Home Depot's Strategic Move Meeting Buyers Where They Want to Buy #homedepot

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

Hey, how are you today, my friend?

Doing good, how are you?

I am doing well.

Happy good Friday.

Yeah, it's surprising, you know, I looked at some of the statistics this morning of the newsletter we send out every Friday morning related to the show and was astounded by the amount of out of offices. So good for the folks that are starting early, I guess we would say. Right? Yeah.

Well, there's. It's a holiday I know for like stock market and banks and stuff like that. So. Yeah.

Yep.

So not here, not here, not at around the Horn.

No, we are.

The show must go on.

It does. Are the banks closed today?

I'm not 100 sure. I just know the stock market is. Yeah.

Hopefully the banks aren't. I eat the bank today. All right, so. Well, we'll see. But I'm looking forward to today's show and we still got a lot of nice folks and joining us today. So we're excited about that and let's kind of dive in. So I'm Kevin Brown. This is my lifelong friend and business partner Tom Burton. We are the co founders of Lead Smart Technologies. Lead Smart Technologies is the sponsor of our show every week and we get together every Friday morning and discuss a newsletter that goes out as well. Every Friday newsletter is called around the Horn. In wholesale distribution and manufacturing, we try and pull all the significant news of the week and do what we we call peeling back the onion or finding the story behind the story on top news articles as they relate to wholesale distribution and manufacturing. So we're appreciative of the sponsorship we have from LeadSmart. Lead Smart has developed a product called Channel Cloud & ChannelCloud is an AI enabled CRM customer intelligence platform that's built solely for wholesale distribution and manufacturing. Don't sell into other channels and other arenas solely in that particular Marketplace. I bring 35 years or so of experience in wholesale distribution. Tom has many, many years in wholesale distribution experience as well. But 30 plus years in technology and we brought all that together with our team to develop a platform that helps wholesale distributors and manufacturers gain deep insights into their customers, their teams and their overall business to accelerate growth. And that's what we do. So happy to be here today as we get ready to start, as you might be with us in the live show this morning on LinkedIn Live, YouTube Live or Facebook Live. We do this every Friday morning at 9:00 clock Pacific time. Well, nearly every Friday, unless there's an airplane involved or something else going on. But we do that live. First thing in the morning we review the newsletter and you will see that if you're watching us live, if you happen to be listening on Spotify, Apple Podcasts, Amazon Podcasts or any of the podcast formats later in the day or in the future. You're not seeing the email newsletter that we're discussing, but if you would like the newsletter, just let us know if you're not getting that already and you can ask us about that@helloadsmartech.com and we'll get that out to you right away. Or you can simply go to the website for the podcast, which is www.aroundthehornpod.com aroundthehornpod.com. sign up for the newsletter there, see for previous episodes and you can get to all the information that's needed. Lastly, if you enjoy what we do here each week, we would greatly appreciate you giving us a thumbs up. Follow the Lead Smart page on LinkedIn, YouTube Live or YouTube or Facebook. Get those updates. If you're listening on the podcast formats, please hit the subscribe button and leave a review that gets this message out to more and more people. We're typically in six or seven countries each week and hundreds and hundreds, if not thousands of people get access to the information that we're putting together. So enough of that. Tom, any thoughts before we dive in?

Well, and if you are live listening right now, please let us know where you're at, where you're from. Say hello. We've had some weird issues with LinkedIn the last actually few weeks it seems like with the commenting. So it'd be great to know if it's actually working again today.

Yep, that's a good point. We use a simulcasting tool to get this out to those three formats and so sometimes it doesn't work as it's supposed to on the connections and so it'd be good to know if you're listening in today. Share with us where you're at and what you're doing within the newsletter. We break the newsletter down into different topical areas. The first area we talk about each week is kind of things about the economy and supply chain. So first article that we Brought up this week, it's about this. Here in the US in the east coast of the US There was this major bridge collapse following a, a container ship that lost power, evidently lost full control. Unfortunately, there were some lives lost there. I think it's 6 is the number of people that were killed. So it's just catastrophic. You know, good news is evidently the harbor pilot that was on, on the ship was had the forethought or foresight to get the mayday message out and that got to police and they were able to close the bridge down. But unfortunately, I think there were people already working on the bridge before one of the uprights on this bridge span got hit. And now you've got this major artery that goes into the port of Baltimore that now has a container ship with 4700 containers on it, 56 of them are containing hazardous materials. And inbound and outbound traffic for these ships is now stalled. So kind of a big headache there, huh?

Yeah, you know, I, it's, and maybe you have more details about how this actually happened. But they also said, I believe that the bridge itself was not constructed really up to the level of how you do things today. So as a result of the collision, it obviously, you know, catastrophic with being the right word here.

Right.

The whole thing ended up going down. Yeah, I mean it's, you know, they say this isn't going to be a big problem. I guess maybe that's true. Unless it's your stuff on those, on those containers and stuff that are there and, or you're waiting. They said there's a lot of, you know, Baltimore is a very, very big port with a lot of vehicles and, you know, cars and things like that that go into a lot of areas. So. Well, it may not be a macro level crisis, but I think there'll certainly be some micro level.

Well, that's the story behind the story here and you kind of nailed it there, Tom.

Right.

Is, you know, it's nice to get Janet Yellen's comment that the, you know, the Fed is going or the Treasury Secretary there that they're going to look at this supply chain issue and we'll do everything we can. The Biden administration says to open it as quickly as possible. But, you know, hit pause here for a second because one of the other comments that they said was they don't expect it to impact GDP. Okay, that's great. But to your point earlier, right. 4700 containers on a container ship that can hold 10,000.

Right.

That is the bow of that ship is at the bottom of the Chesapeake Bay there on that inlet.

Right.

