Blythe Brumleve:
0:00
Blythe, welcome into another episode of everything is logistics, a podcast for the thinkers in freight. I am your host, Blythe Milligan, and we are presented by SPI logistics. And in this episode today, I want to bring you a conversation that we had back in August at the ECC supply chain forum. This was a special talk that was done in part for the engineering and construction contracting Association, and it's been around for about 50 years. This association, and they hold this annual conference all across the country. It's for owners, contractors, suppliers and academics in the engineering and construction business. And so at this conference, they had, I mean, obviously everybody has been dealing with supply chain issues over the last, you know, sort of handful of years. And so coming back into this year, it's how is everybody planning their capital projects right now? How are they planning them for in the future. What struggles are they currently dealing with? And I this is really important for my audience, because most of you listening are logistics service providers, so your brokers, your carriers, you are folks trying to get the business of folks like at this conference. And so in this conversation, I'm moderating a panel with Phil Stevenson, he is the Vice President and Chief transformation officer over at avail infrastructure solutions. And then we have Fred Mudge. He is the Vice President of Strategic Sourcing over at Powell electrical systems. And so both of these gentlemen, both on the shipper side of things, and their insight and their experience, I believe, can help give the folks of everything is logistics. Give you guys an inside look of how shippers are dealing with their own supply chain problems, and then hopefully you can learn a thing or two, and it will help you sell better in the future, whether it's to a construction audience or to your current shippers in the market. So big. Thanks to the ECC for having me out to moderate this panel. Is a fantastic time, and also big. Thanks to Phil and Fred for a great discussion. Hope y'all enjoy. Before we get started with the talk, we have a poll question that we are going to toss it to the audience, and hopefully you can help us, you know, get some results for this. But over the past three years, has your company been, has your company been most challenged by supply chain constraints related to materials, logistics, human resources, or, if you're one of the unicorns, no issues. My supply chain has been impeccable for the last three years. If you could do us a favor and answer that poll question, then I think we'll ask you guys, how would you how would you answer this question? I
Unknown:
2:50
think for me, it would be materials. It's a hard time between materials and human resources. But and there's alternates to the human resources. You can use contract labor. You can subcontract sub assemblies. But no matter what I was told decades ago, when it's materials in your building, you're at either 100% or you're at zero, right, having 95% of the material you need to build something, it's still going to ship it short or it may not be functional. So I think there's other variables with you know, AI bots and and things that can help with the human resources, but you can't overcome materials, right about you? Yeah, I'd echo that. I'd say both materials and human resources. I'd elevate human resources a little bit, just because of the sheer time that you have to invest in staying coordinated with our suppliers,
Blythe Brumleve:
3:43
and for that 3% that answered with no issues whatsoever, we would like to invite you to pull up a chair, because you're one of the very rare people that has no supply chain issues, which is great, so hopefully we can hear from you later on in the discussion, to hear how you are combating and not having any issues. But let's go ahead and start with the first section of this conversation, and that's around materials. Let's talk about market conditions and lead times. How are the current global supply chain disruptions affecting lead times for critical materials? Phil, you just, you just talked about how you're at 100% or you're at zero. What about the global supply chain itself? How is that affecting your shipments?
Phil Stephenson:
4:21
It's affecting everything, especially as you look at it more from a true supply chain, and not just at your individual supplier. And you're trying to delve down into why so many of your suppliers are delayed, right? Which is just that compounding kind of lead time scenario. You know, we're healthier than we were, I'd say, during COVID and post COVID, but it's still kind of held together with duct tape and chewing gum and maybe a little bit of luck wizards. But it there's a lot of fragility in it, but you got to communicate with your suppliers and be proactive and have that that communication both. With ways to understand anticipating changes in your business world, so that they can anticipate those changes and plan ahead of them. And I think that's the biggest way to combat the just the lead time of the old procurement of I'm going to look in my system, it says it's 16 weeks, and I'm going to cut you a PO 16 weeks and one day ahead of that, and expect it to show up. It's just it's not going to happen anymore.
Blythe Brumleve:
5:21
What about Brad? How? What are you experiencing?
Fred Mudge:
5:24
I think for us, we, we had a little bit of false sense of security in that we our business has never chased low cost countries, and our supply chain is 93% plus all North American. But when you go level two and three down below that, a lot of our suppliers were dependent on that, and really made us push a lot farther into their supply chains and mandating stock levels and inventory positions that they have. But it truly was a learning experience, but I think it's made all of our supply chain a lot better. What
Blythe Brumleve:
6:01
about on the customization side of things, which can greatly impact lead times? How are you combating that, or setting those proper expectations and communicating that to your suppliers and customers?
Unknown:
6:14
It definitely goes both ways. Historically, we've had a lot of customers come to us and say, We want supplier a because this site is all supplier a product, and we've had to have the conversations around flexibility with if your project timeline is really dependent or important to the success of the overall project, we need to be a little more flexible and look at potentially some other suppliers that can deliver a little bit closer to that time timeline, I think, from the customization standpoint, right? Is it, in both of our businesses are primarily eto, and I've, I think all my 35 years in manufacturing have all been an engineer to order products. And I mean, you can offset that in some ways, right? There's, there's offset and leavers with you, having safeties and other suppliers having safe fees. But I think some of the ways that we've also tried to combat it is going into platform type manufacturing, where you've got, you know, 80% of the products going to be the same, and there's, there's 20% variation in it. So the automotive world started it years ago. I think we're seeing that matriculate into more and more industries, just so that you can keep that Common Core of 60 to 80% material, and then you only have to deal with the anomalies of the 20% that you got to go wrestle.
Blythe Brumleve:
7:33
And so how are you approaching, I guess, that exception management. Are there any strategies that you've implemented to help with that?
