How Strategic Purchasing Might Insulate you From Tariffs

Around the Horn in Wholesale Distribution - Episode 135 

[Speaker 2] 

What's happening? Just enjoying the show. 

[Speaker 1] 

Very good. All right. I think somebody, I can't remember who that was, brought that up last week that we needed to have dueling spinning chairs to start the show, right? 

[Speaker 2] 

That's true. Well, if I did that, I'd kick all my cords out and we'd have nothing. 

[Speaker 1] 

Very good. Well, anyways, I'm glad we're here. Good morning to you. 

We're by ourselves today, no guests scheduled. Got a couple of weeks before we've got other guests coming in, but we've got some exciting ones coming, which is great. So maybe, why don't I introduce what we're doing here today, Tom, real quick. 

I'm Kevin Brown, that's Tom Burton. We get together every Friday morning. If someone's not on an airplane in the hospital or on a planned vacation, we get together and we chat about the news of the world and how that impacts the economy, supply chain, mergers and acquisitions, sales, marketing, and all those types of things. 

Today we're going to be talking about some ups and downs within the economy, what we're seeing related to tariffs, things going on with that, the importance of supply chain resiliency. We're going to be talking about some e-commerce factors, a little bit about generative AI, both in e-commerce and marketing. We're going to talk about quite a few other things. 

So I'm looking forward to that, Tom, quite a few articles to cover. So it should be a good show this morning. We're looking forward to your comments if you're with us live. 

But again, I'm Kevin Brown, that's Tom Burton, and we do this every week. But what we are doing is we're reviewing the newsletter that we publish, and that newsletter is called Around the Horn in Wholesale Distribution and Manufacturing. If you don't get that, you can get that one of three simple ways. 

If you're on LinkedIn actively, you can just search Around the Horn in Wholesale Distribution Podcast and it'll pop up and you can subscribe to the newsletter right there. You can follow the show and you can also follow us at Leadsmart Technologies, which will be associated with that as well. If you'd like, you can send us an email to hello at leadsmarttech.com. 

We'll get you subscribed right away to that. And then the third method is that we have a website for the podcast. It's www.aroundthehornpod.com. 

We've got LinkedIn page, as I mentioned, Twitter slash X account as well, and you can get all that information there. So we do this every week. We have guests with us here live regularly, but we're broadcasting live this morning on YouTube Live, Facebook Live, and LinkedIn Live. 

If you're listening on the recorded podcast on Apple, Odyssey, iHeart, Spotify, wherever it might be, you won't see that newsletter, which is why we talk about it. We'll talk about it again later. And we're going to be referencing the specific articles from today. 

So, Tom, we're going to dive in. But before we do that, we have a sponsor. We're going to need to talk about that sponsor every week. 

That happens to be the company that Tom and I work for. Company's called Leadsmart Technologies. Leadsmart has developed an AI-enabled customer intelligence and CRM solution solely developed for wholesale distributors and manufacturers. 

So historically, we've seen CRM solutions, which are always kind of the big brother idea behind them, where we push our teams to put a lot of information in and we have the reverse mindset. We gather data from across an organization, from ERP systems, marketing, animation, e-commerce, data lakes or data warehouses and so forth. We bring all that together from those siloed data into a central format. 

And we use some AI and some other unique tools to identify what's most important to that business based upon that siloed data so we can follow customer journeys. And we push more data to the salespeople than we ask them for. We see this tool being used across organizations from sales, marketing, inside sales, customer support, branch level people, all the way across the supply chain and warehouse management people and so forth as well. 

So we try and bring a cost effective and quick implementation together to get early and fast ROI for our customers. So if you're a wholesale distributor or manufacturer and you're interested in expanding your digital transformation, we would love to talk to you. And we can't do this show every week with the costs that go with it, with an editor, producer and the people behind the scenes without the support of Leadsmart. 

So, Tom, got all that out. We got Bob with us. We've got some other people rolling in this morning. 

We're excited to see. So why don't, I'm confused. 

[Speaker 2] 

Is this our Monday or Friday episode? 

[Speaker 1] 

Yeah. Well, why don't you cover that and ask, share why he's asking that? 

[Speaker 2] 

Well, we, we, we started this around the horn 2.0 on some Mondays. So it's not every Monday and it may not even be on Monday. I think it's going to be on Wednesdays. 

Possibly it's going to be when we do it. Right. Right. 

Or it could be on Tuesdays. Who knows? 

[Speaker 1] 

Yeah. Yeah. 

[Speaker 2] 

That's, that's going to be, I guess, more, less consistent. But this one, the newsletter one, the around the original around the horn will be consistently every Friday. 

[Speaker 1] 

So 1.0 Fridays, 2.0 when they happen, I guess, and you know, I think that it's good that we talked about that for a moment because Bob's question, you know, comment there, we've, we've had a lot in, in, I made a little video and posted it to LinkedIn a while back. And we put out an announcement about the 2.0 show. And I guess what I didn't cover well enough was that no, it was not replacing what we do. 

And so we've been doing this. This is, uh, today's 135 times we've done this. It just staggers my mind to think that we do that. 

And it's, it's kind of funny when I think you, you were sharing with me a while back that the typical podcast doesn't get past 10 episodes and it's hard. It's hard work. It's commitment that it takes. 

So we've been doing this for two and a half years plus now. Um, but the reason behind the 2.0 is that we have some great guests and a lot of times with our guests, we have deeper dives that we would like to take in and discuss on those topics with, uh, with them. That's not this format. 

This format is a review of the news. We move pretty quick. And then we've had a few guests that haven't wanted to join us on this show because they say we move too fast. 

So that gives us the format. Well, maybe when we're at some events, in fact, we're in some discussions about doing this show live from some trade association events later this year. And, uh, I'll be doing some updates next week that'll be going on LinkedIn from the industrial supply associations, uh, ISA 25, which is in Nashville starting on Monday, and I'll be there for three days. 

So I'm looking forward to that. So that's the point behind 2.0, right? All right. 

You want to dive in here? Get it started. 

[Speaker 2] 

Let's get on with 1.0 here. 

[Speaker 1] 

Yeah, let's get on with 1.0. So we start each week with the economy and supply chain is the first section of the newsletter that goes out. So some news this morning, uh, popped up about the, um, last, uh, years, uh, 2024, the fourth quarter news was, uh, that the economy actually grew by 2.4%, which was a significant upgrade after they did the final growth episode or episode estimate. So that just kind of ties into some of the discussion we have today about the tariffs and consumer confidence and prioritization of things within the business. 

So back to the up and down, up and down, up and down, right? 

[Speaker 2] 

Yeah. I mean, well, the, the, the announcement this morning, right. Was the, um, costs basically the cost of living increase and a bit higher than expected on a couple of fronts and what, what was expected, but still on that two, five, 2.8 range, um, the stock market doesn't like it, but you know, they're not liking much of anything nowadays, so I'm not, I'm not surprised about that hard week in the market. Yeah. Um, but yeah, I mean, and we can chat about this a bit more. I know it's not in our, our newsletter here, but it does tie, I guess, to some of the things that we're, we're, we're talking about here. 

Um, you know, I had kind of a debate. I had some friends over last night for a birthday thing for one of our friends. And was there poker involved? 

There was poker involved. Yes. Just confirm me. 

Yes. Poker and, uh, it's Thursday night at Tom's house and food. And, um, and friends, there you go. 

So, but it was a birthday, but I was your only friend. Um, you know, just keep thinking it, keep thinking it. That's the hope and a whim, right? 

Yeah. Um, anyway, you were invited, you just didn't make it. So I don't know. 

[Speaker 1] 

I'll check with my social coordinator about that. I never heard about it, but that's fine. 

[Speaker 2] 

So anyway, um, we were debating this and, you know, inflation, right. You keep having this word inflation throwing around tariffs are going to cause inflation, inflation is caused by an increase in money supply. It's not, which then result in higher prices, right? 

The cause is more money in the system. The effect is more higher prices that we all pay for. Right. 

And so there's, we still have, and I think that this shows in the data that came out today is that even though consumer sentiment is down and consumer confidence is down as consumers, we're still spending, um, is spending as much or maybe more than forecasted, which probably means there's still a fair amount of money in the system, which is, you know, again, increasing prices and causing prices to not just necessarily increase, but at least not go down, right, which is what everyone is, is looking for there. And so it's, it's, um, again, there's a lot of this, you know, a lot of things being thrown around. The tariffs are not directly inflationary, but they will potentially cause increases in prices. 

But they could change the next day. As we know, the tariff could change and go away. And therefore then the price could in theory go down, which is different than having a lot of money in the system. 