They, I think the number I heard yesterday was $60 million. It was going to take just in cleanup and offloading the ship and, and everything that's going to go along with that. That's not including the cost of the bridge to rebuild. So, you know, now, and I don't know how long before they'll find a way to get traffic moving around that. But stop and think, right. Let's, let's magnify what is going on with this based upon your comment right. About if it's, you know, it's not, maybe it's not as big of a deal unless it's your stuff on the ship. Well, I think this is really being highly underreported because to your comment earlier as well is that there is a, this is a major off boarding for cars coming in from overseas. It's one of the major ports in the US that that happens at. And secondly, it is the largest port for incoming agriculture equipment, tractors and harvesters and things like that. Can they go around that? Sure. They talk about that, right. They can get to up to New York. They can go down as far as into Georgia. They've been talking about it. There's Newport News in Virginia. They can bring things into. But that's a big disruption and a big delay.

Right.

So now you've got ships sitting out waiting to come in that can't get past that bridge to come into Baltimore that now are going and diverting. You've got ships that were already in port waiting to get out that we're going to. Because this happened at, I think 1:30 or 2 in the morning, you know, Tuesday morning when this happened. So you had the other ships that were scheduled to come out that are stuck there. I was going to look at AIs, one of the ship and boat tracking tools that globally. And so virtually all, well, not virtually all ships have an AIs tracker on them and you can use some free apps and so forth to see what's where I had planned. I'll try and do that later in the day. Looking at an AIs as how many ships are actually sitting in that port right now. So there's going to be a disruption here. But the big picture about all of this really ties to what we've been talking about so much for the last, you know, I don't know, about a year now.

Right.

As we had some potential disruptions in the west coast ports, then we did have disruption in the western Canadian ports. Now there's Some discussion about east coast and Gulf coast labor disruptions. There's the article mentioned. There's 2,000 workers that work unloading ships in the port of Baltimore. Well, they're day laborers. Right. They get paid by the day that they work. So they're talking about this being up to $2 million a day and lost wages once the ships that are already in the harbor are fully unloaded, which is, you know, within a week. So this is, you know, hundreds of thousands of jobs tied to this. There's 2,000 workers just unloading. But there's a lot of impact that goes with this with delayed shipments and so forth. And, you know, I've been on the manufacturing side of things before with a small manufacturer. And you know what? We get a container, you know, because we were getting, you know, a couple of containers a month, not hundreds of containers a month. One of our containers gets delayed by a couple weeks, we might not have been shipping. Granger. Right on time. Those are.

No, I mean, I mean, there's absolutely, you know, local, micro, whatever you want to call it, impact. Right. I think the news is all reporting at the, at the, you know, GDP level and the macro impact or whatever.

Exactly.

It's not coming to an end for. At a macro level, but at a micro or even local or even semi regional level, there can be a very massive impact, and we'll see how long it's going to take them to actually clean up the mess. And, you know, it's. They said it's actually very difficult to get some of the stuff off the, the bottom of the bay there. And, you know, it's not. It's not a quick and easy cleanup, I don't think is along the way.

So ships, ships don't unload quickly in the harbor when everything's perfect. So now you're thinking, right, you're bringing another ship out or big barges, you're bringing cranes out that aren't. Probably aren't the right ones to offload the crane the containers perfectly. It's going to be slow and arduous. So I don't know. I mean, maybe they've got a way. I've not looked at a map or whatever to see how wide it is. Could they get ships in another part? But I'm guessing until they get that offloaded and moving, nothing's coming in. So you rebuild the bridge over a period of time. Right. But I think the port issue is going to be a long time. And when you put that together with, you know, and this is nothing compared to what's going on the Suez Canal. But when you put this together.

Right.

With a major US Port closed, basically now the Suez Canal issues and the Panama Canal issues as well, with a slowdown there and the safety issues in the Suez Canal, now all of a sudden this whole global supply chain just has another chink in the armor, so to speak. And it just goes back to the broader discussion that we've been having regularly here and is about the resiliency that's needed in supply chain. Right. And understanding and consistently monitoring what's going on versus, you know, on an occasional basis.

And you probably can't make this one up or this isn't something obvious, but again, it's just having those contingencies in general.

Yeah, no, exactly. Exactly. Right, so good. Want to jump ahead? What's next year?

Yep. So durable goods orders rebounded in February after a sharpest one month decline in January since April 2020. So the roller coaster continues.

Yep, that's. That's it. You know, I, I was thinking about that though, because I think the CPE numbers were reported this morning and I think they were better than had been planned. So, you know, I think the couple of news alerts that I heard, I usually don't look too closely at the, the, the national or global news too close on Friday mornings because I'm preparing for what we're doing right here with yesterday's articles. But I think those numbers were better. These numbers are better. You know, my, my hope is. And I. We prognosticated a little bit. Was it last week that we did that or the week before? I think it was the week before last, as we kind of said. I think you were pushing Q4 before any, any rate cuts. And I was, I said Q3 and that we're going to get three this year, if I remember that correctly. We might need, we might need to get, might need to get editor.

I think you said three and I said one. And even though the, our friends came out, I think the Fed came out in the last meeting and said they're still on track for three. I'm still sticking with my one and maybe two. Okay, so.

Oh, now it's maybe two.

Well, I'm gonna stick with my one. I'll just stick with my one. How's that? All right, I'm not gonna hedge. I'm not gonna hedge.

All right, so let's, let's see if, if it's, if it's four. The, if it's four, Tom, I get a stake at Chuck's in Santa Barbara.

That's fine. I think you already owe me a few so. Yeah, we can. It'll be leveled out. Oh you a few.

I thought, thought we were good. All right. Anyways if I owe you one that will be. We'll be even on that. But I think my gu. I'm sticking with. With my guns on this. I think there's. There's too much pressure that. I think there's too much pressure to do them and some of it's already baked into the stock market already that for them coming right. And we're seeing that. That there's going to be too much pressure to if things stay like they are now. And that 28 I think was the range right now that they've got to do it right now. We'll see what the election pressure has on that too.

