Supply Chain Now Radio Episode 240
Supply Chain Now Radio, Episode 240
Prefer to watch the podcast in action rather than just listen? Watch Scott and Greg as they interview Andrew Johnson for SCNR Episode 240.
The life of an entrepreneur has been glamorized to the point where most of us dismiss the impact that the resulting risk and stress can have on a family. Entrepreneurs deal with significant pressure and unpredictability, and it is hard not to bring those home. Andrew Johnson, CEO of ShelfAware, grew up in an entrepreneurial family. And while it didn’t discourage him from becoming an entrepreneur himself, he makes an active effort to manage those stresses better than his father did.
Andrew has used what he calls the “hub and spoke” model to expand his father’s business alongside his three brothers-in-law. They use the existing business as the “mothership” and build additional product, service and technology offerings off of that to increase their revenue and market share.
In this podcast, Andrew provides Supply Chain Now Radio Co-hosts Scott Luton and Greg White with his first-hand advice about entrepreneurship and working with family:
- How it takes all types to build a successful business, but it helps if everyone knows what ‘type’ they are and what role they play in the operation
- All intellectual property is worth protecting and monetizing, even if it wasn’t originally part of your go-to-market strategy
- How a “hub” can serve as both an incubator and as a source of venture capital for the “spokes” of the business
- Why you may not need to reinvent the wheel to drive new business – you may just need to recognize where the consumer wants choices and provide those for them
[00:00:05] It’s time for Supply Chain Now Radio Broadcasting live Supply chain capital of the country, Atlanta, Georgia. Supply Chain Now Radio spotlights the best in all things supply chain the people, the technology, the best practices and the critical issues of the day. And now here are your hosts.
[00:00:29] Hey, good afternoon. Scott Luton here with you. Lively’s Supply Chain Now Radio. Welcome back to the show. On this episode, we’re excited to be interviewing Andrew Johnson, an innovative entrepreneur, inventor and business owner. So stay tuned for what promises to be a thought provoking interview. On a quick programing note, like all of our series on Supply Chain Now Radio, you can find our replays on a variety of channels Apple podcasts, SoundCloud, YouTube, where you get your podcast from. As always, we love to have you subscribe to your messy thing. Let’s quickly thank our sponsors. Allow us to bring these best practices and innovative ideas to you, our audience. The Effective syndicate Verusen. Supplychainrealestate.com, talentstream. And many more. You can check out each of our sponsors on the show notes of this episode. So welcome in my fearless co-host here today. Greg White 0 Supply chain tech entrepreneur, chronic disruptor, trusted advisor. How are you doing?
[00:01:24] Great. I am doing great. I love that chronic disruptor. And wait till you hear the news today. I’m gonna be really appropriate.
[00:01:29] We’re looking forward to that. We got the new segment is back. Yeah. Birgit. Thanks.
[00:01:34] Thanks to Steve. The people, Steve Kay. We’ve just announced his last name. You know, we have a lot of listeners when you when you have to cut people’s last names off.
[00:01:43] Well, you know, we’re excited about this episode with this special guest. We’ve had several conversations as we are halfway to Austin, Texas. We had a couple of prep calls we have as we learn more about what Andrew Johnson’s doing. So let’s go ahead and bring him in here now. Andrew Johnson, founder and CEO of Shuffle where LLC Hadin. Andrew.
[00:02:02] I’m doing great. Welcome in. Yeah. Thanks. Thanks for having me. Guys, this is real exciting. My first podcast recording. So you got out of bed early? I fly here from Kansas City where I did. I got off the plane and I’ve got a couple in here in person and person. Brian thought recording remotely would be awkward. Yes. Not nearly as awkward as this is gonna be. Oh, so fantastic. Thanks.
[00:02:24] Great preview. Well, getting aside, we’ve really enjoyed the prep and getting know you better and your vision and what your company does. And I bet our audience can enjoy that, too. So stay tuned as we interview Andrew in just a few minutes here. But Greg, before we get started. Yes, newly reintroduced, re-invigorated newsdesk. What’s going on?
[00:02:46] You need to know today. Yes, supply chain. Right. So not necessarily news because. But this is ever lasting. Let’s call it that. Right. So interestingly, this survey by Resilience 360 says that a third of companies are taking no action to mitigate tariffs.
[00:03:05] So literally no action. One of the thing one of the things that they are they are doing it if they are trying to mitigate tariffs at all. Is sourcing outside of China. Right. One thing that notably is missing here is that companies are they continue to source out of China or are through China. But then they’re bringing it into Canada and then across the border through Canada to somehow use that. Tricky, tricky, Ricky, pretty sneaky stuff. I noticed that that is not here, but I feel like there might be a euphemism for them doing it. Following the next most likely thing to do is to apply for tariff exemptions, finding alternate sourcing within China. I feel like that’s probably the euphemism for sourcing it through Vancouver. Yes. And shifting production out of out of China entirely.
[00:04:01] So, you know, it’s interesting. Greg is there. There was news just this past week. Others, there’s new shipping lanes being opened again up and up in Oregon, up in that Pacific Northwest.
[00:04:11] So, yeah, very interesting to see that because it’s landing in Vancouver going through customs probably and then coming down. Although I think a lot of times they’re pulling it off the ships and trucking it down. I’m not sure exactly how they’re doing it. I’m sure there is some expert who says that. But it’s impressive that that’s not even the third most likely way to avoid tariffs. And a little bit concerning maybe that the people that companies aren’t taking any any action whatsoever. I’m not sure why you would do that unless you have incredible margins that just don’t force you to to do that. It seems like it’s kind of putting your head in a hole. All right. It is. It does. And we’ve talked to some companies who have enough margin in to be able to absorb it. Absorb it. Yeah. And I think what I think with the. Is that we’ve talked to what we’ve seen is that many of them think this is relatively short lived, though, based on recent comments by the president that they may or may not be.
[00:05:09] They think it’s short lived and they’re willing to absorb it for a period of time. Trina’s wait it out. Yeah, yeah, exactly. That’s a strategy I recommend right now. Like that? Yes. If you choose not to decide, you still have made a choice. That’s right. Right. The great Geddy Lee. Mm hmm. And another bit of news. U.S. manufacturing continues to decline, not enormously, but considering what they were expecting as far as manufacturing growth, it’s down quite a bit from the target.
[00:05:40] So the target was around forty nine point two percent. Sorry. Of the Institute for Supply Management Purchasing Managers Index. So in a PMI, 50 or higher means that there’s growth. They were expecting to get close to growth at forty nine point two percent. And it actually came out at at forty eight point one percent, which is just below October, which was forty eight point three. So they were expecting growth, didn’t get it. You know, in a market like this where there’s instability that, you know, that obviously creates some concerns. Mm hmm. And it’s interesting. They’re just full of good news.
[00:06:18] Yeah, well, you know, it is what it is, right? I mean, look, you have to deal with it.
[00:06:23] And I think that the you know, the dealing with it is interesting that we just heard that companies are resourcing goods, but they’re not sourcing them to the states. They must be sourcing them in other countries. Right. So that, you know, that continues to be a weight on the economy. And look, I think we all know and by the time this airs, it may or may not have happened. But I think we all know that the influencers of the economy are waiting for news like this to be able to press it down. I don’t know how sustained it is or what, but it you know, it is going to we’re gonna have some sort of downward pressure probably through the end of next year.
[00:07:04] Yeah, right. In better news. So this is not just influential, not just a downer. In fact, actually, technically not a downer, but also something I’m going to participate in. Nice. You know, we’ve talked a lot about trade shows. And one we talk a lot about is is I want to say pro-Mitt. But it’s mutex, right. Which is coming in March to right. Atlanta. And that is thirty five thousand of your closest friends. If your closest friends aren’t in Logistics, but are instead in the cannabis industry, you can next week on a go to any of the cannabis car hits. Right. MJ Blizzcon, which is in Vegas, December 11th to 13th. I will actually be attending there because I’m on the board of directors of a company called Flourish Software, which supplies technology to the cannabis industry, which has done really well.
[00:07:56] They can do and grow. They have a team over there. It’s been it’s been an interesting one to kind of keep on the radar and see it that the hits keep coming. Yeah. Flourish.
[00:08:04] Yeah, they have. And you know, they serve all aspects of the industry called cultivation and production and manufacturing distribution and retail, the dispensaries. So it’s a really interesting company. So some of my fellow board members have been involved in some of the biggest of the big companies. Micah Sorry, I forgot his last name, Mike. I was looking at Mike Mallis from Jordan or from the Carolina ports. Yes. But anyways, so we’ll be there for a board meeting and then I’m going to attend one day. I’m dying to see what this conference is like. So I was in Vegas not too long ago and they were haven’t yet another one of these conferences. And all I recognized was the smell. So but I’ve never been to such a thing. I’m not really deeply involved in in the cannabis industry. But since I’ve been on the board of this company, I’ve met a lot of people. There are some prominent people, believe it or not, in Atlanta, one of the largest retailers in the industry is based here in Atlanta, where whereby the way it is not legal. Right, yet. Yet. And Flourish is based here as well. Anyway, we wanted to get all of the all of the board members together. It was a good time to learn about the industry. We have a couple new board members who doesn’t want to go to Vegas.
