Around the Horn in Wholesale Distribution - Episode #150

Sa.

Hey, look at him go.

Happy 150.

Happy 150.

Here we are. Who to thunk.

You have your 100th shirt on.

I have my 100th anniversary shirt that we did for the. The panels, that panel of folks we had. And I've just talked to a number of people as we've been on the road this week and talking about having this 150th show. And they're like, what are you doing? And what's. What's the big, you know, shirts or what hats or what's the.

You know.

And no, just three out of the last four weeks on the road and I didn't get quite. Get to anything. But I did figure out a way to get a great guest with us for our 100.

That's right.

So while there haven't been shirts and swag sent out, there is in fact a great guest, too. So, Mark, how are you, my friend?

I'm amazing. Delighted to be here. I didn't even realize when you invited me that it was the 150th, so I didn't.

I didn't either.

I think Mark is going to bring some real class to this.

That's right. Just, just his accent in itself just raises the show up a level.

I feel like I need to sit up a little bit more.

I did, I did put my, my suit on to, you know, to dress up. And I thought you were going to do the same, Kevin, but it turns out this is the. The special. This is the shirt.

You know, aloha shirts are me dressing up.

So.

I'm. But, you know, it's. What's. It's funny.

I will.

I'll just say this right. I'm in my home office, and when you arrived with your handsome blazer on there this morning, I think, well, you know, I'm just a couple feet away from my tuxedo. I could go throw that on. But that's what I should have done this morning is rolled in with a tuxedo one the tuxedo from the waist up.

Nobody wants to see you change now, so let's move ahead.

No. Okay. Well, great. Well, listen, Tom, congratulations to you and Mark thanks you for being with us. And you know, who would have. Who would have thought, what are we, you know, approaching three years to go that we. This would turn into what it has. So what a. What a great opportunity. But I was just kind of trying to find the right word of where we've come. Right. This started out as a me sending Tom a Note, I was talking to a few people this week. Tom and I were at the Affiliated Distributors Functional Success Summit in Florida for a few days and talking to a few people about this. And you know, this whole thing started out as me going to Tom and say, gosh, you know, I get all these emails every week and review all of this info about the economy and supply chain and M and A and all this stuff and industry events and maybe we should do our own newsletter and get it out to these big lists of people because who wants to get just constantly get, you know, emails from technology companies that say, hey, buy my stuff. So why not send something out that has some value? And so Tom was smart enough to say, I almost called him wise, but let's just say smart was smart enough to say that why don't we try this LinkedIn live thing. And here we are 150 episodes later and now our typical show is probably 30 states in the US we have people from three or four provinces across Canada and usually five to seven other countries beside the US and mailing list is up to 10,000 plus people now. So it's kind of exciting time. So anyways, we'll, before we dive in, I'll just add a little bit to that. So again, if you're with us for the first time, we'd love to hear from you. If you happen to be on LinkedIn Live, YouTube Live or Facebook Live, you have the opportunity to comment. I am again, Kevin Brown. I'm here with my co founder and lifelong friend. Tom and I work together at Lead Smart Technologies and we have our good friend Mark Gilham here that's joining us from a wonderful company called Enable that we're going to talk about in a few minutes. But we do this every Friday as we've Talked about Live, YouTube, Facebook and LinkedIn. And then later in the day, our editor and producer John Taylor takes all this data together, puts it into all of the right formats and gets it out to the Apple podcast, the Spotify and all of the other podcast formats out there as well. So it's a great opportunity that we have each week to get together. We're happy if you're here with us. The one thing that you could do for us that would be really beneficial as we talk each week about again M and a supply chain, the economy, tariffs, sales, marketing, people on the move in the distribution industry would be share this with your friends. If you're on LinkedIn, maybe share a comment that you're joining us today if you're. And certainly if you're on LinkedIn, just go follow the show on the around the Horn and Wholesale Distribution Manufacturing podcast, there's a page for that also. If you could follow us at Lead Smart Technologies, that would be great. Then you will also get to show updates from that. And then finally, if you're on YouTube, just hit the subscribe button and you'll get alerts each time. And that'll help YouTube's algorithm to get out to more people. And then of course, if you're listening on Apple or Spotify or any of those platforms, please leave a review, which is a great help to us to get this out in front of a lot more people. So we couldn't do this each week. Our little closing part here is if we didn't have the sponsorship, we've got two people that work on this show besides Tom and I and our guests Lillian and John. And so quite a few costs that go with that. So we have the fortunate opportunity that the company that Tom and I work for sponsors the show each week. Tom and I work for Lead Smart Technologies. And at Lead Smart, we've developed what we describe as an AI enabled smart CRM and customer intelligent platform that is developed solely for wholesale distributors and manufacturers. What we do with that platform is we bring siloed data from across an organization. Your ERP data, marketing automation, E commerce, rebate data, all kinds of different data that you might have across your organization. We bring that into our platform. We use artificial intelligence and other tools to run against that to help you make smarter business decisions, serve your customers better, improve customer experience and gain deeper insights not only into your customers, but into your teams and your entire business. So it's a cost effective program, implements very quickly and returns phenomenal return on investment quick. So if you're digitally transforming, looking for ways to expand and serve your customers better and grow your business organically, this is the right tool for you. We would love nothing more than to talk with you about that. So diving into today's show, our friend Marty McLaughlin here says, nice shirt, Kevin. Marty says that because he has one. Marty was with us as one of our panel guests for our hundredth.

Marty, are you wearing your shirt? I wonder if he's got his shirt on.

We did. Marty is tall and thin, so Marty's might have needed to go to the tailor, but I hope it did when I'm near Philadelphia next. I lost him. I was there, I had dinner with Marty and I will be expecting him to wear that shirt when I take him to dinner next. So Mark, I've talked a lot. Let's hear a little bit about you and Enable and then we will dive into the news.

Sure. Well, to start with, my background is distribution, building materials. Very familiar subjects, what you just mentioned. I still remember the Eureka moments when we actually started to use data as a distributor. What we realized was we could make our customers happier and we could make more profit at the same time. And it was, yeah, it was genuinely Eureka moments when we realized, when we were able to actually get a grip on that data. So I think what you guys are doing is, you know, so powerful and every distributor, manufacturers as well, the whole kind of supply chains, they need this type of technology, Enable. So what we do. So I'm a former client of Enables, so that's how I ended up working for them. They solved our rebate problem. So for us, that was collecting rebates from our vendors or our suppliers. And again, that was a game changer. There was money we were leaving on the table with a platform like Enable. We were able to find it, but then we were able to foster better relationships with our suppliers because we had one version of the truth, one place where we had an agreement with one set of data, managing our relationship, that kind of thing. And what I do now is less about the software, more about just helping businesses do these things. Well, explaining to businesses what a good rebate looks like versus what a bad one looks like. How do you create win win scenarios, that kind of thing. So I've been diligently listening to this show because I really like it. When I was in the uk, it, it was, you know, it was perfect. You, you used to joke, five o' clock in the evening on a Friday, you know, I'd have this on as I was wrapping up my emails for the week and just learn what's going on in the world. A lot of your guests, you know, people I know and, yep. So I, I, I thoroughly enjoyed it. Whereas now it's, now it's a lunchtime session. So.

So you, what you're saying is you're not a North Carolina native?

Unfortunately, no, no. Albeit, you know, the people here, you know, they're so friendly. You know, people talked to me about Southern hospitality and I wasn't quite sure what it really meant. But, I mean, you just go to like a local Lowe's just to get something. You end up having a conversation with somebody, even if it's the Lowe's employee. Everybody's so nice. So, yeah, I've really been welcomed with open arms into the United States. So, yeah, thrilled to be here.

That's awesome. Great. Great to have you with us. And I think some of the work that you do with distributors and what Enable does as a whole will really tie in well to some of the things that we're going to talk about today. So, Tom, you want to get us started and dive in, or do you want to give us a little bit of your background in history?

My background in history.

Hey, Mark. It will say, though, before we dive in, you know, with you saying that when you're still in the UK, which was just what, 45 or 60 days ago, was that in my mind, when you were just saying that you were wrapping up your day and taking care of emails and so forth. I just have to tell you, in my mind, when you were listening in or commenting on the show, you were sitting in an overstuffed leather chair with a smoking jacket on and slippers and a gin and tonic. This is very British. End of the day, you know, so you really kind of burst my whole vision of how you were watching the show previously.

Yeah, I'm sorry, but believe it or not, I mean, you guys know Dirt.

Beverage, of course, Dirk has one of these shirts.

So I, without even realizing, you know, I'm not sure if you were. Dirk stopped drinking. I stopped drinking on the exact same day and didn't even talk to him about it. And then we realized. So every now and then I get a text from him saying, so many days. But, buddy, how's it, how's it going? Yeah, it just. So, unfortunately, yes, no gin and tonic, but yeah, it was. I thoroughly enjoyed sitting in and listening. So can't wait to get into these bits with you guys.