What's interesting, I was just looking here at the data that came out today is. Yeah, we increased 0.3. So it's 2.8% year over year which is good or in alignment. But consumer spending jumped again 0.8% which they said was one of the largest consumer jumps in a while. We've talked a lot about this. Where is that money coming from? A lot of it's going on to credit card and to debt and sure, I'm sure the stock market is, you know creating that wealth effect as well for people are spending. But it's hard to really reduce inflation when people keep spending and keep spending a lot. And I think that's where the.

You're spending money you don't have.

Yeah, I think to me that's where the, the, the, you know, if spending was dropping then I would be completely agree with you that the three, you know, the three rate cuts make total sense. But if spending keeps up then I think they have to think twice about it and if the numbers start to inch up in the other way. So I, I don't know. It's not a slam dunk either way, that's for sure.

So we'll just keep an eye on this. We do it on a consistent basis. This was an article from Modern Distribution Management. It's written by Mike Hockett. Mike I think might be with us today. Mike, if you're here, throw us a thumbs up. He's with us most weeks. Mike is termed a term that I'm going to coin today, right here, right now, 9:17 Pacific Time on the 29th of March. Mike is a FOAF friend of around the Horn.

That's, that's a new thing just Mike.

Well, there's another one who just made a comment we're going to talk about in just a second. But there's a lot of them out there. But that's my new term. There's got to be some T shirts coming at some time and I get that because a yacht racing sailing buddy of mine, Tom Eamon's got a phenomenal Facebook online show. It's on Facebook and YouTube twice a week. It's called Sailing Illustrated. It's a phenomenal if you've been ever enjoyed watching the Americas cup or a yacht race. Tom picks it apart like like never before each week. And it programs it's like three years old now. It's phenomenal program and and it's called Sailing Illustrated. So he calls them fozies. And so that's, that's what hit for me. So we've got foas. So we have another foath with us here. Our friend Lars from 3M made a great comment. I've been trying to get Lars to join us on the show for a year plus and eventually I'm going to break him down. But he just should have been with us today because Lars comment really breaks down our whole first article. Right. He nailed it in a couple sentences. You know are really each of these port issues in isolation may be manageable but the sum some of the issues is a big issue. So good stuff. Thanks Lars. We always appreciate when you're with us. I'm hoping to see Lars in a couple weeks at the Industrial Supply association event that we'll be talking about a little bit later. And the first beer is on me Lars, if, if you're in town. So let's jump ahead Tom. Let's kind of talk about what's next and we kind of jumped to into our manufacturing distribution segment here. David Gordon publishes Electrical Trends magazine newsletter. David's been on the show with us before we got to get him back. Wrote a great article about and I thought about it kind of as trading dollars but interesting. You know last week between Border States Electrical and Sona Par they picked up between the two of them a number of think it was four different independently owned groups and brought them into these larger groups as well. But $600 million of independent distributors, smaller family owned distributors have now been absorbed you know in Border States has you know started kind of in the north central part of the country. Is really a national company now. So it's really interesting to watch that kind of happen. You know Border States is as he mentions in the the article there is over 5 billion. And this is really kind of one of the last major stepping stones for them into getting the presence that they're looking at and they saying they want to be in every state by 2030. I really though appreciated some of what David was talking about here. Not just about kind of the dollars moving around from smaller to large organizations. Sone park tries to do this where they'll, they'll buy a handful of people in a geography, they'll stitch that together into an operating unit because they try and do operating units of about $1 billion each, which is kind of an interesting take. But you know, a number of these companies were already ESOPs which, you know, employee stock ownership program. When you do it in this setting it usually means that the ownership has maybe a family owned company or some partners that wanted to, you know, make sure that for the long term their employees were well, well represented and well taken care of, will basically sell the company to the esop. The ESOP distribute stock to all the employees and including the ongoing executives for a long time. I've had some involvement with an ESOP in the past. But what's really neat about that is with Border States being an ESOP is now that warehouse driver, right, forklift driver or the delivery guy or, or the order entry person from these smaller companies now joining this much bigger company. Really a great opportunity for them because now they become employee owners of a $5 billion a year company in that setting in Border States example. So it's kind of neat to watch the human side of that. And we typically on the show here we talk about the financial market impacts, things like that. But I appreciated what he talked about this because, because if you think about it and there's a lot of employees, you know, ESOPs out there, Mike Mortensen that was with us a few weeks back with Alaska Rubber Group or ARG Industrial there in ESOP as well. Great way to hire, retain, you know, and keep good people. And when you get acquired into an esop it's really a nice thing for employee retention for the people that you want to keep around.

And I would expect that that is part of the Border State strategy. Right. Is a way to attract higher quality acquisitions. Yep. To me that would, you know, you are, there's always risk, right. Of acquisitions and absorption of acquisition. But if you're acquiring an ESOP or it's an employee owned company and you're going in there, I think your retention is going to be much higher. Your everything's going to be much easier or I guess or more effective. Or efficient in that acquisition strategy. So to me it's a pretty, pretty intelligent business strategy for them and intelligent and a very, you know, potentially very lucrative for the employees as well.

You know, I don't know the ins and the outs of this. We might have somebody that does that's involved with this. I wish this we, we had a guest that was from a esop. But I'm assuming if ESOP acquires an ESOP owned, you know, a company that's an ESOP own acquires another company that's in ESOP as well, those employees get to get two bites of an apple potentially too. Right.

I would think is, you know. Yeah, depending upon how everything is distributed. I don't know all the ins and outs about how, you know, money and everything is distributed. But assuming that it's distributed equally. Yeah, absolutely.

