Great Economic News for Manufacturers & Distributors! But Where Do We Go From Here?

[00:00:00] Welcome to Around 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,

[00:00:19] wholesale distribution, independent sales agents, and the global wholesale supply chain. Whether it's M&A, Sass and Cloud Computing, B2BE Commerce or Supply Chain Issues, we peel back the onion with our guests into the topics that impact your business the most.

[00:00:37] To hey, you know what? I am excited today. You know, today is 75. Is that a standing room? Yeah. We, we, every time we talk about this with John or editor,

[00:00:53] we take care of putting all this stuff together and the intros, the outros, and the load in the podcast and editing and video clips and all the stuff that John does such a great job of.

[00:01:03] He's like, you guys need to celebrate right? My my three three boys in the middle, sons uh, something of a social media guy and he's constantly like,

[00:01:16] we need to hit every 25 episode milestones you hit, you got to have a celebration and you know drink champagne and you know do all this stuff and like I kind of forget.

[00:01:26] We just go week to week and cloud through it right? Yep. Yep, but we could have champagne that would be good. I'd make your dancing even better at them. Well, at least it'd be more tolerable right?

[00:01:37] That's good point. Yeah, for you, it would be more tolerable. Hey, though interesting we do in this is housekeeping here, but we do we should start planning what we're going to do for the 100th anniversary if you're listening in with us today live on linkedin live Facebook live YouTube and you've got ideas about what we should do for the 100th episode which is coming up and I guess the middle of the year.

[00:02:03] Let us know maybe we should put our feet up my wife just chimed in and said no dancing. I have the same same view.

[00:02:11] Darling with the Inquire Spritt and Design Group, my lovely wife just shared it that you know unless we're at someone's wedding and she's been drinking a lot of champagne.

[00:02:22] She doesn't like me dancing. So I think I'm actually quite good, but that's okay, but we do we do need to start planning what we're going to do we should probably do it live somewhere and when I say live us together in the same room we're figure something out.

[00:02:37] We'll work on that. If you had ideas throw them out there to us, we'd love to hear it. Big news for us today, although we're going to talk about some other big news today is we've re structured and reformatted our newsletter.

[00:02:50] You know historically time we've had kind of our our just information in the general news right we've invited people to come look at that but you know we had a great group of guests on a while back a couple of weeks ago.

[00:03:04] And one of the guests that we had was we had Mike Marx and Ian Heller and and Burke beverage and Burke commented and and he did it, you know, carrying me for the best of things with us. Was he came back and he mentioned to us.

[00:03:19] We don't talk a lot about people here right and Dirk's work through unleashed WD and we supply America tour as celebrating people that work independently on wholesale distribution.

[00:03:31] And so what we've done is we've restructured the newsletters. The newsletters now going to have a series of five sections economy and supply chain manufacturing and distribution e-commerce and marketing.

[00:03:43] We're going to have a technology cyber security and a eye segment within the newsletter and then we're going to have sales and M&A section and then finally a people and leadership section.

[00:03:53] So it might be two articles that might be four articles in each section each week. We're going to continue with our great read and a few of the other pieces that we have in the newsletter, but I think the structure of the newsletters going to be extremely valuable for our audience moving forward.

[00:04:07] I appreciate the work you and your team did on that as well. Tom so. Let's get ready to dive in. I'm sorry. I think it's important to point out that the newsletter will have possibly a lot more articles week to week than we had.

[00:04:21] It doesn't mean that we're ever every one of them. This is going to turn into a three hour show. So if anyone's nervous about that, that's not we're going to try and hit some of the ones that are the most relevant.

[00:04:31] We didn't tell you that I blocked my whole morning. How you did? Okay. Yeah. I think it's a good morning to Ron. It's always great when he's here and Brandon as well. Two good friends and always great to have them on the show live.

[00:04:51] Good friends and good friends of the show to Ron's a. Now a consultant and working with some some large brands and retired senior executive from Granger, Brandon Lee's marketing whiz and social media whiz and from the great team at fist bumps which is a fantastic tool.

[00:05:11] If you're working consistently on LinkedIn and trying to grow your LinkedIn network and do some. I think that's a right term now Tom is in versus social selling modern selling modern selling.

[00:05:22] Yeah, if you do. If you do use LinkedIn for some of your prospecting and developing your network, you may want to connect with Brandon Lee and follow his his posts as well as his company fist bumps which is a great tool to go with that.

[00:05:41] I've been in the news, my friend, let's get our housekeeping out of the way again. My name is Kevin Brown. This is my good friend and lifelong say lifelong friend and great business partner Tom Burton. We get together every Friday morning. We typically have guests with us every couple of weeks. We usually do it every other week.

[00:06:00] We've got a phenomenal list of guests coming up. We've got almost half the year already booked some big names. It shall recognize we'll mention even a reference a few of those later in the the broadcast this morning.

[00:06:11] We together a Friday morning. We go live on LinkedIn live YouTube live Facebook live on the LinkedIn or the a lead smart technologies page on any of those platforms later in the day what we've discussed on the podcast here that's live will go on to all of the popular podcast platforms out there.

[00:06:29] Spotify Apple podcasts and so forth. So again, I'm Kevin Brown Tom Burton. We're the co founders of lead smart technologies.

[00:06:36] Lead smart is the developer protocol channel cloud and channel cloud is a AI enabled smart CRM and customer intelligence platform that brings deep insights and accountability into both customer data internal company data and allows for actionable decisions that accelerate growth.

[00:06:56] Lead smart technologies as a sponsor what we do here every week. In turn, what we do is every Friday morning. We put out a newsletter called around the horn and manufacturing wholesale distribution that newsletter goes out to thousands of people.

[00:07:08] If you don't get that and you would like to two simple ways to do that, you could send us an email at hello at lead smart tech dot com or you could go to the website for the podcast, which is www.

[00:07:23] Around the hornpod.com and sign up there, all of our previous episodes are there and available as well. So we'd love to have you there. One last thing before we dive into the news today, what we would love and we greatly appreciate if you enjoy coming each week.

[00:07:39] We have one of the hundreds of people that join us through an audience on LinkedIn. Click the attending button if you get an invite from us. Let others know that you're coming.

[00:07:49] If you also want to get the reminders, but you're not necessarily getting our invitations follow or like the lead smart technologies page on LinkedIn, Facebook and certainly our channel on YouTube.