[00:09:24] And let’s face it, Dave doesn’t want to. Who does want to understand the industry better and Sheer.
[00:09:29] We know a lot of our listeners will recognize and be aware that that industry, the cannabis industry is exploding. Yeah. And not not just in the States, but North America and PA beyond all over the world. Yeah, really, it really is. And not for all the reasons that many folks are assuming. So for some those reasons, but as more more of the bar products are being used, different medicines, the regulations are loosening and admit many proven ways. We’ve talked medicine some earlier shows, you know, in our networks. We’ve seen folks that had certain seizure right conditions, right where the oils and some of the byproducts are extremely, in some cases life saving, which sounds dematic, but there is one particular family that I came across a couple years ago.
[00:10:15] So I think it’s really interest- fascinating to see because especially as you’ve seen this exploding industry engage proven supply chain management chops, so to speak. It’s been just really intriguing to watch it all play out.
[00:10:31] So I think it’s important to understand the industry in this, not that we need to go too deep in Trish Boehm. There are THC products. Right. Which is essentially marijuana. That could be a flower biomass where you actually make a joint out of it. Some of it is some of it is edibles, gummy bears and things like that. There’s also CBD product, which is very low or no THC, but has all the benefits of the plant. Right. And then there’s hemp product. So I think people forget that it up until fairly recently hemp, which has no THC and was illegal. I mean, it was made it was used to make rope’s. Yeah. During the revolutionary days and and that part of the industry hemp now that it’s legal, has become quite sophisticated and growing at a much faster pace. The processing it for all sorts of use. Yeah. Like textile and stuff like that. Yeah. Yeah. Yeah. Exactly. They’re back to making rope with it. Things like that. Right.
[00:11:27] Yeah. Norms are changing. Generational transfer is taking place. Regulations are loosening. So be really interested in what you get back so you can share some of the insights and yet what you glean.
[00:11:36] Yeah. I’m really interested. Seriously interested in in in it. So you know, we’ve had some cursory contact with now parallel formally Satara. Yep. The biggest one of the biggest retailers in the country here in Atlanta. And and I’m just interested to see everything that’s going on in the industry. And and it’s good also for us to get all the board members together in person. Yep. And just timely for this.
[00:12:01] So give Colton a big high five. Yeah. We’ll well the whole team. Yeah. And we look forward to debriefing you when you get back.
[00:12:07] I’m going to be scouting out the Mirage for four RLA. Yes. We’re back in Vegas at RLA in February.
[00:12:13] Yeah. And we’ll touch on that. And so good stuff. So big thanks to Greg Malcolm and the whole research team. A lot of developments, no shortage of developments and across the global supply chain. OK, so let’s dove into our featured guests here today. Again, we’re really excited to be talking with Andrew Johnson, founder and CEO of Shell for LLC. And really, that doesn’t do it justice. And we’re going to we’re going to get more into a lot of different things that you’re involved with, Andrew. But good afternoon again. Welcome back. Thank you. It’s not like you left to winning where, but. Yeah. Welcome to the microphone. I’m back. That was in allowing you to use it. Thank you. So as we always like to do that before we kind of dove into and talk shop and talk supply chain what software does. Let’s learn more about you, the person. Right. Right. So tell us where you’re from and give us a couple stories on what it meant to grow up in your neck of the woods.
[00:13:02] Ok. Born and raised in Kansas City, I’m a barbecue steak like we were talking about earlier. Yeah. And that is where my whole story as far as business and entrepreneurial starts and is weirdly with my dad in 1982. He started a family business in a very clever name for it called Ring SALES and Service. And we sold. What do you do? Rings. I know. I know. It was great. Good. Great. Yeah. Thanks. So, yeah, I grew up count no rings and packing boxes because my dad was a big believer in child labor, which is why it’s why you have children pick up the uglier sides of entrepreneurship. So when he was trying to make ends meet, you know, four kids can help you in a warehouse. Yes, they work in a warehouse. Clean toilets, empty trash cans, you know, whatever I can do. I moved his company a couple times. He pulled me out of school to move. It was terrible. I mean, he’d just work this. Not to me. So that was my upbringing. And I. You were talking about family business being a struggle. I didn’t want to work for him for a long time just because I thought it would be terrible and awkward. And it is sometimes. Yeah. So I’m going to be an optometrist then decided when I got a little older in high school that I’d be crazy because my dad’s got a pretty good he finally got in the business to a point where it wasn’t all hand to mouth.
[00:14:13] And I started to see some of the freedoms and the creativity of all that labor. Fruits of all labor getting kind of the hard work done. My dad did all the yeoman’s work and then I’m going to dove right in there and take advantage of it. Yes, I did. At a boy. Yeah. So I hopped in and it can go at this point second generation and it can either go down the tubes or you can take off. Yeah. And we’re hoping it’s taken off. And to do that you can either sit back and kind of just reap the rewards of your dad’s hard labor or you can double down on the foundation he built. And so and basically 2009 was really our jumping off point and that is when I have three sisters and no brothers. What are their names? Only boy got Julie, Jessica and Amy. OK. He passed the test. That’s good. Really? Shout out to. The thing my head, other than their names, I have three sisters, all the presence they got that you did. That’s right. The trips he went on was working in the warehouse. That’s right. Yeah. Just getting whipped. So he had just just the three girls and they all married relatively entrepreneurial dudes from very different backgrounds, very different personalities. And you could say it’s lucky or maybe we were blessed.
[00:15:24] But however, worked on my brother in law’s ended up working for our family business standing distributor, no rings. So it doesn’t sound very exciting, but it’s basically an OEM based product sales business where we’re we’re buying product, we’re not making anything, bring it in-house, stock it and then sell it to manufacturers. And it’s usually pretty highly engineered product. So there are some commodity type o rings and rubber good. There are some pretty highly engineered stuff you’re talking about sourced out of China and Vietnam and Taiwan. And I was mentioned in that travel earlier. So we had sources overseas, sources domestically, and we were middlemen. And so in 2009, kind of our jumping off point, all my brother laws were kind of the four of us all came together and were lovingly called the boys and the office. So I got some longtime employees that have seen me in diapers. That’s OK. So real tight knit group, small company. In 2009 when we started really looking all my dad, a bill recognizing a solid foundation, but then realizing, you know, we need to make a lot of changes. You know, we’re gonna bring this into the next era of business. And so we started diving in with a whole bunch of internal innovations when those internal invasions, you know, really started to spin off into viable businesses. And that’s kind of what led us to too self-aware.
[00:16:45] Yeah. We’re gonna talk about kind of the hub and spokes model that you’re referring to before we do, though. I want to get your take on entrepreneurial life. What it means that there’s so many, as we’ve talked about part of the show as well as we always talk about, there’s so many different assumptions made. It is so challenging. And you talk about how finally your dad kind of things came together. But then after years and years of in the trenches with blood, sweat and tears and everything that goes into that, what do you think most folks don’t truly get or, you know, inaccurate assumptions about being entrepreneur?
[00:17:21] It’s it’s been so glamorized, clammed up, look super sexy. And I mean, it has its moments. But growing up in an entrepreneurial family, it’s brutal. They don’t understand kind of the hand of mouth, early days, the drama. I mean, my sisters listen to this. But some degrees, my youngest sister’s emotionally scarred from from some of the drama and setbacks that my dad took that he wore on his shirtsleeve. So he couldn’t really be in the office and say all the terrible things that were running through his mind. So we’d come home and he’d unload on my mom and dad and my my sisters. And I remember one night he came home and he’s had a bad setback. We built this building and had some terrible construction issues and mishaps. And so he’s looking at a big, big pile of money that he owed on a worthless building. And he was obviously really angry. And he went off on this tirade about how we were gonna be homeless. And he looked at my little sister who says, you’re gonna be eating out of the gutter. And I was like, Whoa! You know, I don’t think I was just by nature more flippant. So I probably chuckled at that, said, like, you know, Dad’s making a big deal out of it. Here we go. My little sister just started crying and she internalized it.
[00:18:33] We’re going into the gutter. You know, we’re we’re not we’re gonna eat again.
[00:18:37] So that’s the brutal nature of it that really hits home. It affects your family. That was you personally affects your friends. And if you get into like a service business where trying to sell services, well, then you got to like hit a ball, your family and friends. And so that’s brutal nature of it. So, yeah, I mean, if you are successful, it is fun, very rewarding. But you have to be appreciative of the risk and the failures that you’re gonna have. And this is not my dad’s first business. And he failed miserably at his first business. That was really in South Carolina. So not too far away from here. He says he was ahead of his time. He started a tire recycling business. Wow. Kisha out of recycled crumb, rubber and tar tar byproduct. And he he’d invented this like tire splitting machine. Didn’t work out. Miserable failure. Had to go back to his parents in Kansas City with his tail tucked, broke, penniless, and then got into sales and then eventually led to starting on business. But interesting. Yeah, I mean, you don’t usually crack it out on the first attempt unless you have a really good idea and good plan.
