[00:00:04] Welcome to Around the Horn in Wholesale Distribution Podcast with Kevin Brown and Tom Burton. Sponsored each week by LeadSmart Technologies, Tom, Kevin, and their guests review the news of the week and dive deep into the topics impacting manufacturers, wholesale distribution, independent sales agents, and the global wholesale supply chain.

[00:00:24] Whether it's M&A, SaaS and cloud computing, B2B e-commerce, or supply chain issues, we peel back the onion with our guests into the topics that impact your business the most. Will, since the last... there you go! Very good! Sheer dancing! That's right! Come on, Tom! No, you won't see that.

[00:00:52] Since the last time you were here, Will, we got a laugh track. Very nice! Yeah. We're in front of a live audience, we hold up the thing, like applaud and laugh and things like that. The best part of the laugh track is it's not even that it brings those sounds in, it's the look on Tom's face. He gets so much joy from it. It's the small things in life, Kevin.

[00:01:18] Yeah, it's the giggles that he's holding back right now every time he pushes that button. So, the issue that comes up is that he doesn't hit the gong for either of us. So... The hook? The hook comes out? Yeah. I'm aging myself on that one. I was gonna say, are you of the generation to remember the gong show? Absolutely. Okay, just barely probably. Because we were kids and we're old, so... I think it was a 70s show if I'm not mistaken.

[00:01:47] Maybe late 70s, something like that. That was around in the 70s, so yeah, I get it. Yeah. Very good. Hey, Will Quinn, thanks for being with us today. Thanks so much for having me. Third time? You know what? I was joking with you before we went live today that had I realized it was a third time, not sure I would have invited you, but just kidding. It's, you know, we're well into year three of doing the show, so it's good.

[00:02:14] It's kind of a once a year thing where today at episode 195, we will be announcing in the next 10 days or so when our 200th episode celebration gala is. We have made some significant progress. We have found the location that Tom and I will be live together. I will tell you as a teaser, it is within an arm's length of water and a bar.

[00:02:45] Doesn't get any better than that. What else could... What more could you ask for? That's right. Salt water. Yeah, salt water and a bar. Okay. A little closer to the bar. So, yes. A little up bar? Yeah, not really. No, no, no. All right. No, you'd have to climb some rocks and come back into the building, but I think it's going to be fun.

[00:03:11] So, we're working up the group for that big event and the exact date. There's a couple options out there, but it's going to be a lot of fun. So, anyways, we're going to dive right in here in a moment with our news. But before we kick off, I'm Kevin Brown. I'm here with my lifelong friend and business partner and co-host of our weekly show, Tom Burton. We get together with great guests like Will every week. We always say whether someone's...

[00:03:38] Unless someone's in the hospital on an airplane or on a planned vacation, we get together and talk about the news of the week and how that impacts supply chain and manufacturing and so forth and wholesale distribution. We cover topics like what's going on in the economy. We're going to talk about a lot of that today and what's going on in the supply chain and mergers and acquisitions, artificial intelligence, robotics, sales and marketing, and all the things that are going on out there that impact wholesale distribution and manufacturing.

[00:04:07] So, if you're with us for the first time, we welcome you today. If you're a long-time listener, as they say, we're very appreciative of you continuing to come back and join us. We do this each week on LinkedIn Live, YouTube Live, Facebook Live. But later in the day, our recording will be on Apple, Spotify and all the popular podcast formats. So, if you're listening on a recorded podcast format, you won't be seeing these three handsome faces,

[00:04:36] nor will you be seeing the newsletter that we'll have up here and there or any of the charts and graphs that are there. So, you could, if you wanted to very easily go look at that on YouTube later on. But the best thing to do is to subscribe to that newsletter. And you can subscribe to that newsletter three simple ways. The easiest way is to send us an email at hello at leadsmarttech.com and we'll make sure that that gets out to you each week. Second is if you're active on LinkedIn, just jump into LinkedIn and look for Around the Horn and Wholesale Distribution Podcast

[00:05:05] and you can sign up for the newsletter there and you can even get reminders of the show each week or you can go to the website for our podcast, which is www.aroundthehornpod.com. So, we've got Will Quinn with us here today. But before we jump in and talk about Will, his work, his recent book, and what he's up to this day, we'll do a little plug real quick for the company that Tom and I work for, LeadSmart Technologies. We have developed at LeadSmart what we call an enterprise growth platform.

[00:05:34] And that enterprise growth platform contains tools like sales enablement functionality and what we define as a smart CRM solution and a marketing IQ center, all kinds of tools related to quoting. So, rather than traditional CRMs that are off the shelf that you commonly see out there or other sales enablement tools where you need to buy lots of software to achieve a single goal of growing your organization, we do all of those tools in a single platform called an enterprise growth platform.

[00:06:01] We do that solely for wholesale distributors and manufacturers where we bring the silo data from around their business, that ERP data, the marketing automation, e-commerce, silo data that's in a data lake or a data warehouse, and that internal knowledge that comes from your teams that might be in SOPs and so forth. We bring all that into a unified data hub and from that we can use the other tools that I described to help you understand your customers better, your teams better, and your overall business better to accelerate the growth.

[00:06:30] We have this dream where organizations could double in size with a very few amount of new people because of the efficiencies that come from that. So, that's what we do. That's the sponsor of our show. We couldn't do that without the money that LeadSmart kicks out every week to get this done. We're getting out to about, the newsletter is getting out to about 13,000 people each week now. And so, we're appreciative of those people that get that. But right now, what I want to talk about for a minute is this great new book. If you're watching us, you can see it here.

[00:07:00] Modern Warehouse Management, Steel-Toed Leadership That Drives Performance. Will, fill us in on that before we get into the news. Will, thanks for that. And it's great that you guys are doing that for CRM because no one hates a CRM more than a salesperson. But the fact that you guys are putting together something that actually helps the person that uses the CRM to engage with their customers and drive more sales. That's amazing. So, good stuff on that.

[00:07:31] And thanks for the plug on the book. Yeah, it's kind of a, it's the book that I wish I had when I started, you know, 25 years ago. It's not something that was built or written by someone that talks about distribution, someone that actually was in there. And, you know, I like to think it as the warehouse as a promise keeper.

[00:07:56] And what do you, how does it help get your customers, keep your customers? And there's so much that goes into it. So, there's a lot of good information backed by stories and real trials and tribulations that happened on distribution center floors throughout the country. You know, what I like about it is I was kind of thumbing through it is that you, it's practical. Like you said, it's got some of your stories in it.

[00:08:23] But as well, you kind of wind down each section with questions to ask your team and real things that you can go do to support what you're trying to do. I'm looking at chapter 10, 712, let's see, chapter 10, the essential topics of safety, culture and training. 712 AM, a pallet jack clipped a corner at the end of an aisle, 14. And you go on to describe that. But then not only that, but the discipline you learned in the Marine Corps that brings into that. And then those questions to ask your team.

[00:08:52] So, this is not just like some quick little handbook. This is 300 plus pages. Yeah, it's about half of it is the book itself. And then about half are the appendices. So, you've got the Monday morning, what you can do every Monday. It's a list of, because there's 100 things to fix in the warehouse. And if you try to do everything at once, it's not going to work well.

[00:09:17] So, it gives you a say, well, if I'm looking at safety, well, here's something I can practical I can do. And then the appendices, there's 26. It's A through Z. And it's got things on there like how to do a 5S or a spaghetti diagram or how to get information from a 3PL and that sort of thing. And linked to that are actual documents on my website that you can use to do those things.

[00:09:46] So, if you want to do a 5S on the website, there's a page that has the 5S spelled out and all the different steps and how to perform that. It's really there to assist an operations or warehouse or distribution professional do their job better. All I heard was spaghetti. Yeah, I'm actually, you know, Will, I'm sorry I didn't get your LinkedIn message, but I'm going to go find it and reply. I want the book. This is really interesting.