So the reason I'm bringing all this up, and this was the conversation we had last night. You know, these are concepts that I think most people never think much about, right? They just know, Hey, it costs a lot. 

They buy eggs at the grocery store. But I think as we live in the world that we live in, I think it's more important to maybe understand some of these different elements and the relationships and, and, and, and all the different kinds of trying to understand at least the fundamentals of the moving parts that are there. 

[Speaker 1] 

Well, I think that's a, it's a great analogy that you put with that. Um, getting a bunch of comments in here from Thomas and Will and so forth. And Bob, boy, you're, you hit a nerf there that every everybody's in alignment with you. 

Did you send out? So I think I know what happened, but you, you clean the clocks of the guests that your so-called guests at your house last night, I would maybe call them. 

[Speaker 2] 

Yeah, I have inflation. I have my inflation at my house because the money supply increased after last night. That's right. 

[Speaker 1] 

I was going to say maybe the folks that I was just thinking about that. When you said I was invited, I was like, let's see, I'm going to get, go drive three miles for you to take my, or three hours for you to take my money. I don't think so. 

I can just go to work and have you take my money. And, uh, so are those, you call them friends, but are they really Stooges or Marks or, or those of you listening, Tom worked his way through college hosting poker games to keep spending money in his pocket. So, uh, those I'm glad those people still come to your house on a regular basis. 

Yeah. 

[Speaker 2] 

Well, I have good food. 

[Speaker 1] 

We have good food. Very good. That's good. 

No, I, I think that it's, these are important things to talk about. I was just wondering, cause we had so many positive comments to your thought. There's maybe you took last night's poker money and sent some out in advance to see the audience a little bit with some good comments. 

But I think that is, that is important to think about. And, you know, you had commented when we were talking before the show today that you had done some, some additional research on this and appreciate that. And, you know, I learned so much from the show that we do here, you know, over the last couple of years of doing this is there's, there's more things that I'm consuming and I'm paying closer attention to some things in the economy that maybe I did before, but you know, what's interesting, and I think if anybody that's listening knows the answer to this or you do Tom, um, feel free to make the comment, but, you know, we talked about this peripherally. Right. 

I think it was till the can't remember. I think it was the early 1900s was that we were funded in this country. In the United States on tariffs, right? 

We didn't have until 1913, right? We didn't have taxes the way we have taxes today. It was tied to the war effort that started was world war one broke out in, uh, two, uh, 1914. 

And so from that standpoint, and so that was that funding of that was of our economy was always through tariffs and make things here and there's not taxes on it, bring them from other countries and there's taxes on the question I think happens is, and I think if people really, and I'm going to blame this for a minute, I'm going to pontificate here for a second. I'm going to blame this on the media really. And, and probably on both sides of the, of the aisles media, so to speak, right? 

Wherever you choose to get your, your source. And my wife and I talked about this all the time. It's like, and I know you don't like to, you don't typically watch the news. 

I probably watch it too much, but the more that I focus on that from a standpoint of saying that, um, think about the story behind the story, right? We try and talk about that here, peeling the onion, however you want to describe it is there's always so much more, right? So we hear this, these news things about tariffs, tariffs, tariffs, tariffs, tariffs, and how bad they're going to be in horrible tariffs and so forth. 

And then if you take a step back and look at the history of tariffs and then dig deeper and say what they could potentially do if this all plays out correctly of bringing more manufacturing to the U S and increasing jobs and supply from this country, there are some potential real positives that can come from, and we don't know what's going to happen with this yet, but I think it's having the open mind to look at that and then look at the history of it. 

And what I'm really interested in seeing is does this, um, does this administration. At some point in time, make the clear and definitive statement. And if they have, and anybody knows this, please let me know, but make the clear definitive statement is that is our goal is to bring us back where now they've said we want to lower taxes and regulations. 

And there's some things in our newsletter today about regulations and so forth that they're, uh, peeling back and, and that's great stuff. But I wonder if that ultimately is that goal is to say, look, we can dramatically, and I can't imagine that we're in a place where we could ever eliminate taxes, but if the tax bill that's being proposed is no income tax for under $150,000. 

[Speaker 2] 

Yeah. I mean, that's, that's a lot of people. That's a lot, a lot of, yeah. 

[Speaker 1] 

I'd like to, I wish I knew what that number is, but it's got to be the vast majority of the country. 

[Speaker 2] 

Yeah. 

[Speaker 1] 

Yeah. And, and that, that is meaningful. Uh, when you do that and if you can just say, look, if you just, let's just say it, what would be the tax rate there? 

You know, if you lived here in California and the people's Republic of California, uh, with a 13.3% income to state income tax rate. Every time I say that out loud, I wonder why I still live here. 

[Speaker 2] 

Um, I don't know if that would apply to state as well. 

[Speaker 1] 

That may be federal, but if you think about just your federal, if your federal's just say your federal's 20%, right? Uh, 20, 20 plus percent could be 30, uh, wherever that is, but that's that much more money in your pocket. So higher prices, you're going to be, should be fine in theory, right? 

You should be ahead of the game when all that is said and done and the headache that goes with it. And guess what? I think the government can probably do a whole lot better job. 

I mean, this almost ties back to the conversation years ago about a flat tax. Right. Uh, because the thought about a flat tax was if it's easier to pay your taxes and it's on one card, more people will do it right. 

And if you think about it, if we have less concerns about how, and we have to pay less taxes, more people are likely to pay them in that setting. And it's probably much easier for the government to administer, uh, a tariff and making sure tariffs are collected than individual income tax. Way off track today, right? 

Then we just went down this rabbit hole, but it's a good one. 

[Speaker 2] 

Yeah, I, again, I mean, obviously there is a strategy, right? Whether the strategy will be successful is obviously unclear. I think the biggest challenge that we all have with tariffs right now is the uncertainty and maybe lack of clarity on if, when, how much, how long all of those things, right, are very unclear at this point. 

[Speaker 1] 

Well, but I was just going to say, Tom, if I can interrupt you for saying that's a really, I'm appreciative that you made that comment about the what and if and the when. I think we may be getting close to a place. So we're April 2nd, which is what, uh, Wednesday of next week is when auto tariffs and some of these other tariffs are supposed to hit, I would think that in this case is this administration has to be very careful about bold statements and rolling them back and not doing them bold statements and rolling them back. 

I think they need, are going to really need to get to a place where they follow through on what they're talking about in this setting, uh, because you know, it could be crying, what is it, you know, the, the boy that cried wolf scenario, if they're not cautious of that. Right. Yeah. 

[Speaker 2] 

Well, they're being used for multiple purposes, right. They're, they're being used for a negotiation or potentially punitive punitive actions, which is different than an economic piece of the whole thing. But again, just going back to the strategy, right. 

The strategy is again, reduce taxes and regulation, buy more American or have more things happening here in America. And we're going to talk about some manufacturing and some stuff that's starting to occur in America here so that we're, you know, actually getting more of that American flywheel really moving and that's going to be prosperous for all of us, that's the strategy. Right. 

At least a high level. Yeah, obviously there's a lot of other tentacles coming off of that strategy that create confusion and maybe even cause some misalignment of that strategy that's there. But yeah, it's, you know, taxes came about, income taxes came about because of the war effort. 

And if you look at the war effort, we've had, you know, world war one, we had world war two, we had Korea, we had Vietnam, blah, blah, blah. They've just kept going on and on and on. And a lot of those taxes have fueled the war effort and the military complex that has gone with that, that effort that's there. 

Yeah. Right. So anyway, if you start to look at all of these different pieces and I'm not advocating right or wrong, I'm just saying, and I think somebody mentioned here. 

Right. I think it's important for all of us to be reeducated a bit and understand the economy runs and to your point, I don't think we should be listening to the news to determine what our education is on the economy. 

[Speaker 1] 

Well, yeah. I don't think the news is absolutely going to educate us on how the economy works at all. Right. 

And I think we're supposed to, we're supposed to learn that in, you know, in, in school or middle school, wherever it might be. But, um, but the reality of it is it doesn't, I think my comment about the news was more tied to recognize that most of the news that you're watching has an agenda. 

[Speaker 2] 

Right. 

[Speaker 1] 

And that agenda does not necessarily tie with sharing all of the facts and very specifically with the current administration, you know, most of the, the mainstream news has an agenda that is going to be negative towards nationalism. 

[Speaker 2] 

Right. It's not education. 

[Speaker 1] 

So, yeah, I mean, but I think, I mean, we differ a little bit on our views on the news. I think, you know, it's, and it's okay. Is that the new, I think it's important to know what's happened. 

I think you need to be an educated consumer of the news that says, what is, what is else going on that they're not telling me, which is the beauty of even, I mean, right now, right. I've, I've shifted out of mostly shifted at it. Let me rephrase it. 