Unknown:
7:41
Communication? Communication, communication there. There's a lot of things that can help right as we we talked about with there's technologies that's coming into place with middlewares that you can put that allows your supply chain professionals to go spend more time dealing with those exception management because the task of cutting a PO or putting an order acknowledgement in the ERP, or even updating lead times in the system, they're all kind of done through the middleware system, so that it's really, I think I said best yesterday in the AI conference, AI is not going To replace people. It's going to enhance the values that you hired these people for, because they're not doing tasks that are below their their their knowledge level, right? And I think once we unlock that potential by taking away these mundane tasks, you can you can conquer some of these things that used to be really challenging because you were doing it in your spare time, if you will. What
Blythe Brumleve:
8:40
about on the customization side of things? How are you getting those custom products and having the flexibility to get those custom products without sacrificing quality? Brett, I'll go to you
Unknown:
8:51
the it really comes back to being nimble on the engineering side, and with like I said earlier, if we have to seek out multiple suppliers, understanding what what their components are and how they go along with the overall design, I think one of the other things that Phil just touched on, too is the our internal systems, You know, I'll say, you know, pre pandemic, they were almost on autopilot. Suppliers didn't change their lead times that often we were we had a real good handle on when you started talking about a project, what the timeline of that project was going to be. And I'll make an example here. And Phil know what I'm talking about. A lot of you guys will guys will too. But you know something as simple as a panel board, right? And I grew up in that world. You know any manufacturers making hundreds, if not 1000s of panel boards, and in a day or a shift, they went over 50 weeks. And. You know, we can build a, you know, five to 10,000 square foot building in less than that. So there's a lot of those things that our internal systems were really working against us, and we spent a lot of time human capital around maintaining our system so we were able to give valid information to customers
Blythe Brumleve:
10:21
and Phil, we we've talked a lot, especially at this conference, about, you know, sort of, you know, low offshoring versus near shoring, how that approach is shifting. Over the last handful of years, there's definitely been a much more of a move towards near shoring. How are you sort of combating, you know, the local versus global supply chain, or sourcing, where
Unknown:
10:44
we I've really put the focus in the directness that I'm putting out, is to kind of do a parallel effort, right? I mean, we already know that there's, there's constraints around human resources here in North America. There's constraints around capital equipment. If anybody's tried to buy a robotic brake press or a robotic laser, they'll see that the lead times are just ridiculous. And so we're doing a parallel source. And so I tried to qualify, and I give you a really great example, when I was at well built, if anybody ever had to buy microchips and had to live through the chip again during post COVID, it was the most, most nightmarish thing I've ever dealt with. I still have ulcers nicknamed after some of those companies. But we actually, we actually took a 7.1 inch user interface that went on all of our fryers and ice machines and conveyor ovens, convection ovens, high speed microwave ovens, and we sourced it out of China, out of Taiwan, out of Mexico and out of Germany. And we were doing that because the brokers, and the chip brokers were kind of geographically located, right? And so we were, we were getting our best exposure to the market. And if, if, let's say, J bowl out of Mexico could get the chips, and they didn't require a board spin, they could send us boards. And then if our supplier out of Germany says, Hey, I can't get this particular microcontroller. We're going to do a board spin. I could still have somebody else producing somewhere. So it's creating those parallel pathways. And trying to find people that can reach into different markets, into their own local markets, has allowed us to kind of overcome some of these tasks that we thought were just going to be impossible. That's
Blythe Brumleve:
12:20
interesting, even parallel partnerships. Is that what you mentioned? Yes,
Unknown:
12:24
absolutely Nice.
Blythe Brumleve:
12:25
Okay, Brad, what about you? You are more on national sourcing. Correct your company, and what are some of the maybe the challenges around has that evolved at all? As more companies are starting to also locally source,
Unknown:
12:39
it has, but again, we're primarily North American dependent. And you know, one of the things that I'll say that we didn't see coming is some of the spin up of of the level of spend that we're seeing today. I mean, some of the the larger projects that we see today, we used to call mega projects there. That term is used for much bigger projects now, but that level of spend around data centers and all that kind of thing, our entire supply chain, I would say, was not necessarily prepared for that, but one of the things that we continue to push on our supply base is, and it goes back to a statement, one of my people I learned from a long time ago is expect to be surprised and be ready to seize the opportunities, and we push that on our suppliers, and some of our suppliers are private companies, and it's their home pocket They're reaching into to get the money, but we keep pushing them to be ready to expand, whether it's buildings, equipment and all that kind of thing, because it's, you know, our industry for lead times for us that are longer projects, right? But we push them on a much faster cycle to be able to be prepared to deliver, you know, something that we may not actually need for six months or four months, or something like that, but I still think you're going to find the unknown. I mean, just recently, with all the data center increases, you know, copper run on allocation, and the price spiked, and then any of you can't get copper right? You can. You can't find anybody silver flash it. So I think we, collectively as an industry and all the different industries need to have better communications through those channels in advance of just saying, I'm just going to suck down all the copper in the world, it's a surprise every week.
Blythe Brumleve:
14:36
Are you in freight sales with a book of business looking for a new home? Or perhaps see our freight agent in need of a better partnership. These are the kinds of conversations we're exploring in our podcast interview series called The freight agent trenches, sponsored by SPI logistics. Now I can tell you all day that SPI is one of the most successful logistics firms in North America who helps their agents with back office operations such as. Admin, finance it and sales, but I would much rather you hear it directly from SPI freight agents themselves. And what better way to do that than by listening to the experienced freight agents tell their stories behind the how and the why they joined SPI. Hit the freight agent link in our show notes to listen to these conversations, or if you're ready to make the jump, visit SPI three, pl.com, all right, I think we have another poll question ready to toss up on the screen. If you guys could throw that up there for us and get your your app ready to vote on it, because we kind of, we expect a healthy debate around this one. So how's your company or your client utilized the holding a spot strategy for procuring long lead materials. So if you guys could answer those for us really quick, we are going to probably have a larger debate around this in just a few minutes, and we'll use the results for that. But let's get into it. You know, sort of the logistics side of things really quick. You know, whether geopolitical or port congestions. Fred, how are you approaching supply chain challenges? I mean, I imagine you're not really worried about a lot of that because you're North American based,
Unknown:
16:13
true, but especially when it comes to our inbound freight, we're having to pay much more attention to that than we ever have. You know, it's whether you have all the parts or you can't ship because you're waiting on one. We've put in place a lot of relationships with three, pls, from a tracking standpoint, understanding what the incoming flow of materials is to us. Yeah, we're not as dependent on that when it comes to outbound freight. About
Blythe Brumleve:
16:41
you, Phil, how are you approaching these disruption disruptions? Because I imagine it's impacting
Unknown:
16:46
it's impacting everybody, right? And it typically just impacts you hardest and in margin erosion, because, as Fred said, you're going to get partial shipments, and you're going to make the decision, from fiduciary standpoint, to air freight, some stuff, maybe from somewhere crazy in the planet to make, to make them, to make the job shipments. But I think again, you can start to tie in technology to kind of offset some of this stuff as well, right, so that there's not opportunities for for missed bookings on trucks, on the inbound and, you know, we've, we've taken a bigger stance as far as as my current organization, and actually managing some of the inbound for critical items versus we never thought about that before. It was just You didn't have to worry about it. As Fred said, you'd cut the PO. You were pretty good on the on the lead time it typically would show up a day or two prior, didn't, wasn't damaged. But now as critical components, can just stack up and shut your factory down. You have to take a little bit more control that logistic, just for the confidence
Blythe Brumleve:
17:48
standpoint. Well, in my industry, logistics, for folks who may not be aware that technology has just come onto the scene with just full force, you know, we've historically used some a lot of the same systems for decades, but within the last five to seven years, it's really been so much new technology, most of them being around visibility and tracking are some of these solutions helping you guys.