[00:08:02] We're all of our videos. We have some product videos and things like that about lead smart there as well. So click the like share with your friends share with others what we're doing and we would greatly appreciate that. So whoo, I'm done. Let's dive in with friend.

[00:08:15] Okay, let's go into the news into this first big top and you need to see and supply chain. Yeah, well, some things picking up out there, right?

[00:08:27] You know, it's it's again looking at the article right talking about and this was I wanted to get your take on this. It said products falling to the lowest level in more than three and a half years.

[00:08:38] What what I couldn't decipher as I read the article was that mean that the price is actually dropped or was it just the price increase was the least in the last three and a half years. And wasn't 100% clear in the article.

[00:08:52] Yeah, the so it says prices charged by companies and I had a discussion with one of our regular guests or regular attendees. These have been a guest on the show who runs a very large distribution company and they were talking about deflation where their price is.

[00:09:07] Their prices went up and haven't changed, but their consumers expecting and driving lower costs from them. And that's what we're looking at in this setting. So we're seeing some of that across the board where things are settling down.

[00:09:21] You've got people in the marketplace charging less for some items out there. The prices are driven down at that we'll just say at the contractor level or factory level or whatever it is, or buying from distribution.

[00:09:34] But their costs have mostly stayed up even when some of the commodity prices have dropped some folks down to your point night we could talk for hours about this and there's others that are far more versed in this than I am.

[00:09:49] You know, we see just like you know, just like simple examples right when you go to Chipotle for lunch prices were through the roof earlier last year because of supply chain issues and labor issues and all of those things those prices aren't ticking down.

[00:10:05] For their costs and they're not lowering their prices to you. You may now choose to go to the taco stand across the parking lot who might have a little bit lower prices.

[00:10:14] And in the world that we live in within wholesale distribution is once somebody goes across the street gets a lower price for the tacos, they come back to the bigger taco stand and try and start pushing on them for that price.

[00:10:26] So as lasticity you might say with that as well, but that's kind of what we're looking at there. So that answered kind of your question there.

[00:10:35] So that sort of you know, it again, it's you know, the reason I was it's an interesting is suggesting that the economy kicked off 2024 on a strong note. But is that a strong note or. Well, yeah, right.

[00:10:51] The reference point is right let's make sure we quote this this article right and and make sure we stay on track with that part right is this was coming from the S&P global surveys that are done this was a writers article that's done.

[00:11:04] That's done consistently and remember this is looking at the PMI outlook so the US composite PMI outlook and index. So this article was talking about the group that the positive notes of the index that they did.

[00:11:16] And they comment that you know anything over 50% indicates expansion in the private sector and positive news. The number that they just came up with with this was 50.9. I'm sorry increased 52.3 the highest level since June in December that PMI index was at 50.50.9.

[00:11:38] Which anything again above 50 is a positive note and it's at the highest level it's been since I believe it was 2021 was the number in there.

[00:11:50] So we're that's that's the idea behind this right is that PMI index. So that particular index that is moving in the right direction that PMI index takes into account lots of different factors and details within the economy and then that brings it back for the index.

[00:12:08] And we've talked about you know we have I don't know four or five indexes that we look at fairly regularly here on the broadcast and this just PMI index happens to be one that we've looked at and it's moving in the right direction.

[00:12:21] It's interesting that they came out of this with January numbers on the 25th right that's what you know we got a few days left in the month here but there's no way that number is going to fall off of any significance right so

[00:12:35] You know there's smarter people listening in today than me on these factors so if they wanted to share something with us that that's I would love to hear more.

[00:12:43] The issue though the this article did go into talk about though is while we've got you know by the way just a quote from that right it says this higher composite reading bolsters economists predictions that the economy will continue to grow this year although at a moderate pace.

[00:13:01] Receiving inflation in the survey also supports expectations at the federal reserve will start cutting interest rate sometime in the first half of 2024 so just ball strength and index that they've pulled together.

[00:13:13] But they did note about rising delays in getting material right now we talked last week and length with will quintet was with us about the.

[00:13:24] Sue has canal issue right and the red sea with the hootie rebels and so forth in the ships being attacked and people going around the the the cape or the horn there that's adding 10 plus days and a lot of costs right.

[00:13:38] There's that factor but now right we had yellow freight go out of business last summer there's trucking issues out there and then we've had all these winter storms and so right now the winter storms or what is hitting the supply chain issue.

[00:13:53] I I literally just ordered some some swag for the company the other day and some sweaters and some things for the team and.

[00:14:02] And they could tell me when it was going to ship normally it would have shipped same day but because of the storms last week FedEx and UPS or way behind there's all those things going on that in fact,

[00:14:13] I mean, you're not just a man you factoring any raw materials in and wholesale distribution getting things from manufacturing so. There was that factor that they mentioned in this article about those delays could be impacting February march issues. Before we jump ahead though.

[00:14:28] Interesting that I got an alert this morning as I was waking up about. From was a this was a Yahoo news update about federal reserve made some announcements this morning with their reading so.

[00:14:42] I was pretty encouraged about that the comment that was made from that was that the feds preferred inflation measure which they call a core personal consumption expenditure.

[00:14:52] That clocked in at 2.9% for the month of December which beat beat estimates and it said that is the first time that gauge fell below 3% since March of 2021. So it's that magic twos.

[00:15:10] We're in the twos right who's yeah, so there's that that what do they call that them maybe some hawkish versus devilish is that the right term.

[00:15:19] More devilish than hawkish right how they're hawkish is you know we're going to get raising yeah raise it raised it raised so that's the right term right very good all right so slide not a little bit what's next. To our next category. And you've been distribution.

[00:15:37] I'll take me to actually distribution for 300 Alex yeah exactly that seems like a little bit. So this is about the future of sustainable logistics innovating for efficiency and environmental impact. Good article I thought a lot on a lot of different fronts about introducing.

[00:15:57] You know they talk about in the article some different technologies that we've touched on over the last 75 episodes right but have been a bit over shadowed with the whole AI conversation in the last few months. You know in particular really looking at an IOT Internet of Things. Yeah.

[00:16:16] Blockchain other things like that that are. And this is something that I really believe to be true.

