trade breakthrough. I'm, I wouldn't argue for a second that maybe there was more of a slowdown coming into the ports and so forth. But I'm not, I'm not convinced that, that the administration, that this, what we saw was not what they were anticipating. Maybe the backlash on it was something. But I've, I want to be careful how I say this because the last thing I want is this to sound like I have a side here, so to speak. I'd like to stay neutral on thinking on this. I read though something this morning and I'll give you a piece of this. Goldman Sachs does a briefings newsletter each day and they talked about the, the rate cuts. And you know, if we look at this right, we've talked about this for weeks now. If you, if you look at the verboseness, the, some of the silliness that comes out of the President's mouth and even some of his, you know, administration supporters and so forth and you look at the big plan of any one thing, right, People are up in arms about the closed borders, people being deported, right? People are up in arms about tariffs, people are up in arms about, you know, lots and lots of components. But if you look at the big picture and you know, I'll mention this again, as we've talked about, I think you've said it and I've said it is, you know, this administration has an opportunity to be, you know, it's hero or zero moment for this administration probably could be the most impactful to the positive or the negative of any administration. I can't think of the last one that could have potentially have the impact of this particular administration. But if you think about that in that setting, Tom is in but look at this globally of what they're looking to accomplish, right. They need to get. We've got a deficit issue. Right. The tariffs can support the deficit. Right. Tariffs I think we talked about a couple of weeks ago that if a 10% tariff were on can't remember what percentage of the countries that were impacted by the whole tariffs program, but it was going to basically offset all of the debt issues that we have and also support the tax decrease that they've proposed for the middle class. So you start putting those things together and you look at these things globally, well then the next thing is if you want to bring manufacturing back to the US as well and you want people to build and invest, we've got an interest rate component, right? So then you've got the Fed now pushing back and saying no, no, no, we're, you can't fire me. And we're just watching the numbers. So Goldman Sachs said today, it said our economists now expect the Fed to begin a series of three 25% basis point or 25 basis point cuts in December rather than July and to implement them at every other meeting rather than sequentially. The Fed open market comedian meets, committee meets every. What a. What a Freudian slip there. The Fed open market. I said comedian instead of committee meets roughly every six to eight weeks, they said. Goldman Sachs Research's chief economist says in their teams report that the rationale for this interest rate cut and their economist forecast has shifted versus it coming in July. But they said it's more about the reason behind it. And this is what I was intrigued by. They said previously the rationale had been insurance, a preemptive action when the central bank sees potential weakness in the economy. Now the team expects that the Fed will instead start cutting with a view to slowly returning interest rates to a more conventional level as, as growth remains somewhat firmer, the unemployment rate rises by somewhat less and the urgency for policy support is reduced. So I thought that was kind of interesting. They're looking at those rates in those every other meeting cuts coming down to getting to the 3.5 to 3.75 rate. So I thought that was kind of intriguing to read that newsletter. So if they're right, then we're going to see going into, you know, middle to latter part of next year rates down in the threes again, if that were to play out correctly, which then would support investments the way we just described it all.

Yeah, I think that's a, I mean I think that's a fair, I guess, and realistic forecast for what that is. I think there's a lot of this is going to play out, right, because these 90 day, we have what, two 90 day reprieves. We have a 90 day reprieve from the, from the overall global tariffs and then we have another 90 day reprieve with, with China. I think those 90 days end up what, late July, early August, somewhere in that time frame.

So you gotta know another one's, gotta know another one's coming if things are going in the right direction. Right?

Yeah, no, I think so. I don't think we're ever gonna go back to 154%. Let's just put it that way. So, but anyway, let's move ahead here because I think you brought up this point here about the tariff receipts, right. And this is in from a CNBC article. Economy Tariff receipts topped 16 billion in April. And if you remember, I think we've talked about it here, the primary objective was to generate a trillion dollars of tariff revenue, cut a trillion dollars from the, from spending. Right. Doge and so forth. Cutting trillion dollars. And if you did that, you were balancing the budget. Now you're, and you're able to support the tax cut piece that's there now. Sixteen point billion is a record in April, up 86% from March. But that's only, that's not even 1.6%.