I'm using a mix of perplexity, which is kind of my, one of my favorite search tools, which is an AI driven search tool. Um, and now that Google is mixing Gemini, their AI tool into their search, I'm kind of going back and forth between the two, but what I'm finding myself doing more and more of with these things is when I'm hearing something is putting, applying the quick filter, right. That there is less than the old Walter Cronkite that, you know, people, our parents came home from work to listen to that. 

They, he was trusted. There are more people that would rather be celebrities on the news than giving the, the, the public great information, but hearing what's actually going on and happening and then peeling that onion back a little bit myself to go and understand more fully what, uh, what is happening behind the scenes on that. What does the tariff really mean? 

What is the, this, that, or the other really mean to things, you know? 

[Speaker 2] 

All right. Should we get back to our newsletter? 

[Speaker 1] 

Yeah, absolutely. Well, I don't think we've really talked too much about the newsletter. When we spoke before the show, we were going to move quicker. 

[Speaker 2] 

Yeah. Well, we have, we're, we're hitting on them. We talked about consumer confidence is low. 

[Speaker 1] 

So why don't you dive ahead? Let's talk about that first front load. 

[Speaker 2] 

Well, I just, you know, this is just article was basically a lot of, it looks like there was a fair amount of purchases last month to try and get ahead of the tariffs, um, makes sense. And, um, you know, it'd be interesting to see if we end up with a, with a glut of inventory as a result of this, but that's what happened basically. 

[Speaker 1] 

Well, we've got, I think let's unpack that a little bit further. Cause I think it's pretty important, right? The discussion here was that the article is from Reuters and talked about front loading ahead of tariffs, boost us durable goods reports there. 

And so, you know, I think what we're seeing here, right. Is, and I did a little, this could come up a couple of weeks ago questions. I did a little looking on that, uh, before our show about, you know, how tariffs are impacting, uh, whether it's. 

Orders that happen after they take place, order shipments, what happens to shipments that are on the water right now and so forth. And so you really, there's a little bit of a mix of that, but I think what we're seeing is, uh, and there's two, there's two sides of this, right? There's what is happening here in the U S and, uh, because of the tariffs. 

And then there's what the Chinese are doing in relationship to that. So there's a couple of components. We had an article in here as well about copper prices, uh, going up. 

So a chunk of what I think we're seeing in this setting right now, Tom, is that lots of orders placed to as quickly as possible, get those orders out of warehouses, because for the most part is, you know, you could, you could place an order today with a Chinese factory and you're still going to get hit by the tariffs because it's not going to ship before next Wednesday, but what got out of the warehouse is not in every case, but for the most part, we're going to avoid that. 

So what you had is a huge push of demand, both from orders from the U S companies, but the Chinese as the same side of that is hugely pushing up manufacturing on that side and taking their own supply in this case to go with that because of the impact of now copper tariffs, not just steel and aluminum tariffs, but copper. So, I mean, if you think, we don't think about copper that much, but everything we have that we plug into a wall has is full of copper, right? So we have some distribution companies with people, I think on the show with us today, that big part of their business is, is tied to both plumbing and HVAC and electrical copper pipe, copper wires. 

And so this huge demand, and now you've got the, and this is where just, I'll just quote this article. It says copper prices have surged to record highs with futures reaching 524 per pound driven by Donald Trump's threat to impose tariffs of up to 25% on copper imports and China's economic stimulus efforts, right? So U.S. buyers are stockpiling in anticipation of increased costs while China's initiatives to boost demand on their own side fuels all of that. So we've got this push pull scenario, right? We're trying to get it. They want to keep it because they want to continue to develop products. 

And so it's an interesting timing with that. So we've got the tariff component of what's being ordered. So orders were rising significantly. 

So that though ties to this follow-up article from CNBC about the conference board's measure of future expectation. And they use the word tumbled. So consumer confidence, which then just trickles down into our B2B world and into business confidence has really dropped into a big low right now. 

[Speaker 2] 

But what consumers are saying and what they're doing are two different things, right? That's the report that came out today does not reflect a consumer that is not spending and, and not doing things. So I think that, you know, we talked about, I think this last week, the confidence, if you want to call it, right. 

Is the, is based around, I think the uncertainty and, you know, a lot of the volatility that exists right now, especially in the stock market, you know, you look at your 401k and it's 20% down from where it was a couple months ago. That's under meaningfully understandable, but you strip all that away. We're still spending and we're not meaningfully reducing that spending. 

[Speaker 1] 

Well, you've talked about this a lot in the past, right? Is worrying about when does the bubble hit with a credit card debt and, and defaults on those types of things. Bob makes a good point for about the opportunities for companies that operate primarily or exclusively on shore are enormous early stage and agile companies are going to have a rent renaissance. 

I think it's interesting. Our guests last week, John Gunderson, I'm looking forward to seeing John on Monday in Nashville at the ISA event. And yeah, John was talking about it. 

Cause he's kind of a pricing guru and writes all the time about purchasing and pricing and so forth. And this is the time that you could really shine in businesses. What John was talking about last week is if you're, we'll just use distributors as an example. 

If you have a strong balance sheet, credit terms. And so, and it's not just to say, Hey, I'm going to buy everything I can. It's going to be finding that balance. 

And then you can start instead of, cause what we're, what we're going to see is the whiplash effect, right? And, and I've talked to quite a few different distributors, both in the US and Canada in the last few weeks that are going through this right now. That it's, they're struggling with getting, you know, one day there's a letter from XYZ company about here's our price increase, even though the tariffs haven't taken effect on them yet. 

And then I think I mentioned a week or two ago, I talked into a, an industrial safety distributor who had literally got a price increase from one of the companies that they work closely with, and then 10 days later, reduced those prices back and says, Oh, we found another source, right? So you got the administrative administration factor that goes internally of dealing with all of that. But right now I think the companies that can manage their balance sheet and their cash on hand and their inventory levels really well can look at this. 

And this is what John was talking about to say, Hey, if I go back because my competitor, if he's doing that, I'll call it the boomerang or the whiplash effect that says, well, my new price is this. So here's your new price. But if we have a balance of inventory at new price at old price and maybe multiple previous prices, and I start blending my pricing, I can get out and take market share. 

Yep. So I was really appreciative of John sharing that last week, because I think it's something that really think about. So, um, so let's jump ahead, Tom. 

There's an article there from DC velocity about business leaders are prioritizing, prioritizing supply chain resilience. I thought that was interesting. They were really putting that in the focus of that, how important it is for their overall business, um, to be able to, to kind of manage and survive moving forward. 

And they really related it to as important to just about anything else in their business. 

[Speaker 2] 

Yeah. Yeah. I mean, look, there's no doubt that you have to, what does it say? 

Resilience and, and, and putting some resiliency and some strategy to that. The supply chain has got to be one of the highest priorities. Yep. 

Tariffs are no tariffs, right? All this stuff that we've talked about for two years. 

[Speaker 1] 

The geopolitical things and all the other things that are going on. Right. Yeah. 

[Speaker 2] 

All right. We're next. Were you done with that one? 

I am done with that one. Yeah. I'm trying to move us ahead. 

Like we decided, like we discussed. 

[Speaker 1] 

So we went 15 minutes or 20 minutes before we got to our first article and now we're going fast. That's right. Beautiful. 

I wonder sometimes why people tune into this show. There were so structured. 

[Speaker 2] 

You don't know what you're going to get. 

[Speaker 1] 

Well, that goes back to Paul's earlier comment today, right? He said, what did he say? That's what we were talking about around the horn 2.0. He says, that's what 2.0 makes it special is because it happens when it happens. So maybe there's a comedic factor. It's not people that come in here for information. They're coming here for laughs at the two of us. 

Anyways, before we jump ahead on that, there was just some, the supply chain resiliency thing I do want to talk about. One of the things that was commented about is that literally they're talking about like 80% of executives that were interviewed. We're talking about supply chain resiliency being as important as cybersecurity or even more in some instances. 

And they were talking about, you know, customer expectations are rising, the geopolitical challenges, and the need to be proactive in adapting to unpredictable environments. And you know, what's interesting, and I do think it's important that we just talk about this for a moment that we could have just easily glanced by is they talk about rising consumer expectations. And that goes back to what they're talking about there is that graying area. 

I mean, it used to be, look, I have a B2B experience and I have a B2C experience, right? How I buy when I go to the mall is different than how I buy in B2B. Well, now both B2B and B2C are migrating to online or e-commerce transactions. 