[00:16:22] I think Internet of Things and and blockchain while in and of themselves have been good technologies really really get boosted as their technology value when combined with some of the AI things that we're doing so I think we're going to see a much more research on those things.

[00:16:37] I think you're right and it's interesting right I mean we had some. Non stop discussion. Pre the. Really I think if you looked at it it's pre what would that have been November of 2022. Is that right when open AI launched. Chudg pt. Right.

[00:16:58] Prior to that all we talked constantly about blockchain we talked constantly about Internet of Things and connected factories and RFID tags and sensors and all the things we're going to change the world right.

[00:17:08] And then all and then particular and I you're a much more informed on blockchain and a big blockchain fan.

[00:17:14] Much more informed on that than I am but you know the reality that so much is come out of this it's almost like those things got pushed paused on at some level you know at least in the media pushed pause on and all we talked about is AI and I like your comment maybe you can expand upon that some appreciative of that idea of how those three things can support each other.

[00:17:36] Well if you look at IOT right Internet of things it's obvious claimed to fame is being able to get a lot of data in real time right get data from right devices or things that are there.

[00:17:49] Well what fuels AI is data so I think that there's going to be a resurgence in the you know and I think IOT as a technology certainly.

[00:17:59] I had a lot of hype but it really hasn't lived up to a type you know in the last few years sure that I think that's going to really be a resurgence for that technology.

[00:18:09] As a way to again gather more real time data that can be used a fuel your whatever your AI that you're doing. Well and I think Tom can I jump in and add something what you just said because I think it's a value really valid point.

[00:18:21] I think what the world has seen to your comment about IOT hasn't moved as much as there's a lot going on with IOT in all call it the commercial side of the world versus the retail side of the world.

[00:18:34] And I think what we've felt today so far is every I don't say everybody but you know I can't think of a house on my block that doesn't have a ring or a nest camera on their front door which is this most simplistic of IOT type devices.

[00:18:49] Or some level of connectivity in their home but I don't think what we found is that people care a whole lot right now about having a connected refrigerator that can order milk from Amazon for them.

[00:19:00] Right those types of pieces what is going to be interesting is and I think to see a larger burst to your point of the concept of IOT's expansion or Internet of things expansion in the manufacturing process by taking advantage to your point of blockchain tools.

[00:19:18] Which is going to bring more data as well as AI. No, and that's what this article was about logistics right so how do we use IOT.

[00:19:28] But I think the number of I do know the number of use cases that even go above and beyond what's going on today can expand and the value of those use cases are amplified through the use of AI in the data that's coming from there.

[00:19:41] Yeah the second piece of it was blockchain right and we'll talk more about blockchain in a couple minutes as we talk about some of the security articles that were cyber security articles were talking about but.

[00:19:54] I also agree with you as sort of been swept under the rug from a new and modern technology has been overshadowed by AI.

[00:20:03] Yep, but again as you start to do more and you're starting to connect more companies and connect more data and you want that security or you want that. Immutability that comes with blockchain which is basically.

[00:20:18] It's they are forever right your storing information your storing information securely decentralized so the block right in it really opens the door for a lot of decentralization. Again now becomes it's value becomes amplified and magnified when you combine it with those other two things that are there.

[00:20:34] You know it's funny it just makes me think can I digress for a minute tell a funny story because as it talks about you know what was the term it used.

[00:20:42] Immutable ledger of transactions and movements right it's so you know that at the end of the day that is for us looking at that right that is or in our.

[00:20:57] I guess in the world that we're talking to manufacturing wholesale distribution could be a huge huge value in that setting because I just thinking back to.

[00:21:06] When I was a manufacturer's rep for many many years in the 90s and early very early 2000s sitting in front of a distributor the distributor would have and and I might you know we represented as an example do pont and their.

[00:21:20] Project of clothing line and for PPE sitting in front of a you know major distributor he had his printouts the distributor did from his ERP system about. What their numbers with us were of by item I had my data from my.

[00:21:38] Retmanagement system that was based off of the invoices we were getting in big envelopes twice a month from DuPont.

[00:21:46] The show to us our copy of an invoice that got sent to a distributor so I had my own data and reports and then I would get spreadsheets from the manufacturer and not I don't think once in the history of the 10 years.

[00:22:00] I owned the rep agency did we ever sit down with a distributor and everybody had the same numbers right they're always off now if you're starting to look at blockchain transactions and it's immutable in that sit right or infallible almost.

[00:22:14] Everybody shares the same data that's correct if it's wrong one place is wrong everywhere. Yeah and you're not going to use blockchain for everything but it's it's something that again fits into your stack your technology strategy and.

[00:22:33] You know one of the things that I know we need to move on but.

[00:22:37] One of the things that AI really opens the door to in my opinion is decentralization and if you look at technology and how we've used technology traditionally it's very siloed and centralized we talked about this.

[00:22:49] Before but in the world of AI it opens up a lot of opportunity for decentralization blockchain is all about decentralization and IOT is about decentralization so if you start to really look at those from a macro level of how do you use technology more in a decentralized way those all kind of work together really.

[00:23:09] Yeah, good. Should we jump into our. I had a wrong bronze comment real quick he said he was a great interview with the CEO of William Sonoma and she spoke about how AI has helped her profitability.

[00:23:23] But they got impacts on their supply chain and customer service she said AI is real and not just an idea you know I think run that AI is a bit of a fad but you know I don't know I just.

[00:23:34] Maybe it maybe it is for real I don't know. I've always been saying Kevin a bit of a fad but you kept going it's no no it's real. So I'm a Tom was the last time you didn't wake up in the middle of the night thinking about AI.

[00:23:47] Honestly it's been it's been months. Lot it's some point I guess yes. Okay, I think it might be here I think it might be something here to stay so.

[00:23:58] So we're going to kind of slide through the next article in our e-commerce and marketing segment but I did want to comment I thought it was it was great the article that we published there was. Let's see what's the final title on that.

[00:24:12] And all see digital as a key to long-term growth again if you just if you don't get our email newsletter that comes out every week and you'd like to please let us know.

[00:24:22] This article is available there when we spent a lot of time on it but I thought fast and all.

[00:24:27] Started off in Winona, Minnesota as a small family run faster distributors and now's publicly traded company and with locations all over the country selling general line industrial and safety as well as. And I think it's a lot of things that we've done in the past.

