Rise Of The Robots! With Guest Mahesh Yegnaswami

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

Well, welcome, everybody. I'm Kevin Brown. I'm here with lifelong friend, co founder of Lead Smart Technologies, and business partner Tom Burton. And we are ecstatic to have a good friend, a personal friend, a friend of the podcast, and a friend of industry and wholesale distribution, Mahesh Yagnaswamy. Mahesh is the director of global channel sales at 3M's healthcare division. But many, many years on the industrial side. Right, Mahesh, with abrasive safety, all of those other channels. Why don't you tell us just a brief little bit about you and your newer role and then we'll kind of get diving into today's show.

Yeah, sure. Thank you. Thank you for having me. Tom and Kevin. You know, I always dial into this one, and for me, it's a privilege to be here with you both. Yeah, I mean, almost too long in industrial. I would say maybe five years too long. But industrial is such a fun space. I love industrial business, industrial channels. So I spent 25 years at 3m and now out of the 25, 22 or so has been in building up our capabilities and our abilities to do better through channels, not only in Canada first, then us, but also globally. And that's where I spent my time in the last, I think, seven or eight years being focused on the global marketplace. And then another opportunity came along about four or five months ago on the healthcare side. They wanted me to come and see how can we better manage our distribution partners and sell more through distribution globally. So I took on that challenge and it is a challenge. New industry and, and again, it's a global role, but I still have my one leg, one hand, and it's hard for it to go away from your system. Right. So, but what I'm trying to do is trying to bridge the gap in terms of what can we learn from here that we can apply here and vice versa.

Right.

So already lots of learnings.

I think that's exciting. And obviously there's, you know, I think once you start in the industrial segment, there's, you know, a 3M adhesive that keeps you in that in that arena at some level as well. You guys should be laughing now. See what I did there. But you were just a speaker a couple weeks ago at the Industrial Supply Association's fall event. So obviously you still have your a few toes on this side of the business. But I think that's interesting. So we're going to look forward to your feedback and your insights. So you're living in Canada, correct?

Yeah, I moved back to Canada. Canada's home for me but originally from India, but Canada's home and I moved back about two years ago from, from the Twin Cities.

These very good. I think you're our first offshore. I guess it's not offshore but international guest we'll call it.

Hopefully not the last.

Well no, we gotta just realizing that you know, our audience is growing so we'll work more on that. So before we dive into the news, let's kind of do our, as I call it, our housekeeping. So as I mentioned, I'm Tom Kevin Brown. I'm here with Tom Burton. Tom and I are lifelong friends. We started a company a number of years ago called Lead Smart Technologies. We have developed a industry specific product category called CRM which you've heard of many times before, but not CRM and customer intelligence which is what we do. And we use AI enabled tools to bring deep insights into customer intelligence and understand what's going on at our customers, our team and as well as our businesses. By bringing data from throughout the business we what that allows companies to do is accelerate sales and growth of their organizations. We don't work with companies outside of wholesale distribution or manufacturing and we get together every Friday morning, we discuss a newsletter that we send out. And the newsletter, just like the broadcast you're listening to today is called around the Horn in Wholesale Distribution. If you would like to get that newsletter where we consolidate kind of what's going on around the world. Recap. A little bit of the news in the economy and mergers and acquisitions, some labor issues, artificial intelligence technology. We bring that all in, we talk about it with our guests and we look at how that impacts wholesale distribution. A couple of simple ways to get the newsletter if you don't currently get it. Simple way is you can pop up a note at an email address of helloadsmartech.com let us know that you'd like it. Or the even better way is to go to www.aroundthehornpod. you can see all of our previous episodes there. You can listen to them and sign up for the newsletter there. So we do this every week if you are listening to the podcast later today versus the live session we're doing this morning on LinkedIn Live, Facebook Live and YouTube Live. If you're listening to the podcast, you will not be seeing what our live guests are seeing, which is a copy of that newsletter that's up on their screen. So we'll introduce those articles that we're going to talk about. We'll try and reference where they came from. So if you wanted to check those articles out, you could as well. So, Tom, anything to add?

No, I can't, I can't add to that, but I do want to say good morning to Lars by Hash, one of your colleagues from 3M here, Brian, Ron, RP who was with us last week.

Yeah.

Brandon from Atlanta, our good friend, and Carrie from Buffalo.

Good to hear from Kerry, first time with us.

Yeah.

That's awesome. Fantastic. Well, share with us where you're from and who, where you're listening in from. You know, we hear from a lot of people that sometimes they're listening on their phone, but they're scrambling and people are coming in and out of their offices. But we love people's comments and thoughts about what we're going to talk about. So, Tom, why don't we dive into the news?

All right, let's do it.

All right. So first article is from Reuters from earlier in the week talked about US Manufacturing sector slumps in October. And that's from the Institute of Supply Chain Management, which does a monthly survey of purchasing managers using that Purchasing managers Index. And so we tend to most weeks we have something about the economy. We'll look at building starts and so forth and have a little chat of this. You know, as I was reading this, though, I kind of dropped the thought of that in, you know, we talked a little bit about and we rarely talk about labor and HR issues. Right. On, on, on our podcast here. But, you know, we talked quite a bit in the last few weeks about the auto industry strike and here's our first indicator and announcement. We're going to talk about a few other articles related to this this morning. Is well, there's, there's the first squeeze that we feel right already from that strike happening.

Well, is, and is that what I, I didn't recall seeing that in the article, but did they tie or connect the dots?

Yeah, I mean, their quote was US Manufacturing contracted sharply in October after showing signs of improvement in prior months as new orders and employment slumped, likely reflecting strikes by United AutoWorkers against Detroit's Pig3. Very, very clearly. It dropped from 49.0 and we're always, ideally we're looking for it to be above 50 and it dropped down to 46.7. So the major factor that's happened in the month was the strike.

Right. But anything that you're seeing on your end, I know we talk about this every week in general, you know, just I guess the barometer, if you want to call that the economic barometer, anything you know, in your world that you're seeing one way or the other that, that can provide any, I guess guidance of the up and down that we.