Yeah, well, now. Now it will be lunch time for you instead of end of the day. Yes, very good, very good. All right, Tom, you want to take us away and get to get us started?

Well, we have a little economy again. First article here. June wholesale prices go and change reflecting mutif tariff impact. Then there's a second article here that I'll just kind of talk about. The first two tariff impacts show up in economic data as companies respond. So what I read from both of these. Right. Is at a macro level, not really too much going on related to the tariff impact as far as inflation and costs and so forth. But at a more regional or local level, it sounds like there is definitely some, you know, obviously impacts depending upon where you. So if you drill down into it. Yes, there's certainly pockets of impacts that are taking place and kind of those are what the. I thought was Good. Those two articles kind of showed both sides of the story, if you will, for more of the local side of things.

Yep. Mark, any takeaways on those?

Yeah, I think June and July have been kind of interesting months because I feel that we're still in the uncertainty, but I feel like a lot of things changed in March and April and then things really haven't changed. We've been in a holding pattern waiting to see are these reciprocal tariffs going to. To come into effect, that kind of thing. One of the things that I found really interesting was I looked before coming on here website Freight Waves, which talks about the teu. And what we're seeing is right now they're marginally up year on year. Next week they're going to be down 11 and a half percent and the week after that they're going to be down 22% year on year. So it feels as if we've had a kind of a bit of a burst of activity on the back of things being put on hold and then we're going to see a slowdown again. So when we talk about prices going up but demand being suppressed because of that supply and demand kind of dynamic, they're almost offsetting each other a little bit, which makes me feel that the manufacturers must be absorbing quite a bit at the moment.

Yeah, I think that's a good point. I think just trying to remember who we had as a guest that did not agree with me on this comment at all. I wish I could remember just another take. My view has been, and I'm going to share some statistics in a moment about, you know, what's going on with tariffs as far as what's been collected. But my mind had been, let's just say there's a 30%, you know, tariff on a, on a Chinese product is probably the easiest way to look at it, right. They're going to take 6 to 10 on their end and put some other programs together, come back and, you know, ask you to buy more of a, you know, this is all, there's all the negotiations. We think about what the administration is doing from a negotiation. Every, every distributor now and manufacturer themselves who are getting raw materials and distributors who are getting stuff from China or offshore now or having to have their own level of discussions. But if you think about it, let's just say you're an electronics manufacturer in China, you know, you're gonna have a discussion with a distributor that says, hey, you know what, on these critical components that you buy from me, you know, there's a 30% tariff, whatever the number ends up being, we'll take 9.2%. But to do that for you, I need you to buy more of this other item as well. Because now and then if you buy a certain level of that, I'll take that 9.2% to 11.5.

Right.

And there's those balancing acts. Mark, you're shaking your head like you've seen this happen before. It's just day to day stuff, right? We want you to buy more of something that we have better margin on. They'll find that balance. The distributor then will, in that setting probably go and take 5 to 7%, maybe themselves potentially, or they may just pass that all the way across. But between the factories and I think maybe some. And it just depends on the distributor and or manufacturer's philosophy, but I think there are some that will work with key customers. Again, negotiating with them and saying this is what I'm facing. And the indirect impact could be, in many instances it could be offset by as much as in 20%. So I just think each one of these situations is going to be different. What I would be surprised of is if across the board you were to see a distributor, H Vac, maybe industrial market that says, hey, we're raising our prices 30% across the board on everything coming from China. Because that's what the I'll just say uninformed or less strategic distributor is going to do. The strategic distributor is using lots of technology to analyze their inventory and last in, first out, first in, last out, all the different models that they can do to balance their pricing best. And then they're negotiating with their factories.

Hey, Mark, would you also see that. Are you seeing this as that rebates are kind of playing into that overall holistic strategy as it relates to pricing and maybe adjustment of pricing or maybe having more flexibility on or less, I guess less, less change on the pricing side, but using rebates to be a bit more dynamic and how they're adjusting with things.

Yeah, we are seeing a couple of changes and you're absolutely right. The last thing you want to be doing is changing your prices too frequently. It's a real challenge whether it's the end consumer. They like price certainty. But just the admin involved is huge in these things. So what you can do with a rebate is you can keep your pricing nice and clean. You can use a rebate behind the scenes to make retrospective adjustments. And that could be, I mean, Kevin, you mentioned planning for inventory and things like that. Inventory is king right now. If you've Got the inventory and a tariff comes in. Well, you change your price and then you say to your customer, okay, I'm going to sell it to you at the new price, but I'll rebate back to you if you do xyz. Right. Because I've got the inventory to do that for. So it's a great way of driving some loyalty without messing around with your, with your price books. So we're definitely seeing a bit of that. Other things we're seeing is a lot of rebates used to be annual, we're seeing them move to quarterly targets, things like that. So they're a little bit more kind of tactical. And then finally the other thing we're really seeing is people trying to move away from what I class as value based rebates and incentives. So Tom, if you think about it, if you have a 25% tariff comes in and everything is worth 25% more, you're going to pay out rebates to your customers who've got targets just because of the tariff. So where possible, move it to a volumetric or a unit based rebate incentive. So we're seeing a bit of that and those conversations also flow into sales comps, these kind of things. What should we be doing there? So absolutely, rebates can play a role. The other thing I would say from what you mentioned earlier as well, Kevin, is if we look at exchange rates, foreign exchange rates as well.

Great point.

They're creating, in my opinion, should be creating headwinds because if I take the euro as an example, a euro would cost you 9,96 cents or. Sorry, and it's now, we're now at 86. Sorry, $1 would get you 96 cents worth of euros. We're now at 86. So the dollar is devalued. We've seen that against the pound sterling, not so much against China. Now I know when a lot of trade happens in dollars, these are just, you know, some other headwinds that you know will definitely help for exporting. But yeah, I'm surprised we haven't seen a little bit more inflation. And then our good friends at Proton AI, I don't know if you're familiar with them, but they did a piece and basically said distributors are going to pass on whatever they get. So what we will see there is if the, if there's price increases, they're gonna happen and apologies, they're not your good friends, I get it. But yeah, so, and that's just another.

Just another good tool in the marketplace.

Yeah, the, the key for me, there is. I come from distribution. We tend to, if a price increase is passed to us, we pass it to the market.

Yep.

And so if we're not seeing price increases coming from distributors, it probably means they're not getting them from the manufacturers.

Yeah.

So let me ask you a question. We had a great, great conversation a while back with John Gunderson and when he was on, and John made some really good points about, you know, really being in a position where a distributor that understands their business has a strong balance sheet, understands their inventory levels, understands pricing, understands rebates, can put all of these components together to offset so much of that. Are you from some of your conversations, are you, are you seeing much of that? The people that are, you know, really putting a lot of time and energy?

Yes. And I mean, I love the, the insights you get from, from John. You know, he's, you know, he is just full of them. And he's absolutely.

All of them are full of it.

Well, I wouldn't say that. He's a big guy. He is a big guy. Yeah. But what I would say is, yeah, you know, you know, when we say inventory is king only if you know what to do with it. And that comes to how can you actually monetize your data and the insights you have, which is where technologies like yours really will play a part in, in this. We've got to work smarter as a business to mitigate these inflationary headwinds. If you don't work smarter, you're going to. Your competitors are going to outperform you.

Great point. You know, it makes me think, Tom, we had a conversation over a year ago, long before all of this got started with Mike Mortensen was a guest with us from ARG Industrial in the Pacific Northwest in Alaska. And we were talking about just supply chain issues in general. We were having shipping problems then as well. And, you know, Mike said they went from, you know, quarterly or monthly conversations with key vendors to, you know, now weekly. And I've got a feeling there's people that are doing things daily now probably of really trying to understand what's going to go on with this. So it's good.

Let's.

Tom, let's kind of take a look. That Don Davis, who partners with Mark Brohan and do a lot of writing now for Distribution Strategy Group for our friends Ian and Jonathan Byne over there, he wrote a good article that we've got here that he published on the 16th, I.e. tariff impacts show up in Economic Data as Companies Respond. So just a couple of the statistics that he quoted there. By the way, before I even share that data, I looked something up a minute ago that I found kind of interesting as well is that you know, when we start thinking about the first two articles we looked at kind of offset, right? One was talking about the producer pricing index that that's kind of fairly flat because of services versus product companies. And then we saw the next article was talking about some of the very specific instances of people having to raise prices and some of the things that they were doing. The reality of it is I just looked this up a minute ago is that the first half of 2025 tariff revenue has reached, it says 87.2. So almost $90 billion has. Has been brought in.

Right.