[00:10:15] I really, I mean, having written the book myself, I like the idea of what you've done of kind of here's the theory of what you do. Here's the practicality of it. And then here's the tools, right, that all kind of go together. So, I think that's a really interesting approach. Thank you. Thank you. I'm not sure I'm qualified to be with you guys today. I haven't. We should probably just let Kevin go. What do you think? Yeah. We'll have an author's podcast. I can barely read. So, let alone write a book. Right. So.

[00:10:46] Hey, a couple other things before we start. I wanted to let Bob know that, no, we're not going to be broadcasting from a boat. But he's very warm. He's very, he's on the right track for that. And. Maybe we'll give out clues each week between now and then. Yep. And Ken, Ken looks like he's read your book as well. And yeah, if you're on and listening live, please let us know if you've got Will's book and say hello.

[00:11:13] And you can get the book, I assume, on Amazon, which is what the link was on the page. Correct. Do we have an affiliate? Do we have an affiliate code, Tom? Is that what that? Yeah. Yeah. Our code is on the screen. We don't need. Yeah. The QR code on the screen is our affiliate link. We won't need lead smarts money this week. That's for sure. Right. Very good. All right. Let's, why don't we dive into the news? Kind of quite a few things happened in this week. We've got supposedly a war that's going to be ending.

[00:11:41] We've got interest rates held steady. So, Tommy, why don't you take us away on that? Well, I guess what, we have two or three articles here about the interest rate. A couple of different views. A couple of different takeaways. You know, I think everybody by now knows, right, that interest rates were held steady. No surprise there. The surprise was, as they say, the sort of tone, I guess you would say, of the Fed governors

[00:12:10] and their viewpoint as they look forward with what they call the dot plot, which is where they expect interest rates to be over a period of time. But the dot plot reflected actually, at least from some people too, based on the surveys they did internally, is, you know, there's a fair amount of the governors, I think six of them, they said, that are supporting a rate increase or maybe more than one rate increase between now and the end of the year. Yep.

[00:12:41] I, so I have a take on this and I'm very interested in both of your take on this. I think that's the most idiotic thing I've ever heard, honestly. If you really take a step back and look, why do you, let's think about why do you increase interest rates, right? You increase interest rates as a governor to keep people and companies to ratchet back on spending, right? So during COVID, when we had all this free money, everybody had free money.

[00:13:07] We were all spending like drunken sailors that drove up prices, right? There was more money in the system. And as a result, it made sense to ratchet up the interest rates to kind of slow everything down, right? But the situation we have now is not because we're all loaded with extra money. It's because of a scarcity situation of oil from the war, which has driven up prices.

[00:13:33] And, you know, we'll see if those are transitory, basically, based upon what happens with the war. So what do you do when you start raising interest rates in a situation where you're not, you don't actually have more money in the system, more spending in the system? Yeah, you create that governor. You create that situation to slow spending. And what does that do? Create a recession. So I really can't understand the logic unless there's something that I just don't know.

[00:14:00] But I don't know. I'm interested in your guys. I just, I can't imagine why somebody could sit here and go raising rates based upon the situation that we've had with the war and the oil prices is a good thing for our economy. I think you know my answer. We're using the wrong metrics to gauge inflation. Well, but Warsh is even doubling down on the 2%. Yeah, right. That's what surprised me, right?

[00:14:29] Because what came out of this is the expectation was that, I never bought into the idea that, you know, the left side of the aisle was saying that, you know, he was just going to be a puppet for the president. I didn't buy that at all. But obviously, to get the nomination, he had to have some thinking that aligned with this administration and what their goals are. And their goals are, right, we talk about this constantly, right, is interest, balanced trade,

[00:14:57] interest rates down, onshoring or reshoring of manufacturing and more jobs. Those were, you know, a series of the pivots if you take out the border, Fenton, all those types of things. So I had expected, I did not expect to have something of a hawkish view, so to speak, and of the idea of a raise. I did listen yesterday to, I was in the CNBC for a bit, and I wasn't Citibank, but it was one of the big bank's chief economists.

[00:15:26] He's still calling for at least one cut. And I think if you were to look at this right now, I think there's a significant factor that says what the bankers are saying and what the Wall Street folks are saying is either wait and watch what happens further or do another cut. Because, and Tom, you've even brought this up before, right?

[00:15:50] It's a lot easier to cut and see what happens and then raise again and kind of stop the slide than it would be to raise and see what happens. And the last thing I'll say on this, and we can go to Will and you can respond, Tom, is that the fact that nothing changed very much, right, when they raised rates, right? Things just kind of fluttered in there. Then we got a couple of drops and things.

[00:16:18] I still think we're just using the wrong numbers, right? And the wrong metrics to get to the numbers. He's not listening to you. He's doubling down on the 2% goal. Yeah. Well, and he used the dot plot and they said they weren't going to use the dot plot. Yeah. So, I don't know. Will, any thoughts on that? Yeah, I agree with Tom. I think this is an overreaction to a temporary increase in energy costs. Now, if I think if they thought this war was going to last two more years.

[00:16:48] Right. Yeah. That's a different story. But obviously, that's not the case. And I think it's interesting. I wrote down this quote because I thought it was interesting. He said, we've missed an inflation for five years. Our target on inflation for five years and we're going to fix that. When we deliver price stability objective, which we will, the American people will feel the hardships they've been living through are in the rearview mirror.

[00:17:16] So, I think that's the kind of the fine line where he's walking. He's like, well, we want to do sound monetary policy, but I don't want to irritate the president in the meantime. So, I think it's a bit of both. But I just don't see how raising those rates is beneficial to anyone right now. Yeah. There's just it's not it's not the same situation that we had with COVID. Right. I mean, COVID, we were flooded with money.

[00:17:46] Right. And all kinds of new money in the system and government money that was just printed that then created the inflation. Correct. Right. Right. And so it made total sense to go, well, let's slow down here because remember that money was distributed at a 0 percent basically in the 0 percent days. So, it made total sense to kind of rein that in. But now we have a price increase that's based around a shortage. Right. Prices are dropping, by the way, on oil. It would be interesting to see how fast they actually drop at the pump.

[00:18:15] I haven't noticed any significant change here. But regardless, right, you should see some price reduction there or some temporary relief. And I agree. If you were going to do one way or the other, I would definitely be leaning towards a cut versus a hike. But I don't think that they could have done a cut on this first. No, no, no, no, no. That's first thing. You know, I think that would have been all things considered that wouldn't have been. That would have looked bad, too.

[00:18:46] So. All right. Well, I don't know if we've lost Kevin. I'm here. Okay. There he is. Don't worry about me. You went silent and dark. So we didn't know if we lost you. Nope. No need. No need for that. No, I think the issue, too, is, you know, if you think about, right, they're trying to balance inflation.

[00:19:13] But they're also have this major factor what they're looking at in jobs and the stability in the job market. Right. If you raise rates, people, I mean, if you raise rates and it's harder to get money and money is more expensive and spending is going to go down. Hiring is going to stop. Right. Right. It's or slow down dramatically. And then you've impacted that other side of it. I mean, you know, again, to reinforce the fact that we're just Friday morning armchair economists. I don't think any of us are are trained in it. I took two economics classes in college.

[00:19:45] It just if you're not going to cut, stay where you're at. Right. And then then you start wondering if you just can stay where you're at forever. Why are we all that worried about the Fed? Which, in reality, the stock market's not. You know, yes, they have their blips up and down based upon what they do. But the stock market hasn't slowed down because of the economy. The inflation is at four percent. It's you know, we're still we're still running strong. So we've had our ups and downs some weeks.

[00:20:14] But in general, it's doing great. So this isn't this is an interesting time. But I think the job component of what could happen with a with an increase is significant. And then the other side of it is, you know, you look at that and then we're going to have an upheaval. If with an within it, I would say if you if there was multiple increases, then you're going to have a fight with the Fed chair and the president again. Right. Right.