Keep seeing, we all see the same news, same article. So you know, certainly when I, we, we benchmark ourselves to the IPI industrial production tax, many of industrial companies do that as well. When we look at that Q4 is supposed to go below zero. So in the US the prediction is it'll be negative 0.6 or 0.7. Then for the first three quarters of next year it's going to be flat at best. So they're talking about 0.5, you know, 0.7 compared to what we saw earlier. So that means, I mean the stated, objective, stated goal because of inflation, the raise in interest rates, etc. Is to slow down the economy so that inflation is coming to a meaningful level. Which means the goal is to slow down the economy. So economy will slow down otherwise our costs are going to keep going through the roof. So we are buckling down for a flat ipi. So any kind of, you know, mid single digit growth would be exceptional performance. I would say next year.

Yep.

Let me ask you a question related to that. You know we, we typically are talking on, on our podcast each week mostly about what's going on here in the US but you're responsible on, on helping develop the channel side of things for 3M and how many countries?

Pretty much global.

Global, right. Yeah. So, and I know we were talking a couple weeks ago, you know, some changes going on in 66 countries that you had mentioned and we won't get into that part of it, but hundreds of countries. Right. So the reason I bring this up and ask this question is I talk, you know, occasionally in my conversations with regularly obviously in Canada, some a little bit in Latin America, a little bit in Europe. We're talking to companies but you know, the sentiment in the, as we talk to wholesale distribution and for the most part manufacturing companies is, I'll stop short of saying bullish. But, but they're growing. Right. They're, they're not, they might feel, be feeling, you know, a regional pinch on something. But in general the mood is good.

Right.

There's the sky is not falling, Chicken Little isn't running around. What's your take on that though globally? Is that a similar feel from distribution or do you feel a little bit more caution that you see maybe in Asia or parts of Europe where you're dealing with people?

Yeah, yes, exactly. U.S. economy has been doing well in general compared to. Still it's holding on. Right. Unemployment rate is low still and etc. Canada is entering into a recession. We can feel that, we can sense that. We can. And the data also supports that feeling. Pockets of the rest of the world are growing still despite high interest rates. And those are the countries that are always used to operating in a high interest rate environment and high interest rate.

They're comfortable with what's going on.

Yeah, Like India for example, they're growing, their economy is growing high. The GDP is expected to grow around 8 to 9%. So highest big economy growth. Right. So whereas China is going in the opposite direction. So pretty much every company that's operating in China is feeling the pinch of the slowdown of the Chinese market. So when you tell, when you talk about other big economies, Germany always does well. And we'll talk a little bit about Germany in our exports country. Right. Extremely interesting country. They buck the trends very well. Whereas France and UK to some extent seem to be following the traditional, you know, up and down cycle. Right. That happened.

So.

So pockets, I would say pockets of different parts of the world are growing still and pockets are either either flat or below.

So.

Okay, I think that's really interesting.

Yeah. Europe as such has been on a very flattish 1% growth type of an environment for a long time now.

Right. Overall. So I think that's a really interesting point, Mahesh though, about countries that maybe are a bit more immune or under, you know, not, not so affected by the high interest rates and the, and the inflation aspect of things. I mean, that's very new to the U.S. if you, you know, for many, many years and so. But other countries tend to operate or have operated that way for many years. So it's very interesting when you start thinking about, hey, different dynamic, what are you used to, you know, do you have the muscle, you know, the muscle memory for those things already or not, which we don't really have here, haven't had here and what we're doing. So I think it's a great point.

Yeah. And again, a couple of other countries, Japan has always been a flattish stagflation, has been going on for two decades now. Right. But they are finding new ways of technology wise, they are very advanced. Right. So. And then Korea has always again done well. Well, I would say, despite everything else that's going on, they've been pretty innovative overall. So.

Yeah, that's good. Well, before, before we jump ahead to the other article, you know, a takeaway from this, which I thought was kind of interesting is, you know, they referenced that this was the 12th consecutive month that the PMI remained below 50, which they just said, obviously if it's below 50, indicates contraction in manufacturing. But the reference point that I thought was intriguing here a little bit was that it's the longest stretch since 2007, 2009, they called the Great Recession. And so I look at that and I think, you know, we hear this stuff, the discussion, you know, maybe recession's coming next year or then you hear other pundits talk about are we already in one or a mild recession that we're already in soft landing. All of these things I would throw out that this probably suggests at least, you know, in this manufacturing segment is, what is it, 11% of GDP, right. So it's pretty, pretty major factor. As we talk about this. This might suggest, you know, that that mild recession piece has been there for the last 12 months as we're kind of looking at this already. So something that we need to continue to continue to pay attention to. So let's kind of jump ahead so that we talked briefly about the impact that was suggested of the, the UAW strike. Obviously we saw earlier in the week that there's concessions that had been made and negotiations done. I don't think these agreements have been ratified yet, but strikes ending. There was a good, really nice. It was both a video and a transcript there in Yahoo Finance with the national association of Manufacturers CEO Jay Timmons. And he talked about that, that smaller manufacturers are already feeling the impact of this. I thought it was kind of interesting. You know, he made a comment, he said, you know, smaller manufacturers are having really difficult times right now. They're having to make the choice of keeping their doors open and laying people off, but then worrying about can they get those people back now. It just kind of makes me think, I think our peace with us. Yeah, he's there some this morning, was with us last week and, and as a retired Granger executive who had run the Great Lakes region, RP was talking last week about, I think he used the number, if you remember, Tom, you may remember not. I think it was there's 5,800 or 5,600 other companies in the US that support basically tier one, tier two, tier three companies that are supporting automotive. Right. And that, you know, in a relationship of that trickle down effect, kind of a big issue, right. That that's gone on with this and now we're seeing this from this, this challenge. I don't know what your guys's thoughts are. It kind of got me triggering. It's like, okay, this was projected, now we're seeing it.

Yeah. When he said 5,600. I think what's going to be interesting here is let's say the strike gets handled and they start to try and get back to business as usual. Well, it's one thing for the big organizations to get back to business as usual, but what happens downstream, you know, as you said, right. If you lay somebody off or certainly shut the door, it's not like you just necessarily throw a switch and everything comes right back.