So there's a little more trickle down of all of this as well. And David covered this nicely in his article was that, you know, some of these organizations were part of either IMARK or affiliated distributors and buying groups and Sonepar is not to my knowledge part of any groups. Border states is part of affiliated distributors. So these, these large acquisitions have some significant potential impact to less to a trade association but certainly to a buying group potentially. So interesting stuff to watch. What, what is in a big piece of this. And this kind of goes to an article we're going to talk about, you know, in a little bit about the big Home Depot acquisition yesterday of srs. But this ties into really looking, when you look at these electrical acquisitions and you start thinking about, and we've got with lead smart, quite a few very large H Vac plumbing electrical distributors that are kind of combined entities that are, are very large. We're talking with two or three other really large ones right now about using our technology to help their business grow. But when you look at these folks, a lot of what they're doing is tying to home building as well. And we have this huge glut here in the US of A need for new homes and so gobbling up these electrical H Vac type folks that are going to feed that. Because you know, it's interesting, David references another article here about Brad Jacobs, who was one of the founders of United Rentals, the big equipment rental company and a billionaire. He's just launched another distribution company that's so called tech enabled. And David references that's something we should talk about another time. But you know, he made the comment about wanting to get in back into wholesale distribution related to the home building market. And home maintenance market is, he said, I think residential construction is not going to be replaced by a hologram. I want back in.

Right.

And you know what? You are not going to find an AI tool that is going to go swing a hammer or use a nail gun on a home right at this stage. So I thought that was interesting. So I think these, the home building space and those folks supplying that are going to be in a unique place here for a while. So good information there.

Yep.

All right. Yeah. Let's move ahead to our E commerce and marketing section. Good article from demandgenreport.com I shared this with. I sent this off to a few folks today. There's a large trade association that's invited me to speak to their membership at an event this summer about. Once that's firm and locked with a date and topic, I'll, I'll announce it. But the conversation is about buyer journey.

Right.

And tracking and managing that and changing buyers is a big part of that discussion. We talk about changing buyers here all the time. Right. You've written quite a bit about it and so forth. So this is a good article about E Commerce Report about the best of both worlds, combining B2C simplicity with B2B depth. So what were your takeaways from that one?

Well, first of all, I thought it was a well put. It's a very well put together article.

Structured nicely, isn't it?

Yeah, structured nicely in a lot of good detail. You know, we've been talking about why as buyers, we're all B2C buyers first. So the, you know, we've talked about this over and over. It was good to see it's, it's good to see this starting to get more and more of a, of a, I guess, traction, if you will, in the, in the business marketing world.

Yep.

Is looking at. First of all, you know, there's two parts of the equation, right. There is the buyer journey in the B2B world, which is generally more sophisticated and complicated than it is for a consumer. Right. Because there's multiple decision makers, there's multiple people involved in the process. Obviously, depending upon what you're selling, it will vary from one thing to the other. So you do need to map the buyer journey. But if you cross that buyer journey with looking at it through the lens of simplicity as you buy as a consumer or how you as an individual want that experience to be, and then you translate that back into the buyer journey, if you look at those two things together, which is basically what this article was saying, then you can really start to build an experience that again, will live up to the expectations as they, as they said here. So it's, you can't just repeat what goes on in the, in the consumer world. You have to look at it in the lens of whatever your buyer journey and is with your different products. But then you can overlay that with the simplicity of a consumer experience. And they talked a lot about Omni Channel. You know, we've talked a lot about Omni Channel and all of that. But, you know, again, just think about what you want to do and, you know, think about yourself when you're looking at this and go, what I want to buy with this experience? Or would I be excited about buying with this experience? Or would I be kind of turned off with this experience? So anyway, good, good article, as you said, good structure all the way around.

Yep. I don't know about your house in particular, but I know in my house, if I was developing a omnichannel e commerce solution and I wanted to take the best, best features of a B2C experience and bring it to B2B, I would ask my wife to come and take a hard, cold look at this because my wife is highly experienced in the B2C online transactions and I would want her take on all of this because, you know, at the end of the day and I, I say this all the time and it's probably, probably said too much, but, you know, the end of the day is we know where buyers are changing. Right. Our was it 62%? I think it is now. And I bet that's probably a year old. That statistic of B2B buyers are millennials. May not be that way within your market yet or, you know, your geography that you're in or the, the vertical that you sell into, but it will be very soon if it's not yet. And they do things different and they look at things different and they research things different. I always say, you know, that that buyer probably ordered doordash to bring his lunch Right. When the previous buyer brought a lunch pail and had lunch with the vendors twice a month. Just a different nuanced way of going about things. And it does really bring into the, and this is a little bit different right now in the B2C world. We're looking to, they're looking to follow you on your online journey and purchases. Right. That, that would be the way we want to track that. We're living in a world where somebody may say, hey, you know what, I researched your product on your website. You know, not just you know, a 3M abrasive maybe as an example. Right. I researched it on my chosen distributors website. I may looked at, have looked at it on my secondary distributors website. I went and looked at Amazon because it's got 2,000 reviews versus 7 reviews on my choice vendor of choices website. And then I looked at it at 3M's website as well. And then some items I might decide to do an electronic purchase. Others I might want to just build my order but have a guy pick it up at the counter. And now we have all these touch points. Right. And that's where a lot of folks are struggling right now to really follow that buyer journey is what, where are they engaging with me? And that doesn't even remotely bring in and it's, I don't even think it's referenced in this article is where is my customer now engaging with me in social media and other arenas, whether it's, I'm emailing, I've got an Instagram that they're following. I mean, there's all of these components of that buyer journey now. And so much of it's coming from how they experience things on their personal life.

Sure. I mean, no different, right. There's an anonymous zone, as I like to call it. There's an anonymous zone where we all research anonymously and we do whatever we do anonymously. And then there's a place where we start to interact with, with a company that we may be considering doing business with. So there's a place where we move from that anonymous aspect of it to a place where we're willing to engage.

Raise my hand.

Right. Unfortunately. Or, you know, fortunately, depending upon which way you look at it. Right. More and more buyers are trying to stay anonymous as long as possible. But so if you make your, if you make your, you know, websites or your, you know, your online presence, whether it's social media or otherwise accessible and kind of safe for them to use and valuable to use. People will use it, right. They'll use that data and they'll look at, you know, all kinds of other information. So it's looking at, plotting out again. We could spend a whole afternoon talking about buyer journey, but it's looking at what is that buyer journey in the, what are they doing generally anonymously? It's actually not that hard when you take a step back, you probably can talk to a handful of buyers or just probably even know a lot of what they're doing, research wise. And then at what point do they feel like it's the right time or the right, you Know, is it safe to engage, so to speak, on those next steps? And mapping all of that through is. Again, they talk a lot about this in the, in the report here.

