Todd Reed: [00:00:00] Welcome to Keeping the Lights On. I'm your host, Todd Reed, and on this podcast I connect with the owners and pros who design, build, and maintain our electrical communications and industrial world to explore the best ways forward. Tom Gail is joining the show today to help me break all that down.

Tom is the CEO at MDM a leading research, analytical and educational provider in wholesale distribution. Tom brings over 30 years of experience in strategy market research and analytics and industrial products and wholesale distribution markets. Be sure to also check out the link in the show notes to the MDM podcast where you can learn more about the work MDM is doing

In this episode, we are diving into the current state of the supply chain, how stronger partnerships may be the solution to the supply chain woes, and where you can find the best sandwiches in gun barrel, Colorado. While everyone is talking about impact to revenue and frustrations brought on by supply chain problems in this episode, we are going to look forward so we [00:01:00] can help you be successful in the coming.

Let's get into the show. Well, Tom, we'd like to start each episode by celebrating that thing that brings us all together, all these different people we talk to and work with, and that's the food that fuels our crews. It's something that's common everywhere. So what is a common go-to spot, uh, for meals in your company?

Like where is it located? What impact does it have on your team? Where is it?

Tom Gale: So it, it's a sandwich place called Snarfs, S N A R F S. So we're, we're located just 20 something miles north of Denver, and it started 20 something years ago in Boulder, Colorado, literally in a shack. And they refer to it as such, uh, on their website, the, the original place that they now have like 20 locations, not only around Colorado, but in St.Louis, Austin, Texas. They even, uh, just recently opened up a place out at the Denver airport, so you, you know, when these [00:02:00] food places open up an airport place, they're, uh, they've kind of reached the next level. Oh yeah. It was this really funky place that still kind of keeps the characteristics and so that's, that's the go-to place for our team.

Todd Reed: Do you, uh, know how that came to be? I'm just curious if you know that.

Tom Gale: Well, what happened was, so we, we've always been pretty remote and, uh, we have people from Boston out to California, but about half our teams here in Colorado. And, and we, we don't have that big of a team, but. Once we started coming back post covid to the office, we started having people come back once a week.

And so, you know, partly just to incentivize, partly just to kind of be able to get together in a room and not in front of a camera and the screen. Mm-hmm. . We started buying lunch for people, you know, every week and, and it just kind of default, you know, we go to some of the chain stuff, you know, the Paneras of the world and this and that, but pretty quickly everybody was on board and it was like, well, where do you wanna eat now?

And it's like, you know, let's go there. [00:03:00] And the reason is, is, I mean, it's this kind of deli place, but it's, uh, they have hit on a formula that is, um, they're pretty. Yeah.

Todd Reed: Sounds great. What's your, uh, favorite sandwich there?

Tom Gale: Well, I'm gonna be careful here, but it's called the Mother Clucker.

Todd Reed: I've heard of that one.

Tom Gale: And it's a rotisserie chicken, but you know, they do a couple different sandwiches and, and I mean, they've probably got 24 standard, then they, they have a Not on the menu menu where they have some specialty stuff and they're mm-hmm. , they're not afraid to go out, uh, where sandwiches have never gone before.

They, I mean, they really, they have some really unique and interesting combinations as well as some of the standards.

Todd Reed: Well that does, you know, and you're right, we do have a Snarfs out here. I think I've been there one time, but uh, for sure I need to get out there to, uh, the Denver area visit you and we need to go hit up Snarfs.

So thanks for sharing that. So you speaking about Snarfs has me thinking about something that happened to me a couple weeks ago that got me thinking about this interview that I knew [00:04:00] was coming up. I was in my local deli grocer. And there was a sign in the somewhat empty chips section that looked like to me had been designed by the chip maker.

And it's a big name brand that we would all know all the brands they sell and make, but it looked like it was designed by them for the consumption, by their distributors and by their grocers. And what it was is it was a, uh, lights of pretty cute little graphics and charts and things talking about how.

Cheese levels were down and their barbecue was up and their, you know, flavorings which ones are up and down, and their strategy for how they were gonna fulfill the supply chain with bigger bags, smaller bags, whatever their plan was. I even took a picture of it, cuz I guess I'm a supply chain nerd. , but it got me thinking about this conversation because I'm like, wow, how mainstream has the supply chain become.

You know, in the past two years ago, you and I, and you know, our people we work with knew about supply chain, and we use that terminology, but I would say even [00:05:00] some of our customers didn't even use supply chain often, right? It was more like, I go to my supply house, or the manufacturer has this or doesn't have that.