Right.

So is there going to kind of, is there sand in the gears, if you will, as a result of this downstream impact? You know, based upon what you just read, my thinking would be, yeah, you know, how it takes quite a bit to get the machine going again.

Well, I think this was probably a much shorter strike than we've seen in the past, roughly a month, I think it was. But you look at all of those, you know, folks, whether it doesn't matter whether you make, make gloves in Pakistan, they go through a distributor in Detroit, you know, or, or your, you know, Johnson Controls or Lear making an airbag.

But, but you think of a month, right, for a small manufacturer, that's two payrolls. I mean, that's, you know, okay, one payroll, maybe you can kind of, you know, get through it. You start to get to two, and you're not sure about three and all that stuff. And pretty, pretty soon you're in a, in a situation so.

Well, and it was intriguing with that, right. Is that the, the comment that was made by the, the CEO there of the national association of Manufacturers said there's already 600,000 open jobs with a labor shortage that we have, which is, you know, kind of intriguing with that as well. So there's this balancing act of, you know, if I lay people off, will they come back? Right. People are already having trouble filling positions, so there's this struggle and then what does that do to the balance sheet of the company if you're keeping people on and so forth. So I'm glad to see this done. You know, we talked a lot about whether, you know, the concessions we've got an article later today that recaps some of those concessions and the wins and losses, so forth. We have an article in the newsletter about that as well. But it's just kind of interesting to look at that.

Kevin, freeze for you. Mahesh. Yeah, yeah, we're good. Yeah.

Okay, great. Okay. Yeah, I was just reading some of the comments. You even have international audience. There's somebody from Turkey there. Yeah, so that's good. Just going. Yeah. You know, my kind of, you know, automotive is such a big sector. Right. And the RP has pointed out it's huge for this part of the country.

Right.

So both in US and in Canada. And hence anything, you know, anything happens to Automotive, if they sneeze, some of the manufacturers and distributors will catch the cold for sure. And we are hearing that from our distribution partners as well.

Gotta write that down. I like that one. If they sneeze, they'll catch the cold. Okay.

Yeah. Some of our distributors, really good partners who are in the Michigan area are feeling it big time.

For sure.

I want to go back to our previous topic just for one comment. This is very interesting. India and Brazil particularly, there's a huge move towards digital payment system, which is so a lot of the economy in the past was cash based, unlike the developed economies as they are transitioning to the digital payment system, which means with a phone you handle everything. Some of the economic growth I feel. So I'm not sure if all of the growth is real growth or what we would call the black economy turning into white economy, which is the bad money that is not accounted for is becoming accounted for because of the digital pay.

Okay, so let me ask you a question that actually goes with it. Yeah, man. The story, right. So you're talking about Latin America really moving that direction.

Brazil. Yeah.

Right. And, and, but that's been. That's been the mode in Africa for a long time. Right. So is this kind of following that path as well?

Well, we're talking volume here, right. You talk about 1.3 billion people out of that. Even if half of them are moving to a digital payments, we are still talking a population that's twice as big as the United States. And if they tell yesterday they've been dealing in cash, but today they are actually doing digital payments. That's being counted in the economy because the cash generally is not. How much of that is fueling the official numbers is the question is the economy really growing? You can feel it sense that. But that seems to be happening in a big way, particularly in India, in Brazil and Some parts of Southeast Asia, which is Philippines, for example. So I just wanted to make that comment because that's, nobody is kind of talking about that. Even the economists are not talking about. Okay, what is the true growth versus shift from unaccounted for dollars to accounted for dollars before I lost the thought in this old age.

I think that's great.

Kevin.

I think that we need to make sure we explore in future shows because I think that's a really interesting concept. Right. It's like sort of this underground financial transactions is now rising into the spotlight potentially that can be tracked and so.

Forth and which is very large in most of the developing economies. Right.

Huge.

Eastern Europe, Asia, Latin America, Africa, space.

Well, you got to know the government loves that. Right. Because now they're tracking where that cash was. So that's good. Good to see. Good. Well, let's, let's kind of bump ahead here. So we, we talked about, you know, kind of this, this impact, the trickle down effect. Right. Of the automotive strike. We kind of jump ahead to an additional story that we're sharing here from Reuters that talked about a German manufacturing company.

Moving.

Now if you take a step back and you look and Tom, you made a couple of good comments about this, you know, last week is about, you know, how sustainable could it possibly be when you're taking a both skilled and unskilled laborers right in these, in an auto plant and saying we're going to pay you 25% more over a period of time. We're going to pay you for 40 hours when you're going to only work 32 hours. And how does that become sustainable? And the other side of it is can we find enough people that even if we are happy and could make that work financially, can we find the people? And this article talks about, it's called as baby boomers, retired German businesses turn to robots. And this is not this S and D. Blech. It's referenced as the company there. It's not a small manufacturing company, but they use this example of the head of their grinding unit is retiring. And so Germany has even a larger labor issue than we have here right now. And nobody wants those dirty or hazardous manual work jobs. Right? So what are they doing? Robots.

Right.

And so I'm watching this, reading this article yesterday and I'm thinking about it. Well, you know what, we're talking about 600,000 jobs in the US and this article mentions 1.7 million in Germany. Right. We're going to see that robotic piece happen. And Tom, I think you made even A comment last week about, you know, Ford being the first to, you know, capitulate on this contract issue is maybe they're buying some time. What do you guys, what do you guys think about the robot side of it? When you look at the labor force up. Can't hear you, Tom.

Mahesh, what's your take? I'm interested in your take and then I have some thoughts as well.

Well, it's part of the manufacturing 4.0 we're all talking about. Right. This is inevitable. It's going to. The throughput yield is going to, you know, increase dramatically with this. But Germany particularly is interesting. Right. We talked about it a little bit. I was reading some time back that 50% of the German GDP is exported, whatever they are producing in goods and service.

50 huge. I think us best cars in the world.

Yeah, cars are the ones that we are aware of. But equipment, machinery, all these Siemens and.