Right.

Of a, of a trillion. That's 1.6% of what is required to achieve that trillion dollar objective. So it's just a drop in the bucket.

Well, but it's, it's, I mean, how would you expect that to happen overnight? You'd say this is possible right now.

My bad. Right. The trillion dollars was over the course of a year and it says that brought the year to date total to 63.3 billion. So we're actually at 6.3% of the amount that we were, that they're targeting to get to.

Yeah, yep. No, I think, and I, you know, I think that what the good news of this for the administration through all of this is that this are real numbers that can be documented and tracked where some of the, there's been some, what would you call it, maybe just fuzziness of what's been coming from Doge. Right. But if Doge could do half of what they're supposed to do and the tariffs do three quarters of what they're supposed to do. And you know, I mean, I, look, it didn't take this country a year to get in the pickle that we're in from a budget deficit. Right. So I mean, I think if we're, I don't know, maybe, maybe this is the disclaimer that we do regularly is neither of us are economists, so I'm sure we're shooting from the hip sometimes, but in my mind it's like if we're making even with. I'd love to see the data on this, you know, $16 billion from that standpoint is if we just had with all of our trading partners, if that flat, and I know that, you know, they know this one number, right. If the, if it was the flat 10% on everybody and say it's 30% or some higher number with China, how long does it take us to get the budget neutral? Right. Because all we want to do is get out. I mean, short term the issue is get out of the risk of going bankrupt as a country.

Yeah. Well, it doesn't solve the budget problem alone. Right. It doesn't solve the deficit problem alone. That's again, there's multiple, you know, Doge and the other things are trying. Yep. That is, and also increasing productivity. Right. So the whole point of reducing regulations and so forth is to increase, increase productivity, increase growth in the U.S. what I find interesting though, about, you know, if you look at 63 billion, that's 6.3% of the total. But let's say it even gets up close to a trillion that who is paying for that trillion, Right. Is that being paid for through price increases, as we've talked about? Is it being paid for by margins in our distribution companies? Is it who, you know, manufacturers, who is paying for that? I mean, that's a substantial, a substantial increase of costs that has to be passed on somewhere or absorbed I guess is the Reddit word somewhere.

So I mean, think about it though for a moment. Let's just say, let's just use the 10% baseline, right. You'll probably would see from the foreign manufacturers at least half of that, if not two thirds of that picked up. So let's just say 6% of it gets picked up by factories. I mean, I'm hearing people talking about factories that are, you know, willing to eat 20, 30% on some stuff sometimes. In fact, I was texting last night with my buddy that I told you about that had a couple of containers stalled, right. Just to use a broker and low voltage electrical products. And he not only got those on the water the next basically Monday or Tuesday, but those same customers came back and ordered, I think he said, four or five additional containers if they could get them out in that 90 day window. Right. So kind of a nice little boom for him, you know, and some people are making hay on all of this right now. And so, you know, there's some positive things coming out of that. But let's just say. Let's just say even if it was from a standpoint, Tom, if we had to look at it from a component of let's just say all parties eat a third manufacturer at 10%. Right. If you could look at things and say, okay, in my business, my manufacturer is going to, let's just say manufacturer takes three and a half percent, distributor takes three and a half percent and consumer takes three percent. But that's going to get us to closer to a balanced budget and a more stable economy, probably worthwhile. Now, the other side of that comes isn't Taylor St. Germain from the ITR Economic Group who's going to be on the show with us next month is he talked about this at the Industrial Supply association meeting last month where he was really referring to this as do all your hiring now because, because of all of this, we're going to need to pay more in wages come the middle of next year. So, you know, there's going to be a balancing act. People are going to need to make a little more money. It can be an adjustment, but that's where that I think most people are thinking I'm going to now ask some people I'm talking to this week and say, you know, what's their threshold? Talking to distributors, what's their threshold? And manufacturers as well, what's their threshold that they're willing to comfortably take without it having a major impact on their business?