[00:20:43] You're he's going to be investigated for something. And, you know, I heard the president say two days ago, I think it was when said there was, you know, discussion of a raise. I think his comment was something related to like, well, that would be unfortunate. Right. As opposed to calling anybody an idiot or, you know, being bombastic with anything. It's got a little bit of a honeymoon period. But look, I don't believe there will be a raise. So, you know, there's half a dozen people that are potentially promoting that. I just don't see it happening.

[00:21:13] Yeah. But, you know, obviously there's chatter. But at the same time, right, you have to get enough people who if there was going to be a cut, there would have to be a majority that would do the cut. One of the other things that is going to be different with this, supposedly, this regime is they're going to be much more quieter about talking about things between meetings. They're not going to have the governors out speaking all the time and all these types of things which, you know, kind of micro manage the market and the expectations that are there.

[00:21:42] So it sounds like he's trying to run a little bit of a tighter ship. Yes. In terms of communications and so forth. We'll see. Right. I don't know that he has any control over who can talk and what they can say and all that. But he's attempting to run a tighter ship. Well, I think the other component that you have of that as well is the length. Powell would, you know, talk for an hour. Right. And I don't think Warsh is planning to do that.

[00:22:10] But even their statement was, I think he said 140 words compared to 350 that would use to come out. So they're taking the more is less approach. Maybe he's like, well, I want it to be fit on the original length of a Twitter. That's right. Yes. Right. 40. 40 words or whatever. That's good. I like that.

[00:22:31] But the interesting thing that is, you know, kind of follow up article that we have is from, this was from industrial distribution, but they're quoting a couple of other articles. Is it the retail sales up a strong nine, nine tenths of a percent in May? So it's the question is, you know, if you raised rates, let's just say you raised rates a quarter point. Is that going to have an impact on spending? How much would you have to raise it to really have the impact?

[00:22:59] Because people consistently are continuing to spend. So if we went from, you know, if we went to a quarter point raise, is that going to change things? Well, probably not likely. No. It's not going to help. Well, what's suggesting, right, what's suggesting is where we're at now, people are spending, right? Inflation's at 4% and rates are, where are rates now? I mean, credit card rates are already crazy and it's not stopping anybody from spending.

[00:23:26] So I just, I wonder if that, to me, it seems like it would take significant raises to impact consumers. And then those same significant raises, maybe, I'm guessing it would probably be a full point raise. And then the recession issue is flying in your face at that point. Massive. Yeah.

[00:23:50] I mean, the only logic I can think of that would be going through some of their heads is they think that the job market is growing too fast, right? The number of jobs and the unemployment is low, the job market is growing fast, and that there's going to be rate increases, and we're going to have all this brilliant productivity from AI. And all of the, I mean, that's the only thing I can think of that would say, that would warrant saying, yes, let's raise rates, or at least go on a trend to raise rates.

[00:24:20] They're not going to raise rates, you know, one point at a time. So it's going to be over, if they did that, it would be over a multi-period of time. Right. But yes, I don't know that it would slow the consumer, but the consumer is not what is causing the inflationary or the price increases that we're seeing, right? For the most part, in fact, if anything, consumers have pulled back in certain areas where we are seeing price increases.

[00:24:50] So again, if you just connect all the dots, it doesn't add up. No pun intended. Yeah, good. That's right. No pun intended. So. I would like to see the dot plot go away. It doesn't sound like it's going away. They said, you know, they talked about the fact that he wasn't big on that, and then all of a sudden they had it yesterday. So what I really wonder out of all of this is, you know, I mean, clearly, he did not sound like he was the president's guy yesterday.

[00:25:21] And so it'll be interesting what comes out of that. Did we just get another Powell? I don't think so. I don't think so. I don't think, I think he definitely more aligns with the viewpoint of Trump and the administration, him personally. Right. But I don't think he was going to run in there day one and go, all right, let's start slashing and doing everything. Right. He has to, you know, come in and get a lay of the land. And, you know, I mean, there's, there's, I don't know what his term is, but it's several years.

[00:25:51] Right. So this is, this is a journey. It's not an event. The, it does give fodder for amateur economists in their podcasts though. That's right. That's right. Well, what are your, what are your kind of thoughts on this as we, you know, as we see this, look at those retail numbers, you know, retail numbers. We typically, the next thing we look at is producer side of things. We're now talking about inventories, warehouses.

[00:26:20] This is a little more up your alley is, you know, from your experience, you know, you worked for Grainger and some other very large organizations running supply chain side of things and warehouses. Have you, you know, in your experience and kind of throwing a curve ball at you that I didn't prepare you for, but you have used, yes, exactly. So, but as a White Sox fan and their strong baseball history, you can hit any curve ball possible. So Yankees yesterday. Well, which the entire country cheers for that.

[00:26:50] Right. So the, sorry, Yankee fans, but it's true. The, have you seen any, as we watch these ups and downs for the economy throughout your career, have you kind of noticed what that impact? I mean, does, does the warehouse manager see a change in things as these things go on? Oh, you know, it depends on what sector you're in. I mean, typically not.

[00:27:15] I mean, I've, I've worked for, for bigger companies, Coca-Cola, MSC, Grainger, and you, you may see seasonality with some types of items. You may see electrical items being purchased more than HVAC or something. But if you've got a wide variety, you typically see steady sales or increased sales, depending on what.

[00:27:39] So it's really not, I don't think wholesale is typically largely infected, affected by, by short dips. It's, it's more long-term. And then it's also, you know, from a consumer's point, who's, who's the one spending, right? I think we're seeing the majority of the spending by the top 10% of earners.

[00:28:02] And those that, you know, in the bottom half are just scraping by, trying to pay rent and utilities and, and food and those sort of things. Because, because expenses have gone up so much. Because, you know, if you're making 200,000 a year and gas goes up a dollar a gallon, it doesn't hurt you that much. But if you're, you're making $20 an hour and you got two kids, that's a big deal.

[00:28:23] So I think that, you know, those, those price increases, especially in energy, really affects the lower half versus the top 25%. That's an interesting point. I'm wondering, going back to our conversation of the Fed governors, are they thinking with, you know, SpaceX and Anthropic and OpenAI and all the liquidity that's going to potentially come into the market through those IPOs over the next few months?

[00:28:52] You know, you talk about the haves and the have-nots, right? But there's going to be some haves of those IPOs and some money coming out. I just can't imagine that would be enough to move the needle. But again, I'm looking for any sort of evidence that puts some logic behind this. Yeah, I mean, it was neat. I think, you know, that IPO, like 4,400 millionaires were created from, you know, cafeteria workers, security workers, all the way up. So, but no, I don't know, Tom.

[00:29:21] I don't think that's enough to move the needle as a country, as a whole. But I think as, you know, if you get gas down back to $2, $2.50, which I think can happen. We live in California. Well, that's just taxes, right? It hasn't been under $3 since the 80s. Well, I'm in Illinois, so it's not much better.

[00:29:48] I just went to Costco the other day, and it was under $4. So that's a win. But the gas tax is going up again. Thanks, Pritzker. Yeah. Well, you know, got to keep those Hyatt dollars in place, right? So that's the same Pritzker, right? Yes, yes. The one that's letting the Chicago Bears walk out of Illinois, too. Is that really going to happen?

[00:30:17] I just saw a couple things about that, but is that they're going to wear Hammond or something like that? Yeah, but it's kind of like a Chicago suburb in Indiana. Right. It's just the difference. I think what's happening is that, you know, Pritzker wants to make a run at the president next go around, and he doesn't want to be seen as giving billionaires, the Chicago Bears owners, the McCaskies, money, which that's not the case. They want to fund their own stadium.