Unknown:
18:11
They are, but I think they're almost also hurt in the industry a little bit, right? I mean, you there was a lot of truckers didn't like to have seven cameras on them, right? They didn't like to have a GPS on them that knew their every move, right? So we lost, I mean, that cost us some driver capacity just because they didn't like those, those aspects of being controlled. But I think, you know, it does put confidence in place with the GPS track and then and having confidence after all the all the missed deliveries that we received for three or four years of knowing that, hey, when the breaker is supposed to be there, it's going to show up, right? And it's already waited 52 weeks for it. You'd think, what's another day? But it's you've got 1000 or 2000 people in a factory ready to put this thing together and get it out to the job site.
Blythe Brumleve:
18:56
Fred, how has technology, or logistics technology, maybe helped her or provided some challenges. I
Unknown:
19:02
think it's definitely helped from a visibility standpoint. The and you have conversations with suppliers, and they say, I can't believe we're having this conversation. We've already shipped it, and it's on the way. And you know that to some degree, used to be good enough, but we're so tight in, you know, needing some of these parts, and then in some of the common parts, we've been able to build inventory. And it's not that big of a deal, but on project specific material, it's a huge deal.
Blythe Brumleve:
19:35
What about sticking with technology and sort of geopolitical issues that are popping up? Is there software that also helps you mitigate those, those or assess those risks across the globe? I mean, in our discussions yesterday, Fred, you mentioned a new Canadian tariff that was just put on or just implemented, and so is software helping to alert you to those issues, or is it really just fall back to the. The human side of things, and communicating that to you that, hey, this is coming, you might want to position your shipments a little bit differently.
Unknown:
20:08
It would be nice. The quick answer is no. Using the Canada example, this week, Canada put a 25% tariff on on materials from China, and it's the same tariff, or sounds like the same tariff that the US put in a few years ago. But again, it causes us to go back to our supply base and understand what are some of our alternatives with suppliers that we do have a good relationship with. If they're not able to do that, how do we find alternate suppliers that are going to be able to to, you know, keep us in position from a cost standpoint, you know, the other parts of that, and you guys probably have the answer to this one is, it's not just an increase in price on the on the Chinese material, the other manufacturers are going to see that as an opportunity. They're going to raise your cost as well. So it is going to be something that we didn't expect. Nobody said, Hey, we're evaluating this. You know, hang on, in three months or 12 months, we're going to put this in place. It was something from our standpoint, we didn't see coming. And
Blythe Brumleve:
21:18
then, Phil, you had mentioned yesterday in our discussions, you know, they trying to circumvent aluminum shortages and copper and especially because of the, you know, Ukraine, Russia war. So are those? Are those, I guess, risk still happening. I mean, obviously the war is still going on, but
Unknown:
21:35
so, yeah, obviously those risks are still present. And I think everybody throughout the entire supply chain is, is bearing a little of that risk, right? And I think with making commitments and firm commitments in the way we've worked with some of our suppliers is we've maybe, and Fred, I'm sure you guys have done it as well, made some rather ambitious volumes of aluminum that will be receiving. But, I mean, we've made the commitment to say, if we don't take it, and, you know, a gear. We're gonna, we'll go ahead and procure it. Procure it from you. But it's, I don't, I don't see any of these problems going away for the next decade. And so I think everyone's gonna have to take some of that, you know, cash, solvency risk, avert inventory risk, and bear it a little bit, or else you're going to find yourself in a really bad situation. And
Blythe Brumleve:
22:26
so, I mean, I don't want to say I'm speaking of really bad situations, but we're going to talk about the holding the slot concept. We could reveal those poll results, please. And then I know that you guys said it was going to be a drag down fight between the two of you of debating this topic. So I'm interested to hear how you are approaching this, and has your company or your client utilized the holding a spot strategy for procuring long lead materials first, maybe Phil, you can kind of highlight why this is a little bit of a controversial topic. Well,
Unknown:
22:55
it would be great if people actually held to the spot, and that's the problem. When we're dealing in this environment where you have pretty rapid turnover with manpower, there's a struggle to get materials, and then you're running your sales and inventory and operations plan to schedule a 7000 hour project that probably is not going to come to fruition, or it's going to get delayed three months, or if I do build it, I'm going to be in house with it, and then I've just got all my cash tied up into something that's not moving, and then I've got another hot job for somebody that's actually got an infrastructure project that they're trying to get the utility upgraded, and it's all tied up in a piece of piece of equipment that's sitting out, not being utilized. So I'm not a fan of it at all. I think, you know, these projects are not short term projects, especially when we look at some of these larger infrastructure projects, it's Communicate, communicate, communicate, and just hold what you say you're going to do. And I know Fred, you guys have dealt with the same issues at Powell. Well, I'm a little bit more of a fanious, because it does drive the communication. And you know, my experience with with people that are looking to put a purchase order in, to hold a slot or engineering only, and that kind of thing it it really happens most often because you don't really know what you need at that point, right? There's, there's other ways to probably get a little bit further down the road without injury to either party. Whether you're talking about a master service agreement, where you can at least get a little bit ahead of that, understand what the project looks like. You can get terms out there in front of everybody and understand, are there terms that we're going to be able to accept, versus a full flow down from the overall project? A lot of those kinds of things, you can get worked out far in advance where it comes back to harm a manufacturer, as Phil was saying, is. Because if we lock down a particular slot, it impacts other customers. And I've probably, in close to 40 years, I've probably seen one or two projects that actually follow the timeline that we commit to when we're saying we're going to hold a slot, you know, and it, it really hurts the production schedule that's behind that hold a slot when, when things don't happen on that time schedule. We do have flexibility, and our operations are big enough we can kind of move some things around. But it gets back to, you know, we play a game internally, we call paper dolls, where we start to lay things out on the production floor and say, Okay, but what if this doesn't hit for two weeks or two months? You know, what other projects is that going to impact? So again, tagging on to what Phil talked about it, the communication up front is huge, and the more that we can have of that and understanding what's the project really look like. What are the you know, if we get to an engineering only Po, we can start doing that work, it starts to take shape, and then we've got a lot more things we can plan from. And I