I mean, you put the names together.

Bear, you know, exactly us, that same number is I think 10 or 12%. We are more of a domestic consumerist in the U.S. but it's 50%. And I think Germany is the only country. When China ramped up its manufacturing, probably every other country exports decline in manufactured goods exports. Germany is the only country that bucked that trip and they kept increasing their exports over the years. And that's because they, I think they understood, they went to them, you know, went to the higher level of value. They didn't make cheap stuff, they kept increasing the value. So Germans that way, I think are fantastic in terms of showing the rest of the probably developed world, if you can call it in terms of how do you continue to have a robust export economy, Manufactured goods without sacrificing, you know, without sacrificing. This, this means jobs. This means everything, right. For the local industry. So that's my thought there, Tom, in terms of. We know, we, we've seen Tesla, for example, very automated factories already.

Right.

In wherever I've seen pictures or where it's only robots that's building the car. There's no human there. Whereas if you probably take our big three, it's still, obviously it's not easy to transform. It'll take years and decades if not to move to this kind of an approach. But Germans are a little bit more, I think let's embrace the change and let's relearn. Their system also allows that for people to go back to school and relearn.

Yeah, no, that's, that's in their, their labor laws are very, very different there, right. Of course. But you know, it's interesting that this article mentioned from a statistical standpoint, going back to the struggle of filling jobs. Right. You know, they were talking about the same place, the same thing in this article is, you know, finding somebody that wants to do a dirty back breaking job is hard these days to find that. But they said that the impact of those 1.7 million open jobs in, in Germany was 100 billion euros.

Right.

Think about what that means to the economy.

Yeah, yeah. And you know, there's an interesting comment here. I want to, and Kevin, I'm interested or both of your take on this from Tim and Mars as well. I want to hit that as well. But you know, I'm, and again, I'm not in the day to day and from a standpoint of a manufacturing plant, but what I'm seeing in general and just conversations in general I'm having in business is that, and I like your point, Mahesh, about some of the areas people being able to go back to school and get trained. Companies are looking at how do I automate and optimize. Now, whether that's AI, whether that's robots, whether that's whatever, they're realizing that the traditional way of using employees and hiring and all of that, they have to look at different ways. So they've got to automate and they've got to optimize what the employees that they do bring in and how they work. And with AI in particular, as we've talked a lot about, employees are not, they're not trained from that perspective of how do you leverage AI, how do you employ AI really efficiently. Right. Versus it just being more of a gimmicky tool. They're not really trained on how to use that kind of stuff, efficient, efficiently. But I do think we're starting to see that switch. At least I'm starting to see that switch where companies are. Okay, we got to take a step back. How do we use automation, how do we optimize, how do we optimize our workforce, all of those types of things. Now this, you know, Tim's question or point here is he's saying the metal collar workforce is expected to grow 5x in the five years for the first time in history. It's not only automotive and in the general interest rate, you know, does that, what, what does that mean exactly? Does that mean that we're going to be hiring five times the number of people in this industry or is it.

No, I think metal call, I think metal collar is a robot.

Yeah, yeah, right.

So, yeah, we're not, we're, you know, to Tim's point here, right. Five times the growth in five years of using automation to do jobs. Right. And to Tim's point, right. And, and Tim's been around and just. I've known Tim for 25 years probably, you know, he's been in all facets of safety and industrial and packaging and so forth out there. And I think this is, this is what's going to be on the rise. Right. And I think one of the challenges is, and I think they're really seeing this in Germany where I have a lot of family is, and obviously we're seeing it here, right. Is we've created an environment. I don't want to get into the social side of this stuff, but I think we've created an environment where nobody wants to get dirty. Right. Nobody wants to work hard anymore. And there's all these other options, whether it's a social program or it's. I'm going to move to technology, which I'd like to see more and more of. Right. But it's. If you can't find a way to fill the job, then we're going to find a way to get the work done and that work is going to get done through technology and automation.

Yeah.

My son finished his undergrad three years ago. He wants to go back to school. I asked him why, he said I need to reskill myself. Things have changed a lot in three years.

That's so true. Completely agree.

That's the pace at which it's going. Right.

So, but you know, it's. What's, what's interesting too is, and, and this is a, we could digress on this for an hour, but, right. We need those, we need those skilled worker trades.

Right.

Where I don't, I haven't seen any opportunity for robots to do plumbing, Right. To fix a drain yet. And you know, and things like this, of course we can get, you know, robots to do welding and interesting things like that. But you know, maybe down the road we'll be at a place where most of our houses are 3D printed. That could be. But we're certainly not there now. So. Interesting time. Right.

Well, you can take a picture of your drain and then give it to chat GPT and say, how do I fix my drain? See, there you go. Who needs a plumber?

So I, I gotta, I gotta share a secret here. ChatGPT is building a lot of my presentations these days. Yeah, yeah. It's doing it in jiffy until it. Where I would have spent an hour pulling something together, structure, etc. It's doing it in 5 seconds, 10 seconds.

That's awesome.

In terms of the content, rather than worry about, you know.

Yeah, absolutely. Well, good. So, you know, we were talking here, Tommy, you're going a little fast there to get a little bit ahead of us. But scrolling back so, you know, we talked about this move with the robotics and so forth and the labor squeeze and all of these things. And obviously we talk regularly throughout our broadcast about, about AI. And here we are. Interesting timing. Biden administration comes out with an executive order on the exact same day that the, the G7, which the U.S. is the, the Global Group of Seven is a part of Biden administration's first AI executive order. What do you guys read the notes on that and what, what were your thoughts on it?