They said June alone saw tariff revenue reach 26.6 billion, nearly quadruple the usual amount. So we should start seeing this impact based upon what you were saying Mark, if that is in fact true that people are just going to fully pass it on. I kind of have a belief that there's a balancing act there that a lot many will do. Not everybody certainly so many will just say hey I got 18% from the factory. You get 18% Mr. Customer but 26.6 billion just in the month of June, almost 90 overall billion. There is tariff dollars that are being charged that are impacting very specific people. What I didn't look any further. It's something I may want to do later. See if we can see what channels or what markets most of that came from. You know, is it consumer related? Is how much of it is truly commercial or B2B wholesale sales. So I'm going to do a little more research on that. But it's interesting to see. But anyways, cutting back to the article that Don wrote and I got a chance to see Don last month at. Last month already. Yeah, last month that Distribution Strategies groups hosted a AI for distribution event that was quite nice and Don and I chatted for a little bit.

So.

So he put some quotes in here. He said that S and P Global in some research that they did says the impact of higher UF tariffs on imported goods showed up in 2.7. Showed up in the 2.7% year over year increase in the consumer price index in June, the largest annual increase since February. Particularly impacted goods frequently impacted such as audio equipment up 11% from a year. Furniture 5.1. So that answers a little bit of that. But then we have an article later about some comments from the Federal Reserve of Bank of San Francisco but Don comments on it here. He said that inflation adjusted income in the US will fall by 0.4% by 2028 due to tariffs. So we're starting to see some numbers really showing up in this as well.

Yeah, we're seeing numbers, but I don't think that they're causing as much turmoil as everybody expected.

Correct.

A couple months ago. Well, I think, and I think that there, what we're seeing is just all the stuff we just talked about is that there we're adapting. Right. We're figuring out how to adapt and they're not so overwhelming that we're, we're unadaptable. Right. Where no matter what we did, we were, we were screwed. So assuming that things don't radically change over the next month or whatever, and I really would love Mark's take on this, do you think that we'll end up just adapting and that there may be some minor hiccups here and there or minor increases here and there, or do you think there's really going to be a more significant impact from all of this?

I think firstly, I think one of the reasons we're not seeing things immediately is because again, I feel that in, in March and April, a lot of the uncertainty was already priced in. We saw a lot increases going through then.

Yeah.

And so I feel that the, the market has priced for a lot of this uncertainty, but only to get us through kind of the summer. But I also genuinely believe, you know, no government wants to, you know, to create the hardship that we're all worried about. So how much of the, you know, how much of this will become reality, you know, is a completely different conversation. But I feel we survived, Covid, you know, when the whole world shut down, imagine turning around now and saying for any other reason we're just going to shut the global economy. Will we survive? Most people would say no, but we did.

Great point.

So, you know that. I think that's what, you know, that's when the kind of, the best in humanity comes out, is when, when we're challenged and we will whatever comes. I know the industries, you know, Kevin, I love going to some of these events where you meet these industries, you know, these people, they're smart people, they're switched on people. They will find a way because they have to and that will be the reality.

I think that's a fantastic point, Mark. I've been, let's see, in the last 45 days, I've been to three or four industry events and been to Washington D.C. and I see no panic anywhere. None. Right. And have probably Talked with besides those, I'll just put those trips together, probably talk to 50 points plus different distributors of size between, I'll say between 100 million, probably, probably 50 to 70 million actually up to a billion dollar plus multi billion dollar distributors. Nobody is running around with their head cut off about this topic. And then we talk, you know, Tom and I both as Tom's on the phone, you know, with his team every day with our customers and I'm talking with customers and prospects every day and you know, it's cautionary and I'm just going to kind of go back to what we talked about when, you know, at the beginning of the year, even before the inauguration with this administration. It's we've just seen over and over again is, you know, watch the verbose statement, take a step back in a deep breath, wait 72 hours or a week, see what plays out. And now, you know, I guess the big question is, you know, I was just. Tom and I listened to another podcast regularly. We talk about, called the all in podcast and they reference polymarket, which is an online betting site. But the statistics and the data that polymarket comes out of on elections and things like that, it's turning into probably more of a, I don't know, Tom, what would you call it almost like a research site then or a reference site for historical data too?

No, it's remarkably accurate too.

So I'm just asking it what the likelihood is of actually those tariffs going through on August 1st because not giving me anything on that. But my thought is if we get four or five more large nations that come to the table, that we may not be in a position where they push out a little bit further. My, my gut says back to, you know, your kind of your point, Marcus. Companies and markets overcome these things. The President's goal or the administration's goal is just balance trade. We're just going at it in a knee jerk way that is, you know, you know, overly powered by threats. And I think when we come out of this, we may not see that big of a, of an impact across the board. So let's see what happens.

Yeah, I think it's really challenging if you think if you're a president and you've got four years, well, you need to implement the change quickly to actually for the benefit to land in your term. And so, you know, I do have some, you know, kind of some, some sympathy with the speed that this thing is having to go at, but it's unconventional and it's, you know, it's taken a Lot of us by surprise.

Right. Well and really the reality of it, Mark, is they have about 18 months.

Yeah.

Because. Right. We have the midterm elections that are here in the US where you could very. And I think I can't remember the statistic. I said this on the show a while back when I read it. But the vast majority of administrations that controlled both the Congress and the senate in the U.S. it's like staggering statistically high that they don't continue to control that after the midterm elections. So you want to push things through that. You want to get to be law. You've got about 18 months because when you get into that six month window now you've got all of the people that are missing for votes because they're in their districts campaigning or they maybe get a little bit nervous about what they may support. So to your point. Yes, 100% correct. The impact coming to your administration. But your ability to make those changes has to happen fast.

Yeah.

Good. Well, let's, let's get off tariffs and talk just briefly about interest rates. A lot of we can get off this fairly quick, but the, the president made a couple of. I was in a hotel room in Florida the other morning and I had CNBC on and they had a breaking news thing pop up that the President says that he's contemplating firing Fed Chairman Powell, which then he reeled back a couple of minutes later. But that's, you know, classic current president. Right. Is let me just float something and then I'll reel it back or change what I really meant. But you know, right now, you know, you've got Powell who's under this extreme pressure. Tom. I think, I think the numbers that. What did you say last week, 20 or 30% possibility of a rate cut.

July.

Speaking of poly market. Okay. Right. So look at that. The poly market is saying that there is a 4% chance of a 25 basis point decrease, 95% of nothing and obviously 1 percenter, near no chance of a 50 point change. I, I was handicapping a bit higher last week. I was saying I was thinking it was more of around a 20%. I'm still keeping that. I'm still going to keep my. Is that what's the meetings next week? I think so.

Yeah.

And you'll see here right. For the week of July 30th. So I guess that would be next week or somewhere in there.

Well, that. Yeah, that's the. So what does it say about the September meeting?

September 41 for a 25 basis point and October for a 51% so much higher in at least in terms of the betting world and the, and the people that are out there are saying But I think that and this I guess ties back to the article that we're just going through here right there. You know there's definitely some of the governors that are pushing harder now for that cut in the July timeframe. I don't know that the data that has come out suggests that it would not be, it would be a crazy decision to be made at this point. There's nothing that's causing us to go oh that would be a ridiculously stupid crazy decision. So I do think there is a again not high, maybe higher than the 4% there on polymarket but I think there's still a chance we could see something in July.

So I just looked at this in follow up too and it says will Trump try to fire Powell by August 31st 19% chance will trump fire Powell by July 31st 7% which is interesting. These are going to be kind of interesting to go back and look at because there's I read a thing yesterday about and I haven't dug deep into this but this whole thing with Powell and the, the remodeling of the offices and so forth but the article referenced fraud with the amount of money that was spent and again I don't want to cast aspersions on, on the Fed or Powell because I don't haven't read enough about it yet but there is a whole discussion and I think what was interesting about this particular article that's from CNBC is that was talking about not just Powell in general but it was talking about the way that the Fed works And you know I'm a big proponent of reevaluating. Mark, I don't know if you've heard know of this but we've talked about other heard us talk about on the show but you know the way we've got to this 2% inflation number in the in really globally is in I think it was the 70s. Was that right Tom? 70s or 80s. Yeah. So is 80s at the latest. Was a kind of some random politician not even a financial guy I don't think in New Zealand was being interviewed and the question came out of a pool of press people that said where do you think inflation should be at for a balanced economy? He said 2% and everybody said okay, globally right. And that I mean literally there's no science behind it. There's no package behind it that says this is why we're doing this and it's kind of funny to me. And I thought this article was a little bit interesting about, you know, this is. Former Fed Governor Kevin Marsh says we need regime change at the Fed and it's more than just Powell. Any takeaways from you guys on that?