And we have in our personal lives an expectation, specifically, whatever you want to call it, the Amazon effect and so many others are doing a great job with that now is that's migrating over. And I think it's great that this particular article talked about supply chain resiliency really needs to improve because of consumer expectations. And I mean, it just makes me think about, you know, I think I might have shared with you this example before. 

This was 10 years ago or maybe a touch more when Amazon business was just getting started. I remember talking to a manufacturer's rep in the Pacific Northwest, and I was actually with him visiting Amazon when he was telling me about this on the way there. And he said he had stopped at a wind farm between eastern Washington and Seattle and was talking to a buyer there. 

And he asked him where he buys. And he said he's buying more and more every day from Amazon because his orders come complete. Because historically, the wholesale distributors he had worked with and he had an item, 20 items that he needed. 

They had this one had five in stock and two were going to get there in three days. And the other one were going to come in two weeks. And the other one had different things that, you know, different timing. 

And he could go to Amazon and get it all right away. So I think this consumer expectations piece is going to continue to be a factor that we're going to need to watch here and see how it relates. 

[Speaker 2] 

Don't we have another article about that coming up? 

[Speaker 1] 

We do a little bit more about that as well. Before we move into manufacturing distribution, we have an article. 

[Speaker 2] 

You may never see any of these articles. What's that? So that our rate, we may not see any of these other articles. 

[Speaker 1] 

No, we're on our way. Hey, I had something relevant to say. Okay. 

Okay. 

[Speaker 2] 

Very good. I think the point about the urgency, right, of the supply chain compared to like cybersecurity or other things that shows that the importance that I think is being shined onto this compared to what we've seen over the years. 

[Speaker 1] 

So, yep. So before we jump into our manufacturing distribution segment, there was an article from CNBC treasury department earlier this week, scrapped a rule for us, small business owners about the beneficial ownership statements. We have to do that at lead smart. 

Others, every business basically has to do that. And it's, I don't want to see things that are important and valuable and relevant go away. But there are a lot of things out there that businesses have to comply with that just make life difficult. 

Takes more people, takes more staff. There's not an AI tool yet that can fill out a beneficial ownership statement for your business from the government. 

[Speaker 2] 

By the way, this never actually got off the ground. So, and I don't think we ever did it actually for lead smart or I didn't. And so we would have been. 

[Speaker 1] 

We did anyway. 

[Speaker 2] 

No, there's a statement of information we do at the state every year. 

[Speaker 1] 

Yeah. 

[Speaker 2] 

But this is different. This never got off the ground. Supposedly, it's supposed to be done by the end of last year. 

And it was early this year. And then anyway, so it's basically, I think, been scrapped altogether. 

[Speaker 1] 

I think this is, you know, this tie just ties back to everything else we're talking about, about this administration is there. There is potential for really great things to happen with U.S. manufacturing and jobs eventually. Reduction in taxes and reduction in red tape and efficiency. 

And this is either going to be the probably, I don't know what I would relate this to in past history, but this could be one of the greatest booms or busts in the U.S., in U.S. history, potentially. You heard it here first. 

[Speaker 2] 

We heard it there. All right. Yeah. 

[Speaker 1] 

All right. Let's roll it into manufacturing distribution Snyder Electric to invest over 700 million dollars in the U.S. That is huge with big facilities and infrastructure. They're going big in on the powering A.I. growth with data centers and electric vehicles and so forth. Nice to see that bringing that big investment into the U.S. from Snyder Electric, who's, you know, if you wonder who they are, if you're not familiar, if you go outside and you look at your electrical panel on your house or those in your building and a lot of the components and things that go with that, it's going to say Snyder Electric on that. So one of the biggest in the world, if not the biggest in that setting from a manufacturing standpoint. 

[Speaker 2] 

Did they say specifically what, though, they were going to do? I think it's great that they're putting in the infrastructure and they're investing. Yeah. 

It wasn't clear to me where the money was going to go. 

[Speaker 1] 

Yeah. They describe it as marking the single largest capital expenditure in its 135 year history. Arms to bolster the nation's energy infrastructure, support the growth of artificial intelligence, enhance domestic manufacturing, strengthen energy investments. 

So this is in their own facilities to support what's going to be needed, right? A thousand new jobs, including for manufacturing professionals, engineers, developers. So they're building their own manufacturing facilities here and increasing and improving their distribution levels. 

[Speaker 2] 

So it looked like what they're saying predominantly is just to be able to prepare for the demand that's going to be required. 

[Speaker 1] 

They're going to be making things here, right? They're increasing a thousand new jobs, right? So it says positions, manufacturing professionals, engineers, developers, technical analysts. 

They're doing that to support what you described, right? With AI infrastructure needs, electrical and so forth. But they're doing that by bringing manufacturing here. 

[Speaker 2] 

So is this a win or what's going on with the approach of getting more on-shoring and more onshore manufacturing? 

[Speaker 1] 

There's no discussion in this about whether they're responding to tariffs with that at all. But I think it's what it is, is it's a support to the growth. And probably I would say, and I don't know this, I would just have to assume common sense would tell me that this is their response to what they believe will be the growth and the boom to the growth of the U.S. economy and manufacturing coming to the U.S., right? That's really, I think, the key to it. So Schneider Electric's headquartered in France. And I think that's basically a bullish statement on their standpoint to say, not only is there going to be more infrastructure being built in the U.S. from some of the initiatives that are there, we believe in it and we're going to reshore some products that we're making and make more of them in the U.S. Fair enough? Fair enough. All right. So let's jump ahead in that. 

We'll just kind of skip the next article about global industrial. And actually, that was, I love it when smart guys like Paul Kennedy say that I'm right. You want to highlight that thing? 

[Speaker 2] 

Yeah, I'm just going to leave it up there for a while. So you can. 

[Speaker 1] 

I was just going to screenshot it. Just the next time you're bashing me. 

[Speaker 2] 

You want to just end off right now? Because it's not going to get any better. 

[Speaker 1] 

Yeah, let's just shut this show down. 

[Speaker 2] 

It's not going to get any better, so. 

[Speaker 1] 

Yep. Mic drop. Yeah. 

There's a good article in Digital Commerce 360 about how global industrials really using some great electronic tools and even some AI in focusing on their logistics and how they're cutting order processing times. Right. And this is the beauty of some of the things, Tom, we're going to be seeing very, very soon across the board in distribution from an AI standpoint is the way that we get orders out the door and they're processed. 

There's a number of companies we are. In fact, I was, you're working, your team's working with onboarding a new manufacturer in the plumbing segment. That's, oh boy. 

You want to highlight that too? Go ahead. Paul, Paul, Paul, come on. 

Paul, for those of you listening and not watching us today, our good friend, Paul Kennedy, who's a guest with us coming up in the early May, if I'm not mistaken. He's commenting that Tom was right earlier. He is really covering his bases here. 

I thought he was stepping out on a limb there for a minute, but now he's covering his bases, which Tom, sideline point quickly, we're 40 minutes into the show. We're into our second segment already. I'm just, you know, it's phenomenal. 

For those of you listening on the podcast, if you're listening on Apple, Spotify, Odyssey, wherever it might be, you're not seeing the screen here. We're looking at the newsletter we publish each week. It's called Around the Horn and Wholesale Distribution and Manufacturing. 

If you'd like that newsletter, that's where the articles we're referencing comes from. You can just send us an email at hello at leadsmarttech.com, or if you're on LinkedIn consistently and regularly, you can just go to and search on LinkedIn Around the Horn and Wholesale Distribution newsletter, and that'll pop up for you. You can click that button and subscribe there. 

So got that piece in. So yeah, see, Bob says like claiming you don't have a favorite child. That's funny. 

Nor would we ask anybody to do that. So, but going ahead from that discussion about order processing, I was talking to one of our customers emailing with her earlier this week, and she was, this is a very large plumbing manufacturer, plumbing equipment manufacturer, and she was commenting that they really need to get to a place where they're not having to manually enter orders because they have distributors that send them screenshots. 

They have distributors that send them PDFs. They have distributors that send them spreadsheets. They have distributors that work on EDI. 

And so she's looking now at some of the AI tools out there that can capture all of those at once and really speed that up with probably far more accuracy than a human typing orders in. And so it's going to be kind of interesting to watch that. So Global Industrial is working on that already. 

Next article before we jump into e-commerce and marketing is the Do It Best group. They've got their big event each year, and now that's the group that pulled True Value out of bankruptcy, and they've got their spring market. We've been to together, actually. 

We were a company we did some consulting with years ago. We've been to the Do It Best spring market. That's really an interesting event when you think about these co-ops of Do It Best, True Value, and so forth. 