Yeah. Good article. I actually sent this off to a few people this morning. I've shared this article that I thought it would be of value to them and their, their marketing efforts as they go. So good stuff. Let's kind of move ahead just because of our time limits today. Next arena that we jump into is our technology, cybersecurity and AI segment of the newsletter. Good article from Forbes about how will you know when manufacturing's AI revolution arrives? You may not know. Any initial thoughts on that one?

There are a couple things. I mean, what they mean by you may not know, right, is a lot of manufacturers are using automation and capabilities already that will be further optimized by AI. So you may not see, you know, it's already kind of happening behind the scenes. It's not like you're going to necessarily see like a whole transformational shift in how the manufacturing process is done. But what I did find interesting in here, and it was kind of deeply embedded in the article about using AI to discover suppliers. And they just talked about that briefly, is like, you know, this is kind of another use case of, of a manufacturer is how do they use AI to discover suppliers? And I assume a distributor could do the same thing, right? How could they use that to discover things that are there? And you start to think about that, think of yourself as the supplier. Now, how do you set yourself up so that when AI is out there discovering, how do you set yourself up so that you end up getting discovered and get discovered in a positive way? And this goes way beyond like having some keywords on your website. Right. This is. And like I said, it was something they just touched on in there. But when you think about it, I think that, you know, and even just we've talked about supply chain and all of that. I think the discovery aspect of AI in the manufacturing world is something that's not really been talked a lot about, but could have a very, very meaningful impact.

Good. I like that they talk about quite a few things, you know, that we're in a reference particularly. Right. Robots, ERP and then other segments. Right. And there's a lot of organizations that already have robotic systems in place. I was on the road last month and got to stop and visit a large H vac and plumbing and electrical distributor in Pennsylvania and watch their robotic system that they've got three shifts running and one of their shifts is Only literally the major part of it is about getting trucks staged for loading while they're loading up their robotic inventory system. So it's a series of boxes that are I think six high in a big it's almost like a big part of their building and there's robots at the top that are moving around and picking which box and the box comes down the conveyor and shines a light on what inside that box. A packer needs to take out of that for that shipment and off it goes to the truck and and we're seeing more and more of that. And this article discusses quite a bit about these robots are already in a lot of facilities, but now they can start doing what they call cobots and cobots that are working with those robots and learning from the first robot. So interesting stuff in there. Here's the big takeaway before we move on and talk just a few a moment about cyber security. My big takeaway is this really article really reinforced the the fact that AI can be nuanced into your business versus a dramatic oh man, we're now an AI enabled or driven company and we went out and hired a bunch of, you know, chief AI agents or whatever it might be. And I feel very, very strongly it doesn't fully align with all of some of your thoughts, but I feel very strongly that the winner in the technology world is going to be incumbents. And what I mean by incumbent is you already have an ERP supplier or you're looking for new ERP supplier, you already have a CRM and customer intelligence solution or you're looking for a new one. The tools that you already need in your business, those can be the ones. And the simplest example of this is Microsoft and their copilots, right? I already have Word, Excel, PowerPoint and Outlook as part of my day to day life incumbent. And as those bring these AI solutions in on a consistent basis, my life gets better with incumbent solutions without me having to go out and buy another one off piece of software that helps me with PowerPoints. And I think this article really relates to that is you are going to see some nuanced things happen because some of it's already going on in your business and we're going to layer AI into those things that we already have. So I had this discussion yesterday with it was a great discussion and we're going to follow up on it in a couple of weeks in Charlotte with Brendan Breen, the CEO of the Industrial Supply Association. We were on the phone yesterday and kind of chatting about that concept. So I believe it's going to be a big, big help to help wholesale distributors and manufacturers ease into AI when they get that from trusted, reliable, even, you know, industry specific sources to get started with. So there's my little rank.

I agree with that. No, I agree with that. But I also think that and because we haven't seen them maybe yet, it doesn't. And obviously every industry is different. There are going to be some killer apps in AI that we've not seen that don't exist with an incumbent that are not just an extension of what they already do, that will not be, that will be have meaning, meaningful change and transformational change. We just may not have seen them all yet. So I think there's going to be both. There's going to be both. I think that a lot of the killer apps are still even conceptually if they're out there, they're not ready for prime time from a production perspective based on the technology. But I think in the next year you're going to start to see some really interesting killer apps, if you want to call that come out again. I don't know if that applies to manufacturing per se. I'm just saying in general and it is going to be a completely different thing than what is happening with the incumbents. That all said, of course we all have incumbents, we all have existing technology, we have all existing things that we want to get more optimized and more efficient. So it's not an either or.

No, I think you're right. But I do you know to expand upon that. Right. And this article was about manufacturing. So I'll say that I'll call it the back door of the house.

Right.

And our company makes front door of the house. Right. On the revenue side of the company of how we, how we work with our customers and, and also with our manufacturing partners. But not supply chain issues. We'll say, but there will be, I believe some killer apps that we're going to want to bring in. But the other side of it is your incumbents and I'll just use us as an example. Right. You've, you've got a roadmap with the team that you run it at our company lead Smart Technologies for our channel cloud AI tools that some of the backed bone technology isn't quite ready yet for. The killer app that you guys have built and not built yet but laid out of where we're headed and I think I'll use that as an example of us being an incumbent also could be bringing some killer apps because of course Some of the stuff, some of the stuff that you guys are working on within our company are gonna really surprise people. Right.

It's just, and the big million dollar question will be right is think of it as not an incumbent, but maybe a trusted vendor or a trusted partner that you already have. You know, a lot of the companies are, a lot of companies are afraid though to make that big killer app chump because they feel about what it's going to do to cannibalize their existing business and all of that kind of stuff. But I do agree that the opportunity, you know, obviously if you have a trusted partner and you have a relationship and a pre existing relationship, then that obviously reduces risk when you start to bring in some of these other applications.