[00:30:45] They just want the infrastructure around that to be built up. Whereas, you know, Indiana is like, hey, come down. We'll fund it. You buy it back from us. We'll pay tax. Because right now, Soldier Field is owned by the Park District, so there's no real estate taxes paid. In Arlington Heights, they will pay taxes. They're like, yeah, we'll pay taxes, but we don't want to pay $200 million a year like they want. Like in SoFi in California, they pay like $8.9 million.

[00:31:15] You're like, we'd be happy with that. Yeah. Is that not to go completely off the rails, but we will. But the, you know, Soldier Field and the Chicago Bear fan base is a pretty unique fan base, right? And a lot of it comes from the city, and it comes from kind of a, you know, there's definitely a demographic, right, involved with that fan base. The Bears. The Bears.

[00:31:41] How does that, you know, moving it out to the suburbs and all of that stuff, I would think that the fan base would not be happy, and it's, you know, going to increase ticket prices. And you're going to end up with all these, well, we saw this in San Francisco, right, with the 49ers moving out to the suburbs and half the stadium turning into luxury boxes. Well, you saw that with the last renovation with Soldier Field, right? Right. And they used to be the Decatur State Lease. So they started in Decatur. Then they moved into the city.

[00:32:12] But you've seen it, you know, the Giants, they play in Jersey. So, you know, Arlington Heights is not that. Plus, they can create, you know, a bigger area. There's just no, unfortunately, there's just not enough space on the lakefront to build what they need to build. Right. Yeah. And there's nothing around Soldier Field, so. Yeah. No, and that's some prime real estate, even where the museums are and everything over there.

[00:32:39] You know, Chicago is one of my favorite towns, and I've been doing a lot, done a lot of sailboat racing there over the years. And, you know, dozens and dozens and dozens of times there for work. And that waterfront area is just so, so beautiful. Beautiful. I can see that whole area being beautiful homes on the lakefront there versus even where McCormick Place and stuff is. It's, like, astounding to have, you know, a convention center where you walk out the back door and look at a beautiful lake. So that's some pretty prime real estate there.

[00:33:07] I think one of the things that goes with that, and then we should probably get back to the economy that we're talking about here in the show. So I don't think people came up, came to the show for this today. I need a sports section in the newsletter. We do. We do. Yeah, well, yeah. But we do have a new section today we're going to go into in just a moment. Today's the inaugural show for that.

[00:33:28] But I think that in Chicago, the mass transit system, the train system or the L system, it may not be pretty, but it's efficient. And so, you know, people in the city being able to get to Arlington Heights. And, you know, Arlington Heights isn't far from the airport either, right? No. So, you know, you're right, kind of right there. So you've got all of that mass transit that's already going.

[00:33:55] You got it's going to be a whole lot easier for people that want to come in for a game, right? To get there quicker. Now, I'm sure if you're traveling in for a game, the lore of being downtown is better for you. But it'll be interesting to see. The question is, does it go to Indiana or not, which we'll have to see. So my guess is it's a political game right now. A little leverage. So, all right. Well, I'll watch the news while I'm in Chicago next week.

[00:34:22] So let's just kind of shift gears back into our economy section here. We did also have an article that we featured that talked about manufacturing production over the last months or so. It's basically kind of staying sideways with the index climbing just slightly. So it looks like, you know, we've got consumers are spending production staying flat in factories. And, Tom, what do we always say?

[00:34:49] The simmering effect that we've been talking about in the economy since we started this show. There's no boil and there's no coal, right? It's just this simmering that I think keeps us kind of, what would I say, kind of stagnant. Yeah. Right. So good. So let's kind of jump in. Any thoughts on it? And we had a couple articles here that we published about tariffs.

[00:35:15] There's an article there from Bloomberg about Yahoo Finances, but it's from Bloomberg originally, about with tariffs, revenue is now flowing out of the U.S. Treasury coffers faster than it's coming in. Nearly $22 billion in unlawfully collected duties reimbursed to importers in May. However, there's also some discussion about new tariffs coming as well. You guys have any thoughts on those? Well, it's interesting.

[00:35:42] I think maybe the tariff suspension is driving some of the more imports. So companies are like, all right, tariffs are lower now. And there may be more. So let's order inventory now to try to hedge that. Right. You know, it's interesting. I mean, these two articles are predominantly around tariff refunds that we have here.

[00:36:10] And then there's another article about, in our next thing, about Port of LA and the volume. But everything we've talked about for weeks related to refunds seem to be coming to play. So, yes, the refund started. I think the administration was like, oh, crap. This is actually happening and money's going out the door. We better figure out a way to maybe slow this down or stop it, which they've done. They've kind of thrown sand in the gears on the refund process.

[00:36:38] Meanwhile, the second article, I think, is talking about just all of the class action suits and other things that have happened through consumers and otherwise saying, wait a minute. Where's my share of all of this? It's kind of a circus. I would definitely say you could put three rings down and we would have a circus on all of this. I like that.

[00:37:03] And I think, Kevin, that's what we've been talking about for weeks is I said all the way along, this was going to happen. You said, but it's going to be a circus. Both things have happened. Right. And it's a long way from being resolved. And there's no... Go ahead. Meanwhile, I don't know if there's going to be new tariffs or not. In fact, there's... But there's still a lot of...

[00:37:25] In fact, I think what I read in one of the articles is we're collecting more tariffs now, maybe to your point, Will, because of front-loading, than we were collecting on the old tariff program. So we have more money coming in now than we actually have going out and what we were even doing before. Which is... I'll be interested to see how these refunds process. So I think there's... Go with your circus analogy.

[00:37:52] I think there's probably three different rings of companies. So companies that absorbed the costs and didn't raise their costs. So then when that money comes back in, that just goes to them. And then companies that passed on part of the added expense to the consumer or the company who their customer is selling to. And I'd be interested to see if they're going to reimburse their customers. And then those who passed along the entirety of whatever the tariff was.

[00:38:21] And are they going to then reimburse their customer who paid the extra cost? Well, we've talked about that. I don't know if you've heard some of the past discussions we've had about this, Will. But this is the argument, right? You've got XYZ manufacturer that got hit with the tariffs, paid them. But very few people didn't pass those on, or at least a significant chunk of them. So now they're getting money back.

[00:38:50] But their distributors of their products took those increases. And those distributors then passed them on to a contractor. Let's just use HVAC, whatever it might be. Or I'll use... We got a new roof on our house last week. And there's workers outside. I'm in my home office this morning. There's workers outside getting ready to put a fence around a 10,000-square-foot lot, which is not cheap. And there's a lumber delivery outside.

[00:39:16] And we've got all kinds of work going on at our house right now over the next few weeks. And am I going to see any of those dollars back? The trickle-down effect? Is the contractor going to? Probably not. And that's where I think the challenge is. And the other component of it is if we start flooding too many of these tariff dollars back into the economy, we talked earlier about a risk of a recession. Oh, so that must be it. There must be worried about the tariff dollars going back into the economy.

[00:39:45] Okay, now I think we've hit the nail on the head. But I don't think they talked about that at all. The Fed talked about that at all. But then you've had, earlier in the week, you had a court up hold. There was one ruling that said that a few weeks ago, a month or so ago, that said that there was trying to halt the administration by adding some of the new tariffs. And there was another judge that said earlier this week, no, no, you can move ahead with that.

[00:40:15] So now we've got all of these. The U.S. was a U.S. trade office that has to do the research. That's all going on with all of this. And so I think we're going to, you know, we're already seeing it, right? The tariffs are around. They're going to be here. It's just what rate, which I think goes back to say why the EU a few weeks ago said, we'll go ahead and just sign a trade agreement with you.