You know, those are buying shows. And what's cool about that is I spent my, I don't know, I looked the other day, I've got 14 trade events this year between buying groups and trade associations left, and that's the ones I know about so far, between a mix of attending and meetings and exhibiting and speaking. What's cool about these shows with these co-ops is that the people that are there have their order books with them. 

Now, I'm sure it's been, what, seven, eight years since we were at one together, and I've been to most of them in a previous life as well. I'm guessing it's being more done on iPads and people stopping with laptops now, but I remember going to one of them with you in, I think, in Chicago, or Indianapolis is where we were, I think. And there was people there with their order books, hand-in-triplicate copies of purchase orders, right? 

[Speaker 2] 

And buying a lot of stuff. 

[Speaker 1] 

And, you know, I mean, spending hundreds of thousands of dollars at those events doing that. Good. Well, let's roll into e-commerce and marketing. 

Great article from McKinsey. You know, you had commented a while back about, I just started getting all the McKinsey newsletters now to kind of bring those into our show here. So, great article from McKinsey & Company, Unlocking Profitable B2B Growth Through Generative AI. 

Tom, you want to lead us off on that one? I think you liked that one as well. 

[Speaker 2] 

No, I mean, again, McKinsey, once again, did a great job on the article, right? They're just very thorough, and they're really, really, really comprehensive articles. But what they're talking about, and I have a diagram I'll bring up here in a second, but they are talking about how do you incorporate AI into the entire sales cycle from one end to the other. 

And let me go ahead and bring up the... 

[Speaker 1] 

So this was done by three $450 an hour senior partners and 14 junior $150 an hour analysts from McKinsey. Okay. I'm just thinking about McKinsey and the consulting companies out there and how they work and they build. 

[Speaker 2] 

We had ChatGPT do the whole thing. 

[Speaker 1] 

Yeah, there you go. But build for it. 

[Speaker 2] 

Yeah. So what they basically laid out, right, is, and this sales cycle is more not traditionally for what you would see in distribution. This is more of a traditional, say, software company sales cycle, where you get leads and then you turn those leads into opportunities and proposals and then into a customer. 

But they basically laid out the different phases of the sales cycle and then how they're applying AI. And there's a lot of details. This is just one little diagram, but each of these little silos here were detailed out in a lot of, and specifically how AI can do that. 

But I realized when I was reading this, Kevin, is this is basically what we've been doing a lot with our customers. But I need to be able to document this a bit more, because I think the framework, we could take this- Didn't mean to talk to you about that. Yeah. 

No, but we could take this framework and look at it from the distribution manufacturing standpoint, where we're dealing with customer and selling to the same customers over and over and different things, and start to really define a lot of what we're doing and to make it more repeatable. And that's what I really liked about this is it said, okay, here's a framework that you can start to work off of. And then that kind of was a, to me, it was like, yeah, we need our own framework because we're doing all this stuff. 

It's just not documented this way. 

[Speaker 1] 

Describe what we're looking at here, because we've got more listeners that are listening on the podcast later than we do live here that can see this. 

[Speaker 2] 

So they're saying that the traditional sales cycle is in three phases, right? 

[Speaker 1] 

So this is a graphic that's kind of showing these three phases, right? 

[Speaker 2] 

It's a graphic. And this came right out of the article. 

[Speaker 1] 

Yep. Right. 

[Speaker 2] 

So it's saying that the, there's an awareness and outreach phase, right? Which is getting the lead and, and getting the lead and turning that into something where you're maybe an opportunity, right? I mean, really probably what they're saying here is really just a lead and getting in the lead generation process. 

So there's two sections there under there. They're saying, how can AI be used to identify what's the next best opportunity or that are prioritized leads as to which ones may be the most qualified. And then what's the Nespex action that I should take, which is something we're spending a lot of time with is on Nespex, easy for me to say, next best action. 

Then it goes into, okay. 

[Speaker 1] 

And that's the beauty of the NAI, right? Right. Is defining that versus having to figure out, let me help you understand. 

Okay. 

[Speaker 2] 

So then the next section is really, okay, well, I have a meeting with somebody or how do I use AI to help me prepare for the meeting that I'm there? And then the next phase is engagement and acquisition. So now I actually have a prospect. 

I'm doing proposals. I'm doing media meetings, even pricing, all of that. How can we use AI to help facilitate that? 

And then the last part is success and growth. Once we have a customer, how do we turn them into a referenceable customer and a customer that doesn't go away? And again, I think this was designed to be more traditional sales cycle. 

You get a lead turns into a customer, get another lead, turn it into a customer. The world we live in is a little bit different, but conceptually there, I think there's a lot that can be organized here. 

[Speaker 1] 

Well, you know what I love about this? And I'm glad that you're, you know, you, you grabbed this graphic and you're showing it. This ties into something that I've, you know, I wouldn't say I, we have been, we've talked about on the show. 

We talk about it consistently in our company and literally we're on, that was on the phone yesterday with a Canadian, very large Canadian electrical distributor. That's looking at partnering with us, with our technology from lead smart. And this is really what we're able to do with the technology that we make is bring sales and marketing together. 

Right. And I, I've talked for a long time. In fact, I literally just wrote myself. 

I know what I've been on the, on the phone earlier this week with a major trade association and about speaking at one of their upcoming events. And one of the, the presentations I really want to add to the, the group of talks that I give at shows and events is about what's the difference between sales and marketing and having a revenue department. And we literally, we talked about this yesterday is forever, right? 

We've had sales says, you know, marketing sucks. The leads are no good. Marketing says, you know, sales is no good. 

They never close any of the leads. And we have this, you know, this pushing and pulling with each other in this conflict. And, and they might be good friends at the end of the day in the lunchroom, but, but they're not really supporting each other. 

And what Gen AI does specifically through what you were just showing there is we bring these two together because what we're really doing is we're focusing on working arm and arm in a customer journey. And how do we acquire the customer and what do we do with them? And then what do we do with them once we have them? 

And I think these, these tools, this McKinsey study, I think was, was a really good tool in looking at expanding that further. And I, I mean, lack of a better word, you know, I, and, and this is, this ties into what I put this best on. You're seeing obviously more and more of the chief revenue officer title where sales and marketing report to them. 

But I, I'm not seeing very much in that setting where whether you have a VP of sales and marketing or a chief revenue officer, and they both report in, I'm not seeing much of that out in the marketplace. So the things that I talk to, whether it's our customers or the events that I'm at is where people are saying, I'm really bringing those two together. So they have immediate common goals, right? 

Because historically in marketing, Hey, it's how many marketing qualify leads did I get? How many events are we doing? What are my, my email open rates, those types of things. 

And sales is driven by a number, but when you bring those two together to one focus on the customer and the customer's journey and experience, then two, you can tie that together and then have a combined group that has a goal revenue goal by partnering together. So, so we're partners. 

[Speaker 2] 

Yeah. I don't think we're seeing a lot of the organizationally, those two areas coming tighter together. Maybe they're under the one leader, as you talked about, but we are seeing is, is at least collaboration and some interaction or integration maybe is the best word between the marketing actions that are taking place and how that can actually impact and help the salesperson. 

So, you know, some of the things we've done simply is, or an example of this would be, Hey, marketing's running a special or a promotion. Well, they're running it maybe around certain price lines, certain price categories, maybe around certain branches, all of that. How does the sales team that then is supporting those customers know that those things are taking place and know, and use that as an opportunity to reach out and potentially have a discussion, right? 

That's never, that chasm has never, that chasm has existed, has never been kind of brought together. 

[Speaker 1] 

Well, thanks for the lead smart commercial there, Tom, because the reality of it is what leads more channel cloud is doing in the, in the setting that you just described is marketing is analyzing ERP data within our platform leads more channel cloud, identifying who the likely customers are that should want to be buying a promotion and literally scheduling tasks for the salespeople of who they should be talking to and what they should be talking about. 

[Speaker 2] 

Right. 

[Speaker 1] 

And it's using AI to do that. So there's, there's fewer manual steps. 

[Speaker 2] 

And I don't want to, I'm not, I'm not trying to, I don't like necessarily just talk about what we're doing at lead smart, but if you look at the results of what we're seeing from that with a couple of customers already significantly seeing much better results with their promotions and their campaigns than had it been done in a silo or in a vacuum situation. And that's the whole point of all this stuff that, that this article drives is how do you use AI to really help kind of close some of those gaps? 

[Speaker 1] 

Well, and I think in closing on this is what we, you just described about that particular customer is doing is they're bringing sales and marketing together. So they're working closely. Sales says, okay, wow, you just helped me with what I should do with what you're, you're doing an effort on the marketing side and your additional efforts helped me see what I need to go do. 

So we support each other. 