would say adding to that, right is slight project moves are not a big deal, right? But recently, there's been further delays to where you're seeing big electrical projects pushing out years and and when you we're partial complete. I mean, you really, as a manufacturer, that's, that's the worst thing ever, is to leave something partially built, push it away. I mean, any good manufacturer is going to finish it right? Follow your SOPs, maintain the quality, and make sure that there's not going to be any sacrifices in that. So you're really just putting a big risk on on your supplier, from a cash flow standpoint, from a space standpoint, from a capacity standpoint, and look, if you don't know something's moving in two years, four months before it's supposed to ship, then there we have another communication problem without the entire throughout the entire industry, right? Yeah, and it could be a really bad thing. You know, from a manufacturing standpoint is, you know, if you're talking about multiple buildings, from our standpoint, or multiple lineups of switch gear, a lot of times we'll tell you, Look your your first building, or your first lineup of switch gear has to leave before the next one hits the floor. And really, that's that's protecting our revenue stream, to be able to be sure that your your project that all of a sudden gets locked up for an additional year or more, doesn't, you know, grow roots in our factory floor and, you know, keep us from servicing other customers and hitting our financial mandates.
Blythe Brumleve:
27:46
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Unknown:
28:47
solved having the perfect supply chain, the everything to be in sync with one another, and having the capacity across that entire supply chain. And it's for a long, long time within our industry, it worked really, really well today with the the gross changes from, you know, our sub supplier to sub supplier, you know, the it's made it really difficult from a lead time standpoint, and, and I will say, and I was having a conversation earlier this morning, You know, there, there's a lot of people in our supply base that are out there working really hard. And, you know, everybody in our industry knows that everybody's going to get in the ditch right from time to time. The secret is how fast you can get out of the ditch. And the unfortunately, there's a lot of people in this industry that have been in the ditch for two, three years. We've got great relationships across our supply base. We're sharing a lot of strategies and tactics across our sub suppliers to help them out of the ditch. There's a lot of money being spent to increase capacity and getting new equipment. And that kind of thing. And my guess, if I made one prediction, in two or three years, there's going to be way more capacity than we're going to be using. It's just it's going to take two or three years to get there. Ebbs
Blythe Brumleve:
30:12
and flow the industry. What, Phil, what about you? What would be a magic wand to answer to fixing logistics and materials
Unknown:
30:21
Biden by commitments. It's, it's, there's just ebbs and flows and it just sends ripples, right? It's, imagine throwing the big rock in the pond. Well, you know, one big project, move hits Fred or I, or whoever you're buying from. They've got 1400 suppliers. Those 1400 suppliers. Have got 2800 suppliers right there. Every single one of them is impacted, and we're too fragile to recover from it. You just keep taking these really small ticks against the whole supply chain, and it just continues to erode it. I mean, it's, you guys all seen it, right? It's, I used to buy from this company. This company no longer exists. I used to buy from this company. Well, now this company is owned by that company. It's the people can't survive, especially the smaller players in the supply chain, can't survive those continued small impacts that just erode the infrastructure of their business, and then that just collapses it even further. And
Blythe Brumleve:
31:19
so I guess, you know, it's all of a it's a very challenging thing to consistently be able to address and consistently be able to try to problem solve, which, considering all of that, we're about to talk about human resources side of things, which adds a whole new complexity to this. But before we do that, we have another poll question related around supply chain technology. If we could throw that up on the screen, has your company or your client implemented an impactful technology upgrade to supply chain management systems? So this is logistics materials or warehouse management, maybe a TMS system. And then we have a few different answers there, if you guys could go ahead and answer those for you, for us, and then we will reveal the results in just a few minutes. But speaking of the Human Resources side of things, you know, labor is arguably harder to source than materials, so let's talk about getting applicants first through the door and qualified in each of your companies. Phil, I'll start with
Unknown:
32:18
you. Oh, it's been a challenge. I mean, one is getting the applicants. Two is getting them processed through, and three is getting to stay past the first lunch break on the first day. I mean, it's, I mean, I think there was a whole mental shift post the pandemic that people just didn't have loyalty. I mean, you can see you're trying to backfill a very aged, talented workforce, right? 2022 there were 17% of the people that left the skilled labor retired. So for every one of those, you're not going to bring in some 22 year old person out of tech school that's going to replace them. I mean, that that retired welder forgot more that day than that guy's going to know for the next five years, right? And so I think the biggest problem that people are having is they're seeing that, and you see it in a lot of organizations I've worked for, Dover and well built where we had 50,000 employees, and they all calculate that head count requirement as a one, right? It's a it's a one or a zero. But they're not all. They're so dynamic, right? I could bring in five welders that might not do the work of this, this one guy that retired after 45 years. And so I think we're, you know, where we're trying to start working around that is that kind of value of that employee and their own boarding and and taking away stupid task and making sure that the works clear. And it's starting to take it's starting to take ground. But I can tell you, you know, last year, we had some really stupid stats of we had one particular business that had hired 353 direct labor employees, and we retained, like, 103 so, I mean, think about that, from how that's eroding your cost. Do you train up this guy for two months, and then they're gone, and then there's another one to train, and then maybe they leave. It's, it's very difficult. And then, you know, the whole time there's somebody in scheduling, or there's somebody in operation that's looking at that human being as a one number. I need to have a head count of 350 and I'm at 345 Well, it's far more dynamic than that. And I think people need to realize that a lot more often, that it is super impactful. The quality level of the people that you're bringing in is directly related to how well you're doing from a sourcing standpoint, to bring in those the right people. There's there's, every business is not right for everyone, and everyone's not right for every business. And I think the more that recruiters and human resources and operation funnel that to where you can find the right person for the right role, and you bring them in, and you have flawless. On board, and they quickly become into the culture of the organization, and it's safe. We can kind of stop this whole whirlwind of people starting and stopping and quitting and moving for $1 an hour. It's almost,
Blythe Brumleve:
35:11
it sounds like a revolving door. It is with applicants, right? Are you experiencing the same things?