I guess the bottom line, if the goal is still a trillion dollars of tariffs over the course of a year. Right. That unless they've changed the goal, which they may have, but unless that goal or that target has been changed, then that's whether, you know, again, the China thing can get reduced. And there's a lot of, you know, things that can be reduced, but that's still a substantial amount of tariff revenue. Right? That is. That is way more. My point being is if you look at this, this is up so much compared, I mean, this is orders of magnitude increase of tariff charges compared to what we've been used to.

Oh, yeah.

Over many, over many previous years.

So. Yep.

Let's move ahead.

Yeah. Yeah, exactly. Good. All right. So where do we want to go to next? Want to jump into manufacturing distribution?

Yep, let's do that.

Good. So this was an article from Industry Today about manufacturers facing that unsame uncertainty. Certainly not Surprising. There's some good charts in here if you get a chance to go look at this article again. This is from May 12th from industry today.com Good article about manufacturers facing uncertainty. Kind of just ties into what we've been talking about. And I think, you know, the term volatility with all of this is. I think that, you know, that's the biggest factor out there right now. When all this stuff settles in and we have an understanding of what's really going to come out of all of this, then people can make some good, good, good decisions on it all.

Yeah, I think the bottom line. Right. We're certain. I don't. I think that volatility is the new normal. And so, you know, there's other articles, we've talked a lot about this. There's other articles even today about what manufacturers and distributors are doing to address that volatility. I think there was a great quote in one of the articles from somebody from Granger saying, hey, we're optimistic about where things are going, but we're not standing still. And I think that standing still is really the only thing that you can do that is going to hurt you. Right. It's like planning and double planning and, and, you know, using technology and all the things that we talk about to me is no longer. It just can't. No, it's no longer discretionary.

Yeah. So, I mean, this is, I had, I had multiple discussions about this kind of topic with people this week. Right.

Are these, were these part of the presentations or just more.

No, no, these were conversations. Yeah, the presentations were really good. I mean, people did some really nice jobs. Our friend John Gunderson that was on the show with us last month, John did. Led a whole session and then he led a breakout group as well. Nick Periclay did a really nice job with a couple of sessions. Eric Copland had a great. From New. Had a great intro. Dan Schubert from NAW did a great interview yesterday with the CEO of Kodiak Building Products, which is based here in Denver, and really talked about something. In fact, I'll throw this in there. I heard a great, great comment from their CEO, which was just fantastic. And he, he was basically, they were talking about tariffs and Dan did a fireside chat with him. And, and it was nice. I had a really nice chat with Dan right after that session. But Dan was asking him about tariffs related to homebuilding. And he, he said he, you know, he certainly, I don't want to put words in his mouth, but Mr. Sweeney's mouth, but he had Commented that tariffs are obviously important and they're critical to other businesses. He said, in the manufacturing of, or the building of a home, it's a few points, three, maybe four points at the most is how it impacts the overall building of a home. He said, now you want to talk about what impacts us, let's get these interest rates down.

Yeah, yeah.

So, and then Kodiak is a private equity group that owns building material distributors across the country. And so I thought that was, that was a good learning moment for me. Right. Just this is, it's not impacting the tariffs component of. It is not impacting some markets in the same place. But I would suggest if you've got, even though if retail prices are up and you're wanting to buy a home, if interest rates are down, more people are going to be able to get into a home.

Yep. Right.