[Speaker 2] 

And it's not, it actually gives a reason to have a conversation, right? And the, and then maybe even the, the customer didn't know that there was a promotion. Maybe they didn't see the email. 

Maybe they didn't see the things that are there. Right. But it also gives an opportunity for the salesperson to have a, to add value, which is a big, I think it's something else we're going to talk about possibly later if we get here today. 

So good. 

[Speaker 1] 

All right. So the next article is digital 360, digital commerce, 360 outdated technology, stifling e-commerce and growth. It kind of ties. 

It's the next flavor of what we just what we were just discussing in that, in that setting. And the, I thought it was kind of interesting. They talked about, where did I lose my notes there? 

[Speaker 2] 

Well, these next two articles kind of go together. 

[Speaker 1] 

They do. Yeah. Yep. 

The, the component with that is talking about outdated, really outdated technology. And we, it's, it's so interesting with, you know, we see on an ongoing and regular basis is the legacy systems in place, right. And if they have even remotely, if they have any type of CRM, it's usually a big brother type scenario. 

It's a real struggle for them to get any data out of it. They've got silo data. This talks about, you know, outdated technology contributing to inefficiencies. 

I, what I, one of my takeaways from this and something that I just, it's so important to me, and it's a big part of what we do in our business is bringing silo data together. Right. And when you've got legacy systems and struggling with outdated technology, you know, it's sometimes hard to get that data out. 

And then, you know, tying a little bit to this is that they were talking about investment considerations and cost benefit analysis and investing in new technology is, you know, so many companies. Gosh, I almost was going to give you a compliment there. I guess I will. 

I just remember you telling me when we were first starting LeadSmart years and years ago was that, how did you put it? You said companies are looking for outcomes, not more software, I think was the quote, right. And it's so easy to just go buy software, but not having a technology plan and a roadmap and understanding the landscape of really what's going on in your business and where your silo data's are and so forth is just critical out of this whole thing. 

So it said literally this report, again, Digital Commerce 360 said 93% of organizations surveyed acknowledge that their existing technology is hindering their e-commerce success, right. So it's not, but I would go one step further. If you would have asked them, is it hindering your success? 

If they are aware of the capabilities of generative AI and other modern technologies, whether it's ours or somebody else's, they would say that that's not just hindering e-commerce, it's hindering their entire business. Sure, sure. 

[Speaker 2] 

But e-commerce is a, obviously a front facing channel that is pretty obvious, right? It's the glaring issues. The issues become more glaring. 

That's something that thing on e-commerce. And I think the other article here, the future of B2B e-commerce feels like a B2B experience. What this was talking about is, I guess, very complimentary to the previous article is, again, we've talked about this over and over, is more and more the B2C, the expectation of a B2C experience that I, or what I'm used to as a consumer is expected in B2B. 

Now, obviously there are a lot more complications and there's pricing and there's other things that are different than in the B2C world. But I was wondering, as we were talking about some of the on-shoring in the article, you're talking about like speed of actually receiving the items, speed of order processing, all of that. I'm wondering if there's more and more on-shoring and more onshore manufacturing and does that help speed up the whole supply chain? 

And does that ultimately end up providing a better experience to the consumer? Because they can get stuff and they can get it faster and they can get all the things potentially, or more of the things that they need at the same time. 

[Speaker 1] 

Well, it's a good question. I think my view that the answer would be is depends, right? Is if you're the manufacturer and you see that from that article earlier that you said that there's consumer demand, not consumer, but there's my customer demand with a higher expectation of service levels. 

And you rise to that occasion, whether you're a manufacturer or a distributor, yeah, you're going to be able to get things faster. We left a long time ago, we left the world of just-in-time inventory, right? Because you just can't do that. 

It's what I say, you can't. It's just harder and harder to be able to do that as a manufacturer. Distributors, customers are expecting them to have things when they need it. 

But a manufacturing side of it, it's harder and harder to do that. But being able to, if you're a purchaser at a large distributor, I'll just use as an example, our audience being wholesale distributors and manufacturers, is if you're a distributor and you're normally used to waiting for your widget supplier that is bringing inventory in from offshore and they're dragging their feet on things and you can start getting things faster, right? Because things have now been on-shored from your manufacturers and you can cut those windows down, right? 

And if you're able to do that, you're going to be able to serve your customers better and you're going to be able to leverage your balance sheet better because you probably don't need to order as much as well. 

[Speaker 2] 

Yeah. And I wanted to hit a couple of comments. Sure. 

You know, Bob was saying here, an onsite can be faster as long as there's energy to fuel the transportations and logistics to keep it straight. I agree. There's a lot to go in there. 

This is an interesting one too. I heard this as well. I didn't hear that. 

That surprised me. It has 700 plus IT systems that are not talking to each other. And, you know, you talk about efficiency, right? 

Or the potential. Yeah. But think about the inefficiency or the potential efficiency that could be created by even tying a small percentage of those together where there's some, you know, symbiotic relationship. 

Yep. 

[Speaker 1] 

No, I mean, it's what we started this discussion about and we talk about every day at, you know, specifically in the distribution world is that you've got, you know, trying to track a customer journey, right? When you, in the vast majority of companies we talk to every day, have never even had a CRM in their business, even a legacy CRM, not a smart CRM. And so you've got, you know, say a legacy CRM solution, your ERP, it's probably some marketing automation data, millions of spreadsheets, probably in a large company, if not tens of thousands, hundreds of thousands. 

And then you've got your e-commerce data. And when you can't bring that siloed data together, you don't understand your customer journey, right? 

[Speaker 2] 

Probably even quoting in and of itself is very fragmented. 

[Speaker 1] 

Well, you think about that, right? I mean, the guy at the counter, right, of your warehouse location, the guy at the counter should have the exact same information about a customer journey that a marketing manager has, that a field salesperson has, or an executive would see. Everybody that touches the customer should be able to see that siloed data in a single location and then give their information that they've learned and Intel, so to speak, that they've learned to share across the organization. 

And I think Bob's example there, I hadn't heard that, but literally I wanted to say that again, the US government has 700 plus IT systems that are not talking to each other. Now, I don't know that you need 700 of them talking together, but I bet you need, in some instances, 30, 40. Well, that's the better point, right? 

You probably need a fraction of that, but I'm sure that there are great efficiencies that could come from multiples of them talking together and really seeing that. So when you think about all the things that the NSA and the CIA know about people, but that the government, from the processing standpoint, to make life more efficient, can't figure that part out. So anyways, talking about NSA, and boy, I did a little good segue and I didn't even know it. 

We're going to talk about technology, cybersecurity, and AI. This is an article from TechCrunch about leaked data exposes a Chinese AI censorship machine. And Tom, you want to kind of hit any points that you liked out of that, and then I'll kind of throw the bigger picture view that I have of that. 

[Speaker 2] 

I don't know if I liked anything of it, but basically what they described- You don't like what it says, but let's talk about what it means. Is that they had built a model, a large language model that essentially was designed for censorship, right? And for obviously looking at the questions and the conversations that were being had, whether on the web search or on AI, and then essentially altering those conversations or removing any data that fell into the censorship brains. 

And this went way beyond the things that people talk about, government and Tiamin Square or whatever. I mean, it was pretty intensive, the number of things that they were altering or looking to censor along the way. 

[Speaker 1] 

Yeah. One of the big takeaways with that was the ethical implications that go with that of doing it. But more importantly is this was related to the Chinese government and to your point, building a large language model to support the AI part of this is that government and other governments are huge, historically have been these bastions of censorship. 

Well, now that previously that censorship was lots and lots of people monitoring things. And now an AI model monitors all of that and makes the changes to it and or deletes things. And the other factor of this was talking about the data security and privacy that goes with this as well. 

So a couple of pieces, one is it's bad that this is happening, but a big piece of it is they talk about the global impact that said, China's AI censorship model could influence other nations approaches to information control and the potential for an international adoption of similar technologies. Now, I don't think you're going to see, how would I put this? I don't think we've ever seen an example in modern history of censorship anywhere close in another country related to what China does. 

But these are providing some tools that other countries could choose to get behind as well. So it's kind of a scary thing. The reason I was interested in this though, beyond what's going on there was people don't pay enough attention to where their data is and what they're doing and what they're using. 

And this kind of goes back to the deep seek idea. And when the deep seek AI model came out, there was a lot of discussion about that. So there was the vast majority, and Tom, you could probably speak to this equally well or better. 

The vast majority of what was in the news about deep seek was that it was showing that these AI models could be made faster, cheaper, and taking less power and less computing power than the OpenAI's models or Claude's models and other models, right? That's what everybody heard about. And then everybody rushed to go download that. 