You know, my thoughts are, because I've read both and I've looked at both and they're hard to decipher. To me, it's basically, hey, look, you know, we're getting tough, right? We're going to do something about this. We don't know exactly what, but we're going to do something about this. And kind of showing that there's, you know, it's, it's important and there's some that we're going to get tough. I guess that's what I read, but I don't read any specifics. I don't really see. The other thing that is a concern if I have, if, is that both of these, if you look at them, are talking about maybe the large, very large language model, large data sources. I'll just call them the mega models. Right? And again, what I'm seeing more and more as I work with more businesses and understand how to best apply AI in businesses is that businesses are not looking necessarily to leverage big mega models, but to build their own micro models that make sense for their business. And these micro models are going to be way less data intensive and, and have way less, if you want to call it risk of harm, risk of harm than some of these mega models do. But my concern is, is that somehow all of this talk of regulation and code of contact gets, I guess, spills over and potentially gets in the way of companies being willing to innovate more with some of their, you know, smaller things or whatever. We'll see. I'm not saying it's happening. I'm just we're going to have to see. But a lot of this is based around the mega models versus the fact that a lot of business and a lot of business application of AI is not going to revolve around these huge mega models. So we'll have to see how it plays out. But that's, that's my initial take on what I've read so far.

Yeah, I'm with Tom here. You got to have more teeth in these things. Otherwise it's at a 50,000, 100,000 foot level. That doesn't really mean anything to an average consumer or average user of these kinds of tools.

Right.

I think we almost have to go back to the beginnings of the Internet when we didn't know what it was going to do, how it will be used. You have the good side and the bad side to it. We can learn a lot. And that wasn't long, too long ago. Right. The government is always three steps behind the private enterprises and anything that we do. Right. So only now we are getting, after 20 years, I would say we're putting some teeth into the Internet side of things.

Right.

For example, how to protect data. And Europe seems to be leading the way in this. More, more than, more than America. Right. So, and I think the US takes the lead.

I think Biden wanted it, needed to, or you know, the US needed to kind of show that we're not ignoring it too. Hence the reason it sort of came out on the same day. I don't know. But, but again, you know, I wanted to spotlight this important comment here from Ron. Do you see that?

Stop it, stop it, stop it.

But he says, you know, there is so much opportunity with AI and day to day leveraging data that businesses have right now. And it is so true. And this is what I was just saying, right, is that in my opinion, the, the opportunity for AI is with companies private or their own data and building models around their own data or even an industry data, but not these big mega models that are, you know, have the potential to, you know, have such, you know, widespread harm potentially if used incorrectly.

So go ahead, Tom. I'm sorry.

Anyway, so it's just, it's just again, I, I don't, I want to make, I'm hoping that a lot of the, I'm just going to call it, it's a bit of noise right now. The noise around all of this doesn't cause companies to go, well, wait a minute, we got to slow down, we have to, I don't know what's coming, right. That you know, use as an excuse to, to put on the brakes which if anything we should be doing the other, the other way around.

Yeah. So I said stop it because I Thought you were going to comment on Ron's first part of that is that you were right again. RP is turning into the chairman of the Tom fan club.

So we got to have some somewhere, so.

Yeah, that's right. I'll keep you in line. Don't worry. But spot on. Right. And it's interesting. It just kind of makes me think a couple meetings you and I have been in recently that we've been talking about, you know, helping wholesale distributors build that internal piece where they can use tools like our technology to access all the other areas of data that they have within their company and kind of build their own model that they're using to use AI within their business. So some cool stuff coming with that. A couple things we should hit, right. We want to be cautious. Sometimes we get ahead of ourselves. We post these articles, right. And then we pontificate and we don't feature much of the information that's in there. So I'd like to do a little bit of that. So this in the US this executive order, right, is basically, it's a law without a law. It's the, you know, the president saying, this is what we're doing. Congress now needs to go step up and do the rest of the work on that. But they talked about 15 major American technology companies that had already agreed to put some voluntary safety standards in place. And I think it's important to kind of look at that because those same companies, right. Are doing all of those are global companies. Right. They're doing business certainly outside of the U.S. i think that'll fit into this. But what this executive order is talking about and it says requires large companies. It doesn't reference yet what a large company is, but they'll be responsible for test results and so forth. And they're referencing prioritizing the National Institute of Standards and Technology to put these standards in place. And I think the easy way to look at that for our audience typically, right. Is, you know, I have referenced this in the past. If you think about osha, right? OSHA doesn't set a standard. OSHA references outside standards. So they'll say, okay, look, there is niosh's responsibility for setting a standard for respiratory protection, or it might be, you know, NIST or ASTM or whatever in standards for abrasives or adhesives or cutting tools or whatever it might be. So I think that's what we're seeing the bend on this moving towards is government's going to say you're required to do these things. And what's going to come from that. I see Mahesh nodding his head, so I'm looking forward to his thoughts on this. I believe what we're going to see out of this is there will be an industry expert group that says here are baseline standards that you have to meet if you have to. Tom, your point earlier, which I think is spot on, is, you know, large language models or maybe mega language models in this setting, you're going to have to meet these criterias. Which the benefit of that, and why I dive a little deep on this is that allows consensus for the industry to help set that. Right. Because ASTM standards as an example, Right. American Society for Testing and Materials, it's not done in a vacuum. Right. 3M has probably countless people on those, those panels and so forth working on that industry. So my take on this is if we look at this two years from now, we're probably going to see this pattern after where we see standard setting versus hardcore laws.

I agree, I agree.

And.

The industry needs to come together and hold themselves accountable to certain level of standard for their own benefit, long term benefit, because bad actors will always be there. They're going to hijack their technology that these guys are building and pull the rug from under their feet otherwise.

Right.

It should be long term strategic.

Right. And this is one of those things that we see is, you know, a large manufacturer, if you go back to the OSHA example, right. They're not going to mess with things and that they're going to abide by those standards because of fines. But even beyond the fines is now there's a baseline standard that if I get sued, there is an industry standard that's abided by, by people and my risk of exposure goes way through the roof of these settings. So I'm guessing that might be what we see. You know, we have another article that just kind of goes right into what the G7 is talking about here with their meetings this week. I think last week, Tom, you commented on a little bit about this is, you know, it's probably into the New Year, I think is what you said. If I don't, if I remember correctly, before we get Canada, France, Germany, Italy, Japan, Britain as well as the rest of the EU that's following along this that they get. They're talking about 11, an 11 point code about safety, security and trustworthiness. So we'll see. I think by this time next year we're certainly going to be way down this path.