So it's good. That was kind of a good learning out of that. But Tom, in this particular article, there's some key points I want to, I want to hit these. Okay. Because it's not just. This article is really nice. It's not just about tariffs. And it says tariffs emerge as the primary concern right in this setting. This was a study that, that, that Whip Fleets did throughout the whole first quarter. And there's some nice charts in here. But they said, I want to hit these points. They talked about, they said that forecasting accuracy, accuracy remains problematic with this uncertainty. But he said that companies are reporting a consistent 3 to 5 percentage point discrepancy between projected and actual performance. Okay, so what does that mean? They tie that to their internal metrics. They're talking about, you know, how they can, people can kind of balance this gap. Companies can leverage historical performance data, managing and integrating better third party data and customer input, so they've got better data on their forecasting and can close those gaps. But then they talked into some of the other challenges out there and they talked about workforce challenges and the competitive hiring landscape and skills gaps that persist. Stuff we talked about all the time. Wage inflation impacts operations. They're dealing with wage inflation. Then obviously the cost pressures impacting profitability. And then they talked about building resilience. So they, they, they talked about a few components that I thought were really important. And this ties to what I was starting to say earlier, Tom, about some of the conversations I had and some of the things we've talked about is really, really well run operations in manufacturing and probably even more so in distribution of companies that are leveraging technology. Well, they've got a good Culture with good people in their organization. They run already extremely efficiently. They're going to survive this in a much different, I don't say survive. They're going to be able to even potentially make some hay. And you know, I've got a, every time I quote this, I've got to quote who I got it from. But you know, John Gunderson was sharing with us when he was on last is, you know, there are, there are distributors and manufacturers who are very well run organizations and who purchase well and have very strong pricing programs in place that really understand the ins and outs of their business who are going to do well through all of this or certainly not have the same risks that other have because they're able to take care of, take advantage of strong balance sheets. So this article has some great talk to conversation points about, you know, internal variables that you can control, reducing waste, data sources, identifying metrics through data, better managing costs a little better from an awareness standpoint. So I thought this was a nice article from some of the depth of things it covered well and I think.

That ties in well to this next article too.

Yep.

Right. The cost of static demand forecasting models which I thought was really good as well. But I think that's a good, another good example. Right. Of you know, in that article they're talking about traditional static forecasting models of oh, we're going to be up 10% on this or this category or just sort of arbitrary, pull it out of the air.

Yep.

Sort of forecasting and projections and you know, what are the ramifications of that? Well, I think that fits in to exactly what you're talking about.

Right, right.

It's like the level of sophistication. It's really sophistication on all aspects of the business. You know, thinking through how do you become more sophisticated and then, you know, a lot of times in the past that would have been oh God, it's impossible. But then when you take account the technology and AI and other things that enable that sophistication, it allows you to be thinking in a more sophisticated manner.

No, this, I like this article. This was, this was put together by, by Dush from the Data Group, had dinner with Dish in March in, in Irvine and really sharp, you know. And I mean this is just the most simplistic example. But what he said here. Right. Is just, you know, an old time quote. Right. We sold 100 widgets last year, so we expect 110 this year based upon a 10 increase. Which it kind of makes me think about, you know, Some of the forecasting and pipeline tools we have built into lead Smart Channel Cloud. We were on a call you joined me on with one of our existing customers. A big large H vac and plumbing distributor in the Northeast and using the right technology to manage growth by categories and sometimes even SKUs. Now those types of things to really understand how you're forecasting, what you're planning for your growth is more than critical than ever because you don't want to be in a bad inventory position when there's tariffs and things going on. Because Joe decided that he would just take the spreadsheet and add 7% to this one, 9% to that one and 11% to this one and 3% to that one with just some rough guesses. You know, you want to know where that's coming from with some high levels of predictability. Some organizations do a great job of that. Most I, I talk to struggle with it.

Well and they talk about in here.

Right.

You have to be thinking a bit more multi dimensionally. Right. Because it's not just well what's my increase of revenue but what's the margin. I mean there can be, you know, rebates. I mean there's all sorts of other things that can factor into that forecasting and what are the things that are really. What are the products that you want to be selling more of? What are the ones that you aren't, you know, less. Less care about selling more of them. That type of thing. There's all kinds of different. Yeah. Variables into the equation. So.