Yep, great point. And that's, I think that's my, when I say incumbent, it's not a using the tool you have, it's an incumbent supplier versus an incumbent product. And that's a good point and thanks for bringing that up, Tom, because I should probably reference that when I, I've been on this soapbox for a bit now and so maybe I should, should clarify that and reference that from a standpoint of an incumbent supplier versus an incumbent person product. So because you're trusted. Right. And, and you understand and, and in that case. So kind of moving along because there's a couple other things we've got on the docket for the day that I, that are going to want to spend a little time on is we're in the segment of our newsletter. And again folks, if you're listening in on our podcast, recorded podcast versus our live show, you're not seeing the newsletter that we discuss. We publish a newsletter every week. It's called around the Horn in wholesale distribution and manufacturing goes out to eight or nine thousand people every week. If you would like to get that and you do not get that, just let us know. Send us an email@helload smart tech.com and we'll get that out to you right away. Or go to the website for our weekly show, which is www.aroundthehornpod.com and sign up for the newsletter there. You can also click the link to go to any of the podcast formats that you like. From there we would love it if you would click the subscribe button. If you're watching the live show, go to the Lead Smart Technologies YouTube page, Facebook page or LinkedIn page and subscribe there as well and you'll get all of our updates. So Tom, in this segment we've got an article here about the surprising Ways that Microsoft Copilot is helping security cybersecurity within organizations. Kind of want to move past this if you don't mind, fairly quick. But it ties back to what we were just talking about a little bit. Right. Microsoft's putting these co pilots in. They built a copilot for cybersecurity officers, CIOs, CTOs within organizations. And the crux of that is it's offloading minutia type tasks, but important tasks with related to cybersecurity checks, allowing people to be more effective working on bigger picture stuff. Is that reasonable takeaway?

And then the second part is as they talked about, you know, it's not easy necessarily to find people with deep security knowledge. So by using the co pilots, it allows you to potentially hire or bring on people that have less experience and can be leveraged with the, with the co pilot. So the copilot can do a lot of the things that you would potentially have to have a highly experienced person do if you were going to do it without. So I think that's a really a good example of using something to augment the people side of it.

Yep. All right, well, let's, let's go to the elephant in the room in our sales and M and A segment. We're going to talk about Home Depot Green to acquire SRS Distribution. So I'm so frustrated. My life some days is just bad timing. So there's, you know, main press releases. This went out across the wires. The source that we use to publish this, because there's some thoughts related to it as well, was from the Distribution Strategy Group from the link goes to their website and we appreciate the content that we get from them on an ongoing basis. But I was on the phone Wednesday for 45 minutes with Ian Heller from Distribution Strategy Group. Ian is longtime VP of marketing at HD Supply and Grainger and other publicly traded companies. And this announcement came out like 12 hours after I was on the phone with Ian. So I would have loved nothing more than to have been on the phone, but I'm sure he was talking to a million different people yesterday. But you know what, if you look across LinkedIn and in other arenas, Twitter X just tons and tons of comments about this. I made a little video, posted it. It's on the lead Smart Technologies LinkedIn page and my personal LinkedIn page. If you're not following the Lead Smart page, please do so and connect with me if we're not connected. But big impact, right? So you had mentioned earlier about, you know, wanting to dive a little deeper into this. But end of the day you've got publicly traded peripheral company that has, is B2C but that has a builder side where they, you know, the Home Depot closest to my house, there's a side entrance where that comes into the lumber section and, and, and some of the other building material sections as well. And, and it's for commercial tradesmen to come.

Right.

Well now you've got an organization like Home Depot that's got. Remember what I said earlier about how many stores they have? I can't remember. It was 20,000, I think was the number. And now they just brought SRS Distribution. SRS Distribution, building materials, roofing supplies and so forth. Those same trademen that tradesmen that they've been trying to get into that side door at their retail location now they just picked up 760 branches in 47 states, a 4,000 plus truck fleet that delivers the job sites. And now that tradesman in their theory. Right back to what we were talking about, about that earlier about home building, the glut we have within all the homes that we need to be built and we're not going to get a, an AI bot that's going to go build homes. What Home Depot strategy now is we're going to meet you and I'm going to go back. Another comment from Ian on this, Ian Heller's comment when he was on the show last, he said with us, he said we have to meet the buyer where the buyer wants to buy. And now Home Depot publicly traded company has looked at this setting and they said we'll work with you wherever you're at. You want to come to the building material location of one of these 460s and get roofing materials or siding or whatever it is that you might need for the job. Stop there. Oh, and by the way, you need it all delivered. We're going to deliver it from one of those locations. But if you happen to be driving home from work through the suburbs and you see a Home Depot pop in and use the same builder account that you have. Right. There's all kinds of nuances that go with that, but that's the crux of what's going on here.

That makes sense. You know, is HD Supply owned by Home Depot or is that I, you.

Know, somebody may want to jump in, in the comments. They go back and forth. I think they're separately owned company now, but they were spun off, back spun off. And I don't know where they are right now.

And how does that, how does this fit with that? I mean, obviously HD Supply is doing different types of products and so forth, but I assume it's still part of their overall B2B strategy. And this sounds like another way to expand that B2B strategy.

Yeah. So, you know, we know a lot of that because of some of our customers at Lead Smart that are in the multifamily space and HD Supply is big and the multifamily space. And that might have kind of triggered a little bit of your question even I don't think that this has been referenced yet about where that whole thing fits. I think that they're a separately operated company now, so. But this is, this is my take on this and anybody that has more insight to this, and there are lots of people that know this much more intimately than I do. Throw your thoughts out or share them later. But is, this is about, this is about building material and home building versus renovations and stuff like that. That's, that's the big, the big push in this. There's, that's there but in the issue right here is. And I think this is what's got people, I mean there's people freaking out about this. There's people seeing it as opportunity. I'm going to share in a moment my deeper thoughts on it. I shared it in a video I made yesterday and that's on LinkedIn and Facebook and YouTube and so forth. Or it will be shortly if it's not yet our editors working on that. But this could be the tip of an iceberg, right? I mean you could have. Lowe's could make an announcement next week about. I won't mention any names, but there's three or four names that come to my mind right off the bat of Lowe's wanting to go do the same thing.