[00:40:42] Because I believe that, and I think that's why Japan's doing it, and others will probably follow suit now, is you're going to get around this and find a way to do tariffs. So let's find something that's fair for all of us and do a trade deal, and then we don't have to worry about it. All right. Well, I mean, was that just so much great wisdom coming out? Yeah, I wanted to have a mic drop moment. We figured we should move on, yeah.

[00:41:09] Do you have a laugh track for mic drop? Mic drop? Yeah, I'd have to find it, though. I want to hear it. It's not it. That's not mic drop either. Okay. Well, I guess that's what it is. So you have a gong, a cheer, and a boo? Yeah. What else do you have?

[00:41:39] Yeah, that was a mic dropping. Okay, good. Yeah, there you go. Big mic. What was that? Do that again. That's a different topic. That's a rubber bike. All right. Don't do that. How many do you have? Eight or nine, something like that. I guess I can download more. I haven't gotten around to it in my case. Oh, yeah. That's what we need. That's what we need. Yeah, so this is the inaugural week. Yeah, tell us about it. I don't know much about this.

[00:42:07] This is not my area. I'm ready to move on to AI. Bye. But this is supply chain news and views. So I think we got the right guy on here to help you. That's why we did it. That's why we inaugurated the section of the newsletter this week with that. And again, it's a note that we always try and update is if you're listening on the recorded podcast and you're not seeing the screen right in front of us right now is our newsletter that's called Around the Horn and Wholesale Distribution and Manufacturing goes out to

[00:42:37] I think we're about 13,000 people now. And excited to get that out to people. And each week we put that out early, early, early on Friday morning. And what we do is we take the news of the week about things like the economy and supply chain and manufacturing distribution and mergers and acquisitions and AI and cybersecurity and human resources and all kinds of different topics. And we apply those back to wholesale distribution and manufacturing, which is the audience that we serve.

[00:43:06] So if you'd like to get that newsletter, we would love to get that out to you. And you can just send us a note at hello at leadsmarttech.com. We'll happily get that out to you. And so this week, historically for, you know, three and a half years, whatever it's been now, I can't believe that amount of time that's gone by. 195 episodes. We have had the economy and supply chain as a singular section. But what we're seeing is that there is a whole lot more going on as we talked about supply chain.

[00:43:35] You know, it seems like over the last three or three plus years, we've had major issues with the Panama Canal. We've had major issues with the Strait of Hormuz. We've had major issues with the Suez Canal. And that translates back to supply chain issues within the U.S., whether it's fuel prices for the trucks moving or the amount of goods that are coming in. So we decided that we would inaugurate this week because of our guest who has written this

[00:44:02] amazing book called Modern Warehouse Management, right? Steel Toad Leadership That Drives Performance. And our supply chain expert that joins us three times now on the show, Will Quinn, this is the week that we would add a whole new section of the newsletter. So let's dive in. The first topic that we had talks about, and I think Will, you alluded a little bit to this earlier about why some of this is happening. But the Port of Los Angeles cargo volumes rise in May. People are pre-buying, right?

[00:44:32] They're doing what they did with the threat of tariffs, but probably even more so now of bolstering inventories. Well, first, I want to say, you know, supply chain is so important. And, you know, it's been my whole career. And you think about the origins. Think about the Roman Empire and how they were successful in keeping such a big territory.

[00:45:00] It was really the supply chain to keep their soldiers fed and with water and tools and weapons and all that sort of thing. Because back then warfare was the Romans are coming. They're going to scorch you. They're going to burn all the crops. They're going to kill all the animals. And you have to bring everything to you. So the supply chain is really, you know, born out of the military. And then it really came to the forefront in the pandemic because the average American didn't understand.

[00:45:28] Well, I just I just go to the store and this is this is my coffee. This is my coffee cup. And it's just there. And, you know, our you know, my good friend and show front of the show, Dirk Beveridge really brought that to the forefront during his We Supply America tour. We talked about the noble calling of distribution and the six million people that work in manufacturing distribution that get everything to you. And, you know, really, it's our whole way of life is dependent on the folks that manufacture

[00:45:58] and distribute all the goods and services. They look everywhere in your office from the clothes you're wearing to the chairs to the pipes and the electrical. All of that was manufactured, went through a distributor to get to where you're at. So I'm really happy that you guys are you created that own section about supply chain because it does affect our life so much. One third of the U.S. GDP, right? Eight to nine trillion.

[00:46:26] Well, do you think that supply chains were a lot more stable or are predictable than they've been since then? Or what's happened? I guess, you know, you would think it would have gotten better with all the technology. All those things. Well, supply chains, you know, as we globalize, right, are very complex. Just think about what goes into manufacturing a shirt.

[00:46:54] You know, you got the raw materials in one country, but they're put together in other countries. They're all those are sent to another country where it's manufactured and then it's shipped around the globe. And, you know, anywhere you have disruptions, whether that's a conflict or bad weather or whatever the case, labor disputes, that one could disrupt the entire supply chain, which causes cascading effects.

[00:47:21] You know, and then things like just in time, inventory strategies makes that even worse because nobody wants to hold inventory because it's a cost. So the longer and leaner and more complex the supply chain gets, the more difficult it is to maintain that balance. And any time there's a little pickup in there, it gets a ripple effect, bullwhip effect, and a lot of other things can cause problems. So it's very fragile.

[00:47:51] So has the supply chain, in your opinion, gotten more fragile and more complicated in recent years than it was, say, you know, 10 years ago? I think it's always been very complicated. And I think we're getting, it's just like information. So the more that, you know, artificial intelligence is developed and the more tracking you can do, the more you see where the issues are.

[00:48:20] And as long as you have information, then you can make a decision, right? So if you're just blind, then it's hard to do anything. But if you know something's going to be delayed six weeks, well, then you can pivot and go to your backup plan. So having that, so I think it's just like world news. There was always bad stuff happening. We just didn't hear about it as much because we didn't have reporters on the ground. We didn't have 24 streaming and satellites. It's just we have the information.

[00:48:50] So same thing with a supply chain professional. And I think that goes into the next article is being able to take the information and have the strategy to plan forward, which it can be a lot. And it's interesting. I just sent that to the head of the department where I teach at Elmhurst University because it's a master's program in supply chain management.

[00:49:14] And I think, you know, when I developed my curriculum about warehouse strategy, I implemented all the incorporated all of the different technologies, the ERP and the WMS and the WES and the WEC and the YMS and all the other three letters and artificial intelligence, because it's about getting the information, but putting it in a usable form so that you can then make a decision. Right.

[00:49:41] So I'm going to pivot on that just to touch, Will. You were talking about the technology that goes with it. So there's always been some great tools with warehouse management systems. You did work for a number of years for the folks at Infor that have a great warehouse management system, plenty of other ones out there.

[00:50:04] And now we've got an abundance of startups out there that are wanting to do supply chain management. They're wanting to do inventory planning out of that. What are your thoughts on, I mean, I can think of two or three right off the top of my head, companies that have popped up recently. Some of them are brand new startups. Others are companies that have been around for many years that are expanding with their technology.

[00:50:33] So what are your kind of takeaways on some of that? Do you see a huge value to those? Are they just kind of your takeaway, I guess what I would ask? No, I think there's a lot of value. And next week I'm going to be at a show in Chicago for AI, but put on by distribution strategy group. And where it's the biggest one in the country, you see all of these artificial intelligence providers that are catering specifically to distributors.

[00:51:02] And it's great things like returns. Like returns has always been kind of a thorn in the side of the warehouse. There's really no productivity you're assigned to it, but it's a huge part of the customer service. So being able to track that and warranties and put that back to the manufacturers has always been a very cumbersome process. So if you can have an artificial intelligence that can help with that, that's gold to a distributor.

[00:51:29] So when I would talk to distributors that are talking about, well, everybody wants artificial intelligence. I would say, don't start with a product and then look for a problem. Start with a problem and then look for a solution. Absolutely. Right? So you say, well, my salespeople don't have good information about their customers. Well, let's go to LeadSmart because they have the information.