Good. Well and that ties us to kind of our next article. Right. So the, you know, we'll move into our E commerce and marketing segment and this is an article from a distribution strategy group, our friends Ian and Jonathan over there and great discussion about MSc industrial bets on AI to drive growth amid market volatility and their managing that through a mix of internal AI tools as well as a lot of E commerce related solutions to power look at powering growth.

So and it looks like from what I could tell in the article they're looking at it a bit holistically and both, you know, what do we call it? The carpet and the concrete side of the house.

Yep.

So they're not just looking at how they're manufacturing or, or the back. Not manufacturing but the back end is working. They're looking as well as how is it affecting the operational side and really looking at it holistically across the whole business. Which was I thought a good summary in that article.

Yeah. So they've got a, you Know on their website they've got a new good content recommendations. They said they saw traffic surge 60 fold over the previous three month period and they're using AI to optimize inventory planning, reduce freight cost and enhance demand forecasting. So they're talking about 10 to $15 million in annualized savings by fiscal 2026. Now, MSE is a very large industrial distribution company and the impact of tariffs could be a whole lot more on them. I'm sure if it was a negative standpoint of 10 to 15 million in that savings that they're seeing. But that number you have to expect is just going to continue to grow. And, and I'm sure there's plenty of other organizations out there that are similar size to msc, that wish they had something in place right now that could say they just offset those, those challenges that are out there right now by 10 to 15 million dollars.

So at the show you were just at this week, what was the sentiment from the, the people that were there? Is there a sentiment of hey, we really want to embrace technology and we really want to take our level of sophistication to another level? Is it more conservative? Hey, I don't, I don't want to be more conservative because there's a lot of uncertainty. What were you. And granted maybe your, your audience there was a little biased based on the audience that was there, but. Right. What was the general sentiment?

Well, I, I think you, you absolutely nailed it based upon the audience. So that was the caveat that I was going to give. I think across the board the sentiment is ties exactly into everything we've been talking about all along. What we're talking about today. There's, I would say, and if you're quite. If let's tie your question. I'm going to break your question down into two spots if I can. I'm going to say first one, let's tie that to the economy and then the other one we'll talk to related to technology. I'll say from the economic standpoint, it's kind of exactly what we've been talking about. There's, there's uneasiness, there's caution. But I did not hear anybody and I, and I did hear only one person when I was in April at the Industrial Supply Association's event. You know, these are conferences of guest speakers and thought leaders and so forth, talking about all kind of all things distribution, technology and all the things impacting organizations, HR taxation, all kinds of stuff. But I didn't hear anybody at this event with the sky is Falling, I'm going to go out of business, any of those things. There's challenges that there's facing, there's cautions that they have in their business. But I saw a lot of people who are already working on putting some of the things that we're talking about in place. When we talk about technology from that side of it. I think we're in a very much of a place where people are extremely optimistic. This was a group of people and there was, there was a handful of, you know, mid size and large organizations that were sitting in on some panels that talked about kind of some interesting unique uses of technology and some plans that they have. You know, sometimes we talk to people, Tom, that, that will say, you know, they're doing great things with technology because they moved their ERP system to the cloud and they got co pilot as part of their deal with Microsoft and they're letting their people use Copilot. And we have other people who are, you know, really working on some advanced AI solutions and really using that much like the MSC example we just talked about. So there's, there's a broad mix through there. But I think the caveat with this is, and I was, there was actually a couple of really sharp young gentlemen I spent about a half hour with yesterday afternoon. Two young guys that are one from Ireland and one from New York who are completing their MBAs at Harvard and they researched what they were going to write their MBA final thesis I guess or paper on and research market after market after market after market in the wholesale distribution market is what really intrigued them both to do this in partnership. And they put their energy into it. They researched and met with, I can't remember how many distributors that they talked to, but a lot of them were having some real challenges with pricing optimization and there's some good pricing optimization tools out there. But these young guys went out and built a, they're not commercializing it or anything, but they built an AI tool with some off the shelf AI tools and the data that they brought back to the distributors was, they said the distributors was astounding. The reason I share that story is one of the things. And then they had an opportunity to have a lot of discussions with some major distributors and you know, I'll say quarter, quarter of a billion dollar to three quarter of a billion dollar distributors that were at this event and they people were really optimistic about some of the things they were showing and I didn't want to burst any bubbles but what I shared with them was these are the people that are at these events are the people that really, really take their business, their industry seriously and they participate in these events both from a giving to and a taking back from. So you know, I would say we had of our customer base, there was only three or four of our customers. You know, there were more, probably five to seven of our customers there and a lot of them go to a lot of other events. But at this particular event there was only a handful. But, but we have some very, I don't want to say sophisticated, but some very strong customers who just, and I know a lot of people who believe they don't need to. I have a dear friend who runs a big company and he believes they'll get as much as they need of these types of things and peer networking from their buying group versus doing these other trade groups. I think that you need to do.