[00:19:36] I think it’s important. I mean, that’s an important thing to acknowledge. I can tell you that I told the C, the then CEO of America hold Logistics that I was going to start a technology company. He said, don’t do it. That was his advice. His specific advice. Sorry, somebody is trying to. Man, I hate to miss this deal at insurance. Yeah. Better. So he. So he said Jenny said don’t. He said, don’t do it. Fortunately, I didn’t listen. But but I mean, we have some of the same kind of effects. The thing that I tried to do and I would give anyone who has a family starting a business. This guidance and that is be very transparent and explicit. We are going to eat peanut butter and jelly sandwiches for the next year because daddy is really going to go for it or whatever. Right. And my two older daughters, my my younger daughter was is 10 years younger than my oldest daughter. So she didn’t experience it all the same thing. She was never poor. Never. Right. Never a peanut butter and jelly sandwiches or anything. So they have a very different per view of that life. But anyway, I think the important thing is to to be transparent and delicate with your family. And if you have to. Yes, that’s what I did. If you have to rant and rave, try to keep that between you and your spouse. Yes or not, Joe. Children, a good friend who also owns a business. It’s always good to have someone else who owns a business because other people can’t relate what we found. Even my wife and I, we found that the people we were socializing with, they didn’t know. They don’t get it because they had J-O-B.
[00:21:09] That’s one big advantage I have over. My dad was I mean, he really didn’t have anybody and by nature is more of a loner. So his only outlet was, you know, his wife and kids because he didn’t do it at work because they’re his employees. Right. You don’t want to shake. The trees are about Derren. So that’s the Vanja I have with my brother Laws’s. We’re pretty tight knit. We share our ups and downs together. And it’s kind of a a school hard knocks. We get to live out together. So big advantage of my dad. And the other thing I’ll add to that, like the finances yabbie, very transparent with your spouse and your family for getting into the entrepreneurial venture. Finances are gonna be really tight, but it’s the time together. I think you have to announce that to the times get really our most valuable asset no matter what you do in life. And if you’re going to go out and start a new venture, it’s going to suck and demand all your time. And then I didn’t see my dad for a lot of my youth. He didn’t come to a lot of my soccer games. I mean, my grandfather came along with soccer games. And I don’t think my dad relex to hear that. But he was he was gone a lot cause he had to be. So it’s really the time to get it started. Yep. Yeah. That really monopolize everything we could.
[00:22:11] Really. I love what you’re sharing. Appreciate how transparent you’re being about it, because I think Greg and I can definitely relate to a lot of what you shared. And I think that you’ve got little kids. Yes. I would just like add a little kid. Yes. And three. Yes. We’re very, very close. And our age is there. But thanks for taking it. And there’s so many assumptions made, you know, and but what I heard both y’all speak to is how critical that support structure, wherever you get it from, you know, family and S-4 walls or, you know, mentors or your partners or whomever that is so critical. It is because it’s not all roses and daffodils.
[00:22:50] Well, I mean, the truth is they usually don’t see an entrepreneur till you get to kind of my stage. Right. Because your heads down in your business. I mean, look, I’ve realized that, too. I’ve been I was heads down in a business for 15 years. My social circle got really small. And even my even my business circle got really small because I was focused on growing this business. And and, you know. And then when you have the time to do it is when people tend to hear about it more when you have a really big win. Yes. Right. Yes. Yeah. So I think it’s good to expose that to people because, you know, it it gives people a realistic expectation.
[00:23:25] Yeah, absolutely. So we can bring you back or take it even deeper. Dove into all things entrepreneur. I love what you are talking about. But let’s talk more about your professional journey. So we want to do. You say you’re new to Supply chain. Some of our pre podcast talks. You’re really not. You kind of. I just I can see you as a child. Yeah. And then some of those activities. Achenbach Which are. Yes. Which are core, you know. You. Supply chain is all things these days, right. True. In the end, big dose of technology, but still a lot of people in process. Right. Right. But let’s, let’s talk about that professional journey up and to shuffle where what what how did that go down.
[00:24:02] So when I say I’m new to Supply chain, I mean I’m really new to like personalities. You know, I when I get in each niche, I find that it’s it’s there’s this core group of personalities and there’s power structures and there’s politics. And so I’m new to that. I have been in Supply chain like my whole life in the sense that we supply product till we Emes and we had a back in Supply chain and we’re managing that whole time and growing up in that world. I can’t say enough about. If you want it, you know, go back to entrepreneurism. If you want to be an entrepreneur and you can you can piggyback off of somebody else’s hard work like my dad, my professional career really has just been pretty simple. We got into my family business. I had the already established playground. We had a bent towards entrepreneurial ism. We use the established playground, made it super, super efficient and where it can basically run itself. So there’s internal innovations. I mean, we have paperless. We get more organized. We changed a lot of processes. We automated it with little pieces of software. We got a new ERP system. We invented a smart counting scale to to make our shipping process more accurate faster. And those were all these like little kind of like micro inventions or micro innovations that we were not only crafting and honing our skills for like establishing products and platforms and services, but just making our core business stronger. Yeah. That’s scary. It wasn’t like we sat down one day and said, we’re going to start a couple of companies.
[00:25:29] It was just this more natural process of we’re gonna make what my dad built better, faster, stronger. Yep. And then us recognizing, oh, crap, there’s a there’s a business. We’ve created something. Yeah. The first one we’ve missed on. I completely missed that. That smart scanning co.’s scale exist today. You can go by the system called Pivot Wireless from Pennsylvania County scales. That’s ours. We didn’t license it. We should have. We didn’t protect intellectual property. It should have. We literally just wanted to solve a problem for ourselves and then went out in the marketplace today. These county scales, they’re not network. Boy, you can’t put them on a server. You don’t have a brain powerful enough to really compute anything. This is pathetic. So we put a Raspberry Pi, a little computer inside the county’s jail in our own warehouse and then road user interface or an Android app. And it save ours. And shipping department. That was your brother in law? Yeah. That was Adam. Yeah. So in the you’ll it all starts there. He’ll come up Maureen story. But that piece of writing software and taking my dad’s company from basically the 90s to a modern day distribution company and really coming up with their own tools and our own pieces of automation drove us from 2009 to today. My my family business, this core business is doing a lot more with less. We tripled the revenue and we have the same amount of people that we had in 09.
[00:26:52] That is outstanding, you know.
[00:26:53] Look good, Greg. No. That’s why I was going to say that’s a that’s a huge leverage point. Yes. First of all, to be able to use the the O-ring company as a leverage point for the technology businesses, but also to leverage up that business to that scale.
[00:27:07] That’s pretty dramatic. Yeah. And so, I mean, again, we didn’t plan all this out. We’re planning as we’re going, we’d huddle up with. What we do. We made this we made this piece. But now as we were watching it develop and seen these other ventures pop up and we learned from the counting scale things and more crud, we missed an opportunity to establish another revenue stream and creating the whole business. All right. It’s OK. Well, Brian, so it created another one. And so we kind of. I mean, I just call it the kind of hub in spokes model, which I think is a term that’s been used in other aspects of business before Sheer.
[00:27:38] So I want to dove into that Miura quick. I think what you just what you’re describing in terms of the innovation, the entrepreneurial thinking, the creative thinking, the critical thinking and the problem solving that is inherent to successful supply chain professionals. You know, let’s talk about the hub and spokesmodel. How does that work?
[00:27:57] So what we realized was if I think it’s much more efficient to take an already established business and from an entrepreneur’s standpoint and build off a separate revenue streams from that central hub and the central hub being O-ring seals central hub in O-ring sales and service.
[00:28:14] So that was what we saw as like the mothership. And we. And let me back up a little bit. You know, I had the three brother in laws. These are dudes that my my sisters married. I don’t know, before they brought him in and married him. The drug amount of this family business, you know, it was awkward at first. And I think I would I would say this to anybody that’s working in like an entrepreneurial team or startup. My brother Jay and I dropped the in law part now. So my brother Jay, I noticed that. Yeah, it’s hard. I go back and forth because I confuse the heck out of people. Last call my brothers or sisters. Well, I do have my brother Jay. He said all these guys are so different and we all very different roles. And we started recognized we were extremely different. We started have some early conflicts when we’re going through this process of making my dad’s business just better, faster, stronger. And so, Jay, step back. That will will work. We’re gonna have some serious conflicts if we don’t really get to know each other on a deeper level. So he actually made us all take a personality test that I thought was stupid.