And he's also, he's also advocating a alliance more with the Treasury Department so that, you know, the Treasury Department. Right. Are the people who collect and spend the money and the Fed is the people who govern the interest rates and, you know, can do other things related to that. And I think having, what he's saying is that it would not be any more than a collaboration. It's not like one works for the other or anything like that. But I think having more of a collaboration, I think being more aware of how the impact of these rates are on our deficit and our interest rate, I mean, I think it all makes intelligent sense. Yep. To do that and not just have a bunch of, you know, siloed decisions going on.

It's almost like, it's almost like the data at a distributor.

That's right. That's right.

And I think, I mean, a lot of the, you know, obviously the central banks are a, you know, prominent feature, you know, across the global economy. I think for me, what's really important here is you can't, it's all or all or nothing with this. You can't have a politically influenced Fed and be partially influenced. You either are completely influenced or you're not. Because the danger you have is right now they'd be influenced and then you'd say you definitely wouldn't want them to be influenced when you're going through election cycles and things like that. So you create kind of a dangerous precedent. And when we look at kind of the, Is it the Fed Reserve Act? I think it was way back. Was it 1913? I think I did my homework. Two objectives. One was regarding maximizing employment and the other one was stability of prices. Well, we've just talked earlier about how we haven't seen loads of inflation. So. And we also know our employment numbers look good. So you would argue they've got inflation under control. And yeah, the, you know, they, you know, unemployment's in a good place. So, and I, I mean, and then personally, my view is if, you know, if I'm in the, in the decision seat and I've got the President pushing me to do this, if I make the decision now and let's say it's a 50, 50 decision, it makes it look like I did it because the President told me to do it. Whereas if I hold off for another quarter, it makes it look more like actually you're not influencing me. And I just think there's a, you can look at the history of other countries where politicians have got involved in kind of interest rate decisions and things like that. And there's some pretty big cautionary tales there. So I'm all for the independents. The key is you put the right people in, you get the right decisions, and you have to just trust the process. Will they get it right every time? No. But should they ever get it disastrously wrong?

No, I think that those are very good points. I think that the challenge that we see in this setting is they relate to raise rates. And now Powell is so overly cautious and nervous about being wrong again. And then he's also digging his, apparently digging his heels in saying he's not going to be pressured by the President. I think he's in a no win situation at this point because, you know, he, he has said he wants to watch the data. The data is just kind of staying, you know, it's the stolic. Right. It's just kind of bouncing around it. There's, he needs to step up and make some decisions.

Yeah. And then if anybody wants an interesting little thing to do with it with a spreadsheet, what I would say you need to talk about the 2% growth. If you think of like a, I don't know, like a Mayan culture or something like that. Cultures that lasted or civilizations for 2000 years compound something like 2% for over 2000. And the easiest way to do it is take one, multiply it by 1.02 and drag the results of that down 2000 rows. Look how big that number is. It's colossal. So it's, it's interesting when we talk about the, you know, this, this, this need for growth every single time because some people say it's not sustainable, but it's what our whole economy is based on.

Yep.

So, so from that standpoint, just the market's tanking right now, by the way. Nasdaq's down 11, Dow Jones down 205. Stock NYSE is down 51. So not, not a great morning, I guess. I just saw that there was an announcement about a push for at least a 15 European tariff. So we'll see what plays out. But so back to the. And those were very valid points you shared, Mark. So let's talk about July and September. Mark, we put everybody in the spot here. Any Fed rate cuts in July from your standpoint?

No. Like I I agree. He's in a tough spot.

Zero chance.

I'm going to go with, I'm going to go with 4% because I, I might have seen that number somewhere.

Okay, Tom, you're at 20 still.

No, I'm still going to say that, yeah, I'm going to say there's a short, small chance. I'm not betting that it will, but I think there's a reasonable chance that something could happen.

I'm a little bit, I think I was at 30 or 40% last week or was I even higher? Might have been at 50. Yeah, no, I, I took. You were at 20 or 20 plus and I was higher than that. I, I, I'm still okay with 20, 25%. I think there are way too many things that can happen in that next, was that next 12 days or whatever it is. I think that there's just, I'm not a hundred percent confident that Powell will be in his job. It's, I think it's a high likelihood. But I, watching what's been going on this week and I think there's way too much to play out. It does, it makes, does it make sense if you look at it, if, if you knew that Powell was safe where he was, I would say yeah, probably, you know, 4%, whatever. But I, I just think there's way too much pressure going on. And he's getting now, in fact, this particular article that we just had up from with this former Fed governor Kevin Marsh, he's again back just using polymarkets research of the when you look at who will be the next Fed chair, it says 31% say no announcement by December of this year, 22% Scott Besant. But Scott Besant says he wants to stay at, was it treasury and he's got lots of work to do there. Right. And he certainly doesn't need a job. He's a billionaire hedge fund guy to start with. And right behind that at 20% is this Kevin Marsh. So you've already got some of these people, including some people who are current Fed governors who are coming out and saying, yeah, you know what, July is fine. We've had two or three of them already say that, that they can see an argument for that. And you get another one or two of those guys put a little bit of, you know, popping, popping up with that. I mean, Powell probably isn't as bad a place right now as anybody in this country as far as with their job, you know.

All right, well, on July 30th or whenever our next show is after July 30th. We'll have to replay this segment and.

Yeah.

See where we all end up on it. But.

Yeah, so, so Mark says four use. What's your number, Tom? I'm saying 20, but 20 and I'm still at 30.

Okay. All right. You're the most, you're the most bullish on the one.

The steak last year.

Yeah. Okay.

You know what's funny though, Mark? I bought Thomas steak again on Tuesday night.

You did, huh?

Yeah, I bought Tom half a. Yeah. Half a steak. How's that? So we'll have what, what we'll need to do is Tom needs to put his company card out. We'll do that and then we'll call it. We'll put it on his expense report next time and then we'll call it even. All good. Hey, Bob's with us. Misty Bob. Bob Britton joined us this morning. So Bob gives. Gives us an aloha from Texas, so.

That's right.

Very good. All right, let's roll into our manufacturing distribution segment and get through a couple of these. Bob says we'll be happy to see Powell start the next chapter of his life. That's great. Appreciate that comment. So a couple of articles in manufacturing distribution. Tom the one and Mark the one that I wanted. We talked a lot about Big Beautiful Bill kind of ties into the tariff stuff. We talked about. Any takeaways from either of you on that article from distribution strategy. That was a nice recap. They did.

Yeah. I, I mean I, I read a lot of what David Gordon and the, the team do at. So I know that that's Ian, isn't it a distribution strategy, Ian's company?

I think this article was actually written by. I don't know if they. Yeah, Don wrote Davis that I mentioned earlier. They've got, they've got Don Davis and Mark Brohan. Right. Doing a lot more writing for them now, which is great.

Yeah. Yeah. So the DSG stuff and. Yeah. And I do read David Gordon stuff as well. But yes, it's really useful when you start to read these because the key point there. 870 page. Bill and I generally might. One of my kind of mantras in life is complexity is never your friend. And so digesting what does this mean and actually less about what does it mean. But how is it actually then going to affect us? How's this going to play out? Just like the tariff scenario. How is it going to play out? It just adds that to that complexity pot that we're, we're already dealing with. And so Yeah, I think there's, you know, I think everyone accepts there's going to be some big winners and losers. And so the key point now is who are they going to be?

Yeah, there's a good summary here. You can download Kevin. I believe it's from the company that.

Taylor Saint IPR Economics. Exactly right.

Yeah. And there's a free download. I guess they kind of ran it through AI and summarize it all pretty quickly. And their big winners on their summary there were oil and gas, mining, electric, defense, aerospace. There was actually quite a few of them. The biggest losers were going to be renewable healthcare providers and education where their take from those things that were there so and so for as it relates to distribution. Right. If you're doing projects with wind, solar, EVs, things along those lines, then yeah, there could be definitely an impact. But if you're oil and in fact I think you mentioned Mike Mortensen. I think he quoted in there or mentioned in there as, you know, a lot of the oil and gas things that are going on in Alaska and Canada.

Well, drill baby, drill, right?

Yeah, yeah.

Yeah. I also read that EV manufacturers putting them in with the kind of the renewables sector would struggle. So perhaps that's why we saw, you know, Musk very unhappy with this bill because. Yeah, Electro, you know, kind of. Yeah, the combustion engine has almost got a, you know, a new backer as a part of this bill. The bit that I find interesting as well is the story below about stronger skilled workforce. We've just said that the education system is going to struggle and yet we need a stronger skilled workforce. That's where I kind of see the conflict as well. We're not talking about workforce, skilled workforce. And I was on a call just recently and we were talking about going back to the tariff thing and the, one of the objectives of bringing manufacturing back to the U.S. one is building the infrastructure. But the second part is the skills. A lot of these skills are retiring or have retired. And so it's, you know, these are not things that are a quick win. So it's really, it's going to be again, interesting to see how that plays out.