Unknown:
35:16
Yeah, our numbers are almost identical. And it's, it's not that we're staying static, either, right? It's not trying. We're trying to replace one for one. There's a growth mode in that as well that compounds, you know, the need for people. You know, one of the things that we've started to do is start to understand and talk to people across our entire organization around you know, what are some of the flexibility things that we can do. So we're running a pilot in one of our plants now, where we started a weekend shift, similar to what you know, the nursing industry has done for decades, and we run a Friday, Saturday, Sunday, 12 hour day shift. It's tough, as a manufacturing person on shop floor, being there 12 hours, but it's allowed us to grow in a market that hasn't been available in that area before. And there's a good group of folks there that like it. It's somewhat of a rural area. There's a lot of people there that farm. If they're saying, heck yeah, I can go work and get benefits for three days and I can go do my other things for four days. It fits with their lifestyle a little bit better than saying, No, you're going to be here five days. Hasn't solved the problem, but it's helped.
Blythe Brumleve:
36:32
What about retention? I would imagine those different options would help with retention as well.
Unknown:
36:38
We're we see a gap. So, like Phil was saying that there is an outflow from a manufacturing standpoint, we we've recently celebrated several folks in our business that have 50 years of service, and they're they're leaving our our average tenure. You know, when I started with our company, you know, 18 years ago, was in the 20 to 22 year range. It's down to about seven or eight. And part of it is the growth, but part of it is attracting new folks into the business.
Blythe Brumleve:
37:12
And so when it comes to that skilled labor and focusing on the retention of that skilled labor, are there any strategies, or is it just, kind of, it just comes out of nowhere, because the the employee is ready to move on, but replacing that skilled labor, you know, Phil, I think you mentioned, you know, trying to get five people to do the job of one experienced person. How do you combat that? Well,
Unknown:
37:34
you know, we, we were very honest with our employees, and we asked them, you know, those that were there for a while, why do you want to you want to you like working here? And those that would turn over, we would ask them why you didn't want to be here. And it's, you know, there's, it's no mystery that that there's different people that have different mindsets. I mean, 2022, right? Coming out of the pandemic, 14% of the workforce decided they no longer wanted to work for an employer. They wanted to be part time or through skilled contract. There's, there's a lot of things that are moving. So as you take that data in and gather that data, and then work with the employee, the employees and the staffing, you know, you make some crazy changes. Like Fred will tell you, we've got a factory that's in Missouri, and we've had that factory for 45 years, and it's never been air conditioned. It was one of the biggest complaints. So it's really freaking hot in Missouri in the summer, so we air conditioned. It's amazing how much different the people reacted to that. And I mean, you'll see, you know, one hourly guys holding the next guy accountable. Because if he, if he rolled up a door to drive a fork truck out of it. He's like, you need to, you need to close that door. Right, close the door. I mean, we've, we've invested a lot of money to keep ourselves comfortable, and we're going to work. So it's, you really just got to talk to the people. It's going to, I think every geographic region is going to have different things, but you know, the old traditional pizza party is not doing it right. It's about increasing their skill. It's about providing them with values to make them a more valuable employee. You know, it's the stupid old diatribe is, what if I invest all this time of this employee and they and they leave, and that's, well, what if they what if you don't invest the training into them and they stay right. So just invest. You can't you can't worry about the risk and things change. People change. People want different stuff. Just listen to the voice of your employees, and you can get retention. And I think it's not just in the DNA of of the American worker, like it used to be that, hey, I'm loyal. I come to work, I work hard, and I earn my dollar and I go home. That's not the society we're dealing with anymore,
Blythe Brumleve:
39:46
with coming up with different solutions, whether it is, you know, having a three day work week or some of these other things that you guys have talked about. What about the upscale factor, you know, is it regularly communicating and figuring out how that employee wants to up? Skill. How are you offering them? You know, those additional, I guess, benefits to the job, that they can learn more and grow?
Unknown:
40:09
Well, we mentioned a lot about the shop floor. I mean, it's all the way through the business. And go back even pre pandemic, probably seven, eight years ago, we started trying to understand how we better interrelate to customers and project type business. And we really started to talk to engineers and sales people and all that kind of thing. And there was a disconnect we saw in our business around project management, and it was really something we started to evolve within our business where that it's really the path that a lot of people take. And we had a lot of engineers that held up their hand and said, I love to be an engineer, but I hate it when the phone rings and somebody's got a question, right? The which that question oftentimes is important to the project, but they're so locked into going after the next one. So, you know, we've, we've gotten a large group of project management professionals throughout the group today that that is what they they live for. And you know, they love it from the interaction with the customers. They love it because they go across our entire business, and they touch each, you know, each piece of our business.
Blythe Brumleve:
41:27
Bill, how about you?