[00:29:10] What one was? Of course you did. Well, he’s a huge believer in the Jenny. Graham Okay. What was that? Any. Any? GRAHAM Okay. But there’s a lot of mouths. There’s lots of yeah, tons of them. I think we took a different one first. But anyway, we all took the personality test and then we had he had Adam read mine and Jay, you know. Reed Adams and we went around a circle and read the results of this test. It’s that thing that is you. Yeah, that that is exactly you. And that’s what really bugs me about him. And that’s what makes you great, you know? Yeah. And so that process that was probably somewhere in like 2010, 2011, where we were just getting our our arms and our head around everything. But that set us up and really started to drive all of us into separate lanes, which was key for us to be able to work and drive together was find your lane, find your niche. So I’ll run through more quick plays. So I’m the dreamer. I’m the dude. That’s OUTFRONT plowing new ground. And frankly, I don’t care if I leave people in my own organization in the dust.
[00:30:11] Right. And if they fall off the wagon. Well, sorry, buddy. If we run over you. Boy, that’s Cazenave. Yeah. We’re just plowing ahead. Yeah, that’s me. Dreamer. Onward and upward and upward. To hell with everything else. Yeah. Jay, he’s the he’s the probably the true innovator. He’s the guy I like. Looks at anything process system people and just says it could be better. And to the extent he’s kind of crazy, he will burn something down before even knows what he’s going to build. And that can be a real problem. You got to watch Jay. Don’t let him lose silver. Don’t give me that. Just. Yeah. No matches. He’ll burn it out. And then Evan, he is. He’s a mechanical engineer by trade. Very much engineering mindset. But he is by far the level list of all of us as far as level headed. So, you know, when Jay’s burning stuff to the ground and running people over Evan saying everybody needs to like relax. And so he’s kind of the glue hold us all together. And then Adam is the fixer. So when Jay burns it down and I dream up something as completely impractical, Adam gets really mad at us.
[00:31:16] He’s going to practically fix it all. Yeah. And then Evan cools us all off. Yeah. Then in about an hour, we have a real viable option to move forward, which Adam’s probably executing from a software hardware standpoint or process stamp.
[00:31:27] Don’t also forget that you and and Jay Jay take credit for it after. Exactly after he’s dead.
[00:31:34] Yeah. All the pieces. That dude that’s out front. Yeah. That takes all the credit. But honestly, it was three brothers that are behind me that have made all this possible since 0 9. Jay. Adam and Evan. Yep. Right. Jay. Adam and Evan. So yeah. Go back to Hub and spoke model. We started really Jenny it up in like 2012. We had some new innovations. We’re driving new business, picking up new customers because we’re more efficient than our competitors. Right. And with some new services basically to offer our competitors. So and 14 somewhere and 13 and 14, our next two venture started. So one venture has to do with Amazon and the other venture is self-aware. They both started about the same time. I guess I’ll take credit. The upfront dreamer for dreaming and both up by executing poorly on the Amazon one for years. It kind of more or less. And we’re in touch with Amazon. I mean. Yeah, but the shelf or model, it didn’t take that long really to put it all together. And again, out of that hub, we had all the pieces there, the experience, the supply chain experience, distribution experience, the customer base. So we had readily available betas.
[00:32:38] Ryan And did you have demand from your customers because shelf aware not to give away the right deal, but yeah. Shelf Where is basically a vendor managed entry, so it’s a VMI.
[00:32:48] Yeah. So did you have. Yeah, yeah. We were we’re running VM eyes, right. We hated him. We had a son really valued employees and gone. We’re trying to make a business with less people in bigger. So we didn’t want to send our customer service dude out in a truck, drive 30 minutes down the road, do a physical count, you know, or use a barcode scanner for 30 minutes, then come back and I’d watch this develop for 20 years and answer for probably longer. This whole VMI mentality where the consumers, the big manufacturers, the supply chains are so complex they could not manage them. So they just outsource it to suppliers and suppliers have struggled, you know, how to track consumption on the consumers factory floor. So product would be scattered everywhere. And the solution really has been dudes. People, not just dudes. Women, too. But yeah, people out in the factory floor literally visually scanning inventory or maybe even a barcode scanner to just increase their accuracy and input on data. But then you got to go through a barcode, everything. And and the product that you have is often not individually packaged. It’s almost always bulbul. I mean, it comes in 10000 at a time and we use our fancy boxes of o rings. Yeah. Trident bags of stuff.
[00:33:57] So we won’t take a deeper dove in the shelf where especially the technology at the core and how that came about before we get there. You got some neat views on Amazon and collaboration and whatnot to talk talk about that.
[00:34:10] So again, back to this hub and spokes model. I mean, we’re we’re building Shell for out of the hub because we had a service, we had a need. We had we’d made the business more efficient way, the cash flow to do it. That’s another key component. Yep. When we venture capitalists like we’re our own B.S. so money from the hub is going to fund these spokes. So we’re like an incubator of our own. And in a works really well and we’re leveraging our current resources, our current I-Team, my current programing, all this stuff was all in-house, just read it all in-house. The Amazon thing was a recognition from me just reading all these crazy business journals and articles saying from our marketplace perspective saying, well, you’ve got to defend against Amazon, you got to put up walls because they’re coming into the B2B space, they’re grown into business, they got Amazon business and they’re coming in.
[00:34:59] They’re gonna take us over and we have to fight against them. And that was just my millennial perspective. My brother in law and I I’m the youngest of all the brothers, but they’re all pretty young. Adam just turned 40. Get really old. Yeah, he’s over the hill. Over the hill. So that was all of us just sitting back and saying like, well, what in the world you’re not going to like legitimately fight against Amazon, but if they’re all gonna waste their time trying to fight against Amazon, who’s fulfilling a really needed value? Right. In every space they get into, which is that kind of consumerism mentality. I want it now. I want it. I want to, you know, tomorrow I want a cheaper, faster, stronger one. So they’re filling that need. And we said if all of our competitors are going to waste their time spooling up resources to fight against it. Heck, why don’t we just jump in with Amazon and help, you know? I don’t know. Put some black eyes on our competitors. Just kind of quietly behind the scenes.
[00:35:51] We spooled up this business that had really nothing to do with our our hub, which was selling engineered products to OEMs. Yep. But we took everything. Those are back in Supply chain. Ah ah. I guess our niche black arts and knowledge of rubber sourcing, plastic sourcing and our supply chain, our warehouse and our cash. Yep. Again, that’s a big component of it. And we want to take advantage too. I mean that’s a big advantage.
[00:36:17] It’s hard fault to get. But still, when you’ve got us debt outstanding, if you want to double down, it’s a really sweet resource.
[00:36:24] So we took all of this stuff and we basically had one creed. We were gonna go to Amazon into their new book, Market Space into Business. And we were gonna look at Amazon as just Greenfield and we were gonna go pick out SKUs, individual SKUs that we felt our business, our supply chain and our business acumen and were adept at Supply chain. So we do a bunch of market research basically on a skew BSU basis and we pick off these products that other people really had no business supply. And so some medical device companies supplying a medical device that’s made of rubber and plastics, we look at it and say, can we do it better? Can we do it faster? We do a stronger. So it wasn’t just about how we do it cheaper. Right. At the end of the day, that’s kind of where it all heads and Amazon. But there’s this really sweet space on any product that’s selling on Amazon where, you know, eventually is going to race the bottom. But if you can hear it like way up here, you can sell a lot of stuff for it gets down to just dirty right market monitise, yet commoditized. And one way to keep it from commoditizing fastest enervated. So we were looking at products made of rubber and literally just changing the color. So the product was just sold as black or gray. And as a consumer based product. And I won’t get away because Jay would murder me when I get back because it’s one of his babies. But as a consumer based product made of rubber, black or gray, and I just wasn’t sexy, but it was selling to consumers who want choices.
[00:37:44] I want sexy. So this product was gonna get installed in their house and their car and our home. And it was grare black and ugly. So we literally just made it colors and I started selling the heck out of it. Wow. And so Jay, rurally innovator, looked at the model and said, we need to just apply our strengths to any product, broaden horizons, get out of this whole manufacturing sector, get into consumer products, which were the volumes are at. And look for four particular products where we can innovate and make them better and then make huge margins, sell the heck out of them. So it’s an Amazon. I could talk all day about the different types. You can go to market and Amazon have. Yeah. Southwire. Froome routes to market, but it’s it’s basically O-rings. So this whole time my dad had never made an e-commerce company. I could never. We have a great Web site, O-ring sales dot com. Yes. Suite Web address. It also also very brilliant. Yeah. All right. Yeah. So that was my dad a long time ago. Great. Harper really? Seriously enough? Not yet. People tried to buy it. MIKE Yeah, all the time. And with price should just sell it now at this point. But it’s more or less a couple landing pages that tell people about our company because we never built an e-commerce company on O-ring salesforce.com. We should have. But when we started the Amazon thing, we also recognize like we’re a decade too late. Right. On the e-commerce play.