Yep. We're going to dive into that article in just a minute. So funny. Mike Mortensen's with us this morning. Happy to have you with us, Mike. Mike says Alaska for the win on that. So that's, that's good. The, the coin that we coined the phrase is that the drill baby drill phrase. But in Mike's business, right. They're big working with all different types of construction companies and mining companies and drilling companies. They do hoses and fittings and connected products and so forth. So great business there. But you know, Tom, I wanted to catch before we get too far off in moving because I do want to talk about this workforce article that we had and tying it to reshoring and so forth is Paul made a Kennedy with dsg made a good comment. He says if Paul gets fired and is not in place of bigger issue than the July reduction. Waller was talking this morning, he said from the St. Louis Fed saying that September would be fine as well. And I think that my takeaway from Paul's comment, and I would have liked to have listened to some of that myself, was that, you know, end of the day it's six weeks away. Now in a normal environment, in a normal economy, I would say six weeks away, probably not as big of a deal. And it's probably not a big deal. But when you look at the volatility of this particular administration, there's some wild things that could happen in six weeks, too. So I'm going to want to go back and kind of check with that. Maybe I can check that Bloomberg interview that Paul's mentioned.

But thanks for that feedback and Kevin, on that, I think, you know, it is such a fine balancing act. You are Fed that are not reckless.

Yeah.

But at the same time, you do want them to make decisions and, you know, and respond to, you know, to the market. And yeah, like you said, Powell's job is probably one of the most difficult out there right now.

There's no win. Right?

Yeah.

Right. Because right now if he, even if the, I would almost say even if the data in the next 10, 12 days gives him the window to go, okay, let's do it, then he's going to be accused of kowtowing to the president. And if he digs in too much and starts talking about, you know, or continues to just hold this, I mean, that he's not a dynamic guy. So, you know, that's that one of the challenges. But when you listen to him talk, it's like you start having to kind of wonder at this, at this stage. I didn't think this nine months ago when we were talking about just interest rates in general. But at this stage, it feels like he's digging his heels in and is like, well, I'm not giving in. Well, that doesn't help anybody. Right. And I'm sure that's where the administration is looking at things now is, well, let's get somebody in there that 1 is more friendly to us, but 2 isn't afraid to act. And I think there's just, like I said, I just don't think there's any win here, so.

Yeah, and on drill, baby, drill, the only time I don't want to hear that is when I go to the dentist. Yep.

Well, agreed. But it's a common occurrence as we get older. Right. So good. Well, thanks for that feedback with Paul and Mike. We appreciate that. Tom, you want to dive in a little bit on this workforce topic that Mark brought up as well?

Yeah. Yep. So where do you want to. Where do you want to go?

Well, I think it's an interesting thing, and it just, it really triggered. This is an article from industryweek.com it's from the 14th. It says a stronger skilled workforce would boost reshoring. And it kind of goes to Mark's point. And I think we've got a. Got a chart that kind of goes with that as well. But what is. There's. That's the. Yeah, there's that one. And there's also. That's fine. We can. We can look at that one as well.

So two.

Two sides of this. Right. It makes me think about, with this as we talk all the time about all the good things that could come from reshoring. Right. If we can get interest rates adjusted, if we can get our interest rates moving at all. Right. If we can get some tax breaks for manufacturing and we can bring not just near shoring, but on shoring or reshoring, as it says here. And bringing these businesses back to the US it just drives all kinds of great things. We talk about all the jobs. The other side of that is, do we have enough skilled workers? And it's been interesting. Remember, remember the show that was around in the early 2000s? It was really popular, Dirty Jobs. Remember that show? Yeah. So that guy. Now, Mike Rowe is the. I think he actually developed the concept for the show. He's got some other similar shows still, but he's traveling the country now, talking at schools and universities. And he's like, right on the. Peter Thiel, the billionaire venture capitalist that talks about. Literally, Peter Thiel has paid people not to go to college and to go get into the workforce because it's so easy to learn now. Right. Peter Thiel's whole thing is just go start a company. Right. So he's literally paid people to go do startups in the technology world in Silicon Valley. Well, Mike Rowe is saying is, hey, you know what? You can make $175,000 as a plumber, you can make $225,000 a year with, you know, putting some overtime in and stuff. As a welder, why do you need to go to college? Because we. Not only is it good for you, but the workforce needs these skilled workers. Right. And when we start thinking about distribution, if you can't find enough plumbers, your plumbing and H Vac distributor is going to suffer because jobs aren't getting done right at the end of the day. So it's interesting. And then we have the other side of that, which is the number of employees that are over 55, which this chart talks about with retirement, you know, imminent. Mark. You know, I. The days run together for me. Were you at the. At the Distribution Strategy Group AI event in Chicago?

I was, yes.

I thought we talked there. Yeah. I was just thinking back to our long hallway chat. Long, long hallway chat at ISA in person. But at that event, I remember talking with the era, listening to the chief. I think he was chief Information officer from Sonopar that was there, the large electrical distributor. And what. What do you remember was. It was like 12 or 1500 people that are in critical positions in their organization that are retiring over. Don't quote me here, but I think it was. I think it was the next three years they have like 12 to 1500 people in key knowledge positions and trying to figure out how to get that knowledge.

Yeah, yeah. I mean, it's a real challenge because so what we're seeing here is an aging workforce. Maybe society has almost made these jobs uncool. I don't know what it is.

Gotta be a finance bro.

Yeah. I mean, nobody wants to become accountants these days either. I don't understand why. It's a wonderful career. But the thing for me is maybe because you think about 50 years ago, the only jobs you could get were the jobs that were in your town. You couldn't actually do a remote job or people didn't, you know, didn't travel as much. That changed everything. And so, yeah, it worries me because that line, that first line going up, if you were to put that into the number of people that should have been getting trained 10, 20 years ago that are not now. Because we're not just about skilled. We're talking about experience as well here. You know, you go to some of these. I've been and done some of these factory tours. The skills these people have and that they actually overlook these skills. They're like, oh, I just. And you're like, no, what you do is an art. That art is being Lost and that that's a real danger, you know, for you know, for bringing manufacturing back. We need to get people to your point into these jobs. Not everybody has to go and get, you know, kind of, you know, go through universities and things to earn the big money again. It's supply and demand. If there's no plumbers and plumbing work needs to be done, it's going to be a highly paid profession.

So go ahead Tom.

So let me ask you a question on this or both of you. We have an article I think coming up, I don't know if it's in this section or whatever is that, you know, there's talk in the next basically 15 years that robots will have the majority of these jobs. Right. So what is the incentive if I'm coming out of college right now to go get trained in a manufacturing role or you know, some role that it's basically more of the quote blue collar role within an organization. Knowing that there's a reasonable probability that I will not have a job in 10 or 15 years due to robotics completely that are there. So what is the incentive for me to do that? Knowing that it could be short lived. I think otherwise there could be a lot of incentive. Right. If you're. I think there's a couple things. I think there is that. I think that the working conditions. It was funny. We were at a distributor, large distributor a couple weeks ago and we were sitting in their nice conference room and all cool and air conditioned and whatever and we walked out into their warehouse and it was like 110 degrees and humid and all that kind of stuff and a. But and it's like would I want to work in that environment day in and day out? It's like, you know, these are, I think these are all things that we have to be thinking about. And then you know, as Marty's saying here.

Right.

Is mentoring is required to do that. But I have to have the people that are willing and excited to be mentored and wanting to take these jobs going forward. And I think there's a real challenge on just the environment as well as the potential risk.

I think there's two sides to what you're saying here Tom. And let's unpack that a little bit. Right, right. So there are the factory jobs that are assembly line. Let's just use those as an example. In fact it was interesting. I had a, a good friend and, and I'm not going to name him because I'm going to mention something that came up that was a, could be a challenge for his company. But he shared with me a LinkedIn post about Tesla eyeing two and a half billion dollar savings with replacing 10% of staff with their optimist robot. So not 10% of Tesla staff, 10% I'm sure of factory staff. So that means 90% of those jobs are going to be there and let's just say in the next five, 10 years probably 50% of those jobs are still going to be there from that standpoint because we're never going to completely replace people with those robots. The interesting so other side of that is there's, I'm going to hit one point and then come back the discussion that we were having because this from an industrial and industrial safety distributor that we were literally, we were text messaging about this last night at like 10 o'.

Clock.

His comment was because his company does business with Tesla is none of those robots. And that 10% wear personal protective equipment, at least not as we know it today of what we would sell for a human in those jobs. Right. So now we start. It's not just that, hey, you know.

The trickle down, there's a big trick. Great point.

Right. Way to put the trickle down.

Right, right.

Yeah, yeah.