Yeah.

I also hope they bring China into the loop and make sure they are part of the solution because China's AI technology is far advanced, far advanced than 99% of the other countries. So they got to be part of a solution.

Yeah. Dr. Burton, what's your take?

No, I agree, I think that, I agree with Mahesh completely. Right. China and some of these other countries need to be included in this. I'm still skeptical that in 2024 we're going to have anything that isn't that's really practical and usable and makes sense. I don't, I don't, I think we're still farther away. I think there's going to be a lot of talk. I think there's going to be a lot of positioning. I think there's going to be, hey, look at us, we're doing something about this. We're not, you know, sleeping on the job type of thing. But as it really comes into a practice, and I tend to agree, Kevin, with your take is that we are going to have to not only look at industry, but we're also going to have to look at use case. I think there's kind of a matrix of things here that have to be looked at when you're starting to, you can't do a one size fits all because there's no way a one size fits all. So and I think that's where the complexity is. And I think already if you just look at some of these things here, you can kind of tell that the people that are doing that are a bit out of touch with reality, they're a bit behind. And again, we're just so, I don't know. I just don't, I don't see anything practical until 2025 at the earliest. That's just my, my take. It might even be longer than that. But it's not, there's not, it's not there won't be a lot of conversation over the next year. That's, that's the difference.

Well, I'm glad you, I'm glad you talked about that, Tom. So a couple things I got a question for you. But first is I, I read another article this morning related to all of this and it evidently it turns out that the, you know, the story behind the story, so to speak, on how this kind of came together was former President Obama was Biden's guy to go have all these meetings with these groups to get this first level for executive, executive order. So Obama was behind that, that, you know, the back room discussions and getting some general consensus for this first part of this, which is interesting. But I want to go Back. Tom, to your, your comment about 20, 25, and I'm happy you brought that up. Is that, is your take on that tied to a little bit? Maybe if we don't know what we don't know even about AI yet, there could be more things that we need to understand before it can be monitored closely, have standards or be regulated more. What's your thought on that?

Completely. AI was, oh, AI, look at all these great things. Now we're starting to see, and I say starting in the infancy of understanding the use cases and the practical. I'm just from a business perspective, the practical business use cases, not to mention the practical consumer use cases that goes up there. But we're just starting to understand and even get our head around what is even possible. I believe from the use case perspective, then you combine that with the industry aspect that we're just talking about. There's just still a lot of unknown. So how do you regulate something when you don't really know how it's going to be used and how it's going to, you know, be used to drive business and drive the economy and all the other things that we've talked about? So I, I just don't again. And my concern, if anything is if people go, oh, whoa, wait a minute, I gotta slow down. I gotta wait and see how this shakes out. I've gotta do.

Right. Don't worry about this.

Right. You know, what was it last week? I'm all set until this gets, until this gets. It's like that. Is that as I think the risk here of some of this noise. And yeah, we don't know how long it's going to take to get to anything practical. So just good judgment and move forward. I mean, that's, that's my two cents.

But I like that, I like that, that, that fits. You know, I was saying by this time next year. I'm sure we'll see more by this time next year. But what we might end up finding out is that there's a lot of teeth that need to get added to this. Right. Over time because we see use cases change and some of the technology change.

Yeah. Kevin. Tom, I'd say, you know, the industry will never stop innovating. We never know everything before we say it. Right. So based on what we know, you got to put some regulations to make sure that that technology is not misused or hurting people in some way. In the meantime, as that is rolling out, the technology is going to improve. Right. So you got to. It's a catamount game.

Right.

It's going to keep going for a while until it reaches a certain amount of. A certain level of plateau. Right. So when the change or the rate of change slows down a little bit. Right. But till then, we can't just wait to put these things in place. Right. And we'll never know all of it at any point in time.

Yeah. Yep. Agreed. Good. Hey, before we jump ahead, just a little reminder that we do each week during our broadcast here is if you're listening on our podcast, which we're on all the popular podcast formats, whether it's Spotify or Apple podcasts, Odyssey, wherever you might listen. What you are not seeing today is that Mahesh, Tom and I are sharing with our live audience on our screens a newsletter that we publish every week. And so sometimes I have to remind myself that we need to reference this during, during the pod is that some people are just listening. So if you're just listening, we're discussing the around the Horn and wholesale distribution newsletter that goes out every week. We try and as we talk about the next article, reference where it's from. If you would like to get access to that newsletter and you don't currently get that, please reach out to us. You can do so@helloadsmartech.com and say you'd like a copy and that'll get out to you every Friday morning bright and early or. Or aroundthehornpod.com will get you access to all the previous episodes as well. And then if you'd like to see the handsome faces that we have each week here live, you can catch that on YouTube Live, LinkedIn Live, and Facebook Live at the lead Smart technologies sites or pages there. So little guidance on that quickly before we jump ahead. So, Tom, next article. What are we talking about marketplaces again in the B2B world? Right.

Yeah. And I know we're running kind of short on time here, so I may. We can combine a couple of these, but I think this article, this B2B marketplace and the proliferation, and I apologize, I think the link didn't work in the article, if you tried to click on it. But it's, you know, they're talking about the proliferation and growth of B2B marketplaces to over a thousand in five years. I think that this is a great example of what we were just talking about. The B2B marketplace proliferation, in my opinion, will be driven by very, very focused, vertical, specific use cases that can then be augmented with AI or technology to provide a really good experience for those marketplace users. This isn't Just going to be. I'm going to replicate Amazon. This is going to be. How do I build marketplaces that not only provide the right products for the industry but can provide a level of service and, and insight and knowledge and capability through Z.

Right. Tommy went away again.

Another example of use case and another example of, you know, these are a kind of a micro use case, if you will, for these different. So I think that the opportunity for marketplaces gets. And you're not just a me too right now. You can proliferate but not be a me too. I believe that is what we're seeing here and, and certainly how that will end up playing out.