[00:39:00] Yes, forget it. Stating the obvious. I mean, hindsight is not 20/20. It’s 25. It’s super cute, right? But for all the things you did get right in the lead up to be in the position now to change the game and transform the organization and take advantage of these opportunities. It’s really a I didn’t gather all of this story in these summer earlier calls. But what I also really like is how how you are surveying the landscape in. And not buying into the, as you put it, to insulate ourselves. Guy, get out. Yeah. Amazon vaccine. You know, no, there’s there’s so many different ways you can collaborate and make good money. Sure. And and and be innovative. Yeah. And change a game. Yeah.
[00:39:48] But we’re very much against the grain. I think the point I think the first recognition that you had that was most important was you can’t fight him. Right. I mean, you know, I I like fighting gravity these days and not just these days. I mean, in 2017, I wrote an article called Enemies with Benefits. It’s about doing what you did. And and I got it from a speaking engagement at Hardi, the heating and air conditioning, refrigeration, distribution industry, whatever.
[00:40:19] And a fellow stood up in the back of the room and said, Amazon will never be able to do what what we can do because they won’t have the personal service or blah, blah, blah, blah launa. And I felt compelled to probably less than diplomatic, but I felt compelled to address that because he said that during another speaker. And I said precisely. Somebody said this. And I repeated what he said. Precisely. The problem is you can’t conceive a world where Amazon can do that because anything you can do is a $50 million distributor. Imagine a company with eighty six billion dollars in cash. They can do it right. They can do anything. And that’s precisely the first recognition that you need to have and that you guys had that recognition, especially so early on. Is is that’s the key to what happened to you? Plus plus the innovative spirit of your company.
[00:41:10] Yes. Yeah. And then we I mean, again, J. And he’s very, very much a realist. And so he realized early on the Amazon thing that we are credo would be leverage our supply chain to sell anything we could on Amazon. But at the end of the day, we always repeat this around the office. Jeff Bezos wins. So it is a race to the bottom. It’s an interesting platform. If you’re not the best person to sell that product, to manufacturer and to sell it on Amazon for a number of different reasons, then eventually you will get completely bludgeoned. By somebody else. So it’s a very fast moving game. It’s perfect for Jay. Honestly, it’s a great place where he really thrives because every day is a little different. Yeah. Amazon’s moving so fast, they change the rules all the time. They change all the fine print and you have to keep up with it and you have constant competition. I mean, overseas from China and India and people hopping on platform from all over the place.
[00:42:02] Yeah. And so many of the manufacturers in China are directly marketing up. Plus they’ve already got a far better platform over there with Alibaba. Now it’s Brownback announced Keelen. You know, I mean, Amazon’s not even you know, we talked about this the other day. Amazon’s not even the second big right e-commerce company in the world. So they’re doing pretty good. All right. Okay. But but I mean, at all that does is except exacerbate the the acceleration to the bottom. Right. Because they are not in charge of even.
[00:42:33] Right. The broader world market. Yes. And before we move on, I guess what’s one more point and I’d like to make, because as much as I do love the success we found on Amazon, back to that dude in the crowd at at your keynote that said, you know, Amazon, I’ll never be able to do what we do.
[00:42:50] Right. The true part of that is if any independent distributor can can create a value proposition through other services. And that’s where our distribution industry is headed. If you’re buying and selling products, your lunch is going to get eaten by Amazon is probably already getting eaten by Amazon or your competitors that have more compelling offering through an e-commerce platform or just selling through Amazon. So if you’re not if you’re not heavy on the engineering, heavy on the service supply chain portion of this piece, adding value to your consumers and purchasing things more efficiently from end to end, your days are numbered.
[00:43:21] Yeah, that’s where we’re headed in and accepting the reality. The yeah. The real reality rather than just get over it. Yeah. Yeah. So okay. So let’s let’s dove more into shelf where and I know Greg has got a variety of questions but I think it’s stari article. Yes. Please, please. It starts with the technology right.
[00:43:41] Yeah. Where. Well yeah. I think that the first thing that it started with, which is beautiful to me is the leverage point and. Right. You call it a hub and spoke I would call O-ring the leverage point for then and the recognition that there is a need out there. So I’m particularly fond of what you’re doing because I worked, worked at and then founded a company that does pretty much what you’re doing. Right. We provided VMI solutions, so I know the difficulty that you guys were going through. You’re trying to do somebody else’s business for them. And that is an important distinction to make. Yes, you’re trying you as a distributor, trying to do the manufacturers or the OEMs job for them. Yes. And that’s that is a difficult and that’s a difficult line to cross. And we saw a lot of difficulty there. So a lot of your risk. Ignition of that had to come from your your understanding of how your customers needed to solve that problem. Maybe not how they did solve that problem. Sure. They had very distinct ideas on how they did solve that problem. Yeah, but but to gain traction not only with the technology but also with ordering sales, you had to have reached some sort of agreement with them. Correct. Yeah. I mean you had to reached a level of understanding where they became confident that you could do that. You said you took business away from your. Oh, your competition.
[00:45:02] Yeah, we did. We did. And early on, I mean, it’s the value added sales proposition. You know, I was terrible at it. I mean, I knew I had something good, but it really know how to sell it. I didn’t really know. I wish I knew a lot of people. I was just stumble on my way through it. Yeah. We came up with this slick system, like you said, it’s just a shelf or was conceived as we just want our guy in the truck back. We want him off the street. Come on, man, it’s 12. Yes, 2015. Certainly we can track the consumption this product without having to do there. We have to be able to do that. Yeah. And so the whole conception shopper was just a kind of a thought in a sales meeting presented by. So my sales guys recognizing the internal innovations and saying, hey, can we create something that’s more valuable than we can go sell? Yeah, I Gates. It’s funny to sales guys are and I’m a sales guy too. So don’t try to beat the media, all sales guys here. But we’re all thinking about ourselves. And so the salespeople are Sanlikol like the internal efficiencies are great and all, but it’s not as easy to self, which is great as an external service.
[00:46:03] So that’s one way that big leap from going internal on the innovation to go and external went out to the customer base. We did have kind of a habbits, really a handshake agreement with one of our longtime customers right there and came to city called Eskridge Manufacturer to make planter gear. So shout out to my boys and ask Rich manufacturing, great company. Yeah, you’re right. Umbridge across the Midwest. There is a great Lu. We’d have a long, long, long relationship with them. And we were running just as a dude in a truck. VMI. Yeah, on about two or three hundred SKUs. We wanted them. We said, hey, we got this like half cooked idea where we’re gonna use RFID technology is very similar to the pitch I had to make to my dad too. I gave Mike this really well-thought out 10 minute business pitch like 2014/2015 after the sales meeting. It is more sketches on some paper, did some research on Google, decided I knew nothing about RFID technology software. I knew my brother in law could probably write me something and I knew I could probably go do enough Google Research to figure out RFID tech.
[00:47:03] So a real concerted pitch to my dad. Ten minutes I said, dad, I need 15 grand to get this kind of idea off the ground and go try a bat in our own warehouse. I could do with this really great pitch. I thought I really knocked it out of the park. And that’s what I think, Dad. He goes, Yeah, I’ll give you the money. You can have a 15 grand.
[00:47:18] But just answer me one question. I thought I was going to be deep. I’m scared what you’re gonna ask me. So I got out. Here we go. It’s going to be a really tough question because what the hell is R5 yet? Yeah. Yeah. What? You don’t know what that is? No, I’ve no clue what that is. Oh, gosh. That was like one of my early issues was just selling the value. Right. Ellen, the technology was a lot of education and that’s what the approach I ended up taking was. It’s all very educational.
[00:47:46] You got to sit down with operations executives at these manufacturing places, supply chain managers, and educate them on not only where the technology because they know RFID from 20, 30 years ago.
[00:47:56] Right. You got to re explain to them we know where it’s at. De wides, lucrative. Why it works. What value it can bring. The organization where they’re going to save time and money. And really you can throw money out because it’s all about saving time. Yeah. Whether you’re preventing a stock out or you’re just trying to keep their inventory lean or you’re trying to automate their purchasing process, they’re not cutting purchase orders to suppliers all day long for penny products. I mean, it’s all about time savings. Yeah. So yeah, I bought the 15 grand in our FETHI technology, had no clue, was doing really fumbled around for probably six months or so trying to make it work. It wasn’t working very well like I had intended on it. And that’s one of the unsexy parts about RFID. So it’s Ryder frequency. It’s ripples in a pond. When you dropped that piece of frequency out into the atmosphere just goes out in every direction. Very difficult to control. It’s always been kind of the one of the big cons of RFID. That’s kind of old technology, like you said, tooling around for 30 years ago. So why is watching? Well, why go that direction? Why RFID then? At the time when I was researching and I saw it was because getting inexpensive. Yeah, the printers used to encode. And so I brought brought some labels with me. Hey, it’s smart packaging. So it’s all show the camera is done for by six label. And then if you peel it back there’s a passive UHF tex that’s ultra high frequency radio tag, that’s transmitter. It’s passive meaning there’s no power supply so there’s no battery.