So I think that was a unique piece. But let's. Tom, can we go back to your chart real quick? So I do think Tom is to answer your question is there's kind of two sides. There's the factory automation that will come into some of those factories. Then there's the tradesman. Right. We are maybe we'll have at some point a robot that can put a roof on a building. Probably likelihood the case but that's down the road. But it's probably going to be a long time before we have a robot that is truly an electrician that's going to come pull wires and, and troubleshoot things. Might be, but you know, those are some of those trades and the reality of it is you can make a lot of money between now and then. And a smart person could say okay, you know, if I'm thinking about if I'm coming out of school and I've talked to my, my youngest son about this who's just a couple years out of school and still trying to settle into, you know, what is the career look like is I've been pushing him towards a trade because with the idea, because if you're smart enough with the trade, you get in, make a bunch of money between now and when that happens, the good people are going to go, you know, take the years that it takes to become a journeyman and then go out and start their own business in that setting where you can make a lot of money. But you could also become, as we've talked about in so many different categories, you could become the expert on AI or robotics in that field and then go make even more money because you're that mark. We, we have a term we use in our company. We call it Ralph. And Ralph is the guy, we always refer to him as at the, at the distributor level that, you know, Ralph's the guy that's in customer service that's been there for 32 years. He knows everything that's ever happened in the company. He can tell you when you ask for a file or data that says, oh, well, you know what? That's in the branch number 27, back corner of the warehouse, there's three file cabinets that have a moving blanket. Over it's the cabinet to the left and the second drawer down, about halfway back. I mean, there's a Ralph. Right? And every industry has those Ralphs.

Yeah. I mean, while we've got this chart on here, this is really interesting. So 10% of the manufacturing workforce are going to become robots. Well, if we look here, 25% of the workforce are over 55. You sell. And so in the next 10 years, what you're telling me is 25% of the workforce are going to retire and you're telling me that 10% of the workforce will become robots. So that makes me less concerned if I, you know, really kind of, kind of broad, ugly numbers. The other thing you mentioned, Tom, about these hot, sweaty warehouses, and I'm all for keeping employees safe and everything, but when I look back at my, my memories, even as a student working in the summer months in, you know, in factories and things, we used to use the term character building. There's almost a rite of passage that people go through and it makes you appreciate other things and you, yeah, you learn and you have a lot more respect for certain things. The, you know, life is not without its challenges. There's definitely things we can do, but we definitely do not want to get to a place where we basically, robots do everything we don't want to do because we lose purpose, you know, and that's what's most important to us. So I do think this is going to be this continued uncertainty around robots and things, and there's certainly going to be areas where we're going to be uncomfortable with how this evolves. And I also believe it would get worse before you got better. There'll be things where we'll be like, oh, we should not have done that. So to his point about buying safety equipment, well, that's also 10% of people who are not buying anything, including Tesla cars. So ultimately the more we use AI, the fewer consumers we have in the marketplace. Unless I start driving the Tesla cars as robots and then. And get their own bank or we.

Need to put hard hats and.

Yeah.

And orange jackets on the robots. Who knows.

Yeah.

Well there will be. I mean there will be probably a new level of PPE that comes out for some of those. But my guess is those are probably going to be less commoditized that you would buy from a distributor and were probably built into the robot in that setting. Before we move past this though, one kind of last. Excuse me comment. From my standpoint is if we think back to the chart that we had and Mark, I appreciate you your analysis on that is I think we look at that, we could probably take that chart. And I was going back to mentioning the gentleman from Sonopar that was at the DSG event. Mark. I don't know if you remember that his presentation but. And that discussion is he wasn't talking about trades people or warehouse people. He was talking about knowledge workers within there. And when I use knowledge worker it's field sales, inside sales operations, supply chain people across the board. That is one of the biggest challenges right now that I think companies are really facing in this setting is when you have an aging workforce and you have a completely different mindset of those people. Right. To your point, Mark, about, you know, it's character building. Right. Bob here called it in his comments. Sweat equity. Right. Is in. Hopefully we've all done. I have a laundry list of places that I've worked when in my younger days that were not pleasant. But those give you a different perspective on life. I had an opportunity for many years as a reserve firefighter to go into burning buildings and wildland fires and completely different perspective on how I go about life. We have a generation now that is more interested in how much I can make while I can still be on my phone all day and doing things my way. And there's a balancing act with that. But now we have that generation retiring that has that internal or intrinsic knowledge base because most companies have not done a good job of moving that knowledge base into technology that can make it easily passed on. Getting ready for the lead smart technology and our lead smart channel cloud product plug here coming in a moment. But that is a critical space that so many distributors find themselves in now. The quality of the worker. And what they're willing to do is in many instances less. I won't say all. You've got the hard workers that have been around that are controlling, I call him Ralph, right. That has this knowledge that are getting ready to retire. And most companies don't have an action plan in place to transfer that data. We look at it with our customers from a standpoint is when you're tying into your ERP data and your E commerce data and watching all these different customer journeys and you're even bringing in data, say from, you know, your, your technology, right. At rebate management software comes into our platform and then we look at things like our partners at Moblico that have a great mobile messaging solution and we can tag things from mobile messaging. Ralph becomes part of the feeding. And as we talk about AI models getting trained, Ralph trains before he leaves the technology, and the technology then can help train that new person.

And Kevin, what I think there's a word I use a lot here, which is you have data, but to make it meaningful, you need context. And that's what Ralph gives to that data.

RALPH makes it actionable because he understands the context. Right. You were talking about another company that makes an AI software solution in the market. That's the biggest challenge that that software has is it doesn't understand context. Right. Of a conversation. Ralph does. Right. And RALPH knows that when I'm talking to somebody about this, this piece of hose, that hose only works with these fittings. But if an AI solution were to come back and say, sell him a hard hat, right. Because it doesn't understand the context of the conversation becomes problematic. And that's what that knowledge transfer really helps. Because so much of AI doesn't necessarily, can't necessarily work with the context. But when you have that knowledge base from Ralph in a platform where it can be accessed by humans as part of their training and so forth, and just some great search tools that go with it, now you can start bringing the context and the experience that RALPH brings in that setting.

And to your point here, a real example, I used to work a lot in support of plumbing and heating. Quite often when one part fails, other parts fail. What RALPH will do is when somebody comes in for a part, he will say to them, you'll probably find when you've put that in, you're going to realize you need to put this in as well. So why don't you take this as well? If you don't need it, bring it back.

Right.

You won't see that in the data because Normally they'll take that one piece which is one transaction and then there'll be a completely separate transaction that is unlinked for another piece.

Right.

Ralph brings them together.

I think that's, I think that's. I'm sorry Mark, I was interrupting you. You weren't done.

No, I was just going to say. And people, your Ralphs of this world don't even realize that value that they add. They just, it's just second nature to them. But that is so powerful in itself.

That's great. I think we'll get, we will get to a place with AI where it will know that. The challenge though is we don't want a group of people working in our distribution company or our manufacturing company who them in themselves become robots because everything is fed to them. When that data of the why it's making the decision is also because we had a knowledge transfer from Ralph before he retired and it's all the, you know, as we start talking about structured and unstructured data as we put that, all of Ralph's notes right are also in the system. Now we can start adding context to why this suggestion is being made within the technology.

Yeah, yeah, completely agree.

I think we need to give Ralph a raise.

Yeah.

It'S astounding. So Tom, why don't we kind of jump ahead into our next segment before because we're going to run out of time and have not gone anywhere else in this. Anything in our E commerce and marketing segment stand out to you guys? The article From Martech on B2B buyers wanting less sales contact stood out to me but wanted to see what you guys thought first.

Well, that, that article, I mean the B2B, you know, people wanting to do things more independent of a sales rep. That's been a situation for many years that hasn't changed, it just continues to evolve. Expand. What I found interesting about the article was it wasn't so much the, the fact that they don't want the interaction with the salesperson, but when they do want an interaction with the salesperson it's at very specific key points in the buying cycle. Right.

And I think that's that chart handy.

I think. So was it next one.

There you go.

Yep. Make this a little bigger. Yeah. So I guess the blue here is when they would potentially want the salesperson to be involved and then they want self service tools over here the biggest one is fix a problem or issue with something my company already bought. Okay. That's post sale. So let's take that away. Search for general information, prepare if you look here, prepare for potential risk involved in making a purchase. If I look at the sales cycles that we've been involved in, Kevin, recently, a large percentage of the conversation that we have is not about our products or our features or all of that. It's how are we going to mitigate the risks of adoption, mitigate the risk of people not wanting to use it, mitigate risks of their data not being quite ready, all of those types of things. And you know, because there's a fear of messing up, right, that is stronger than the fear of missing out. And so I think that's probably the area if I'm in this. And I think this is an area that, you know, any sales organization should be thinking through is, okay, how do I level up another level with some of these in my sales cycle? So I can answer those questions and, and not just answer with a yes, no, of course it's not a problem. But really go into and explain and understand so that they understand how we would go about or work with them to go about addressing whatever issues are coming into the equation.