That's good. That's good. All right. Well, every week we, we then we'll kind of move ahead from that. We talk about. We have an article called Tech Talk this week. It was Pros and Cons of AI Generated Content. You know, Mahesh made a comment earlier about how he's using chat, GPT and other tools to build presentations. We have an audience that has varying degrees of understanding and use cases within existing AI tools, especially if you're newer and dipping your toes into the pool here, so to speak. That is a great and helpful article that I think most people would find some value to seeing some of the pros and cons of things and maybe where to get started a little bit. We also do each week what we call our industry scuttlebutt. A little bit of news of what's happening out there. Some good news. Mdm, Modern Distribution Management friends Tom Gale and Mike, Mike Hockett and their team over there. I think Mike's with us today. They do a regular update on the M and A marketplace within wholesale distribution. It was a big month last month and so we were happy to see.

That.

There is no shortage of wallets being opened in the M and A world. In fact, I think last month there was a number of companies that had multiple acquisitions done as well. So I, that to me is extremely encouraging. You know, I, I hate to see it, you know, if you're, you're talking about companies that were struggling, that got acquired. But you know, that's part of the world that we live in. So good news there. M and A keeps pushing forward. We also had some news last week about large distributors opening new branches and even building new facilities. So that's nice to see as well. I think we talked about the Dakota Supply Group jumping into two new states with two new buildings from the ground up. Quick article there about Valen Mahesh. You were at the ISA fall event recently. Valen won an Innovation Impact award there. So congratulations to them. Last couple things here we've got is the UA that we had a special feature this week. There's an article there about, you know, an autoworker strike one. Things that some of the things that people didn't think possible and what did, did happen and didn't happen there. So I don't know if you guys had any take on that. I thought that was a, a good quick little read that gave an over a good overview.

Yeah, I mean I have, I, I think we've touched on some of these. My take was what we kind of talked about last week is I think the UAW thinks they won big things and I think they did get big concessions. I'm not arguing that, but I think that maybe it's the beginning of the end for them. And one of the things that really jumped out at me when I was reading that is they said that in order to get to the, the high end, like the high pay range, you had to be like on the job eight years, right. And that shifted to three years. Now to me that just says okay, we're going to buy time for the next three years or so. And as we start to really do some of the automation and other things, I don't know, I just, there's just as I look through that there's things in here that I think short term you go, oh my God, you know, pop the cork. This was an amazing result for the union. But if I also see, I see, I just see concessions in there that are not sustainable, not. And I just, I think that again I'm not an expert in the auto industry but just reading between the lines, that's what I'm. My take is might be a little care.

It might be a little bit about careful what you wish for.

Yeah, exactly.

Right, exactly. I, I think this is interesting when you were describing that, what triggered for me is the, you know, look at the tech world, right? People leaving after 9 months, 12 months, 14 months and job hump hunt hopping to the next, you know, well, I want to work on this and that company is doing this and this company has a little bit better stock options and I think now we, you know, that may be a little bit of a trickle down that we're seeing over here is well, I need to be there three years to vest or whatever it might be. So interesting time related to that.

Yeah, we'll see.

Good. So we also had an article, we have a feature each Week we talk about it's called a good read and saw an interesting article earlier this week that I read and I hadn't seen anything that he Jack Keough was just a staple in industrial distribution and wholesale distribution for as long as I've been around. I think I met Jack for the first time in the early 90s. Mahesh, do you know Jack Keough?

Yes.

In the Boston area there and just a stalwart in this field and he wrote a nice article about the cost of for lack of succession planning and so many of our customers at at lead Smarter, our family owned businesses, multi generational businesses and so forth. And you know we see that especially when you meet with some of the folks that are part of buying groups and active in trade associations and so forth, do a nice job of succession planning. They've got tools that maybe their trade group or buying group helps them with but boy there's some things to look at the hiccups and the challenges that come by not doing that. And Jack wrote a nice, it's a short article but a nice article there. So good to see some stuff from him. So okay, so before we wrap up today which we're heading into, I just saw an update on my phone come through. The jobs report is out and we've been talking a little bit about the economy and and mild recession potentially and so forth. Unemployment is at its highest rate since January of 2022 which reinforces the Fed not raising rates earlier this week and maybe is the first inkling of a Fed go away for a while and think about rates stabilizing and then dropping if that were to hold up.

So yeah, there's a comment here from RP earlier on right. There's so much opportunity.

The one that says great job Kevin.

That one. No, the one that about the know opportunity with AI in the day to day is absolutely right. I'm seeing that in the healthcare being used a lot to by both manufacturers and distributors working together in terms of leveraging those algorithms to tell us what the future, immediate future is going to look like. That's the more the, the whole predictive thing about analytics and using that data to tell us what is going to happen. And we verified and validated some of those hypothesis and lo and behold nine out of ten were true. When you, when you peel back the layers and really go back and work with supply chain, work with operations, yes, this is going to happen. Okay. Now that you know we, we have understood that you know it can be right more than you know, wrong.

We.

Are Working together with the industrial, with our industry partners there, external partners, to make adjustments together. To make adjustments together, us and the distributors. So that the hospitals, the patient who is our ultimate customer is not going to feel the impact of anything that happens. Right. Lack of product, lack of supporting stuff, materials, et cetera, that they need. So that when you go in for a procedure, they're not sending you back home saying, I don't have this stuff. That's a huge, huge inconvenience. Huge, huge inconvenience for everybody involved.

Right.

So that application of AI is here and industries are using it. Now, how does the industrial side of the businesses need to start using it?

Right.

So big question for all of us.

Well, I think if you mentioned Mahesh, I think there's a lot to be learned that can be carried over to the industrial side of things.

Yeah.

And you know, we've talked about this before. Industrial distributors and manufacturers are data rich. There's a lot of data. Sure. So how do you use that data effectively? And I'm, I was excited, we were talking before the show about what you were doing in the medical world and how much you said the speed of the adoption is much faster, but there's a lot that can be carried over. It's still a channel, right? It's still a channel. Somebody makes something right, it has to be sold through somewhere. It's the same, same concept. It's just how do we learn from that?

So, yeah, the one big change, the one big difference I find so far is the trust. The trust level is higher.

Oh, good.