Unknown:
41:30
I think a lot of it resonates to Fred's responses. It's, you know, we there's very traditional methods of doing skills matrix. But the reality of it is, comes down to is incentivize people for the habits you want them to have, right? So if I, if I need to upskill my, my my workforce, but there's no incentive in it for them, it's not going to happen, right? There's different tiers. There's different ways of people going. Well, I'm a welder. One, a welder one or welder two, welder three, water four. But, I mean, we've started looking at different groups to be able to create tiger teams, right? That could come in and and really work on anything, where you get a two and a half x multiplier, if you're also trained and certified on the electrical as well as on welding. And so you know, people don't come to work just because they really like hanging out with you, right? They they do it because they really expect to see some money landing in the bank account. And so if you incentivize them in a mean, meaningful way, and they see value in that, and they see that they're investing in themselves, and they become a more valuable assets to themselves and in them to their families. Upskilling is not really that hard.
Blythe Brumleve:
42:45
Now we've talked about how, you know, sort of technology has impacted the materials and the logistics side of things. What about human resources? I would imagine that it's just more technology. More technology. Is there such thing as too much tech when it comes to human the human side of things,
Unknown:
43:01
you've got to have the human aspect, but you can never have too much data. All right, a good decision with bad data and a bad decision with good data look exactly the same. You're both on getting unemployed, right? Somebody's gonna get hurt. So I think you gotta have the human aspect to be able to make the good decisions. But you got to have good data, and you got to have volumes of data. Small samplings of data don't give you enough to create the trends that you're going to be able to make proper reactions off of. So yeah, I think technology is there. I think using the data properly, especially never using the data as like a whipping piece to your to your workforce, where? But if you have the data, and you teach people to make good decisions, you'll, you'll kind of have that reciprocal workforce that continues to kind of build back to that 2530 year, 10 years that was so common here in the US market, right?
Blythe Brumleve:
43:57
What about you? Yeah, and
Unknown:
43:58
I'd say one of the things Phil touched on earlier, you know, on the shop floor again, you know, robotic press brake, you know, that's a great thing. And you used to have people that wanted to be skilled and be a press brake operator, and they knew the correct tooling, and they could read a drawing, and they could figure out where the first bin was to be made on a flat piece of metal. Today, you can buy a machine that does all that, and you've really got, rather than an operator, you've got an observer. But when things go wrong, they don't really know how to fix it. So there, there are ways to get there, but then you get to a sticking point because they're not really educated on the true craft, if you will. You go farther in the organization, like the project manager I talked about earlier, yeah, there's a lot of data available to that person, but it's truly not technology. They've got to actually do the job.
Blythe Brumleve:
44:53
And so we've talked about a lot of different, I mean, each of these different sections, from the materials to the logistics of the Human Resources side of things. We could have spent an entire talk on that, but I think we're going to move into Q and A. So if you have any questions around those three topics, we would love to hear from you, just be sure to use the app or we do have roaming mics that will be around to be able to ask the questions, and the panelists will be able to answer.
Unknown:
45:18
Lubna, is this on? All right? So we do have a number of really good questions that have been coming through the app. So I'll go ahead and start with this one. What is the most critical message you can deliver to an owner to help improve their project outcomes? Oh, that's yours. Come with the question again, there's an echo. I apologize. Actually, let me shift here. What is the most critical message you can deliver to an owner to help improve their project outcome? That's a tough one. Yeah, I'll take it first the Yeah. So we talk a lot about communication, and it's again, it's both ways. And one of the things that that we preach, like I said to our project management groups, is they're our customers, eyes and ears inside of our buildings, right? And if we sense a problem, let's talk about it. It may not materialize, but the more information that you have on an ongoing basis, the better the project goes. And I think one of the things too, and honestly, personally, drives me nuts, is when we're finished, we're finished with a project, and folks show up to a factor acceptance test with a list of changes that we want to make. The that's a bad day in our office. The you know it we we can make any change. We're much better prepared to make it through the project than at the end, and the worst thing we can do is ship a project where we have to come to the field and make those changes in the field. So again, it kind of goes back to what we talked about from a communication standpoint. That's kind of adding to that right is adding some good processes in the organization, right, hour by hour, boards, day by day, boards, just to make sure that, if I'm supposed to be at 65% complete manufacturing, am I at 65% complete, right? And that's another area where adding technology in Blythe is is going to kind of change that because, you know, traditionally, that's all done very manual, but you still kind of want it to be manual, because it opens up that opportunity for the workforce, to talk to the leaders, to the supervisors, to the management, and it tears up, but being able to transfer it into into digital data, that you can actually have customer portals, even for your customers, right? And that's something that we asked for with a lot of our suppliers, is portals in let me see what your inventory is, let me see where your what your production status is on my equipment. And then, so it's kind of the self serve market. So I guess to the whoever asked that question, rather than me having to tell someone that there's confidence in their job, that they can self serve and look right into my system and see, hey, what's the status of it? Do I have all the materials? Do I have the staffing? Are we on at the percentage of completion that we should be in? Is really, I think, where the future of this will go, so that you don't have to really do these mundane conversations. And
Blythe Brumleve:
48:28
it sounds like it'll save a bunch of phone calls too, if you have some of these customer portals available. All right. Next
Unknown:
48:33