They're.

That could be gobbling up even some of these, you know, ESOPs that we were talking about earlier that are very large. That gives them these big footprints that then support now SRS distribution. You know, in I think we said 46 states. Right. That just is a, you know, this was an 18 plus billion dollar deal. Right. That's down. Right. So 760 branches. I mean, you know, we have some of our larger, larger customers that are major players in the marketplace are, you know, 40, 50, 60 branch is big oftentimes when you see the independently owned group. So this, it is, it's, it's not. To me it shouldn't be surprising. I don't think we're going to see this. And you know, if, if you're in the building material space, you're thinking about this a lot yesterday and today and will be for the near future. If you sell power transmission, bearings, things like that. Not a big deal to you in this setting. Doesn't mean that it couldn't be later. But right now this is building material focused and probably mostly tied to home builders. I'm going to take a twist on this because we got a few other things to talk about today and, and I'd like your feedback on this as well. Tom, is it? I look at this though maybe a little bit opportunistically if I'm a wholesale distributor and, and I know your team's working on onboarding right now. Just a great. The upper Midwest family owned building materials distributor and it's kind of got me thinking about their business and the upgrades to technology that they're doing.

Right.

Part of the threat is of this if, if you are threatened by this at all is that Home Depot in this ownership role now knows more than we've ever anybody's ever known about customers. Right. Because somehow they're going to find a way to correlate what Joe Smith buys in their stores, Joe Smith buys at their branches, and maybe even what Joe Smith buys in his personal life at Home Depot. And the detailed data that they have and the, the teams that they have that are working on analytics and customer understanding and customer intelligence, the E commerce component, all of these things is, hey, you're never going to beat these guys. But you can play a mean game if you are working on E commerce, customer intelligence, truly understanding and meeting your customer where your customer's at. Because this is the ultimate example of meeting the customer where they're at. Right. And so now is the time that was that I mentioned that video that I made yesterday. Now is the time to be thinking about if I'm not there yet is where am I at? I reference it as a tech stack, right. What are the technologies that I have to serve my customer better? Right. To understand my customer better and to give them the tools that they, they want and my team the tools that they need to do that. So now's a good time to be really jumping in on all that.

So yeah, you're going to have to be more. Well, you're just going to have to become, in my opinion, if you're going to stay independent in this area, you're going to have to become even more valuable and provide even a more, a better and different experience than you're going to get from the big guys, the big box. Right? So. And the only way you do that is what you just talked about is, you know, looking at that, how you're using technology and process and all the things, buyer journeys and things we've talked about to provide a level of experience and maybe a more intimate experience than you're going to be able to get with a Home Depot and an srs. I mean, there's, there's always going to be room for multiple players. But I agree with you is that Home Depot is certainly got a lot of technology, a lot of data that they can work with and, you know, certainly have the budgets to do some of these things.

So I'm sure we're going to talk about this more in the future. What I'm looking forward to though is the, the other side of this story because I'm sure there's some very intelligent people out there within the industry that can talk about all the problems that are going to come from this. I'm really looking forward to within, within Home Depot. I've done this acquisition right. There's, there's probably a whole set of thoughts about why it won't work well, but I'm looking for, like I said, I'm going to pay attention to this one. So before we kind of jump ahead and wind the day down, our good friends Jennifer Murphy and Dan Judge and the team at NetPlus alliance, they published some information. We've put that article in here, excuse me, about the strong growth of their members in 2023 and what they see for the future. So check out what NetPlus has published if you want to get a look at that. You can find it on our newsletter or through Net Plus. So we appreciate the work that they do and the partnership that we have with them. So any. Anything stick out for you, Tom, in that?

No, just happy to see, happy to see the continued growth. So that's good news.

That's great news. Good. So we added in I, I reference our good friend Dirk Beverage on this. I'll probably need to stop doing this soon, but Dirk reminded us in January that we didn't talk enough about people and leadership in the show. So we've got a People in Leadership segment now. Great article that we put in here that came from Industrial Distribution magazine and it is within our People in Leadership section. It's called the Science of Success. It's a good article, really good article about Joyce Lansdell. Joyce is the VP of Industrial Sales at Valen, the huge industrial supply company. They've got U.S. canadian, Latin American operations and it talks about. I think the article is called the Science of Success. And it kind of follows Joyce's journey as a woman in industry. She talks about starting as a road warrior, 23 years old to where she's at now. She's incoming chairman of Industrial Supply Association. Super involved in the volunteer work that goes on there as other people on her team are Chris Pergoon and a few others that are part of the leadership team. Chris is this chief marketing officer there. So if you didn't get a chance, take a look at that article or just Google that one about Joyce Lansdell. But Joyce, I think she was actually joining us today on the show. If you're with us, Joyce, thanks for being here. I'm trying to get her to join us as a guest soon. So. Good article about her success and the road that she's traveled as a woman in business. And what do you think, Tom, 32 hour work weeks is the next article in that section? Bernie Sanders?

Yeah, I mean, I don't have an issue with 32 hour work weeks. I think there's a time and you know, given the fact that we're kind of on it seems like 24 by 7 in our work world.

That's what came into my mind.

Yeah. I don't, I think though that it's not something that should be mandated by Congress. I think it's something that's more on a business level thing in the market. Right. If, if companies start doing this and they are finding that employees are, they're attracting employees of that, then others will do it. Right. The market will take care of it. So, so I'm not a big fan of the government mandate aspect of it, but I, I think there's some really, you know, I think the idea of the 32 hour work week or maybe the four day work week is maybe more of the appropriate way of looking at it. Especially in some of the, you know, these info jobs where we're kind of on 24 by 7, I think there's some merit.