[00:24:43] But they talked about a billion dollars in their core and their fourth quarter numbers or digital which accounted for 58% of their total net sales were digital so you think you think we're back to talking about fads right if any e-commerce is a fad. Not so much.

[00:24:59] I'd love to know how much of that 58% was not a hundred percent digital but more hybrid or there was digital touch points along the way but then there was also potentially a sales person or a human interaction with it.

[00:25:14] Yeah, my instinct tells me is that a fair percentage of that 58% was hybrid and not one hundred percent digital but. Because that's an awful lot in my opinion for one hundred percent digital. We're seeing more and more hybrid sort of scenarios people we're talking to.

[00:25:32] Well, and I think what we have to remember with that and your spot on with the hybrid part of it is you know this I can guarantee you that they did that's not a billion dollars of people buying safety vests and having them shipped to them right their e-commerce platform is ordering.

[00:25:50] It's building quotes it's it's much deeper which is what you know most whole cell distributors are doing with that but the reason I wanted to talk about this and not spend too much time on it is that the quote that was there is that.

[00:26:06] They said let's see digital sales methods provide customers with multiple channels they want while also providing fast and all. Ready time take a deep breath I'm ready for lighting fast and all with the data it needs to grow its business.

[00:26:21] What do you talk about all the time distributors have and manufacturers have this treasure trove of data that is rarely tapped into.

[00:26:33] To even a fraction of what it could do for them and that's what this article is saying about you want to think about it right a billion dollars in online transactions or e-commerce type of transactions. And they're saying it's the data that they need to accelerate their business.

[00:26:49] So those billion dollars of transactions there is an asset that's created as a byproduct of that which is all of that data right by using that so not only is it just the transactions but all the data that is which may in fact maybe more valuable than the transactions themselves right you know so.

[00:27:06] It's interesting you want to catch runs last comment there.

[00:27:10] You want to skip that one I saw Ron let's say I saw Ron here saying that I just the other just starting to realize it not just last which is which is great and I want to talk like games is common as well about AI not being a right right right.

[00:27:25] And it is being you know interesting to hear out being applied across multiple workers that's all I see is there a comment that you see that I missed no just just you know.

[00:27:34] Ron saying nice things about me so which is I expect you would would skip that I do when when we appreciate everybody's comments but I really like James comment because James is runs a a.

[00:27:47] A perimeter office products in Atlanta and they do business nationally with office products a lot of our audience here is. You know distribution from a standpoint of.

[00:27:59] HVAC pipe valve fitting industrial safety whatever it might be and our audience and and as well as lead smart customers are broadening out to all different facets of wholesale distribution we kind of get.

[00:28:12] My topic a little bit sometimes and I love you know some of the chats I've had recently with James that brings a different perspective than when we were just talking to people and you know will call it.

[00:28:25] Building materials factory supplies things like that so appreciate that comes with you but what's true about that is that.

[00:28:32] A lot of the same challenges are the same right they have different things they have different things are selling different customers but a lot of the same challenges and opportunities are. Are the same which is yeah.

[00:28:43] Yeah interesting for me to observe is not being a 35 year you know veteran of the industry. Yeah well I you know I think you're right and and it just it ties me back to and James will probably laugh at this but.

[00:28:57] I've said to say think before on our show here but I had dinner in San Diego after a large trade show probably. Oh probably 2013 I'm going to guess roughly and it was.

[00:29:15] With a couple of Amazon executives middle management person more senior executive and we were in a nice dinner downtown San Diego and we were talking about their business in general and he made the.

[00:29:26] Made the company said you know, Kevin he was talking about their expansion is with some of the earlier days of Amazon business it was called Amazon supply at the time and he basically said you Kevin if it fits in a box and it's.

[00:29:41] Legal and reasonably moral will sell it and. You know the end of the day it doesn't matter if you're selling you know pipe out we are on the phone yesterday with you know one of our customers who's working on a.

[00:29:56] Major bid right now for a new football stadium in the southeast and it doesn't matter if you're selling a box of copy paper.

[00:30:05] Incontoner or its pipe valves and fittings right people by the way people buy and the technology to support that is growing and getting better every day.

[00:30:16] And the data is the data right the data that in that case the James has is no less important than the data that Granger has from their transactions so good stuff. Good stuff you want to jump ahead. Let's go to technology cyber security and AI.

[00:30:34] You know if you wanted to get that done I would be okay with that because I know that these things are dear to your heart. Again, so what's your reason we want to touch on I know we don't have time for all of them here.

[00:30:49] Well I think we were going to talk about the just spend a little bit of time about talking about the manufacturing we got three articles there one is cyber security competence new regulations and standards in the industry. Probably an important read but we could impact that another time.

[00:31:05] We got an article in this section two in the newsletter manufacturing attacked in the cloud more than any other industry and the last one will finish up with his generative AI five risks that should be addressed but you know let's just kind of talk about this first one about.

[00:31:21] Manufacturing attacked in the cloud more than any other industry I didn't realize that until I read this article that it kind of surprised me and it said this is now was.

[00:31:31] A small survey it was 1600 and 10 IT and security professionals but what was interesting it was across a hundred countries.

[00:31:41] I thought that was kind of astounding with that brawl brad it was globally and it said according to the survey 64% of companies in the manufacturing sector suffered a cyber attack during the previous 12 months.

[00:31:54] And it said it's similar to the fighting among organizations overall that 68% and those numbers seem so high to me Tom I don't know what your thoughts are but maybe there's a lot of attacks that are going on there that.

[00:32:07] Are simplistic that they're counting and maybe there's stuff that people don't even know about I'm not sure.

[00:32:13] Yeah, it's be interesting to know what they consider a cyber attack right I mean in theory I mean look at the number of fishing emails we get every day is that a. A cyber attack.

[00:32:25] Yeah, it says right here among manufacturing companies that detect an attack 85% spotted fishing in the cloud compared to 58 across other verticals right so basically manufacturing is getting attacked a lot harder by fishing scams and.

[00:32:44] You know you in your team run, you know the our email system within leads more technologies. And I'm confident in you guys and we've had these discussions about what we're doing for safety but the amount of spam that's fishing that I get every day it's.

[00:33:03] So I look in my my track or my spam or junk folder and there's probably a hundred things in there you maybe 60 70 each day but of things that even get through into my email there's another 40 or 50 minimum every day.