question. All right, we've got our second question is, do you have any rules of thumb when reading a supplier's lead time in our current environment to set realistic expectations for your projects or your clients, or methods to go deeper, to understand the risks. Oh, it just disappeared, to understand the risks of your project to your project. So, yeah, there's no substitute for communication, right? And when I'm working with my suppliers, I like to understand, for those guys where they're putting their risk, where they're putting their cash, I actually also like to kind of ask them, Hey, what is your supplier your customer base look like? And what is your supplier's customer base look like? Because I try to avert risks, I can give you a great example where I have one of the best suppliers. They have never missed a single delivery, and that is the culture of that organization, but they were awarded this bid because of one single statement. I asked them, How big would my company be in relationship to your annual revenue. And they said, Well, you're just the right size, because we never allow any customer to be greater than 1.5% of our annual revenue. What does that tell you? Right? It tells me that that great culture that this organization has, that they pride themselves on high, tenured employees delivering on time and taking. Care of their customers, that there's no single client that they have that can sway that culture. And I think you really got to have those communications, and you got to have that transparency with your supplier base. The days of just I'm going to cut you a PO, you send me an acknowledgement, and hopefully your stuff shows up at the dock. You know, those are, those are long gone. I mean, when I, when I get into a commodity discussion with a group of potential suppliers, we're discussing 17, 1819, aspects. And it's not the legalese terms, it's, I just want to know how we're going to do business, right? You think about sports teams. They don't show up on the field and just go, Hey Fred, which position you playing? Right? Everybody knows what we're going to do. They know the rules. And we try to generate rule books and playbooks with our suppliers to say, here's just what I expect, right? And we hold each other accountable every month and every quarter we say, here's here's how I think you're treating me as a supplier. Now I want your honest feedback on how I'm treating you as a customer, and so it allows us to evolve and adapt, but you just got to get past the price and when it's going to be here and, oh, you're a day late. So let me slap you on the hand, because guess what, you're going to get inherently worse lead times from that supplier that you treat like that, right? So if you want good lead times, treat them with respect, treat them as a relationship, and know what their strategies are and how their strategies align with your strategies. And if you can get cultural alignment, I find with your suppliers that they're really never late, and if they are, you know way before it's going to impact you. And I'd say it to some degree. It varies, right? If you, if you're talking about a raw material supplier, a whole lot easier to manage a raw material supplier if you have stocking programs with them and that kind of thing, if you're going to order a catalog item, a whole lot simpler. I mean, you, you do want to have a relationship with them and understand what stocking levels they typically have and that kind of thing, so you can build the confidence. But if it's an assembled product supplier, you've got to be in there with them. You've got to understand where they are from their supply chain standpoint. Where are their manpower issues? They're dealing with the same things we are. They're dealing with the same churn of people. Some of them are doing some offshore engineering today. The it's great from a capacity standpoint may not be all that great from a quality standpoint. So you have to learn that. And you know, every supplier is going to be different. And one of the things we mentioned earlier that makes it even more difficult is that you know where you had a stronger relationship with a supplier A, where the majority of your spend went, but they're in the ditch, right? And you've got to be with B and C today. You've got to, you've got to have those relationships there, and you've, you've got to know who's going to give you the true answer. And, you know, there's, there's some large organizations out there that we deal with from a supply base standpoint, some are better than others at either the information that they have or the information they're willing to share, and those are the risk discussions that we have. A lot of you know from our project management and our buying community and that kind of thing, and it's it's not fun for you guys. It's not fun for us when we're having these joint conversations around Who's your supplier, I want to go see him and all that kind of thing. That's where the real disruption comes in. Next question, all right, what strategies and best practices are companies employing to enhance cyber resilience in their supply chains, and how can organizations effectively de risk their operations against potential cyber attacks? Good question, right? We we are learning, I'd say, from my organization, we're in a learning phase of that. And the, you know, from an IT standpoint, the it's gone from the guys that said over in a dark corner to making sure you had all the information that that you needed to to make decisions, to where they're really out front in a protection mode. You know, talk about cyber attacks. We've had more internally driven phishing emails come through the organization trying to educate ourself on what we do to protect ourselves, what we do to protect our supply base, and those kinds of things. So it's, you know, I can say that we've had, I can think of four sub suppliers that have been impacted by cyber attacks. One of them, the. Was pretty devastating to their business, because they had to go back a long time and recreate a lot of data. And it, I think that was probably three years ago. They're probably still not back to the level they were prior to that. And you know, it's something you didn't have to pay attention to now, but it is a reality of the business. We're looking at it a quarterly basis with our IT teams. But the crazy thing about cyber resilience is, as soon as you put a patch in place to prevent it from happening, there's someone else there creating the next hack, right? So it's a never ending process, and it's not always just around things that that you're doing within your organization, or your suppliers doing within the organization, right, if you think about, I guess, the mobile phone so a couple months ago, right, where they went out for half a day. Well, we had, we had sales guys that were working projects, and you know, it kind of took you out of communication. And we've also had cyber attacks on our voice over IP for one of our sites that took took all the phone lines out. So it wasn't anything that we did, it was a provider that we, that we dealt with, that that was experiencing a cyber attack. But I think it's everybody just has a responsibility to make sure that you're putting whatever safeguards you can put in place, but it's just like another pandemic or another country that goes flop, or another supplier that goes flop. It's the it's the unknown. So have a contingency plan for everything, so even if it does get hacked, that I can go back to paper, right? I mean, that's the one really, really scary part about technology that from the manufacturing world, that they talk about is like, what happens if it collapses? Everybody forgot how to run a business off of paper. They forgot how to do paper scheduling, right? And I think the world in general is learning more and more. I mean, if, if any of you are doing business in the UK, we've got a UK operation now there are mandates for third party certifications around this exact thing. And it's not that they're all bad. We're learning a lot from those third party certifiers.
Blythe Brumleve:
57:12
Think it's the human element too, because there was that, the big hack of the MGM casinos a couple of years ago that cost, I mean, millions and millions of dollars. But the way that these, you know, the cyber attackers, got in is they impersonated someone on their IT team by looking at their LinkedIn profile called the customer service hotline, and was able to get through with just basic information that was on, you know, that employee's LinkedIn profile, and it shut down casinos all in Vegas. And that was the impact is the human element side of things when it comes to cyber security too.