Distributors and manufacturers. And now you can argue, you know, you can find reasons for it. But that's not the point. The point is there is tremendous amount of trust level. I mean, the trust level increases between the two parties. The winner is the customer, right. At the end of the day. And hence your services and your value addition greatly improves to the customer.

So Mahesh, I'm going to ask you in 30 seconds or less, can you give, because we could probably do a whole nother separate broadcast and conversation about that point you made about trust. Can you, in a nutshell, what are your thoughts on why does that trust exist differently in healthcare than it might in tooling or construction or building materials or industrial? Why is it different?

Top of mind, two reasons. It's very fragmented, okay? The industry is very fragmented. That means a lot of players on both sides, manufacturer side, and on the.

Distribution side, they have different sizes, different.

Sizes, shapes, colors, etc. Then the second reason is the fact that we Keep in industrial. We keep going back. You did this to me 20 years ago. I'm not going to trust you now. Okay. So that thinking, that mentality is there still, I would say we got to get past those. Right. And, and say, okay, what's happened? We can't change the password. How do we work better together?

Right.

What are the checks and balances we have within our agreements to make sure one is not.

That's the. And is that trust? Is that trust? And I know we're out of time, but yeah, this is just an interesting topic. Is that trust more prevalent in medical because they don't have that long history, maybe that they're up against or is it, I don't know what, what, what elevates it in medical? That doesn't exist in industrial. Industrial.

I would say, I would say there is only that everybody's view. If you ask who is your customer, it's very interesting. The manufacturer doesn't say it's the distributor. The manufacturer doesn't say it's the hospital. The manufacturer doesn't say it's the surgeon or the nurse. Guess who they say is that is that customer.

Patient. Patient. Right. Right. You just have to.

Patient. So there is one central point of who that customer is and that, and that customer's well being is driving everybody else to rally behind that. Whatever needs to be done to make that customer's well being as your primary focus.

And is it safe to say Mahesh, then the idea then is whether you're a manufacturer's rep, a wholesaler, distributor in that process, somebody working with GPOs, whatever it might be, I need to then prove my value in this chain every day of my value to that patient.

Exactly, exactly.

Which is very different. Right. Because in theory I could argue, right. That the guy in the plant that's using the adhesive or the cutting tool or wearing the hard hat is ultimately, I'm just using 3M as an example in those product categories is that is still the customer.

Yeah.

But what I think we're missing is that those that play that role through the. They'll call it the dis. I like to say the distribution chain versus the supply chain. Right, the distribution chain. We're focused less maybe on proving our value to that person and more about our own fiefdom that we have within that. Is that fair?

Yeah, absolutely fair.

Okay, well that's a whole nother. We could spend an hour.

That's a whole nother level of. We have to keep ourselves too in industrial. That's why even distributors not only. I mean, POS is table stakes in this.

Yeah, yeah, yeah, yeah, sure.

Right. But in terms of. Imagine a distributor. Imagine Granger. I know RP is probably left. Imagine Granger sharing their service levels by customer, by product to different manufacturers so that we can improve that service level that they are offering, because they themselves can't do it. They need manufacturer support to do this.

Yep.

So that's.

And that's a different mindset. Right. It is a complete shift of that, because what. And I'm gonna. I'm gonna wrap this up just for a point of time, but we're going to talk about this further, is I look at this from that standpoint, is I use the term five times earlier. Maybe that's a little too much. But I'm not sure that it necessarily is. Is. It's not our. Our. And I think we're starting to maybe see a little bit of a shift in this. You know, you were. We talked about earlier. You were just with. With the Industrial Supply association. Asa, that's more on the H vac and plumbing side. They just had another big event and so forth. I think we're maybe moving in the right direction with this. My gut is telling me, but I think historically, a distributor has said, that's my customer. And the manufacturer, especially somebody the size of a 3M that says, yeah, I got lots of people that can sell to that guy. Right. It's my customer. And what we need to be thinking about is that everything we do is about them. And if we're not rallying together to improve their outcome, they lose and they'll find somewhere else to go.

Exactly.

All right, good.

They'll go find a B2B marketplace that will do it for them better.

Well, great point, Tom. You know, there's your compliment for the week, is that. That is exactly right. That is what will push people to. I don't care about seeing XYZ distributor, ABC manufacturer salesperson, my facility. I'm gonna go get it on a marketplace because DHL can get it to me in two days from the Netherlands, if that's where I choose to buy it.

And the marketplace provides the service. Anyway. This is a great thing. I'm sorry, we. We covered this at. Well, we wouldn't get people who stuck around to listen.

Yeah. Had we started on this earlier, we would have never got anywhere. Thank you, Mahesh. Thank you for being with us today. Did you. Did you enjoy yourself? Was it what you hoped?

Oh, fantastic. The hour went by so fast.

All right, so we got to get Lars on here soon. We were talking about him earlier. Everybody tells us each week, I'm not sure I have enough to add. And then they drop these nuggets in like, like you just did at the end. So, great guests, we appreciate having you. My final question to you is, will you join us again in the new year?

I will. This is a wonderful, wonderful opportunity for me to share my thoughts and so thank you again for having me.

Great. So as we close again, Kevin Brown, Tom Burton, around the Horn in wholesale distribution, we do this every week or nearly every week. We have a little hiccups once in a while with travel schedules and things, but we appreciate you being with us. We'll ask you one favor. If you're listening in today, whether it's on the podcast or on LinkedIn, please click the like button. If you're not following Lead Smart technologies on LinkedIn, Facebook or YouTube, but probably most importantly, with our platform, if you're not following us currently on LinkedIn, please click that button and join us so you'll get notifications of the podcast every week. If you're listening in on the pod and that's how you absorb information, click that, that button for a review on Apple Podcast Spotify. And that's how we get out to broader markets. We had, I think here today, three or four different countries at least represented that was with us live and we normally get to six or seven different countries. We'd like to expand that. So again, Kevin Brown, Tom Burton, our guest, Mahesh. We thank you for being with us today. We wish you a fantastic weekend. Be kind, enjoy yourself, do good things and be safe.

Thanks, everyone.

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