[00:33:19] And it's it's astounding so it doesn't take a lot for somebody that's unsuspecting and this could be you know John the forklift driver that has to enter some things into the computer that also has a company email that.

[00:33:31] You know I get things almost every day that looks exactly like our banking logo or our banks logo right and so if we're not trained in our people on this stuff it can be pretty darn dangerous it clearly.

[00:33:44] But the point in this article was is that the manufacturing sector experiences more cloud infrastructure attacks right than any other industry surveyed.

[00:33:55] And I packed that a little bit for a storm because I want you to dive in on that if you would mind because you know we talk when we talked about cybersecurity which you've just started doing more on this show in the last.

[00:34:07] A few months, but we've had a number of people comment and I don't think they're saying this as Cavaliers at my town.

[00:34:14] But it's easy to have the caution that says oh if I'm in the cloud I'm perfectly safe and while it's safer maybe you can expand upon those thoughts.

[00:34:24] I don't with the issue I don't think so much here is the cloud I think it's the fact that in the man in they talk about this right in manufacturing we're in an ecosystem.

[00:34:33] Right or in distribution we're in an ecosystem so we're constantly working with other companies for getting data from other companies we're getting information from our suppliers and all of that so there's a lot of handoffs occurring right and whether using needy all or or the cloud or whatever.

[00:34:50] And in blockchain we can talk about that in a minute but the handoffs open up those are the kind of the cracks and the armor if you will because if there's all these handoffs going off between one company to another.

[00:35:01] And that's what they said in the article this opens up the door for a lot of the cyber attacks to come in and kind of exploit those handoffs and those cracks as they move from one company to another.

[00:35:13] So and yes it's not so much the cloud is it is the fact that we have an ecosystem and we have handoffs occurring between companies and then it opens the door again for your your your your your vigilance and so forth is not as.

[00:35:28] Is not as strong sort of speak as you're working entirely within your own with your in your own company.

[00:35:34] So let's talk about those those handoffs that you'd let's unpack that a little bit you know what what are your thoughts on an example even you know in our company and technology company. As it relates to well I mean you're talking about.

[00:35:48] The ecosystem's right and cloud handoffs of so forth. I mean let's be using example of that.

[00:35:54] Well if I'm again if I'm a manufacturer right I have suppliers that I'm getting my supplies from so they're not my company right so I'm getting information from third party companies I'm getting communications with third party companies data whatever the case may be.

[00:36:10] That's all I'm happening through the cloud if I'm a distributor and I'm getting stuff for my suppliers and my you know so forth I'm so again we're not we don't work in a siloed. Yeah if you look at.

[00:36:21] You look at knowledge right in the technology world we may have some partners but our ecosystem is nowhere is. Is sophisticated and large as we have in the manufacturing and distribution so we have a lot of handoffs and a lot of communication and collaboration between companies.

[00:36:38] That's not isn't necessarily just connected systems if I'm hearing you correctly that it says I'm connected in with my one of my vendors but it could be just as simple as we they gave me my own dropbox folder and we're sharing spreadsheets or the email transactions that are going back and forth is that kind of what you're describing.

[00:36:58] Yeah I mean it's all of it right it's all of it but again the cloud infrastructure of.

[00:37:03] Data sharing data information all of that stuff again with a using EDL or cloud or API or whatever it is you're using to share data it potentially and I believe that's where they're saying in the article it opens up the door.

[00:37:15] For some cracks in the armor that may not exist within a company on its own and again I believe that's where blockchain will start to have more of a presence because blockchain is a decentralized way of sharing information.

[00:37:30] Between companies and there's a lot of security that can be done with blockchain that's not as it's much more difficult to do without something like that so again I think the issue that needs to be observed is not just cloud.

[00:37:44] The fact that there's a lot of communication between companies inter company communication that's occurring through those. And we're just going to become they're just going to become more and more of that as we go technology right of course. And so take away from me on that is.

[00:38:01] No where your your ecosystem is connected have the right people that you're allowing to do this and you know I think so often we get vendors that want to talk about connections and different things like that understanding the cybersecurity issues that your partners have right in place understanding.

[00:38:22] The transfer if we're going to connect whether it's apis or shared at any way understand maybe is an example we talk about this with our customers all the time you know most companies and wholesale distribution unless they have a sophisticated IT department.

[00:38:38] And I don't think through the process of even asking hard questions about the platform that a software product is built on right how secure is that could attacks come in through that to get to their system.

[00:38:50] Right there's a lot of things like that and those things become very important and understanding you know who your partner with and where your dad is coming from probably the biggest thing we're seeing today.

[00:39:02] And so I think you know the most interesting things in this article even suggested that are tied to the idea of you know email you know I think the fastest way in any organization is through email I just actually heard yesterday you know.

[00:39:15] not highly sophisticated but a great company that works hard on IT, this one of our customers had a major hack class here that I just heard about yesterday. And it's not so much sometimes even what they'll get from you.

[00:39:32] It's the cost and the inconvenience to go fix things. And it's just a power of a week. It's been hours talking about cybersecurity and frankly, I'm far from an expert on it

[00:39:42] and would like to get some guests on coming up this year that can talk even more about that about some ways to protect ourselves better. So what do we jump ahead, my friend? And I realize I got too many different acronyms. I had to use the word EDL.

[00:39:55] I meant EDI. Right EDI communication, not EDL. I've been doing much with ETL recently. Okay. All right. So next one is what, gender to AI five risk for distributors? And it's great. I wanted to congratulate you today and I placed these in, when I put the, my notes

[00:40:15] together for the newsletter, I placed our first article that discussed AI at all over half way through our broadcast today. And I thought you did well. I anticipated you to be shaking a little bit maybe sweating, waiting to get to this,

[00:40:30] but you did a good job and I'm proud of you. Yeah. Well, practice makes perfect. Right? Okay. Very good. So good article here in talking about gender to AI five risks for distributors. And this was from Industrial Distribution Magazine.

[00:40:47] Tom, I'm going to hit time out for just a second. We do this every week, about, it's usually more than halfway through. Remind those who are listening on the podcast, who are not seeing these two handsome faces here this morning discussing these topics.