Unknown:
57:46
Next question, all right, so this is around human resources post pandemic, have you implemented different strategies for employee retention? Good question. Oh, yeah. I mean, we've talked about that several little, brief points, but a lot around adding value to the employee, right? They're an asset. They're, you know, in Hey, again, you may train them up, and they may be really super power, and they may leave you, but that's a risk you got to take. But it's, it's all about adding value back to the employee. It's, again, it's not the old pizza party. It's not this little pat on the back. I know this morning he said, Hey, the employee of the week. That's great. Guess what? It's really not. Because if you got 10,000 employees, and there's one that was the employee of the week, guess what? There's 9999 that feels shaded because they weren't never going to make that list, right? So why even try? So I think it's about looking at each individual employee, asking that employee kind of what they're what they aspire to be, where they want to be, what do they want to do? Right? It might be a welder on the floor that says, I really want to get into engineering, and you help them find a pathway to get to what their dream job is. So that's, people just want to be heard, right? And if you don't retain them, you got to listen to them, yeah. And I think you know a lot of why people come to work, as you mentioned earlier. I mean, it's paying benefits, right? But we're responsible for creating the environment once they get there. And you know it's, everybody's not going to be overly pleased with where they're paying benefits are there's always going to be something better or something that says they're better. But if you have the environment there where people appreciate the environment, it's clean, it's safe, they like the people they're working with, it's a big deal. And one of the things that that we do. We've got an intersect our internet site within our company. It flashes up every day. It changes on who has a work anniversary and whose birthday it is. And you know, for me, for the folks that are in my divisions, every one of those folks that has a. A work anniversary or birthday. I send them an I am every morning, and you know, you some of them I don't even know, right? And have not had a chance to meet. But when you do go to the site, and I hear it all the time of hey, I can't believe you remember it is my birthday. Well, I didn't remember it's your birthday, but it's right there in front of me, right? But it means something to a lot of people,
Blythe Brumleve:
1:00:24
and I think, too, coming from the logistics side of things, specifically with truckers acknowledging their wives as well as one key point, I think, in the logistics industry, that has helped it a lot, because these truckers are out on the road all the time, so it's very much, you know, it's up to the wives at home to handle the house and everything that goes along with that. And so acknowledging different companies, acknowledging the wives as well, we've seen a really dramatic reception to that interesting. I
Unknown:
1:00:52
think trucking was hit hardest with retention. I mean, maybe not just leaving, but leaving one mode for a different mode, right? I mean, we talked about a lot of LTL carriers when, when la Long Beach was backed up, they're like, Man, I can make a lot more money just sitting in my truck waiting for a container to come off at the longshoreman. So, yeah, that one's the really creative one. Because no matter what, you don't really change a whole lot about that environment. It's it's wheels and a gas pedal, right? It's
Blythe Brumleve:
1:01:20
a tough life, and very much impacts your own health and plus the health of your family as well. I think we have time for one more question.
Unknown:
1:01:29
All right, so, and I think we expected this question, do you anticipate lead times for electrical equipment to go back to the historically typical lead times, specifically for Transformers or switch gear, absolutely not. I mean, I can't make any clearer, it's not, as we continue to try to solve the problems around electrical gear, new problems will get created. There's fragility around. I mean, I don't know if you guys saw Peter's view yesterday on electrical steel, right? There's it's fragile. It's glass. But I think what happened is what really has compounded this, and if it does come back, it'll be a decade to come back, and it's because before the pandemic, there was a high peak load of electrical equipment that you would ever need. Post the pandemic, we were already starving the global supply chain, but the demand was Forex, the capacity. So as you're trying to increase capacity through very long capital equipment that you can't get because of steel and electronics and motors and all these other things you're still trying to meet the current demand. So all we keep doing by the whole great post pandemic panic by was just elongate the solution out times 10. So I don't think we'll ever see it come completely back to where, you know, medium voltage transformers are being stocked, or they have all the equipment that they need to be able to throw one together in four weeks. I think those days are gone. I mean, they were gone a decade ago, right when solar hit and started doing a supplemental utilization of medium voltage transformers. It's never recovered, and we just keep impacting it, because we haven't increased the capacity to manufacture, but we keep trying to request more and more off the draw. I think it gets better. I think it takes a while to get back to where it was, 568, years ago, but there's a lot of people that have left the space, a lot of manufacturers that have left the space. There's a lot of consolidation that's happened in the industry and but especially the a lot of the major manufacturers out there today, they're putting a lot of money into new facilities and new equipment. Like I said earlier, it'll be two or three years before they get online. That will make a difference, but the consumption is is there today. It'll take a while to get caught up. I think Eaton just announced they're going to do 500 million in capital in the next five years, just to try to reduce lead time. But I ask them if they'll guarantee they'll be back? The answer is absolutely not, because there's so many unknowns as you still try to invest in capital to improve your manufacturing operation, there's still hits and misses. But that's a really good question. I think it kind of reflects back on the is inflation ever going to come back to 1% No, it's not going to do that either.
Blythe Brumleve:
1:04:43
Well, as you can tell, managing and de risking your supply chain is full of complexities. They are probably never going to go away. So these are issues that we are going to have to constantly evolve on to find different solutions. But, but I want to thank you know Phil and Fred. Thank you for your perspective, and thank you for you know the conversation around. Topic for the rest of you in the audience, thank you so much for sticking with us. I know it's tough for the second day of the conference, and especially, you know, around lunchtime, so appreciate your time and attention, and we should be available afterwards if you have any questions or have any comments. So thank you. Thank
Unknown:
1:05:16
you, Bob. Thanks everybody.
Blythe Brumleve:
1:05:22
You I hope you enjoyed this episode of everything is logistics, a podcast for the thinkers in freight, telling the stories behind how your favorite stuff and people get from point A to B. Subscribe to the show. Sign up for our newsletter and follow our socials over at everything is logistics.com and in addition to the podcast, I also wanted to let you all know about another company I operate, and that's digital dispatch, where we help you build a better website. Now, a lot of the times, we hand this task of building a new website or refreshing a current one off to a coworker's child, a neighbor down the street or a stranger around the world, where you probably spend more time explaining the freight industry than it takes to actually build the dang website. Well, that doesn't happen at Digital dispatch. We've been building online since 2009 but we're also early adopters of AI automation and other website tactics that help your company to be a central place, to pull in all of your social media posts, recruit new employees and give potential customers a glimpse into how you operate your business. Our new website builds start as low as$1,500 along with ongoing website management, maintenance and updates starting at $90 a month, plus some bonus freight marketing and sales content similar to what you hear on the podcast. You can watch a quick explainer video over on digital dispatch.io, just check out the pricing page once you arrive, and you can see how we can build your digital ecosystem on a strong foundation. Until then, I hope you enjoyed this episode. I'll see you all real soon and go jags. You.