But now people are purely acutely aware, the supply chain and the impact. So I think that's a positive for people in, you're in my world, right? People are starting to see the importance of, of that. All right, so let's lay the groundwork. What do you believe is the current state of the supply chain issues that companies are facing today?

Tom Gale: I'd say confusing, frustrating, but getting better. Uh, and, and that's the sound bite, but the reality is it's all over the place. Todd. I think what we've learned over the last two and a half years is just how much we've come to take for granted the incredible strength and flexibility of our supply chain.

You know, like, like PPE, nobody really knew or thought. Supply chain. It's been this hidden infrastructure that's really the backbone of the economy. It's like the studs and framing in a house. Really. You don't see it behind the drywall, but it's the only reason it's standing. Right? Right. So our team spends most of our waking hours tracking [00:06:00] a supply chain channels and, and it's this hidden sector of the economy.

That's the circulatory system. It's the beating heart, really? So, so more than a third of us. Domestic product flows through some form of wholesale distribution, supply chain channel. It's incredibly fragmented. It's incredibly flexibility, and that flexibility has really been challenged over the last couple of years.

But I think where we are today is we're seeing it coming back. People are adjusting, and I do believe it's coming back better and stronger than ever. So whether you're looking at industrial construction or other market sectors, I think, you know, we're hearing that backlogs are getting better overall, but we've gone to this just in time mindset from that for many, many years to just in case, you know, people don't wanna run outta stuff.

And so we're seeing some of those unintended consequences right now in this part of the, of the cycle.

Todd Reed: Yeah, that's interesting. Just in case. I would say that definitely happened [00:07:00] in in force a couple years ago. Okay. So you know the number one goal in businesses and definitely in all the businesses that we're talking about, up and down the supply chain is contributing or creating as much value as possible, right?

It's not just, here's what, Hey Tom, here's a product. Thanks, and that's our relationship. I need to provide value to you in that distribution and that supply chain. And I think leaders think about this. How do I add value to the people I work? . So what do you think is preventing leaders from doing that right now when it comes to, you know, working with the supply, their up and down supply chain?

Tom Gale: I think there's a couple things going on there. First, I, I think we've, we're feeling this impact of the lack of transparency that's, that's been a part of that extended global supply chain. A lot of people, it's kinda like each part of the chain has only seen so far back or so far forward. and it's been so reliable.

It's been like clockwork, let's, it's worked pretty well. But I think where we are right now, it's kind of like when we're, [00:08:00] when we're driving on the interstate around the city, right? And, and you come to a dead stop and there's nothing going on, it's all clear ahead, but it takes like five minutes or more for traffic to get back into a more nor normal flow pattern.

So I think that's some of the element here in terms of where we are right now. And, and it kind of goes from that. Shift from, we were so accustomed to this just in time and, and then we came to this screeching halt. So, you know, this is a global wave and, and so it takes time. This adjustment is just, you know, it doesn't happen overnight.

The other issue I think that's going on here is around noise. You know, I mean, business leaders have been playing whack-a-mole with, with all these different issues, and it's just one thing after another. You know how to best serve customers in a pandemic environment. How to get projects out the door, production lines, stabilized, people issues, inflation.

I mean, I mean, it's really been one thing after another and, and, you know, we're still in it. And, uh, you know, it, it's become the new normal.

Todd Reed: Yeah. So do you have any examples [00:09:00] of, you know, that that noise or some of those set factors affecting someone?

Tom Gale: Yeah, I mean, I think this is, this is still going on. I think there's tons of examples of customers are still placing orders that we're seeing with multiple vendors to hedge their bets.

They do not want to be. Left without. Most distributors I, I talk with, they are selling just about anything they can get in the door. So they're doing the same thing to their vendors as well. But then, you know, when customers get that order, then they're canceling with the two or three other orders that they placed.

I mean, it's just, there's a lot of chaos in the markets in some cases. And so, That's impacting costs, it's impacting productivity. Where I think you see the real separation and is really in the importance of relationships. So, you know, that's, that to me is really what's separating how people are able to build some reliability back in it.

It's not around the transactional and, and the digital aspects of, of where we've kind of come through all of this. It's really more [00:10:00] in, in the relational aspects of the reliability, knowing the, the vendor you. That you can count on and there's no digital substitute for that. Right.

Todd Reed: So can you maybe get into a little bit more detail about, I mean the digitization of all work is like in a lot of, I used to deal with that in my past.

Life is just a growing, but can you maybe talk a little bit more about the changing nature and relationship? That's kind of weird. The relationship between digital and relat.