[00:41:03] If you're listening versus watching what you're not seeing is that we're reviewing through the newsletter that we publish every week. It's called Around the Horn and Manufacturing and Holestyle Distribution. It's sponsored by Leeds Smart Technologies, the company of the Tom and I both worked for.

[00:41:20] And we bring together news and data about, as we've talked about today, I ready e-commerce, marketing, people and leadership, the economy, manufacturing, distribution, sales, and M&A. And so forth, we bring that together. We discuss it with our audience this year.

[00:41:37] We get great comments as we've had today. And we bring that to you every week. So if you're not getting that newsletter and you would like to, simple way to do it is an email

[00:41:45] to hello at leedsmarttech.com or we have a website for the podcast, www.aroundthehoranpod.com. And you can see all of our previous episodes there and you can sign up for the news other.

[00:42:00] So if you'd like it, join us, always want to address the fact that we've got a very large audience. In fact, our podcast audience dwarfs, our live online audience. Now we're most typical weeks. We're in somewhere between five, seven, even eight countries that are listening

[00:42:15] in on the podcast, which excites us. We're appreciative of that. Last piece on that little bit is if you like what you're hearing, hit the subscribe to follow, share with your friends, let others and get involved in this as well. That's it Tom.

[00:42:28] We're going to talk about generative AI five risks for distributors. Do you want to lead that off? Well, why don't you just kind of go through the quick five and then we can put on a couple of those?

[00:42:38] Yeah, there's I had thoughts on every one of the topics, right? And this is the first one was inadequate quality control and inaccurate output. Garbage in garbage out. Safe way to say.

[00:42:49] Yeah, I think the first three in there, if I remember right, the first one was bad output and then bias, I think what's the second one was bias or prejudiced or it was. It was IV, right? Copyright IV. Yeah, IV.

[00:43:01] Fourth was over-dependence on technology and the fifth was data system security vulnerabilities which ties into our previous article. I've got a quick thought on most of those but I want you to drive this one.

[00:43:14] Yeah, well, I think, so that to me, the punchline on the least the first couple here is we've talked about this. First of all, know what you're doing with AI. So because AI can be, you can be playing with fire a bit if you don't know what you're

[00:43:34] doing with it and how you're spated up in your organization. So this becomes more and more relevant is AI starts to incorporate the first party data that we've talked about that we all, that we all, you know, I've talked a lot about right and different things here.

[00:43:52] So first of all, I'll certainly know what you're doing, know how it's being set up but even if you properly have set up the AI, we're not at a point where AI is running on autopilot.

[00:44:02] And I think the first two things there are make sure that if you're creating documents or letters or articles or blog posts or emails or whatever the case may be, is make sure that you're reviewing it before you're just arbitrarily sending it out or using it.

[00:44:21] Because yes, it can be very, and again this is all dependent to a large degree about how you're saying up your AI, your prompts and your data and all of those things.

[00:44:30] But even if you don't have done a great job of that, you can end up getting something that is hallucination, right? If you want to call it that, your bad data and you can get biased on things. So you have to QA, right?

[00:44:44] You have to QA and review it. I know there's AI coming out to do AI to review these types of things, right? So there's kind of like levels. But it's where you're going to get biased and that struggle that the AI review AI comes from, right? Right.

[00:44:58] But again, it's just the point being as you can't look at it as an autopilot type of thing. And you see that a lot. Even I see emails more and more. I can just see even especially quote unquote spam emails that I get from people.

[00:45:12] You can just tell that they went into chatGBT wrote something and put it in there and didn't look or think about it twice. And that's kind of a, can be a risky situation. Yeah.

[00:45:23] We would be interested in me on that as you make that point is, and we talk a lot about this with ourselves and with guests as well about helping with writers, block or white page syndrome or whatever you want to call it. Big help for me with AI.

[00:45:42] When I stop and take the time to write, I enjoy writing when I have the flexibility to do that. But what's interesting with that is I'm seeing consistently now specifically on LinkedIn, but another social arena with people who historically have not posted a whole lot are

[00:46:02] posting long articles, not articles but long posts that are far more expansive. And it's not bad, right? Because it's their thoughts because they had to put the prompts in to get that output. So it's not that it's bad.

[00:46:19] It's just interesting to watch how many people are now doing this, which is really important. So you know that one of that, I want to hit on Kelly's comment related to that because many don't understand how elaborate prompts are. They're not one word or one sentence prompts.

[00:46:34] Very sophisticated to get good results is now a job in an art form, right? And it's a job title. Right. It's a job title. So it's not just like made me an article about you know the economy or something.

[00:46:49] And you have to continue to refine your prompts over time, but again we don't need I won't try and get into a master class if you want to call it on the AI structure,

[00:47:00] but you have prompts, you have your data, you have a lot of different things that influence the output of that, right? Of that AI. And but you completely agree with Kelly is that prompts are.

[00:47:12] Is a real becoming a real science on how to use those and by using them properly. I think I did a prompt this week with something that was probably 500 words and multiple paragraphs. And the good news is you can tell it what to do.

[00:47:28] And for the most part, again, it will try and do that, but you still have to queue at what comes out the other side. And that's the I think the key, right?

[00:47:35] Two things coming to my mind quickly I'll share related to that is I, we were messaging this morning not about the podcast but about our business. And I shared with you some statistics that I had used chat GPT for right?

[00:47:51] I would never want to share those with a third party unless I had gone and vetted those further and found the reference sources right? Now that's the beauty of chat GPT is you can if you have the paid version of you're using

[00:48:03] chat GPT versus another model is you can ask it for it to always in your results show it sources or you can go back and ask it for that. But I did an interesting exercise earlier in the week that there's a lot of additional

[00:48:16] work to be done on still, but I was trying to do some work related to helping with our messaging as a company within Leeds Smart Technologies. And I asked chat GPT to ask me 20 questions as a starting point to help it and so I built

[00:48:33] the GPT right our own small model there so that we could help us ongoing with our marketing efforts as a company. And I wanted to share that with the agency that we work with and other people that we work with.

[00:48:47] And I went and asked it's what I wanted it to ask. So basically he said, ask me the questions that you need to become an expert on my company. And it was tons and tons and tons and tons that very valuable of what that came back with.

[00:49:03] So before we jump ahead on this time, I'm going to recap these. The risks that they talk about in this article again is from Industrial Distribution Magazine is inadequate quality control and inaccurate output right.