[00:51:55] They have the tool that's going to give my salespeople the information they need when they walk into their customers. Okay. Now I'm solving a problem. I'm not buying a shiny tool to look for a problem. Great. Great solution. If I tell people, the problem we're solving is we're taking the sales process away from donuts and bagels and turning it into a consultative sale. Hey, don't forget the power of donuts. Well, you can still bring the donuts.

[00:52:21] You just also bring it in with a consultative sale or consultative value added sale or meeting. Very good. Very good. Further thoughts? We had three articles in this inaugural section for that. And so I think you were talking about, will you reference the article from Supply Chain Management, Developing Supply Chain Talent for a New Product Development.

[00:52:48] And also we've got some information in there about the AI component of that as well. So, Tom, any takeaways on this section? Are you happy that we have this now? Are you going to learn more about it? I'm super excited. The only thing I don't like is that you put it ahead of the AI stuff. Well, it kind of fits right in the order. Yeah, but it's good to break things up, right? It's variety. But I will say there was an interesting article that I don't think is in this section about

[00:53:16] that they were saying that supply chain, people that are AI savvy, supply chain resources are one of the hottest areas of hiring right now. I think it was a Gartner article or the Harvard Business Review. I think it was Harvard Business Review. Those are Will's students from Elmhurst that are hot commodities. So, I do have a question before we leave here for Will. What is the...

[00:53:43] There is all of this hiring taking place or looking for more resources. Where does that resource going to? Is it managing the AI? Is it continuing to streamline things? Where do you think that job is? What is the job, I guess, of the future is in the supply chain area? Honestly, I think it's for all of the operators to understand the technology and then be able to use the information to make better decisions.

[00:54:13] I think that's really where it is. So, you have to understand how the technology works and be able to use it to get the information you need to help your operation. I don't know. I'm not sure if that's answering your question because I don't think most distributors are hiring data analysts or data scientists to do that sort of thing. They're asking that information from the AI.

[00:54:42] And I think what you need is you need folks in supply chain that have some strategy and can take the information and make those good strategic decisions with it. I think Bob's comment is on track with that, right? He's saying not all problems can be solved. Many of them need to be managed, not solved. So, what I'm hearing you say is that the resources that will likely be hired are going to help manage the supply chain process.

[00:55:11] Use data, use AI where appropriate to manage it to be as... You're never going to solve the AI or the supply chain problem completely, but you can manage it. Right. Well, there's always going to be issues and risks and unforeseen occurrences and events that happen along the way with that. I think, Tom, there's actually... You brought that article. I misspoke. I went ahead and looked. It was Gartner that that came from.

[00:55:39] There's a great chart that Lilly prepared for us because it's not just a demand. It's a spike that really comes with that, that goes with that as well, which I thought was kind of unique as I looked at that a little bit closer. It's a pretty major spike that goes with that. So, yeah. So, this is the demand for supply chain jobs with AI skill outpaces market growth. So, it looks like that's the blue one here. Yep.

[00:56:07] That's significantly increasing. Yeah. It's interesting to see how they define that. Like, what is a supply chain AI job? Yeah. I think it's going to be the person that understands both AI and... It'd be a guy like you that went and started researching and studying. In my mind, it would be one of your students who took some additional coursework in really understanding AI.

[00:56:34] One of the main things that we're learning about AI now, a few years into a genic AI, is to be thinking about the human component of that, right? That's providing the guides and the prompts and all of the things and watching the outputs and so forth. I mean, I think this is really intriguing when I look at this chart and think about this article in general, is the opportunity that's out there, right? You're really mixing blue and white collar skills kind of in this setting as you think about that.

[00:57:02] So, Will, I'm looking forward to seeing the additional courses that you're going to be teaching soon about bringing AI into that because I can totally see the value with that. So, Tom, I want us to jump into our AI section because I want to let you jump in with some of the thoughts that you had on a few of those articles. But before we do that and we leave the supply chain section, do you know, right, if we were

[00:57:30] to look at the AIS chart of the maritime traffic in the Strait of Hormuz, we've looked at it for off and on for weeks. Thanks for bringing that up, Tom. We have that up on the screen now. If you click on just about any of those, every one of those boats is moving. Those ships is moving. It'll show you, it shows the speed and what they're carrying. The red dots or the red arrows on there show the direction that they're going. And the red shows that they're typically oil tankers.

[00:57:59] Those boats are all, ships are all moving now. You know what the, one of the most important roles and jobs that are happening right now and that they're struggling to keep up with in the Strait of Hormuzes? Toll collectors? No, because there's no tolls right now. That's a threat. Okay. I don't know. What is it? Well, lifeguards? You're warming, getting warmer, right? What happens to a ship? Directing traffic?

[00:58:29] What happens to a ship or a boat that sits still for long periods of time in Sopho? Oh, barnacles. Barnacles collecting on the bottom? Yep. Yep. They are struggling to get enough divers to clean those ships, right? To get those barnacles off because they need those barnacles not off to transit the Strait of Hormuz, but think about the inefficiencies that comes, right? This is a guy that's been a boating guy since he was a little boy, right?

[00:58:55] It is extremely inefficient even to have moss and any growth on the bottom of your boat when you're transiting anywhere, right? Sure. So I race sailboats most of my life and our boats get their bottoms cleaned before every race. And whether it's one of us down below or mask and snorkel or it's a professional diver that's coming to do it. But now as you think about it, right? Those boats are the first boats that got through earlier this week of the Iranian ships were

[00:59:25] heading to China, which is a big deal. There's a whole discussion about China's need for that, but we talked about that in the past. But now you think about it, if you've got something growing on the bottom of that ship, it is so much less efficient and the costs go through the roof on the fuel consumption when you're crossing oceans. So I just kind of... It's like driving your car with the hood up. Yeah. Creating that track. Right. Yep. Yep. So yeah, I just kind of thought that was an interesting one.

[00:59:54] So Tom, take us to our next spot in the newsletter. Back when I was younger, I did some boat cleaning out in Catalina. Did you? Scraping barnacles. Yeah. Some of our friends' boats and stuff, I would go out there and dive and scrape the barnacles off. So maybe I need to take a little LOA and head out to the Strait of Hormuz. Yeah. Make a little extra side hustle money here. Now that you mentioned that, I think I remember seeing Dr. Blair paying you to clean the bottom of the Sweet Tooth. That's right. Yeah.

[01:00:22] But my guess is the equipment that we had a little like a putty knife. We just go with a putty knife and take it off. It wasn't super sophisticated. Nope. Now there's pneumatic tools that work underwater that have different levels of brushes and so forth that work well. Okay. Sounds like an opportunity to develop like a Roomba that would stick to the thing and just clean it itself. So they actually have something similar to that for cleaning.

[01:00:51] It doesn't work on barnacles as I understand it. So anyways, there's my... The barnacles need the putty knife. You can't just take a little brush. You have to go scrape them off. They have to be scraped. But the damage that can be caused with a putty knife is pretty significant. Yeah. Especially in untrained hands like teenagers who are looking for Doritos and beer when they're underage. Yeah. So Tom has some history on Catalina Island, which is...

[01:01:18] I don't know if you're familiar with Catalina Island, Will, but it's island about 25 miles or 26 miles offshore from where Tom and I grew up in Long Beach. So don't get me started. I never drank when I was underage. Don't get me started. I never had a big idea to do that. No, no. Not me. Don't get me started on Tom and Catalina Island as a kid. So... Of course, when I was 18, I was stationed in Iwakuni, Japan until I was 22. So it was really never an issue. Yes. Very good. Good. Very good.