Both, but I think it's good to do both.

But yeah, there's so much data out there and just, you know, watching people network yesterday literally on my screen just popped up another LinkedIn suggested or not connection request from somebody that was at the event that I didn't even get get a chance to meet. But I just had a little pop up that said saw you were there, didn't get a chance to meet, would love to connect and talk. So such a value. But to answer your question, technology side, a lot of optimism by those forward thinking companies, supply chain economy things, there's caution is what's really out there. But again I did not hear anybody with the sky is falling and we'll never get out of this. What I heard from the old timers when I say that, you know, people that have been in the business for 25, 30 or more years is we've been through lots of challenges before. We'll get this through this one too. Yeah.

Okay, makes sense.

What they all said is we'd never been through a pandemic.

Yeah.

So that one they didn't know what to do with. So. All right, good. Quick article here coming up out of Digital Commerce360 about QXO. We've talked a ton about them recently and there's an article here and again we're in our E commerce and marketing segment about leaning into digital strategy after the Beacon deal. You know, of course they had an announcement that they took a little bit of hit in their first quarter results based upon that acquisition, which can only be expected, but big optimism and big focus on technology. I think I was talking to a gentleman that I met on Tuesday who's a former senior executive with Wesco and he was talking about the digital tools that are going to be coming to distribution along with the ones like us that are already here are going to be great because one of the things that's going to happen is organizations, you know, the, the magnitude of QXO that are doing these large deals are, are going to really, really be leaning on technology for this was great. So it's kind of fun. Yesterday we've talked a number of times about this. Brad Jacobs, the founder of QXO and the, I'll call them the Q companies because they have multiple other companies, freight logistics companies and so forth. We had popped up for. I forwarded this article on in my LinkedIn feed and done it a few times and I got a nice little note from Brad Jacobs in a LinkedIn connection request yesterday. So it's kind of nice to be connected with Brad and certainly throughout the show.

Let's get him.

I, I sent him a follow up note with the nice note he had sent me and told him about what we do with the show. And I, I don't know, Tom. That will be probably the first time that we've had a, a regular contributor to CNBC and the Wall Street Journal on our show. But it would be pretty cool.

So just make sure you don't cut yourself shaving that day.

I thought we were going to leave that alone from here on.

Okay.

Okay. So yeah, I can't say that I got in a fight with a waiter last night or anything.

Yeah, that's fine. You could have come up with a much better story.

I'd like to, but you know, it just, it's. Anyways, it is what it is so maybe we need it. Maybe we need a third host for when I'm stuck in an airport or cut myself shaving or something.

That hospital thing, we should just take away from the thing because.

Yeah.

So, all right, what's next?

Well, there's a good article there about B2B. It's brands or bust. We've talked a lot about that and I kind of want to move into our technology segment. But good, good article there from marketingprofs.com and we publish some of their content quite regularly but you know, we think a lot about, and especially, how would I put this properly, we work in wholesale distribution, manufacturing, I'll just say mature businesses.