[00:49:15] So garbage in garbage out, lack of a better term, biased or prejudicial content and conclusions you could convince AI to give you the answer you want. If you ask the questions and load data that way, easily we could infringe on an intellectual property.

[00:49:32] People start starting I think to depend on tools that aren't fully baked even yet. Right? There's a lot we need to learn people. I think are starting to rely on AI technology and tools like being in chat GPT and other

[00:49:45] reference points that they have as kind of gospel and not necessarily checking their work or adding to writing it in something becomes, I don't want to say fake but totally written by something else versus their ideas. And then there's security issues that go along with it.

[00:50:04] The last piece is there was a quote at the end of the article says, the power and potential of artificial intelligence to wreak havoc has often manifest as itself in movies like 2001 Space Odyssey or the Terminator says, well, distributors may not have to worry that

[00:50:18] their use of generative AI will bring about the apocalypse. They should approach its adoption cautiously and thoughtfully to minimize the risk of unintended consequences. So I love that. And that brings me to a point. I'm going to say something.

[00:50:33] There's people on the broadcast with us today that say we don't talk enough about what we do at Leedsmart and there is a whole concept within AI that says, hey, you know what you can go out and hire prompt engineers. You can go out and hire PhDs.

[00:50:50] We've got a PhD in AI coming on that we got two of them. Scheduled is guests coming up in the next 45 days where we're going to learn a lot about all of this sophistication of what they do. You can go do that.

[00:51:03] You can also go quickly and easily start buying third party products that you probably don't fully understand how they work and bring those into your business. There's a concept, I think Microsoft's the one who introduced the topic and they talk about incumbents.

[00:51:20] And the incumbent concept is taking your AI road map through trusted existing sources. And the roadmap that you and your team have developed for our company is to allow us to be that trusted source for our customers to bring chat type tools in AI and structured

[00:51:41] and unstructured data. And all the big words that people like to talk about into a wholesale distributor or manufacturer with a trusted source on the secure trusted platform we were talking about earlier today about cybersecurity so that you go with a trusted partner on your AI

[00:51:58] road map rather than just trying to go through the jungle on your own with a dull machete. So there's a little bug fan day. But I wanted to tie that in. Kelly's on my bandwagon, two Kevin. Domain specific data with my customer. It was smarter than that.

[00:52:17] Yeah, good. It's going to be very accurate and powerful. It's not in what we're learning and by the way speaking of a lead smart, if your company is on a clips, apicoar clips, this week are finishing up a really new integration with

[00:52:36] apicoar clips that's going to super slick. So if you're on a clips, talk to Kevin because we have some really great solutions for you. But one of the things we're really working on there is what data really matters, right?

[00:52:49] It's not just take every piece of data and throw it into the data lake and let's use is like what data matters and what data is really going to have the best result and not create some of those issues that you're talking about before.

[00:53:01] So there's a lot that goes into it to making sure that you're going to have a foundation to get those results that you're having that right guy and putting those together is very important.

[00:53:13] Yeah, we need a guide in lots of phases of our life and in technology, most organized stations need a big help and a big support. So if you're interested in our roadmap of AI, we'd be happy to talk to you about that. So here's what's that?

[00:53:28] No, I like Kelly's comment. Hero data, right? Yeah, very, it's great. Very good. So as we kind of move into our next section, we'll talk about a couple things as we wind down today. So we have this new section called Sales and M&A.

[00:53:44] Insighting news this week, National Association of Holsealer. Holsealer's had purchased modern distribution management, Tom Gail and his team have done a phenomenal job. We publish content from them. Multiple pieces of content from them every week. We're very appreciative of them. Great relationship with them.

[00:54:03] In fact, Mike Hawket, senior editor there is on with us in the next, I'd have to go check. And the next few weeks, Mike is going to be here. Mike is a regular listener at Tom's with us Gail's with us occasionally.

[00:54:13] I'm excited to say that I've been in discussions in the last couple of days with the folks at NAW and we've got at least three of their executives are going to be guests on the show this year. And I'm very proud of that.

[00:54:29] We've got Eric Hopplin, there's CEOs coming on, I think Dan Chuber, there's CROs coming on and a few others. So this is a powerful, powerful piece. We publish information, you know, and share information from so many sources every week.

[00:54:44] We love the folks at distribution strategy group, NAW National Association of Manufacturers. But this is a unique piece. And so we're looking forward to having Mike's going to be on and then some of the NAW people coming shortly.

[00:54:59] We're expanding our partnership right now with NAW as well with Leeds Smart. So really kind of exciting because you bring this behemoth global, I was at global but very national, the largest trade association within wholesale distribution that has the lobbying group. They're training in technology groups.

[00:55:22] They have, you know, all the roundtable sessions they have throughout the year. They have their biggest event of the year is next week and watching to DC. Now you're bringing them with another group that has very unique and specific research and other data with MDM, bringing that together.

[00:55:39] I think there's going to be some neat stuff that comes out of that. So it's good stuff. Congratulations everybody involved in that. Yeah, just I think to me it just continues to spotlight the importance of how companies are

[00:55:50] recognizing the importance of having good thought leadership and good information to be able to be sharing with their members. So I think it's going to be great. Well, I think too, you know, we had this discussion last week that I thought was really interesting.

[00:56:05] That it just kind of comes to mind to me in this setting is that, you know, I had somebody in another that has somebody else that has a podcast and publishes a lot of data.

[00:56:20] You know, ask me the question a while back if, you know, we were going to become their competitors. And I kind of made me giggle because we just jump on the phone ever around like then live and,

[00:56:29] you know, and YouTube and Facebook live in the podcast every week. We just have conversations, right? We have a wonderful sponsor in the company. You and I work for and run that does that but we just bring people together and have a big

[00:56:41] discussion with things is where we're at with this. And but what I realized is the competition out there is for time. And so I know I read consistently almost day and not almost every day. I read MDM content and any W content to start seeing some of that.

[00:57:02] I'm assuming combined into a simple single format will be great. It would be great. So that I think will be very helpful to the group going on. So as we kind of pushing through this today,

[00:57:17] I think probably one of the best articles that I've read certainly year to day. If not in the last few years is in Ted magazine, the electrical distributor magazine, they were gracious enough to get just one of the finest industry experts out there.