[01:01:47] All right, Tom, scroll us into some AI. Let's talk about some AI and robotics. All right. I'm going to skip manufacturing, I guess, for now. Yeah, might as well. Oh, you know what? Can we pause here for a second? Well, have you looked in Medline that, you know, I think they're the largest, well, either Medline and probably tied right up there with Cardinal Healthcare and McKesson, but a huge medical distributor had this monster fire up in kind of northern part of the Central Valley of California.

[01:02:14] I was thinking about this ties to you being a warehousing expert. If you have a fire in a major warehouse that basically either shuts it down or destroys it, right? I mean, we had not about an hour from where I live, there was a fire a couple months ago that was set intentionally at a Kimberly Clark toilet paper warehouse that was set by an employee. I mean, that building's gutted, right?

[01:02:40] I mean, maybe give us a minute or so on the mayhem that happens within a supply chain and a warehouse management system. And what do other warehouses have to do to kick in for all of that? And maybe some takeaways you have as a warehouse management expert that might help a distributor that was listening today if they ever had a crisis. Sure. So a couple of things. So I think I was anticipating initially once that Kimberly Clark went up, there would be copycats.

[01:03:10] Oh, wow. Hadn't thought of it. I'm surprised. Honestly, pleasantly surprised that that didn't happen. But I would say is, you know, if you lose one of your warehouses, it really depends on your network. Like if you have two warehouses and you lose one of those, that's a big deal. Yeah. If you lose one of your warehouses and you have 150 warehouses, you know, it's not as big a deal unless you have all of one type of product in there where it really depends on

[01:03:40] the strategy. Typically, if you have that many, you're going to be sprinkling your A's, B's, C's, and D's throughout. Right. But yeah, anytime you... So companies have warehouses for a reason and they're necessary and needed. So if you lose one of those, it's like with that just in time, you just want, you want to have as little bit of inventory as you need on hand as possible because there's carrying costs associated with that.

[01:04:06] So you lose a million square feet of inventory, that's going to have a huge cascading effects downstream. So the planners and the manufacturers are going to have to be working overtime to try to look at that and fill the holes where they anticipate to mitigate the downstream effects of that. Yep. That was kind of what I anticipated.

[01:04:33] Medline has 50 different warehouses, but I'm thinking if you're a wholesale distributor and you've got five, right? But if you've got five balanced warehouses, that's probably a lot more manageable than if you say, I'm keeping this category in a particular warehouse because that could really throw you off. Yeah. You might see those other, those other warehouses will probably see their outputs increase by

[01:04:58] the 10% temporarily, which will then will create a void that that'll have to be refilled again. Well, and that delivery times now are now lagging to the end user customer on all of those things and so forth. So if you go to the doctor in the next couple of weeks and you're in anywhere in California and you don't have tongue depressors or KY jelly or whatever it might be that your doctor needs, then you'll know why it was this warehouse.

[01:05:26] So, hey, Tom, I want to hit that, jump into our AI section here and really good, good article there that I wanted you to really kind of take the lead with us on. Brian Hopkins, our friend Hoppy at Distribution Strategy Group. Brian used to work before as a DSG for one of our customers, wrote an article about not knowing which artificial intelligence models are running inside your software.

[01:05:52] Tom, we've talked about this a lot and you would be the expert here. Do you want to kind of address that and give us some feedback and takeaways on that? Yeah, I think there's a couple of things. One is, you know, the point of his article is, right, is you're buying software from a vendor. They have AI capabilities, quote unquote. You don't necessarily know what's under the hood. So are they using open AI? Are they using CLOD? Are they have an open source model or whatever the case may be, right?

[01:06:21] There could be, in theory, anything or a combination of them thereof that our companies are using. And their point, at the point of the article, which I thought was a solid take, was, you know, at least ask the question, right? What models are being used? Are there risks? Now, granted, the Fable 5 model and the Mythos model that got pulled out, those were very, very high-end models, very few. I would suspect no vendors were using those.

[01:06:48] They were expensive and high-end, right? But that doesn't mean that that couldn't happen or there couldn't be problems with, you know, some of the more mainstream models that would be used in those products. Remember that these AI products, and ours included, right, are making API calls out to the major model providers. So, they're making API calls out to CLOD or OpenAI or whatever with data, getting data back,

[01:07:17] and then bringing that into the system that's here. As I was reading this article, though, the thing that hit me, and this is something we're learning, and, Will, interested in your take on this, just on some of the... I'm seeing that a lot of companies are overusing the models and overusing the LLMs, large language models, and how they're building technology.

[01:07:44] And what I mean by that is, and we were guilty of this in the beginning, is if you ask, like, a question related to data of an AI model, a lot of times the AI model will dynamically write code in real time to kind of analyze, let's say, a set of data. So, you know, I want to go through and look at sales data. I want to find out what product categories company A is buying and they should be buying

[01:08:11] A and they're not buying B, or what are their sales between those? Something like that. Right? That is not... That is a math calculation. Right? So, using a model to then have it write its own code to create a math calculation, A is expensive and B doesn't make a lot of sense, and C is not very... It's impossible to test and impossible to validate because the model is writing the code every single time

[01:08:40] based on the request that you're giving. So, one of the things that we're really learning is, how do you separate out, without getting geeky, deterministic code, which does not rely on a model. It relies on traditional if-then analysis type of things versus probabilistic code, which is using a model, which is using the probabilistic aspect of the model to return the data that you need to. And so, I think there's...

[01:09:09] This wasn't covered in this article, but I think this is a next step from that article is not only what models are you using, but understanding how and where they are using models. Right? Are they using models in places where I'm relying on sort of math calculations and calculations about data and all of those types of things, or are they using more traditional deterministic code for those

[01:09:37] because the model is not the great fit for that that's there. So, I think there's a number of sort of due diligence items, which I think that was Brian's point, right? Yeah. Is, hey, do a little bit of due diligence on what you're doing. I think his point is valid, but I think you could take one step further in making sure you really understand at what point and for what use case and for what scenario the models are being used as well. I think that's wise, and I appreciate you breaking that down for us.

[01:10:07] You know, it's interesting because he talks in here about, you know, what if terms of service change, right? Do you have a plan for that and know what's going on with your data? We hear from distributors, I'd say one in every four customers or so will ask us, hey, what are you doing with my data? Right? Where is my data going to train someone else's model and so forth? And that's, I think, good forward thinking. I think what's missing,

[01:10:36] if I were to add to this article, and I had an opportunity yesterday with our friend Ed Koh from Commercial Vehicle Network, the trade group there. I did an interview with them and some of their members on their innovation show that they do monthly yesterday. And we were having a big discussion about what's a platform versus what is software. Now, everybody uses the term platform, right? It's easy to say the word,

[01:11:06] but a platform is something that you can add APIs to yourself, that you can build and expand upon, which the vast majority of software companies, if you were to ask them, hey, how do I get access to the code because I want to build some things internally myself, it would make their head explode because it's just impossible for them to do that. But yet they still call themselves a platform, which is not factual of what they are and how they're built there. But when you're working with a platform,

[01:11:35] then you can start seeing those security layers that are in place. And the question that I talk to people all the time is, maybe it's very reasonable to ask what's happening with your data. The question that very rarely ever gets asked is, talk to me about the security of my data, right? Because it's probably more important that there is security around your data than it is, is it training something or not? You mean the governance

[01:12:05] and what data is being returned? Well, it's not only that, but it's the hacking component of it, right? You've got a three-month-old Silicon Valley startup that comes out that says they have SOC 2 Type 2, which is great, great start, but there's so much more that can be done. I remember a couple of years ago, about a year and a half ago, one of the companies that we bump into some deals here and there, you know, did a whole press release

[01:12:33] and a big announcement about having SOC 2 Type 2 compliance and said they were the only one in the industry that had it. Well, there's about four different levels of SOC type compliance. We have all of those and 26 other certifications and attestations because of the platform that we're using for our technology. So that's a little bit of a plug for us, which we get to do because it's our show and sponsored by our company and we get to do those things here and there.