Tom Gale: Yeah, and I think what's happened is we, we have been in this digital transformation no matter what part of the, of the society, what part of the economy we work and play in.

And I think Amazon has, has been a, a big catalyst of this in terms of how we have just come to expect this seamless online digital experience and be able to go out and source. You know, research that we did very quickly after the onset of [00:11:00] the pandemic, we reached out to a lot of customers of distributors and specifically asked them how their, their vendor relationships changed, how they were sourcing and purchasing products and working with their vendors.

And what we found was very quickly people. Increase the amount of self-service where they would go out. I mean, there's, there's tons of product information in that. And what they really wanted to do was for transactional stuff, they wanted that to be online, whether it was by text, by email, website, but that wasn't a substitute.

After they'd gotten 80% of the information they wanted about a product, they wanted to talk with a, a representatives, a specialist who could, knew how. To apply that to their specific situation, to challenges that they were trying to solve. So I'm a big believer in the power of relationship. In combination with digital tools and the power of that [00:12:00] as well.

So I, I think we're in this pendulum here, really where that value added service capability of, of the knowledge of the customer's problems and their operations, that's really, that's hard to replicate or, or provide digitally online. So I, I do feel like we're back in the future. I think that that knowledge piece of this is gonna still be.

Huge differentiating factor in how value is created in the supply chain. Yeah, it's great.

Todd Reed: What's at stake if companies don't start to change, you know, the way they interact with the supply chain as far as, you know, for themselves, for their customers, other stakeholders?

Tom Gale: There's a couple of different angles there as well. So I'm a glass half full kind of person and, and as strong as the current state of the supply chain is with all of. All the challenges and, and the sort of the instability that we're working through and that market conditions have created, you know, it's exposed some [00:13:00] weaknesses in terms of risk exposure and transparency that I mentioned before.

So I think what's, you know, we're already seeing, there's movement and momentum towards reshoring and knee shoring, nearshoring to address the, the risk that we've seen. You know, the Suez Canal obviously was a huge, you know, international. Media event, essentially it turned into, but it really was the, uh, kind of the signature event that just illustrated how that risk has played out, uh, in terms of more extended supply chain.

And then the other piece of this is I, I think we're already seeing people leveraging technology to create this next version of the supply chain to improve visibility across the entire supply chain. So your question was really around, if we don't go in that direction, I, I think there. Are people and customers who are just pretty well set in the way that they've always, uh, sourced and, and kind of structured their supply chain.

And I think they're gonna still be vulnerable un [00:14:00] unless they sort of update and, and take a hard look at their own processes because I think, I know that vendors are, are, have been incredibly motivated and there's a lot of competitive opportunity there. To just create the stability, uh, for customers. And I think that's where a lot of the future's gonna play out.

Todd Reed: Okay. So you've kinda, you know, laid that groundwork there. And so I'm, and you said something about, you know, the next level and, you know, transparent. You've mentioned transparency a couple times. You've also talked about the digital, uh, along with the personal relationship. So in your mind, I guess I, I ask you to look a little bit to the future. What does the world look like if we, if more companies truly embrace this, Balance to the way they, you know, approach the supply chain.

Tom Gale: Yeah. So, you know, a lot of people I think, look to their vendors through a product lens and, and I think. Where we're going is really more of this combined product services and even, [00:15:00] I guess, service relationship from a standpoint of, and here's, here's where I'm going with this, Todd, is if you think about preventive maintenance and all the sensors, you know, all the, all the chips, Challenges that have been, just think about the number of sensors and, and the internet of things in terms of, you know, the way that we're able to monitor equipment, you know, whether it's moving equipment or plant equipment.

And if you think about that and, and the capability particularly for vendors, uh, and suppliers. To proactively go way beyond the products that they sell to kind of build in this as a, as a much more comprehensive package. That's where all of this is going today, and I, and I think it's what we've just been through here, is really gonna accelerate that.

So it's much more of a complete product lifecycle production cycle, so that you're gonna get much more sort of cradle to grave solution providers. And, uh, that goes just beyond the, the core product [00:16:00] sell that really bundles in a lot more of that knowledge and the capability of maintaining that product through its entire lifecycle or production lines, whatever it may be.

So I, I think this, I think we're early in this stage really of this combination of sort of this digitalization of our, our of our world and acceleration of that. But this is where I really think the relationships, uh, play a key role is because, you know, you can spray technology all over the place, but, and, and you see it a lot, you know, people are spending a lot of money on technology.

But the, but the really incredible, uh, value creation is taking place where, Where customers are saving a lot of money, uh, in their process, improvement in just their productivity rates, in terms of what they're able to achieve. And honestly, you can't do that acting by yourself. It's really about partnerships and I think ecosystems going forward.