[00:49:25] So never expire. We need to put that where you keep tabs on Sheer down as battery leaks. Honestly, like the RFID. World is blowing up. You mentioned the cannabis earlier. They’re using intelligent labels like this to track seed to sale. Right. For sale. Each plant will have a little plant tag. That plant tech, not just a readable label. It’s got a little RFID chip behind it to help them track and inventory these plants because they have all these regulations revolving around the industry. So I just I landed on that technology because it’s gotten cheaper and much more effective than it ever, ever was before. The printers were easier. You can integrate the printing and encoding of these tags even into a supplier, because that’s where we do our original. And the suppliers apply the tag to the product and ship them to consumer. And so I recognize that the suppliers are not where we were at. They didn’t have a software guru on staff. They didn’t have any kind of like baseline technology ourselves advantages. Yeah, we had to create a third party software platform that could feed the tag in quotation data to a real cheap and expensive. It’s a zebra label printer. Thirty five hundred bucks. So that’s your initial investment top on the shelf or platform as a supplier. So you drop in less than five GS to build. Offer this innovative service to your consumer where you’ll run of the Imai for them from anywhere in the world.
[00:50:41] So folks are clear, right? Vendor managed inventory is so folks are clear. It is. Yeah. Helping you with your pitch. So thank you. Yes. Sometimes I go so fast. No, no, it’s OK. No, it’s. I mean, this is all really fascinating. But, you know, one of the things where you learn it in the sale I Trish Boehm from UPS. Right. Is you’ve got to kind of spell it out. Now, not all of our listeners, some are in the transportation writers’ strike on my right. Right, right.
[00:51:07] Techies are VMI guys, the most well-known VMI companies. So just put a name to it. You’re a target on somebodys back. That’ll be Fastenal nominal. Com. Lots of growth. Yes. Cannot say enough good things about them there. They’re phenomenal. They’ve been doing this forever and that is vendor managed inventory and services like that. Yep. So VMI can include vending. Yeah. Would you just be like a Coke vending machine? You know, I got bottles pop in there, but so that you have luber cans, solvents, whatever. Use it on a factory floor. Measuring. Measuring stick. Yeah. Yeah. It’s about VMI is about managing all of the penny parts that drive billion dollar organizations. And so these big giant manufacturers think about all the little tiny parts that are on a car. Yes. Forklift. And they’re asinine. I mean, in value from a dollar system, what they cost pennies like two or three pennies for a stupid. Oh, right.
[00:52:00] Which I would of also managing the data behind all of that which which is allows you to make. Yeah. It did it. Huge, immense undertaking but allows you to make huge decisions with huge benefits. Yeah. And so we we did, we did a show at Fastenal. So shout out to Greg Campbell. And I do have a fascinating story. We did two shows out there. One of em was really focused on the Fastenal store. I me with the name episode fast, all family and faith thing or something. But as we took a tour of their facility and put, you know, the image of what you’re describing for our listeners, I haven’t been into a factory and seen these vending machines. You know, imagine in the old days or, you know, in the shops I’ve been in when I’ve worked in. If someone needs a Sharpie to write on, you know, a shipping box and go grab four or five. Yeah. And ID be invisible. Right. And Sharpies are probably the cheapest component that that things would go missing. Well, these machines as a as you know, employ one, two, three. You know, it’s called Jenny. Smith needs a Sharpie or needs a, you know, some kind of tool. A badge. The machine issues one and records a transaction so that you can aggregate all of those all those all that data and see, you know, what’s being used, what isn’t being used, what’s being used way too much. Yeah. What’s you know, what can you eliminate? What are we running out of? Yeah. And so if you imagine that over the over the span of just one plant. But, you know, for some these Internet intercontinental, you know, they have dozens of plants, dozens of locations all over the country.
[00:53:35] Absolutely right around these complex supply chains. So there’s two big drivers that I think of bookshelf where and Fastenal, frankly. I mean, you guys know the Fastenal guys. So you can tell them like I’m kind of a creepy stalker of theirs. Then following they’re all they’re listening to this so they know already. I actually use a lot. They probably already know. So they have an RFID solution. Several the Rod freight solutions that I’ve studied, you know, shot holes in and actually used some of the ground they’re plowing to go a different direction with with large shelf where product. And it was kind of away from the concept of vending. And so. So there’s a couple ways you can sell the VMI hurdle, which the VMI hurdle, I think most simply put, is super cheap little commodity products that are very complex and an individual and come from multiple suppliers who got a thousand different product SKUs going in to build one little pump or motor. And they cost pennies. You put them together and you can sell it motor for. Thousands of dollars. You’re missing one of those thousand parts. You can’t build the dang motor, right? And so you have these massive operations that are cranking out motors at an insane pace and they run out of a two penny O-ring.
[00:54:42] That is the cardinal sin of a commodities supply chain manager. And I say commodities kind of tongue in cheek because I love o rings. I mean, clearly fed me. Yeah, I really like him. Yeah. Yeah. But they’re cheap by nature. Just a little tiny rubber o ring. But there’s tons of engineering into them. There’s a lot of dough for materials. Sometimes there’s really long lead times. And so as much as we want to hate on the supply chain energy that a Rande the pump factory out of an o ring. It’s actually really complex problem. He can only buy from one source. Maybe it’s a brand name like I’m six months or whatever, six months or six weeks or eight weeks and they’re all a little different. So the solution and VMI was push all of that complexity back to the supplier who has a much better knowledge base on, then make him run it and push the liability back on him too.
[00:55:27] Well, I think the magic of VMI is that, too. So I worked for a major auto parts chain now owned by O’Riley. We had a thousand stores and we had 60000 SKUs in the stores. Your SKUs were inconsequential to us, but they were everything to you. Yeah. So it makes so much sense. VMI for you to tell me when I need more of your stuff. It makes even more sense when you just do it for me because I don’t really care until I can’t until you till I can’t build that engine or sell that part or whatever. Right. Yeah. So it the beauty of VMI is that it is the person who has the most to gain and lose. Right. Is managing that piece, that segment of the supply chain. And I think that’s the magic of when you guys are doing.
[00:56:11] Yep. Yep. And so when we looked at all the different solutions that were out there on the marketplace and we chose our 40 as a baseline technology, but then we deployed it in a way that hasn’t been deployed before. So a lot of people put RFID chips on Bend’s because you get to Ben Kanban system has been around forever. So the easy innovation and this is what happens a lot in innovation, it’s incremental journey today. So you take something that preexist they say can make it slightly better. That’s butwhen happening for years in our industry. They’re trying to make the A-MEI slightly better. We had the opportunity with the whole hub and spokes model to sit back with our experience and our knowledge and do a lot of research. I stock the heck out of Fastenal and other companies like Fastenal trying to figure out what they were doing, why they were getting phenomenal growth. Jerai huge growth. They’ve killed it. Yeah. And how we could do something very similar, but different and maybe better in some respects. And so we went down this intelligent packaging route.
[00:57:00] Yes. Yeah. And you say stockcar tongue in cheek but. Yeah, but you know, beyond Hawking it’s been around for for millennia.
[00:57:07] Ryder his tongue. I’m not really tongue in cheek. I’m a creepy stalker. Legitimately stalk them.
[00:57:13] So I know we’re intrigued with this cloud sourcing.
[00:57:17] Oh yeah. Yeah. So. So. So first of all you use this RFID. This is the this is the juxtaposition that I love you use to disrupt an industry. You used an old technology, 30 year old technology, and then you combined it with a cloud platform. So. Yeah. So. So and then you trade marked this cloud sourcing term. Right. So tell us a little bit about that.
[00:57:41] So again, the advantage of just like standing back at the 20000 foot view and rocking its stock and fast all the other great companies like that and starting with just just white room or where we approached it from a completely different angle when we. Very quickly. This is where, like my brother Adam, the guy that was he was behind the scenes cranking out all the software to make this work on a very small scale.
[00:58:06] Well, when it worked, the first thing that happened at the consumer was Eskridge came back and said, hey, this was phenomenal. We’re not to coach Gestapo’s. We never run out of stock. And you’re pushing the data to us in a really transparent, visible software system. So the consumer can see what they’re consuming and they can see their own inventory value than ever knew inventory on it again. You know, every day what’s on the shelf is dollars and cents. And they were just over the moon. So they said, what else can you supply us? So my dad sits back, you know, he goes, let me handle this one. What do you want us to sell you and ask? It said, well, everything just put everything on the dang system.
[00:58:41] So we had this giant vending machine that wasn’t really machineries open shelving with intelligent packaging so we could really tag anything. You know, if they wanted to buy giant 50 gallon drums of liver cancer and we could track that. My dad has gone down the rabbit hole of the quintessential 1970s and 80s models of distribution, which was an Industrial supply Industrial supply chain. It was get bigger by getting horizontally vast. So you go out to different product groups and you bring on a new product group making all cell fasteners, ok. Also hos. OK, also lubricants. No problem. And that’s Granger Fast and all those big giants, they can sell you everything from solvent to fastener to an engineered steel product and brought no problem. And that’s where my dad and my brothers and I, we said, Wall dad, right. We’re not doing this. Don’t you? Yeah. Dawn Idealogues Abair been done on a different round. Here’s what we’re gonna do. Sweetback The train up a little bit and as were my brother, Adam was like, no, we’re not gonna do this. And said, we are going to do it. I’m the dreamer. We’re gonna do it. And a drag or going to law. Yeah. You’re gonna clean up the mess. We’re going to clean up all the messes I’m gonna make.