And I was the one, I don't want to say you weren't, but on this show, we talked regularly about the dangers or the risks of where your data is going just from TikTok, right? And it was interesting, once my wife kind of, and I talked about this a little further, she was a big fan of TikTok and she got rid of her TikTok pretty quickly. And so now we think about deep seek and other tools that will be coming from China. 

And let's just say other potential nefarious sources. We need to know where our data is, right? And we need to know how it's being used. 

We need to know what security is being taken into. And the reason I may be pontificating on this a little bit or soapboxing this a little bit more is, you know, we had a company that we bump into in some deals here or there that makes a CRM solution for wholesale distributors. They just came out of having almost a month of being down from a cyber attack. 

Their wholesale distributors didn't know where their data was that were using their system. They didn't know where their data was. They didn't know how it was being used. 

They didn't know if it was compromised in the attack. And by the way, they couldn't use the software product they bought. And the vast majority of the people that I talked to that had been using that system had never asked hard questions about their software provider of where their data was being stored. 

What was protecting it? How many certifications or attestations did they have to protect their data? And those are important questions. 

And that's what intrigued me about this particular article was the idea of, hey, we need to talk about and we need to be thinking about what technology tools are we using? What apps are we downloading? What apps are our sales teams and our inside teams downloading onto their phones where they also have access into SharePoint or Dropbox or their ERP system and other critical systems? 

It's time to really take a look at those things. 

[Speaker 2] 

Yeah, I mean, look, data is really going to be the primary competitive advantage or the differentiator and a competitive advantage, right? As technology gets cheaper and easier to create and more ubiquitous, then the only thing that is really going to enable you to differentiate yourself competitively is the data and how you use the data. So I think there's two parts of the equation. 

One is, yeah, of course, you don't want the breach of your data. You don't want to necessarily be sharing your data or privacy information with people that shouldn't have it. But maybe as importantly is how are you using that data competitively and together? 

And I think we are seeing more of that. I think on the plus side, I know I'm seeing more of that every day. I mean, we just went through a major, major questionnaire a couple of nights ago that had a whole bunch of questions about data and data strategy and data security. 

So we're definitely seeing more of it. But I agree with you. It's certainly not. 

It's not widespread. 

[Speaker 1] 

Nope. Good. Well, let's roll into this. 

This is a follow-up article from CFOdive.com. Talks about nearly one in five small and medium-sized businesses or SMBs are at risk of shutting down after a cyber attack. That's pretty significant impact that it talks about that. 

And I think the reason behind that, what it's sharing is the financial impact that goes with that. It says the average cost of a cyber attack is $250,000 per incident for small and medium-sized businesses with the research that they did says the potential for reaching up to $7 million. So let's just say if you split that in half and say it was $3.5 million of what it could go up to, a lot of small and mid-sized businesses, that really, if it doesn't put the squeeze on questioning whether they're still in business or not, it certainly puts the squeeze on what is their financial position and their balance sheet look like moving forward for a period of time. 

[Speaker 2] 

Yeah. And they didn't say in there exactly what the types of small and medium-sized businesses, but I mean, if you had a restaurant, right? The restaurants, most restaurants run on technology and things now for ordering and everything like that got hacked, I guess, in theory, you could be, the restaurant could be shut down, right? 

Their point of sale or any of them. 

[Speaker 1] 

What does a wholesale distributor do when their, if their system crashes? Sure, sure. Right. 

Kick your orders out. Exactly. So that's really. 

So I was just, I'm just searching this, trying to remember what the, the government's view of, of let's see. So definition of an SMB employee count is small businesses, fewer than a hundred employees and mid-sized businesses between a hundred and a thousand. Revenue is for a small business is less than 50 million and mid-sized businesses between 50 million and a billion dollars. 

I thought I had remembered it as being under a half a billion, but obviously that's been ramped up. So the vast majority of the people that would be listening to this podcast or our customers would fall into that probably mid-sized business range, right? But big impact. 

I mean, you get a cyber attack that costs you three, four or $5 million that one is not even the disruption factor within the business. It's the cost to solve the issue. And then the other part of it is that people rarely talk about is that, you know, the issue that what does it say to your customers about how well you're taking care of their data? 

So right now we're all stewards of other people's data as businesses, right? So that becomes pretty important to us. Any closing thoughts on that before we? 

[Speaker 2] 

No, I think we can move on. Yeah, good. 

[Speaker 1] 

All right. You want to talk about that Industry Today article about what manufacturers should ask before implementing AI? 

[Speaker 2] 

Let's see. I'm just trying to remember what was... Do you remember if you read it? 

I did read it, actually. Do you have any key points on it? 

[Speaker 1] 

You're going to bounce that one back to me? I do. It just kind of that they talked about focusing on having a clear business case, right? 

Organizational readiness. Do we have the right people in place? Do we understand how we're managing our data? 

And do we have a plan for implementation is kind of the key takeaway points from it. And which I thought was great. And this really ties into, I think, not just AI, but it ties into technology, right? 

Across the board is we talk to people, you know, day in and day out that, you know, want to look at acquiring new technology, but they don't know if they have the right... They have never even thought about, do we have the right people in house to manage and organize it? They don't have a clearly defined business case. 

They might have some things that they want to address and do within their company, but they don't necessarily have built a business case for it. They've got the question is, is my company ready for this, right? From an organizational standpoint. 

And then their data is a mess, right? And so I think this article kind of ties into what we see in a day out and day in basis. And what we work with companies on is getting that plan in place. 

And, you know, when you're choosing a vendor, your vendor should be asking if you have some of these things in place with having a plan of how to help you do all of these things, right? Because the comment I made about, you know, something you shared with me years ago, right? It's easy to buy software. 

It's not simply get outcomes. And your vendor should be helping you with a roadmap to how to get the value out of your technology investment. 

[Speaker 2] 

Yeah. I mean, there's the outcome, but then there's even the why behind that. Why do we want that outcome? 

What's the purpose of that outcome? How is that going to benefit that? And, you know, there's a lot of outcomes sometimes that you can look at that are questionable, where they may seem like they may have some value, but they really have very relatively little value. 

[Speaker 1] 

Very good. Anyway, good. Well, let's roll into our sales and mergers and acquisition segment in the M&A side. 

There's an article there from roofingcontractor.com, and it's some interviews and some discussions with some beacon roofing or beacon supply employees about looking for their new future under the new acquisition by QXO and Brad Jacobs and his team. You know, 8,000 employees across 530 branches in the US. Um, so they've already done a town hall with approximately 3,000 of them. 

They said that they're literally going to talk to, and it's already started every single employee. And I think they had two questions for them. I think it was, what are we doing really well right now that we shouldn't change? 

And what is the number one thing on your mind that we should change? Where I think the two key questions I liked about that, but and we kind of we're running short on time, so we'll kind of move quickly on this. But my takeaway with this is what I thought was really, really interesting from this is one, they're doing what they said they were going to do about getting with all of the people. 

But there was a great point in this article that they talked about. They talked to somebody who had been a long-term employee and that he had just been having a discussion with a fairly new college graduate that was there for like barely a year. And they talked about it saying that basically, it didn't matter what your tenure was. 

Everybody has a new day one, right? Because anyways, I was going to say there's a new sheriff in town, but just basically having new ownership and not that there was anything necessarily wrong with the previous ownership and leadership team. But now there's a new day one and we're all on a level playing field. 

I might be older and have more tenure, but we're all fresh with this new organization, which could be a great thing in some instances. 

[Speaker 2] 

Yeah, at least they got the deal done. 

[Speaker 1] 

Well, yeah, this one was not a simple one. So I saw this morning a LinkedIn post from Brad Jacobs about a podcast appearance he did with some folks from Bloomberg that I want to go listen to because he says they beat him up pretty good. So I want to kind of listen to that because this was not a simple deal that went through. 

But the magnitude of it, you had both parties multiple times on CNBC and talking about it and it was a big deal. So this next article comes from the Entrepreneur Magazine or entrepreneur.com. It says, walk into your next client meetings armed with these four guiding principles. 

And they talked about, you know, intending to serve, not sell a lot about listening, waiting to be when you're having discussions with people and listening about what's going on in their business. They're likely to prompt you to talk about your business versus going in to talk about your business. It makes me think about how we've within our organization, you know, we get requests all the time for people to do it. 

We just want to see a demo of your product and we don't do that, right? We do what we call discovery calls, which is where we can learn about what's going on at those companies and they can learn about us as a company before we go dive into that. And there's a lot of reasons for discovery type calls. 

But in this setting, they really talked about refraining from discussing your business until prompted, aim to derive value for all parties involved in this. So there's some good points about, you know, listening versus going in and selling. 