So that's about, what is that about 40% of what you work a week.

In the 32 hours. Yeah. So that's Monday and Tuesday. Yeah, yeah.

Right. I, it just, I, I, I like what you said.

Right.

One, I don't like the mandate idea. And, and to, I think we're on 24 7. So I do think if you can, you know, it's funny, it made me think too is, you know, we've been kind of having some discussions with our team because we're getting ready to open another office and have more People in the office and good friend of mine that runs a large publicly traded company just did a back to office mandate and trying to work through, you know, it's like do we need three days in the office with everybody and some flight flexibility and as long as you have the right people and the projects are getting done and you understand it. I, I look at it as. It's less important about the hours, it's more important about what you accomplished.

Sure.

You know, you know, and, and I think we'll see more about that. So that's good stuff. So hey, let's kind of move ahead from that standpoint. Hit our industry scuttlebutt a little bit. Bostwick Braun mentioned here from Industrial Supply magazine as well and turns their folks exclusively to Industrial. They've got a series of different brands of companies that they own. They've shed a couple of them. They've allowed a few to be acquired and they're getting very focused on things. So good for them. Hope to see some continued success for them. And we'll move from there too. Also if you get a chance, take a look whether it's through our link there or Industrial Supply magazine has a Great segment on ISA24 and the industrial Supply association is having their spring events. Great event every year. It's in Charlotte. I'll be there. I'm looking forward to that. Some fantastic speakers we've got Jim Craig is Jim Craig. I think it's Jim Craig that was the goalie on the Miracle on Ice Hockey team from the. Is it 80 Olympics? 80 or 84. So I told, I was talking to Brendan yesterday about that from. From isa and I said, you know, last year they had Bill Walton and Bill Walton is about as broken as a human being. I think he said he's broken his nose like 14 times and something like that and teeth replaced and the guy can barely walk. But he never stopped moving across the stage and was dripping in sweat. So I loved listening to Bill Walton at the event last year in Phoenix. So isa's event's going to be great. The opening introduction reception is I think it's the 15th on Monday night is at the NASCAR hall of Fame. So the entire event turns left. Just continually left turns. So I'm looking forward to that event. If you are not registered yet, isapartners.org I believe is it. Check out that article and if you're there let me know. I'd love to see you there. Last piece in our scuttlebutt piece is Mars Supply. The good folks There in Minnesota and, and, and Wisconsin based company celebrating a hundred year milestone. They're great affiliated distributor members some really doing some cool stuff. Peter and his team there doing some cool stuff with E Commerce. The Mars family still actively involved in the business had a chat with some of them at a recent affiliated distributors meeting. So good on them for a hundred year milestone. And then last but not least is an article in our Goodreads segment from our good friend and FOAF as well. Dirk Beveridge wrote a great article about how to bridge employee well being versus business growth. I think that would tie really well into that 32 hour workweek and so forth. But if you're not following, Dirk is doing some just great stuff about you know, people, let's just call it people within wholesale distribution. So good stuff. What did I miss there, Tom?

No, I just think you know, reinforcing what you're saying about Dirk and I think it ties back to what we're talking about. He's really, he's, he's really I think creating a movement. Right. To yeah. Not have people look at being people look at as commodities but is look at how do you really look at people as a strategic part of the business and a strategic part of your growth and you know, treat them the way that you would want to be treated essentially. And you know you combine that with some of the technology and all the other things and that's how you are going to differentiate if you're a smaller independent versus the Home Depots and the other things that we're having here. So the people, the technology I think are all really big opportunities for differentiation.

Yep, couldn't agree with you more. All right, well we covered a lot today and we talked about a lot of really important things. Thanks for the comments that we got in through the day. I got a couple of direct comments to me and it wouldn't be Friday without Will Quinn chiming in at the end. Dirk has an amazing message. He's right. If you don't follow Dirk Beverage, find him on LinkedIn. He posts just seems like almost daily relevant stuff. And what you know what I really love about Dirk is he posts really good stuff on the weekends. He seems to really get in a groove on.

He's not in that 32 hour work weekend, huh?

That's right. That's right. So some good stuff there. And then he's got his We Supply America tour coming up again and so that we'll be looking forward to that. So anyways, you're in Florida, I'm Here in California. We're waiting for a big storm to come through here tonight. For the next few days, it's hot and sticky in Florida.

Not so bad.

Not so bad.

I've been outside, but I, I don't think it's so bad here.

Very good. All right, well, thanks for my friend. Appreciate everybody that was with us today. Again, we do this every Friday, around the Horn and wholesale distribution. The website for our podcast and live show is www.aroundthehornpod.com. we get together, we review this newsletter. If you don't get the newsletter and you would like to let us know on that website, find us also on LinkedIn, YouTube, Facebook, Apple Podcasts, Spotify, all the popular podcast formats. We're looking forward to doing this again. Next week's guest, Tom T. Lynn Chase. She is a hoot. You're going to love her.

AI guru.

Yes, she is. And it's what's interesting is she's not just an AI guru, she's a business guru. She's been involved in a handful of startups. She's a consultant. She's an expert witness and an AI guru. And if I remember correctly, when I met Lynn was at Distribution Strategy Group's AI event last October. They're having their next one this coming June will be there as well, exhibiting there. Lynn was one of the keynotes, by far one of the top keynotes. There was two out of the four for me. Really stuck out. And Lynn talked about what AI isn't to your business a lot. And she's graciously going to join us and we're going to talk a lot about AI next week. I'll throw this out. If you have things you'd like us to talk to Lynn about when she's with us next week because we'll probably have fewer articles that we'll discuss, let us know ahead of time. So, Tom, I'm going to wish you a good weekend, my friend. Everyone else out there as well is be kind, do good things and be safe. Have a great weekend.

Have a good holiday weekend. Okay?

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