[00:59:47] And so I went to some buddies in Kansas City that were also in Industrial supply, but a completely different product vertical that Eskridge Orkestar also consumed. And that was Hosein fittings. Okay. We didn’t Selam, but a new guy did. So I went to the guy that did. We had like several beers while I tried to explain RFID technology TOOM, which was fun and did get easier or harder after several beers. Oh, much easier. Yeah. Yeah. I mean. Yeah. At the end of it. I get it now. Yeah. Kind of like the the weed convention are gone too. It’s all gonna make more solid on my team. I can gather. Yeah. And it’s only there for one day. That’s right. Innovation. Yeah, that’s right. So I went to this guy and said over a couple beers and a handshake. Hop on our platform. And then my brother I said okay. Fixer figure out how to get him on the platform. So here we real homebrewed system and we’re adding somebody to it from like a license standpoint. Right. And we’re running their data form swade across a ton of hurdles about data security, data management, how we’re going to do this.
[01:00:39] And that’s when it became really clear that shelf work needs to become a completely separate entity, if only because of the liability towards Obering. So, yeah, if only. Yeah. So we had to. That was a tough process for me to leave what I knew and loved and go out as an entrepreneur and do something completely different. I mean, I didn’t know everybody. I didn’t know software and supply chain. So we created a separate entity. And the vision for cloud sourcing is we think we’re pretty confident at this point. We have several licensed suppliers on the platform. We’re pretty confident we can continue to build out the back end supply chain on shelf where to supply large OEMs or really any industry did a vision, dental, some recent retail applications, but specifically B2B. You think B2B is probably our niche? I always kind of stay in, but we can put together a cloud sourced team of experts. They have expert knowledge in each of these product verticals. So the whole isn’t fitting guys. Really good Ho-Hos and fitting good on engineering all the services. O-ring guys, really good at orangs. We’ll put them together, put them on one symbiotic platform.
[01:01:45] They’re all using the same technology, the same printers that get the same cloud based system that track their miter. And we can run one big, multi sourced VMI at the largest consumers and a more efficient, more cost effective, more visible, more transparent fashion. So what we’re really going after is the fasteners of the world that have these really large VM eyes where if you really get into them and you get into these engineered product verticals, they really have no business selling some of those products. And the niche distributors like my dad’s company in our company, we have much more.
[01:02:17] I mean, honestly, when you get behind the curtain or supplying a lot of these large, horizontally integrated suppliers, we’re supplying them product. They’re not buying it from the factory in Vietnam or China or Taiwan necessarily. And some of these smaller niches, they’re buying them from other distributors because the products are so specialized. So if you put a bunch of specialty dudes together on one team, Team America, and then you can go after any of the largest supply chains and you can deal with them in a very transparent kind of collaborative fashion. So that is cloud sourcing. So part of the syllable explained. No, no, no, no, man. So part of the solution is the talent that the industry expertise. Exactly. And it’s not just technology. It’s a marriage of the the physical tracking of the product. Yeah.
[01:03:01] With collaborative software. That’s the marriage. And so we’re we’re collaborating from a supply standpoint for our expertise and our engineering and our knowledge base, our testing facilities, the other value added services we can bring to the table. So that’s the collaboration. Laughs. But then we’re all on one simple, easy to use cheap, fast, effective physical tracking of a supply chain product.
[01:03:22] So we can’t do this all day. Yeah, we have to talk about this. EFT absolute power over us. Worldclass untilit enchiladas. Yeah. All right. So let’s I want to touch on innovation, get some thoughts there before wrap up this interview here. But before we do that, to talk to us in a nutshell, the path ahead for shelf Sheer. Where? From here? Yeah.
[01:03:44] That’s a great question. So I think where we’re headed is just further down the cloud sourced supply chain model. We’ve sunk our teeth into some large consumers that are driving some of the narrative. One of them is Ingersoll-Rand. So they’ve taken notice. Yeah. So we’re gonna have our first. And this is one of my big like bucket list things. When we came up with the Shuffler concept was I wanted to be able to say I can run these large, complex supply chains. coast-to-coast from Kansas City. So little old Kansas City, there’s supply happens to be my family business, which is also convenient, but they’re supplying to factories that are manufacturing completely different products. coast-to-coast that were formerly managed by one big corporate supply chain. Group based on the East Coast, yeah, and what they’re really looking for was vendor managed inventory that had coast-to-coast visibility and transparency that only technology can offer outside of Fastenal with all their branch locations.
[01:04:42] Three thousand plus branch locations, they could offer that, but it wasn’t scalable to the fact where they could go to like the badlands in the Dakotas and still track product with the Internet cell signal and RFID chips. So they hopped on with us. And so some to some degree, the large consumers are kind of dictating where we go. I think it’s always going to kind of stay in the B2B space. Collaborative supply with the baseline technology. And we’re just gonna build it out. It can go. It’s cool because the consumer can drive and they’ll onboard suppliers for me. I get it in a place like like I are right. And I say, this is great. Hey, supplier of lubricants, dance. Get on. Get on the shelf. What platform? What are they going to do? Probably going to come talk to me. So that’s that’s kind of convenient and it can go the other way. So I can work with the supply chain side, the supplier side of it, introducing them to technology so they can differentiate against Amazon, so they can differentiate against Fastenal and Granger, who are eating the launch of some of the smaller independent distributors. Right. I give them tools like self-aware, equip them to go to battle against some of these juggernauts. So it goes either way. That’s kind of the path forward that I’m burning the candle on both ends and then just figuring it out as we go.
[01:05:53] Exciting or nature agnostic position, though, in the marketplace, we’ll serve you and the consumer. You’re your customers. Well, because ultimately Fastenal in Granger, they have to I mean, they can be have vast product mixes, but they have to focus them on on their product line. And you can be agnostic in that regard. I can’t I can go anywhere.
[01:06:15] So we’re going keep fingernail tabs. We’ll have you back. As special as it sounds like you’re priming up for a huge 20:20 excited. And here’s some of things that you’ve got going on. You know, kind of where you been, where you headed as we start to wrap up this this podcast conversation.
[01:06:31] I want to pose a question to you. I’m a frame it up so we can get it in under the 2 hour timeframe. What then? What? Number one, what is speaking innovation? And if you think of any of our listeners, take anything away from what the story you’ve Sheer already. It’s just how innovative you and your brothers and the family has been. Right. Going back to your dad and some of things he was doing differently and and pushing the bar. You talked about whether it’s process or some of the equipment you design that that unfortunately kind of went out from, you know, different places. So speaking from innovation standpoint, talk about, number one, what one of the biggest challenges you see for independent companies to drive innovative processes. And then the second part of the question, what is one of the things that can be done to help address these gaps more effectively and get by gaps talking about successful practical innovation, right. In the independent company arena. Biggest challenge, first, oafish.
[01:07:38] I mean, it’s so hard for me to put like one just pick one challenge. But but for me, it is. Is there an in Industrial supply just I’ll speak from where I’m most careful. Industrial supply chain.
[01:07:53] There are a lot of independents out there that are still run and managed by baby boomers. And I’m not an I just I get along really well if my dad and he’s very innovative, but they have just if they don’t really open up their minds and just consider the possibilities and allow some of these crazy millennials to. To. To dream a little bit. You know, they’re at a big disadvantage, and I think in some of these independent companies we’ve failed to reinvest in the company and update the infrastructure. So that’s probably the biggest struggle is the the personalities that have maybe failed to to invest in their small independent company. Those will get acquired by folks like Fastenal and other large. The M&A markets really having to push back against that if you don’t want to be one of the guys that gets acquired. But you want to create a value add distribution company, which I think is what you’re going to have to create to exist in five, 10, 15 years, not just exist, but really do thrive. Well, yeah. Is you’ve got to have an atom. So I kept referring to my brother Adam. He was a physics major, has a masters in physical education, loves coaching. Ever did it? Not much of it, anyway. And he really he taught himself computer programing through YouTube videos, which I think is the scary part about like where our industry is headed. There is so many ways you can take your business to create value for your customers with preexisting pieces of the technology already established.