[00:57:32] I think you're probably really excited about this when do you want to lead this one off? About the pros you know, it's I agree. It's such an impactful article that I'm not going to do a justice.

[00:57:44] So what I would recommend is go read it because we're just not we're not going to have time to cover it today and do justice with it. Well, so the good folks from from Ted or the electrical distributor magazine, great publication. If you're not subscribed, go subscribe.

[00:58:01] We've got their publisher coming on in next couple of weeks. Mr. Costa is kind of going to join us as a guest we're looking forward to that. But their writer Susan Bloom did an article about the pros and cons of private equity and

[00:58:12] you know, we kind of joked his I'm who she interviewed through the whole article on this. And we talked about venture capital private equity, other debt forms and so forth that are available. We see such an abundance and growth of private equity coming in to wholesale distribution.

[00:58:29] And it was a really enjoyable process. I wanted to thank them for including me. And then all serious. That's a really good article. It really is a good article. And I do recommend reading it.

[00:58:39] There was quite a few things we could end up talking about there in the world of. Yeah, we probably think we may do something like that down the road because you know, the reality of it is I think people have a fairly if you're not involved.

[00:58:51] If you're the CEO of a you know, 50 plus million dollar distributor, you're having conversations off and on with PE. But general understanding about how PE works, how these deals work, what are expectations coming out of the deals? What may happen? What did deal structures look like?

[00:59:08] That's what this article about is about. So if you're interested in what private equity does and this has happens to be published by the good folks that the electrical distributor magazine, but the topic that we're discussing goes across the board in any type of distribution

[00:59:22] and the relationship with PE. So we are going to move ahead and talk about a couple things as we end wind down. We have our new section called People and Leadership. If you're not seeing our screen time just scrolled to that.

[00:59:35] We have an article in there from CNBC. It talks about his company's layoff even more workers. They could be making a big mistake in the way we're doing.

[00:59:43] I think this is just a good read to kind of think about not even just if you had to do a group of layoffs, but just even letting somebody go, which we all have to do in business. Great article that just kind of give you some feedback on.

[00:59:57] I think there's more in here about what not to do. Jump in ahead. We still have our industry scuttle about section each week. Thanks to C3M delivering some good results. There's an article there from Industrial Supply.

[01:00:08] MDM published something this week too about loss and products, which is owned by DSG. They acquired emergent safety supply, regional, a distribution company in Illinois. So nice acquisition there. And then another acquisition by MSC Industrial. So three good posts there that are worth reading.

[01:00:30] Our good read article this week is five ways to demonstrate leadership beyond a title. So we get a chance to do that. Lastly, as we close out today, so important. Last week we had a great guest on Will Quinn with in for Will is the distribution guy.

[01:00:48] Do not try and use that word and call yourself that because Will is trademarked the distribution guy. Great guest, great friend of the broadcast here. I think he was on where this earlier made a comment.

[01:01:01] Will was on with us last week and as I curated our articles for last week, what we posted in the newsletter was an article from one of his peers. This week we have it posted. It's called the Future of Distribution top 10 trends and predictions for the next decade.

[01:01:18] We talked about it in last week's show with Will. It's published in this week's newsletter again. If you don't get the newsletter reach out to us, hello at leadsmarkdeck.com. As an email and we'll get it out to you.

[01:01:29] So last thing I'll hit on Tom in this diet tribe here, I've got rambling is we don't talk about this regularly. We have a link here. The good folks in Hell are in Jonathan Buying at distribution strategy group. They publish on their website.

[01:01:48] They have an index tracker for publicly traded distributors. And if you're an investor, a stock trader or just kind of paying attention to what the publicly traded companies are doing, go to distribution strategy group. I think it's just distribution strategy group.com.

[01:02:02] Good folks over there, great information that they publish and they have that index. I look at it often on. Last thing is we've just updated our through the help of our research and MDM is there's a great listing of events and shows coming up,

[01:02:19] whether it's Power Distributor, Power Transmission Distributors, Meeting NAD, Meetings, AD, Meetings, Granger Show, all of these different things are published through the middle of the year on our newsletter as well. So my friend, in closing with all of your step in the newsletter,

[01:02:34] I don't know that you need to read anything else during the week. There's a lot of stuff in there now. Get the newsletter in front of you. That's right. Just summarize everything. So okay. Hi, I am proud of us. We did one article today on AI.

[01:02:50] Okay, we're diversifying. We're an equal opportunity. Good. Contributor. All right. Well, listen, Tom, thank you as always. Great to have you for all the hard work you do on getting this show out every week. Appreciate it. Have your friendship and our business relationship.

[01:03:13] We love everybody that comes and joins us each week. Again, tell your friends, if you don't get the newsletter, let us know. We thank you. We're looking forward to next week. We've got an abundance of great guests from across the board.

[01:03:27] In fact, James, from that was with us earlier, made a comment from a perimeter office product. He's going to be joining us and a broad group of people coming that I think will excite you. If you like AI, stand by over the next couple months.

[01:03:43] We're going to have two different PhDs in AI coming with us. But both of them are able to not boil the ocean, but bring things down that are manageable and you'll leave with great taste. Have you got a small amount of signed up yet?

[01:03:56] No, but what's cool is, you know, what I would want to mention is that distribution strategy group has just opened registration for their upcoming AI event in Chicago in June. And I did see that Zach Cass, who was the original.

[01:04:15] I can't remember the title, but Zach, I had a chance to meet him at the previous DST event in Chicago last October. He gave the key main keynote. I think he was the Chief Commercial Officer or something like that. Super insightful.

[01:04:31] How did you answer to talk to him for about 10 minutes after the keynote? Great guy. He's coming back to that event evidently. So great event distribution strategy group Jonathan, Binie and Heller get an opportunity to look into that event in Chicago in June at the Chicago

[01:04:49] Air, O'Hare, Mary-Op is where it's at, which was a great spot for. So that's it. We're going to wind down here and have a wonderful weekend. Everybody that was with us today, whether you're with us live or you're listening and later on the podcast. Have a wonderful day.

[01:05:02] Be kind, 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.

[01:05:18] 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.

[01:05:28] 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.

[01:05:45] And finally, please check out our sponsor Leedsmart Technologies and their manufacturing and wholesale distribution industry CRM, customer intelligence and channel collaboration platform. That's Leedsmart Technologies at leadsmarttech.com.