[Speaker 2] 

Well, as I read that article, it made me think of our friend, Larry Levine, who was a best selling author of selling through the heart. That's his whole premise is to serve, not sell. And he works with a ton of different distributors and manufacturers and I'm coaching that type of situation that we're doing more with him and we'd be doing some joint projects with some of our customers. 

And it's becoming, you know, it's great to have the technology, right? We talk a lot about the AI and the technology, but there's also at the end of the day, there's still a human element of it. And how do you combine those things together? 

As we talked about earlier, you know, the authentic aspect of it and the how do you actually bring that value from there? I think these are some great tips that went through. 

[Speaker 1] 

Well, I think they are. And, you know, at the end of the day, regardless of all the technology that we talk about and all the tools that we do, we still, as our friend Mike Marks calls it, belly to belly. There are still personal interactions. 

There's still people, there's still people that, you know, their, you know, knee hurt in the morning or their back hurt when they woke up and they're going home to maybe a challenge of a health problem and the family or whatever it is. And there's still the human side of that. I think Larry talks a lot about that and really being, you know, using some of these tools or, you know, the main one that it really hit here was transition from selling to serving. 

Right. And if you can't help somebody solve problems in their businesses, you got a lot of work to do. So that kind of ties into as we talk about the people in leadership segment of the newsletter. 

Again, we're reviewing our newsletter that we do each week here. It's an article from sales and marketing magazine about Bridging.com about bridging the gap, enhancing sales onboarding with cultural connections. And, you know, I think the larger organizations get, the harder it is to keep culture. 

Culture is just so important. And so this talks about, you know, defining the sales culture of the organization, foster emotional proximity. It says, it talks about prioritizing, making new hires feel value and connected to the team's mission through an empathetic support and recognitions of contributions and connecting new hires to peers and mentors. 

And I think that peer and mentor thing is a great, great component of that discussion. So any thoughts to go with that? 

[Speaker 2] 

Well, I think it ties in interestingly to the next article, right? Where 9% of the workers say they would quit immediately over the musk style. I don't know, you know, musk style being essentially pushing people to justify what they're doing, right? 

What are they accomplishing? What are they getting done? And so forth. 

I don't know that those 9% would actually really quit. And actually that's even maybe much smaller than I would have expected. Well, that was my question, yeah. 

[Speaker 1] 

Right. That was my question to that, right? Does that mean 91% of people say, yeah, hey, go for it. 

No problem. Right. But I think the point to all of this is in the sub headline that says employers should evaluate whether constant reporting is truly improving productivity or simply escalating stress and find ways to reduce unnecessary pressure the report talks about. 

So that's, I think that, you know, is, are we, are we using culture and efficiency technology to make people's lives and jobs better? Or are we micromanaging day in and day out? 

[Speaker 2] 

And I think you have to compare if you want to call it a turnaround or some sort of efficiency project that may be doing some of these things short term, that may not be the longer term approach that's taken in there. In fact, you might root out some of the deadwood just through that process that's there. 

[Speaker 1] 

Well, there's an interesting point to this, and this is really a kicker for me here with this is that one of the other takeaways from this article, it says that it talks a lot in the article about monitoring of employees and kind of micromanagement. And we did some consulting work in a number of years ago together on a project with a company that did, they were monitoring computer usage, emails, online activity. They had some of those monitoring tools that took screenshots constantly to see what they were looking at, counting keystrokes, how often their mouse was moving. 

I remember that they, they fired a guy because he had found a piece of software that could make it look like his mouse was moving regularly and his keyboard was working right. And I'm not suggesting they shouldn't have fired him for trying to get around that. But there wasn't a strong culture in that organization, right? 

The culture really, really struggled there because of that monitoring. I think, you know, as an employer myself, right, as us having people working for our company is, hey, you want to make sure people are efficient, but how do people feel, you know? And this is a good, ties to Bob's comment here. 

It says culture eats strategy for breakfast. Great, great point, right? Great point with that. 

So, Tom, we're running kind of low on time. We've got, if you just want to stop there at, stop there really quick. The only thing we're going to talk about on our channel leaders on the move is MDM published a women in distribution honorees, big award that's going out. 

There's just most of the trade associations and buying groups are doing a lot about women in industry. The, it's a big push with women, excuse me, women in industry within affiliated distributors. One of our partners at ISA and the industrial supply association. 

But I just, you know, shout out to some, some folks that, that are on this list that, you know, are either listeners of this show or connections of mine or some of them customers. Just great to see our good friend at APR, Jenna Hertz. And she's the director of strategic initiatives and project management. 

We work with her weekly. A lot of other friends like Robin McGuire, the CIO at renders, who's here regularly at the show. Baby pulling Seymour at famous, or excuse me, at first supply and a number of other folks that are there. 

Sonya Timmons, who at the Valen who comes into the show here and there. So a lot of great folks that are kind of friends of the show or I'm connected with, and so forth. Congratulations for those women in industry nominees that are there. 

So I think Tom, we can kind of move through pretty quickly. Number of points in our industry scuttlebutt we do each week, but we can move past those. Those are some acquisitions, some awards, but the last thing I wanted to hit on before we close out the day is our good friend, Will Quinn. 

Will commented earlier. I think he's with us. Will wrote an article after the ProMant show in Chicago last week that published in the distribution strategy group. 

They published Will's article and it talks about what distributors can learn from Dion Sanders winning mindset. And a lot of discussion about his childhood challenges, talks about the father that he is. And so that's in our good read segment. 

Talked about working hard to be a good father because of the father he didn't have and work ethics. And Will ties that really nicely into bringing that all back around in that discussion with Dion Sanders and the talk he heard there about to bring it back to how that relates to the supply chain. So Will, good on you for the writing you're doing. 

And so I appreciate him posting that for us. 

[Speaker 2] 

Okay, yeah, that was a good article. 

[Speaker 1] 

Yeah, it was. Will does a nice job with those things. So appreciate him doing that. 

And I told him I'd plug that article for him this week and that's published at our good friends from the distribution strategy group. But we're really appreciative. And it's funny is we're starting to get more and more companies that are sending us their own press releases. 

We don't, in fact, I didn't even talk to you about this. Willie, who manages our website and so forth, is proposing some ideas about how we'll publish some of those things ourselves. But we're not the media outlet. 

We just are two guys that get together on Fridays and chat about what's going on out there. But we couldn't do that without the likes of Digital Commerce 360, our friend Mark Brohan that's there that publishes so much great stuff. Ian and Jonathan and the work them and their team are doing it, and their team are doing it, distribution strategy group, the good folks, Tom Gale and Mike Hockett. 

Mike's leading the panel I'm on at ISA next week. They just publish so much good information out there. We just kind of disseminate it to our audience through our newsletter. 

So again, we publish our newsletter every Friday morning at O-Dark 30. It goes out about four o'clock Pacific time, I think. Over 10,000 people get that newsletter each week. 

If you would like to get that, it's called Around the Horn and Wholesale Distribution and Manufacturing. You can get that by signing up for it by just searching for it on LinkedIn. You can also find it there at the Lead Smart Technologies page on LinkedIn. 

You can send us an email at hello at leadsmarttech.com. We'll get you that newsletter. What I would love to just ask people at the end of the day is two favors from Tom and I. 

If you like what we're doing each week, whether you're listening, if you're listening on the podcast on Spotify or Apple or whatever, hit that subscribe button and leave a review. When you do that, it pushes us up a little bit in the algorithm, and that means they get it out to others of your peers. Take a screenshot and send it to some of your peers by text message or whatever it might be that might benefit them. 

If you're listening on YouTube or watching us live or watching later on YouTube, click the subscribe button, and YouTube will get this in front of other people as well. And then if you're listening on LinkedIn, go follow the show and then follow Lead Smart Technologies as well, because that's where so many of our updates are, and we'll get more of that out. We're trying our hardest each week. 

We said today we're 135 episodes. We're trying to get better. And the last thing I'll ask, and Tom, I think you would agree fully on this, is if you have suggestions about how to make the show better, send us a note. 

We'd love to direct the message on LinkedIn, email to hello at leadsmarttech.com. Tom and I, we both will see that, and we'll work on making the show better. So before we go, my friend, anything to add? 

No, I think we've covered pretty much everything. Yeah. 

[Speaker 2] 

Thank you everyone for all the comments. Thanks for being here. Yep. 

And no guests next week or no? 

[Speaker 1] 

I don't think next week, but I'm going to be coming back from ISA and I'll have a lot to talk about. 

[Speaker 2] 

Okay, good. 

[Speaker 1] 

Yep. That's great. So thanks, everybody. 

Appreciate you being with us. Be kind. Have fun. 

Do good things. Be safe. 

[Speaker 2] 

Have a good weekend.