[01:09:27] So if if you want to push back, if you wanna be the independent distributor that thrives in 2020 and beyond, you’re going to have probably not just one guy, but a team of individuals that really intimately know your company, that are entrepreneur in nature and motivated to make it better. Put their heads together. You’re gonna have to give me a really large budget of time, not necessarily money, because again, some of these pieces like Google Cloud A W.S. these technology pieces already exist. You don’t have to build them from scratch, right? Right. So they just need a lot of time to think and put some ideas together and give them a long leash to take some risks. But they can take your independent distributorship to the next level through a process of internal innovation. That’s where you practice. You’re good at it. Get a couple small wins under your belt and then your team can launch something. External innovation and the marketplace. This niche to you. And you know, I don’t know what that could be. It could be a whole host of different things that have to be supply chain related Maureen. But that’s I think the way forward for a lot of these small independent attributes is it’s very tangible. They can do it without a big budget of money. I would not hire outside consultants. I think you just if you want to do it right, you don’t want to do it effectively. You got to do it yourself. He’s got up in the trenches and do it.
[01:10:38] Love it. Yeah. It was a one. One last question around the innovation space. In the conversation, we talked a lot about the associational space and what’s going on there and the innovation centers that are that are, you know, here in Atlanta, we have Innovation Alley. I think there’s 60 innovation centers of all sorts. We’re sitting in one right now. That’s right. That’s right. But there’s so many different approaches. So real quick lighting around us from a social, social standpoint and from an innovation center standpoint. What still works today?
[01:11:13] Networking, sharing, ideas, thoughts, struggles. That’s what works. You got to get people in the room. If you want to get something out of a trade association, you have to participate in the conversation. So get on a committee. Get on a board. Even if you’re a young dude like me, that I mean, I would probably like I’m 25. That’s true. I was thinking Toy 3, if I could Hurley if I could grow beer, don’t help me because it sounds positions. It’s it’s tough to get like some credibility, but they will you will earn respect quickly if you participate.
[01:11:41] Yes. In the solution in the conversation than some of these trade associations.
[01:11:45] So I got to weigh in here because Andrew, you Sheer shared so much in the last hour and 10 minutes that I think will be valuable to many people, but that what you just shared is lost on so many folks as someone that all of us have been in associations for so long. So many people join the membership card and they sit and wait. Okay. What’s going on in a way now that you what you nail the head, you’ve got to get out there, get involved, engage, volunteer your time, your insights. That’s where. Participate it. Participate.
[01:12:14] Yeah. And I don’t think it has to be, you know, have to be. Right. Right. I mean, everybody right now, they don’t know what’s coming because it’s moving so fast, especially in tech space, business, B2B manufacturing and Port Said to here that is down or no, not going the right direction, but so much white space in America where we can reinvest with technology and automate. We’re way behind the times, Europe, Asia, way ahead of us. Automation technology goes home. So you want to be right. You just have to have a vision and a plan and be willing to get your hands dirty and move forward with it. If you share those ideas and sentiments, trade associations, they’ll value that. And if you’re not right, you’ll be right. Eventually do something if you do it wrong.
[01:12:51] Yes, right. Stand to benefit tremendously. OK. So how can folks, you know, if they liked something they heard, they will compare notes with you. They may want to kick the tires and software. What’s the easiest way for folks to reach out and get in touch with you, Indra?
[01:13:07] This way. I think, you know, to get to know what we’re doing and just start a conversation as honestly. I’m a huge fan of Linked-In. I’m a huge fan of content marketing. I love this stuff. I’d start a podcast, but it’d probably be a bunch of complaints and you should think it’d be great.
[01:13:20] Tough competition out there. Yes. I don’t know.
[01:13:23] To me, yeah, too many. I’d probably check out my LinkedIn page link with me on LinkedIn and follow my narrative on there. I always tell the story. Keep it fresh. You’ll get some inside scoop on my family business and the dynamics there. We should probably have a reality TV show, too. And then my YouTube channel, I put a lot of content on the YouTube channel. So between Linked-In, YouTube and then of course I have a Web site shelf where VMI dot com, you could go there. But yeah, that’s those are three resources. Great. Yeah.
[01:13:52] Self-aware. And you’re doing more and more keynotes. Yeah. You’re talking about some of your keynotes. Yeah. Prior to going on. And I wonder if you want me to come speak.
[01:14:00] I can yamarone on a podium. I’m getting better at it. Podcasts are easier because conversations are always easier.
[01:14:06] But putting together like a prepared speech or keynote. Yeah, I’m I’m willing to do that. It takes practice and I’m getting better. But debts that comes from just being a part of trade associations and just standing up and saying what our rales is thinking. Yes. Leaning in. Yeah. Leaning on yourself there. People say, hey, what are you doing on stage? Sure.
[01:14:23] Well, I’m sure our listeners enjoyed this as much under Sunday as some of these pockets of conversation we could have. All right. Do your own VPN and then so we’ll follow up on that. But really appreciate Andrew Johnson, founder, CEO of Shelf where LLC for for flying in to Supply chain City here in Atlanta. No problem. Safe travels back and looking forward to dinner later this evening. All right. So, Greg, we’re gonna do a vary as we wrap up this episode feet round. Yeah. In fact, it’s gonna be ludicrous. Speed round. All right. A few meatballs reference. So, too. Really? Also. Yeah. So really a wrap up on two thoughts. First off, if you hurt some here, all during this episode or any of our other previous episodes and you will learn more about that and you can Google and find what you’re looking for. You can reach out us, hit up our chief marketing officer at Amanda at Supply Chain Now Radio dot com and we’ll try to serve as a resource for you. And then secondly, we’re gonna be at a slew of events. We spoke some of these here were streaming live, many of these events. We’ve got a great calendar page from CSC MP Atlanta to the reverse Logistics Association to Moto X here in Atlanta to our 2020 Atlanta Supply chain Awards on March 10th. Really excited about all things going on. Check out our calendar page at Supply Chain Now Radio dot com. Oh, and Amy.
[01:15:47] Amy. Yes, I always him on manufacturing excellence May 4th.
[01:15:51] Absolutely. Where they’re bringing your Atlanta twin Leane Summit here to Atlanta. OK, so Andrew. Excellent conversation. Thanks again. I love the shout outs to Sheer. Pleasure, your partners and suppliers. May your Tommy. You’re right on cue to our listeners. Be sure to check out other upcoming events, replays of our interviews, other resources at Supply Chain Now Radio dot com. Yeah, course you can find us an Apple podcast. Spotify. Where else? Greg you too. But wherever all the leading sites where podcast can be found, be sure to subscribe to your messy thing on behalf of the entire team, including on behalf of Greg White. It’s a Scott Luton wishing you a wonderful week ahead and we will see you next time. Owen Supply Chain Now Radio, thanks for putting.
Andrew Johnson is CEO of ShelfAware. Andrew is an entrepreneur, inventor, and business owner. Formerly the sales manager at the family distribution company, O-ring Sales & Service, he is now pursuing a new endeavor, a tech startup called ShelfAware, which is attempting to redefine industrial distribution by leveraging RFID technology, the internet, and the power of data. He is also lucky to work with his three equally talented and passionate brothers. Learn more about ShelfAware: https://shelfawarevmi.com/
Greg White serves as Principle & Host at Supply Chain Now Radio. Greg is a founder, CEO, board director and advisor in B2B technology with multiple successful exits. He recently joined Trefoil Advisory as a Partner to further their vision of stronger companies by delivering practical solutions to the highest-stakes challenges. Prior to Trefoil, Greg served as CEO at Curo, a field service management solution most notably used by Amazon to direct their fulfillment center deployment workforce. Greg is most known for founding Blue Ridge Solutions and served as President & CEO for the Gartner Magic Quadrant Leader of cloud-native supply chain applications that balance inventory with customer demand. Greg has also held leadership roles with Servigistics, and E3 Corporation, where he pioneered their cloud supply chain offering in 1998. In addition to his work at Supply Chain Now Radio and Trefoil, rapidly-growing companies leverage Greg as an independent board director and advisor for his experience building disruptive B2B technology and supply chain companies widely recognized as industry leaders. He’s an insightful visionary who helps companies rapidly align vision, team, market, messaging, product, and intellectual property to accelerate value creation. Greg guides founders, investors and leadership teams to create breakthroughs that gain market exposure and momentum, and increase company esteem and valuation. Learn more about Trefoil Advisory: www.trefoiladvisory.com
Scott W. Luton is the founder & CEO of Supply Chain Now Radio. He has worked extensively in the end-to-end Supply Chain industry for more than 15 years, appearing in publications such as The Wall Street Journal, Dice and Quality Progress Magazine. Scott was named a 2019 Pro to Know in Supply Chain by Supply & Demand Executive and a 2019 “Top 15 Supply Chain & Logistics Experts to Follow” by RateLinx. He founded the 2019 Atlanta Supply Chain Awards and also served on the 2018 Georgia Logistics Summit Executive Committee. He is a certified Lean Six Sigma Green Belt and holds the APICS Certified Supply Chain Professional (CSCP) credential. A Veteran of the United States Air Force, Scott volunteers on the Business Pillar for VETLANTA and has served on the boards for APICS Atlanta and the Georgia Manufacturing Alliance. He also serves as an advisor with TalentStream, a leading recruiting & staffing firm based in the Southeast. Follow Scott Luton on Twitter at @ScottWLuton and learn more about SCNR here: https://supplychainnowradio.com/
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