I think this as well really ties into some of the other bits we've talked about, like the AI and things like that, where there's opportunities for business. We know that, for example, working with your technology as the customer, consumer demand is shifting. It means the business can be shifting. To your point about your ralphs. Well, the role of your RALPH is changing the consumer. We've seen generational shift and so it's really important to be up to date with this because what I've seen is distributors who don't keep up and just kind of allow the markets, they just flow with the market. It's a dangerous place to be because what happens is your relationships become less about people and more about price. And that's not where you want to be. One of the biggest things as well you will see as a distributor is if your customers start to buy online. Hence why we saw the article about private equity. Again, buying up. These online businesses are much better at upselling. If a consumer goes online. Oh, sorry, when they used to come into the your branch and you had the relationship, you could upsell to them. But when they phone you up or you know, they used to still send through faxes, you would have order takers and you would lose that upsell opportunity. So these smarter businesses are not allowing disruptors to take away their upsell opportunities. Whereas if you just go along for the ride, you will lose the upsell. There'll always be volume. I'm Confident of that. There'll always be, there'll always be a customer who wants to give you an order. The question is, is it the types of orders you actually want? And that's where, for example, your technology.

Really comes in at the margin, right?

Yeah, but, but if you think about it, Mark, the reason, right, that we want self serve in a B2B transaction is because we don't want the noise from the sales rep. They're not adding the value. If they were adding more value across.

The sales cycle, we would welcome.

And not just adding value, but we.

Don'T feel like we're being.

Tommy, you're a little underwater. There we go.

Okay, but I wanted to hit just on Paul's comment or his equation here, right. Fear of screwing up is greater than fear of missing out one of the mistakes. And there's a great book on this if you haven't read it. It's from. It's called the Jolt Effect by Matt Dixon. And what, what they talk about in there is how do you. Most salespeople, when they want, when they fear, you know, when there's a fear of messing up or, or screwing up, they go back to. But look at all these features. Look at all these things. We're going to just, you know, they try and keep reinforcing the features and they don't really address the real problem, which is the fear of screwing up. So how do you change your narrative, how do you change your conversation, all of that stuff? When that fear of screwing up, a fear messing up comes together again, that's adding more value because you're actually showing that you're understanding that these customers are working for. And I know in our world, right, it's a real concern with our customers as to whether or not a salesperson is going to embrace the use of a CRM tool. And we spend a lot of time helping them understand how we will cause that embrace of this to occur. Not just try and go, oh, but look at all these great features over here. How can they live without. Right. It's a very much of a different piece there.

Yeah, yeah, go ahead, Mark.

I was going to say, personally, I feel the role of the sales rep is evolving and needs to evolve. To your point, future sales reps are very technologically and data driven because the consumer one is saying my interaction with the sales rep needs to be different. So I think like, with any change, there's always that initial resistance. But I do see, yeah, the, the businesses that are winning are the businesses that are able to actually get their CRMs working effectively for them.

Well, it takes a smart CRM that can not just a. You know, because historically, right. When we talk about CRM, it's, hey, here's. Here's a tool. Contacts, accounts. Go put some notes in. Nobody wants to do that.

Right.

But when we're flooded with data, our philosophy is the reverse of traditional CRM companies, which is why we call it smart CRM. Our view is the idea that says at least 60% of the data in the CRM, or in our case, smart CRM should be from the company to the salesperson to enable them to make for a better customer experience. Because the days of. And specifically as we're talking about, even just the chart we were just looking at, right. The reason that people are migrating that direction is a couple of reasons. One is it's generational of how, you know, right now I think we're approaching 70% of B2B buyers or millennials. They buy differently, they research differently. They might be watching Monday Night Football, but they're on their phone looking at all of the vendors of XYZ widget, and they make different decisions and they're not interested. And can somebody bring them donuts on Tuesday or, you know, tacos on Thursday or whatever it is? Because they're getting doordash anyways, right? So their mindset is a difference and a shift from that of how they want to go about it. Where they want to be able to see somebody is when somebody can truly bring value. Maybe it's an engineered solution or there's some product knowledge, or it's Ralph that calls. And when Ralph comes in, we learn something. So it's a different, really shift there. I'll. I'll apply that towards. I just have had the most horrible week with airline challenges and most specifically United. And at Denver Airport, where I spent almost nine hours trying to get to Orlando last Sunday, which is why I left on Sunday, was to be there early on Monday, not to be on a red eye early Monday. The experience was so poorly handled because they have taken all of the people out of the discussion, literally. My communication with United happened on Twitter to get a response because they're so afraid of bad, you know, Twitter conversations happening. Because people have. And the reason I share this is companies are migrating from personal experience to full online or full chatbot experiences versus taking the customer on a journey of you can communicate however you want. And this particular chart that we were just looking at, and we've talked about this many times on this show, is what people are really saying is I want to decide how I communicate with you. There will be times I want a salesperson there there will be times I want to chat with your chatbot on your website about a spec There will be times I want to make an online purchase or there will be times is we've discussed something but I'm going to go ahead and do my punch out on your website.

Right.

It's choice I think is what people are looking at and I think it's. It's really wrong for companies to be doing what we're seeing so many multinational companies doing. I was just beating up on United for a minute because of my frustration is with with how they've handled things in this is it's when you go from cold turkey to what you want people to do versus listening to what the customer is saying they want in that experience. Big difference there. So Tom, before we jump ahead, we've had this is a really good conversation. I'm going to make a little plug here for our friend Bob that joins this show regularly. Bob Britton is hosting a roundtable discussion. You can reach out if you want information about it. Just send me a direct message on LinkedIn or look Bob up. But it's coming up at the end of the month. It's on the 30th. Revenue generation strategies for CEOs and founders in 25 and beyond. But it's not just I don't think about CEOs and founders because they're talking about what's changed in the way buyers engage with sales teams and how revenue leaders should respond. A series of different topics that go right into what we're talking about. So Bob Britton, B R I T T O N he's the founder of Revenue Generation Strategies. This is going to be a good session.

I think we're both going to be on there.

Cool.

Good. Hey, I just wanted to hit the and I know we're going to have to wrap up here but there's some intelligent comments here that I think we should hit. Marty, I you know, first one is brand value has to be elevated for sales value to be elevated. And we've talked a lot about this over the time. But that brand value certainly if that, you know, it's what's that aftertaste. Right. Brand value is the aftertaste that you experience when you think of a company that's there when that aftertaste is positive. It certainly gives you more leeway and more willingness to deal with the salespeople. I wanted to, you know, in Paul's Comment this is, I think really accurate is how much, how much, you know, fear of screwing up as a reflection of the inability to effectively do change management within a company. Boy, we could do a whole episode on that and I'll save that for another day.

Well, it's really, really funny because just was it Tuesday had a lengthy discussion with two of Paul's senior leaders about the change management things they're working on in their business. So they're, they're tackling that full speed ahead. So that's, that's a great comment from that setting.

But you know, I was just gonna say, Kevin, I would say my career, the best bosses I've ever had and would encourage me to take, you know, to actually take that step because their view was that's how as a business you progress. So super powerful comment.

No, Very good. Before Tom, I want to also hit John Gunderson's comment before we go. Before you do that, Marty, if you're still listening, we have only done it a few times, but we also now have our second show which is around the Horn 2.0, which is traditional podcast conversation. Hit three, four topics with somebody. Marty, we need to get you on for that show to talk about brand value because Marty's comment brand value has to be elevated for sales value to be elevated. And that is a phenomenal conversation to have. And Marty works closely with a lot of distributors. Marty's a former chief marketing officer at Affiliated Distributors, a large buying group that we're partnered with at Lead Smart. Marty's done some advising for our company at Lead Smart and is a phenomenal business leader and marketer. So I think Tom, we should get Marty on and let's have that discussion. We can all wear our matching shirts. Let's catch Mr. Gunderson's comment before we wrap up for the day. So John talks about self service. He says what is maddening for channel leaders as a customer may want self service on Monday at 10am and then call in for full service at 11am that creates for salespeople a false narrative that on Monday the customer only wants full service. Customers like all of us are widely inconsistent buying and communicating habits. Text call Visit Social to an order written by on A on a 2 by 4. So I don't know if we can catch the rest of this. We lost the rest of that quote. We didn't get it all John, but it was a quote that he had been given by the CEO of Crescent Electric. But I think that is John encompassing though as a challenge. I think what it really is though is an opportunity for distributors to meet their buyer where their buyer wants to be. And it's not going to be easy. John just outlined and did a great job. I have deep respect for John and he's a good friend. I think my thought is pushing back on what that experience right now is. It doesn't sound fun and friendly. What he just described about full service at 10am and or 11am and self service at 10am but the buyer is describing who and what they are now. And it's not the same buyer that we sold to 10 years ago. And our businesses are going to need to evolve or at least find a common ground with those people.