[01:13:02] But it was kind of astounding. Sorry about this, Will. I'm dragging you into this, but it is astounding to me that what people will say and how few distributors or manufacturers ask harder questions about, no, no, tell me more about what happens or how you protect or what is your uptime in the last X number of years, right, of your platform. We do hear that, well, I don't want my data training ChatGPT. There's probably less risk to your business

[01:13:30] that ChatGPT could read how many invoices you have and who they're to because if it got that data, it would get all of your competitors' data likely as well and it's not going to impact anybody really negatively. But what happens if you have a source of truth in your business like an enterprise growth platform is or an ERP system is, right, if that goes down because of security, it's pretty big risks in comparison to that.

[01:13:59] So I think this whole thing is going to evolve. I'm happy that Hoppy did this article. I'm going to text him later today and congratulate on him. I think it was nicely done. And, you know, there's some really good content coming out of Distribution Strategy Group with Mark Brohan and stuff that Mark's doing. I think that was a big congratulations to Ian and Jonathan in getting Mark to come over. Mark's a friend of the show and has been on multiple times and I'm a fan of his. And Will, do you guys still do your lunch regularly, you and Mark?

[01:14:28] We haven't in a while because he did the transition and he was just, he was walking the line between both and it's, but I'm going to see him next week and we'll probably start getting that back on the schedule. We'll give him my best and if I'm in Chicago one of these days soon, I'll be in Chicago next week, but I don't think I'll see you guys. But when I'm in Chicago next week, I'm going to meet up with both of you. That'd be great. But anyways, I think that the caliber of data that Mark is putting on

[01:14:57] some of the stuff that Brian Hopkins is writing right now is really high. And the funny thing is, right, Brian Hopkins, who wrote this article that I thought was pretty insightful, you know, three years ago, he was an operations and a warehouse guy, right? So he has really dug in and built some pretty cool stuff out there. So good for you, Hoppy. Happy for that. So Tom, anything else you want to take us through? I thought of the AR, AI articles, I thought that was probably

[01:15:26] as valuable to our audience as any of it. I've got to wrap up. And so we probably need to wrap up here. But again, just to kind of summarize is, you know, due diligence, right? As you talk to the vendors, yes, security, did you point it out, right? What are the AI models that you're using? What are the platform environments? But again, I would also ask the question, where and when are you using AI models? And when are you not? Right. And like I said,

[01:15:56] it was, you know, I was guilty of this in the beginning. It was like, I'm just going to give everything to the AI and let it sort it out. And that just wasn't a smart strategy. Yeah. So it's much, much more intelligence to do as much as you can deterministically, especially as it relates to calculations, then give it to the model. So you're using the model, I won't say sparingly, but you're using the model practically and intelligently versus just throwing a bunch of stuff at it. Yep.

[01:16:23] Because when you add more probabilistic results to what you're doing, you're likely to get more and more unprobabilistic answers. Is that a new word? Yes. Okay. Unprobabilistic. Yes. It should be in a spelling bee. Yes. Very good. U-N-P-R-O-B-A-L-I-S-T-I-C. Okay. Yeah. Attributed to Tom Burton, Esquire. That's right. So just, just before we kind of close out, we can hit a couple,

[01:16:52] what we won't talk about them necessarily, but there's a good article in here about from industry today from June 16th, who's liable when industrial agents go wrong. And the concept behind that one was when you start using agents that are working with other agents, and building new agents for themselves and so forth, what happens when there's trouble with that and who's behind all of that. So some good articles. I think, you know, wholesale distributors and manufacturers both are in a place now where, you know,

[01:17:20] and there's lots of events out there. There's lots of shows like this that they could be listening to. Certainly lots of things that they could be reading to really understand, right? Not just saying, hey, I want AI so I can tell our board that we now have AI or the board wants to know an AI strategy from our CEO and our CEO is asking questions, right? And so let's give them something that's an answer, but what is my AI strategy for my business right now and for the long haul, right?

[01:17:49] What are the tools that we need? Because it's easy to buy shiny objects. You know, one of the, well, one of the things Tom told me very early in the development of our technology company with me being a distribution guy, I'm sorry, me having spent my career in distribution. What do I owe you? I said that out loud. I'm the distribution guy. Do I owe you like a dollar or something? No, it's only three cents just down. Okay, good. You can take it off the royalties we're going to get from the book. It's fine. Very good. Okay. Because Will has trademarked

[01:18:17] the phrase, the distribution guy. So I'm the distribution dude. Try it. Because I, my first job in distribution was in 1989. So I know I have you beat. I joined the Marine Corps in 88. Oh, were you? Supply chain. Okay. Well then, there you go. I, I was fighting, fighting fire and teach, teaching EMT classes in 88. So, you do have me beat. Didn't realize that.

[01:18:47] That's something. Anyways, long and the, long and the short of that is, and I completely lost my train of thought. Well, you got them all. You got them all. Sorry about that. And just to go back further, when I was 17, I was a supervisor for the Chicago Tribune, putting the, putting the Sunday paper together. Okay. So there we go. Better, better just stop talking. Yeah. I'm just going to stop talking because now all I can, now all I can think while you're ahead. No, now all I can think about

[01:19:17] is 1980s music and Joe Jackson with his Sunday paper. That's right. Right. Thank you. So there you go. All right. I digressed way down a path. So anyways, some good articles today. We'll wind down. Tom's got a call in just a few minutes and well, we thank you for being with us. Appreciate that. Appreciate your friendship and your support of the show ongoing and your feedback and input today. And again, we have the inaugural, inaugural day of our supply chain section.

[01:19:47] Tom is going to now be a supply chain expert as well soon. So, oh good. We popped that back up, Tom. Appreciate that. If you're watching. I'll send you a message on LinkedIn. I'm looking forward to my copy. So. You'll get it. Thanks for having me on, guys. Yeah, it's a pleasure having you. So again, I'm Kevin Brown, Tom Burton, Will Quinn. Tom and I get together every week. We'll be having info in the next week or so about our 100th, or sorry, 200th anniversary show. I just cannot even believe that that's the case

[01:20:17] of where we're at since, what is it, 90 plus percent of podcasts don't get past 10 episodes. Um, so I think we've accomplished something more than we recognize someday. So we're looking forward to that. But, uh, we thank you for being with us. A couple things that we ask is, uh, one, if your company is looking to continue your digital transformation and wanting to bring siloed data from across your business into a unified platform to help understand your customers, your teams, and your business better to accelerate growth,

[01:20:47] grow revenues in your business, and reduce risks, we would love to talk to you. That's what we do at LeadSmart through our enterprise growth platform that we've developed. We'd love to have that conversation, uh, with you as well. But if you're listening, regardless, if you're on, uh, LinkedIn, click the, uh, the like and follow button on the LeadSmart page that's, with that. If you're on YouTube, hit the subscribe button, please. It helps us get into the algorithms out there a little bit better. And if you're listening on Apple or Spotify or any of the other podcast formats, please subscribe

[01:21:16] to the show and, uh, leave a review that helps us a lot and helps us get this out to other people. Most weeks, the podcast is downloaded in between six and eight different countries around the world, which we love to see. And the more people that we get, the more, uh, we get this out in front of other people. So we thank you for all that. Will, thank you again for being with us. Have a great event next week with the DSG folks in Chicago at the Applied AI event at the, uh, Chicago Marriott or O'Hare Marriott, I should say. I hope that that, uh, event goes fantastic for everybody attending.

[01:21:47] Until, we talk to you again next week, we wish you a great weekend. Be kind, be safe, and do good things. Thanks, gents. We hope you enjoyed today's episode and our guests. Each week, we try our best to dig into the topics that are impacting your business. So please, reach out to us and let us know how you think we can make the show better, or topics you'd like for us to tackle or talk about more often, and even guests you'd like to see join us.

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