And I think we'll wrap up with Bob's comment. Here is how they buy will continuously evolve. The reason why they buy has not and will not change.

And that's a mic drop moment right there.

That's right. I think that's a good way to end up because again, if you keep reinforcing the why, handling the potential fear of screwing up add value, put the. I mean we've kind of put the pieces of the puzzle here together today. You know, they'll want to deal with your salespeople.

Well, it reinforces Marty point about brand value.

Yep, exactly right.

And, and that is not. Mark, I don't know your experience in your travels, but my experiences and 35 years in distribution manufacturing is a focus on brand value is a conversation you hear few and far between. That's different than saying we updated our logo.

Right.

That's different than saying we have new signs at our branches. Brand. That's not brand. Brand is the why and the feel. Right. And what comes from doing business with your organization. So we're gonna get Marty on. We'll have that discussion.

All right. Well, I think we got through, I don't know, maybe half the newsletter today.

That's more than normal.

At least we got out of economy, so that was good.

Yeah. But we had some, some, some additional good articles. Let's just hit real quick in this week's newsletter. Again, around the Horn wholesale distribution newsletter. If you don't get that, send us an email at hello lead smart tech.com jump on LinkedIn and share that. Ask for the request to get that through LinkedIn. Or we have a website for the podcast www.aroundthehornpod.com. we'll get that out to you. There's a great article here that Border States does. It's not even an article. It's just their research. Tommy just passed it there we go they do a commodity update on a regular basis and that shows kind of where things are at from purchasing power and prices and different commodities whether it's copper or PVC pipe or whatever. That gives you some pretty good insight into that as well. Um, let's just kind of scroll through there Tom and we'll kind of catch. We just talked about that B2B buyer section. We'll move past that. And in our technology and cybersecurity and AI article there's a few good ones in there. There's tying into our robot discussion earlier. There's a good article there about futurists said that robots will upend work within 20 years. So kind of that article will tie back to that 20 year point Tom, of you know your comment about why would I want to go get that factory job at this high paying if it's not going to be there? We've got it. And then my comment is we've got a curve that will come with these things. So a few good articles in here about cyber security as well. Interesting. At the event we were at earlier this week we talked to a manufacturer and a distributor who had recently within the last year had under gone through a pretty major cyber attack. So it's happening out there. We need to stay on top of that. So anything else out of these that caught your guys attention? We don't need to go in depth.

But just reference I would recommend just you know there's some good articles in here. Maybe we'll hit some of them again next week or try and incorporate them because there's a couple in here that would have been good to talk about but very good. And so we made it 150 mark. Really amazing insights, really appreciated it. Really good stuff. And I want to come back.

Absolutely. I want to talk about my summer job checking that there was a straw in every single kind of WD40. That was my character building moment and I think everybody should share what was their character building moment. But yeah, absolutely, this has been a blast. Thank you.

That is awesome.

I worked in a liquor store Mark. And you don't want to know all the character building that we did there.

I did some character building at the liquor store Tom worked at.

That's right.

You know I have worked probably five or six different ones from construction sites, labor laborer to some factory val, a valve factory that I did work at. But I think one of my big ones was I worked in LA and Long beach harbor for a while and I worked for a courier company that we brought mail and other documents out that had to have a person with them to be signed for. And you know when you're climbing the side of a supertanker that's four stories high at actually six stories high at 4am and it's windy and foggy and seas are moving and you're climbing a rope ladder up the side that that reminds you that that's a well earned $6 an hour. So I did that for a while and then I quickly realized that I also worked part time at a, at a continental dessert and and cappuccino and dessert coffee place and that was the same $6 an hour with tips with hot girls coming in all the time when I was a teenager so that that harbor work character built and said I I can make the same money and have more fun somewhere else. So I got a handful of them. We'll have to chat about those over, over an iced tea one of these days at an event we'll get to. So Tom, anything else before we jump for the day?

Let's wrap up. Thanks everybody for sticking around. Great comments and really appreciate it.

Have a great weekend. Be kind, be safe and do good things.

Thanks everyone.

Thanks.

The way buyers engage with sales teams and how revenue leaders should respond. A series of different topics that go right into what we're talking about. So Bob Britton, B R I T T O N He's the founder of Revenue Generation Strategies. This is going to be a good session.

I think we're both going to be on there too. Cool. Good. Hey, I just wanted to hit the, and I know we're going to have to wrap up here, but there's some intelligent comments here that I think we should hit. Marty, I, you know, first one is brand value has to be elevated for sales value to be elevated. And we've talked a lot about this over the time. But that brand value certainly if that, you know, it's, it's. What's that? Aftertaste. Right. Brand value is the aftertaste that you experience when you think of a company that's there when that aftertaste is positive. It certainly gives you more leeway and more willingness to deal with the salespeople. I wanted to, you know, in, in Paul's comment, this is I think really accurate is how much, how much, you know, fear of screwing up is a reflection of the inability to, to effectively do change management within a company. Boy, we could do a whole episode on that and I'll save that for another day.

Well, it's really, really funny because just was it Tuesday had a lengthy discussion with two of Paul's senior leaders about the change management, things they're working on in their business. So they're tackling that full speed ahead. So that's a great comment from that setting.

But you know, I was just going to say, Kevin, I would say my career, the best bosses I've ever had and would encourage me to take, you know, to actually take that step because their view was that's how as a business you progress. So super powerful comment.

No, very good. Before Tom, I want to also hit John Gunderson's comment before we go. Before you do that, Marty, if you're still listening, we have only done it a few times, but we also now have our second show which is around the Horn 2.0, which is traditional podcast conversation. Hit three, four topics with somebody. Marty, we need to get you on for that show to talk about brand value because Marty's comment brand value has to be elevated for sales value to be elevated. And that is a phenomenal conversation to have. And Marty works closely with a lot of distributors. Marty's the former chief marketing officer at Affiliated Distributors, a large buying group that we're partnered with at Lead Smart. Marty's done some advising for our company at Lead Smart and is a phenomenal business leader and marketer. So I think, Tom, we should get Marty on and let's have that discussion. We can all wear our matching shirts. Let's catch Mr. Gunderson's comment before we wrap up for the day. So John talks about self service. He says what is maddening for channel leaders as a customer may want self service on Monday at 10am and then call in for full service at 11am that creates for salespeople a false narrative that on Monday the customer only wants full service. Customers like all of us, are widely inconsistent buying and communicating habits. Text call visit social to an order written by on A on a 2 by 4. So I don't know if we can catch the rest of this. We lost the rest of that quote. We didn't get it all John, but it was a quote that he had been given by the CEO of Crescent Electric. But I think that is John encompassing though as a challenge. I think what it really is though is an opportunity for distributors to meet their buyer where their buyer wants to be. And it's not going to be easy. John just outlined and did a great job. I have deep respect for John and he's a good friend. I think my thought is pushing back on what that experience right now is. It doesn't sound fun and friendly. What he just described about full service at 10am and or 11am and self service at 10am but the buyer is describing who and what they are now. And it's not the same buyer that we sold to 10 years ago. And our businesses are going to need to evolve or at least find a common ground with those people.

And I think we'll wrap up with Bob's comment. Here is how they buy will continuously evolve. The reason why they buy has not and will not change.

That's a mic drop moment right there.

That's right. I think that's a good way to end up because again, if you keep reinforcing the why, handling the potential fear of screwing up add value, put the, I mean we've kind of put the pieces of the puzzle here together today. You know, they'll want to deal with your salespeople.

Well, it reinforces Marty point about brand value.

Yep, exactly right.

And, and that is not Mark, I don't know your experience in your travels, but my experiences and 35 years in distribution. Manufacturing is a focus on brand value is a conversation you hear few and far between. That's different than saying we updated our logo. Right. That's different than saying we have new signs at our branches.

Brand.

That's not brand. Brand is the why and the feel. Right. And what comes from doing business with your organization. So we're get Marty on. We'll have that discussion.

All right. Well, I think we got through, I don't know, maybe half the newsletter today.

That's more than normal.

At least we got out of economy, so that was good. Yeah.

But we had some, some, some additional good articles. Let's just hit real quick in this week's newsletter again, around the Horn Wholesale Distribution newsletter. If you don't get that, send us an email at hello lead smart tech dot com. Jump on LinkedIn and share that. Ask for the request to get that through LinkedIn. Or we have a website for the podcast www.aroundthehornpod.com. we'll get that out to you. There's a great article here that Border States does. It's not even an article. It's just their research. Tom, you just passed it. There we go. They do a commodity update on a regular basis and that shows kind of where things are at from purchasing power and prices and different commodities, whether it's copper or PVC pipe or whatever. That gives you some pretty, pretty good insight into that as well. Let's just kind of scroll through there, Tom, and we'll kind of catch. We just talked about that B2B buyer section. We'll move past that.