That's kind of a buzzword, but I really believe that. And, and it's this combination of that knowledge that a, that [00:17:00] a supplier, uh, can bring to the table that goes so far beyond just the, the core transactional product sale that you can do in your sleep online.

Todd Reed: Uh, you know, um, when you said ecosystem, it, you know, that's one of the reasons they started this show is to bring all the different silos.

Systems that, or ecosystems we work with, kind of bring them together. For example, bringing you on here to share your knowledge in the 19 different wholesale sectors that you know, you. Kind of pay attention to on a regular basis where some of our other people and even myself may not pay attention to. So what can we learn?

So that's kind of how, it's one thing I'm hoping to do here with this kind of show. So I guess the question I would ask you, and maybe you can help our listeners out is, you know, how does the company start to get there and how, you know, start to build these better relationships, especially with the current vendors as opposed to, you mentioned way earlier, which was interesting, that, you know, it's always good to have multiple relationships for a variety of, I think, I think that's, Proven out this in over the last two years, but you kind of said you don't wanna [00:18:00] spread it out too thin.

You know, you don't wanna just use people to buy product and then cancel orders and all that stuff. So what would be the next thing a company could do to start getting in this kind of better position?

Tom Gale: Yeah, there's a big answer wrapped in there because I, I think this really is a sort of a shift in mindset.

And you know, one of the things that. Really monitored as a research org organization and we monitored very carefully was as, as companies went into the pandemic, how quickly they were able to pivot from reactionary and um, sort of crisis mode to being able to start looking a little bit forward in terms of proactively.

Where they could really find some opportunity and sort of their sweet spot in terms of how they could connect with con customers, make sure they stayed close with customers and create value, which you know, was really the heart and soul of their business, right? It's the heart and soul of any business.

And what I think we learned out of [00:19:00] that was that, you know, some organizations, it was very difficult for them to. Sort of take that next step. Either you're going remote, some organizations had already become a little bit more digitally savvy, had already put in teams. I mean, it's just kind of basic examples, but they were able to pivot.

Pivot, you know, within a week or two. And online meetings weren't a big deal. And it sounds like, you know, that's kind of a simple thing, but it was really a big deal initially it taking that to higher levels. I think you see some companies not as open to. How can we really leverage digital in a way that we can innovate, become more agile?

I think a lot of what, you know, the last two and a half years has, has for every organization opened up some questions about, Hey, you know, are we, are we as agile as we really want to be or need to be to serve our markets and our customers as as well as we can? I think a lot of organizations have [00:20:00] answered.

In really interesting ways, and it's not about company size. It's really more about the culture, it's about the mindset, it's about the leadership of those companies. And I, I just see every day we see some great examples of, uh, where companies have been able to free up. The talent within them to really provide tons of value for customers and very specific applications, and then take that and replicate that out to the rest of the team.

So it's the shift I think that's really taking place is I think it's pushing a lot of organizations to be more learning organizations ongoing and sort of lifelong learning organizations. And I think that's really a, uh, sort of a key shift that, that I haven't seen a lot about, uh, talked about, but I, I think it's pretty fun.

Todd Reed: What's your goal for the next six to 12 months and how are you gonna accomplish, accomplish it?

Tom Gale: You know, for us, you know, for 30 years I've just been studying sort of value creation and differentiation in terms of, uh, [00:21:00] of an industrial construction markets, you know, what, what does innovation look like?

And we are in such a, uh, I believe even in, in spite of, uh, you know, setting the unknowns of, of how 2023 is shaping out. There are so many longer. Tailwinds that are going on in our economy that I'm really excited to see what's gonna happen over the next six to 12, 24, 36 months. So my goal personally is, is for us to really, you know, stay on top of these.

I guess not not get caught up in the noise. You know, it's really easy to pay attention to the national media and it's just, you know, it's one crisis after another every day. But if, if you're running a business, if you're trying to create value for your customers every day, you know, there are things that you have in control here.

And I, and I really believe from a strategic standpoint that there's a, in turbulence, there's a lot of opportunity to, to gain market share. To, you know, find [00:22:00] new ways to kind of create the next version of the business that's really gonna be sustainable for, for longer term. So, to me, those are the nuggets that just that, that that's what's kept me, you know, really motivated.

And I think we really have to keep our eyes open here over the next six to 12 months, cuz I really think they are gonna be transformational, not only for our society and, and our economy as a whole, but I, I think for individual businesses in the markets that we serve. Electrification infrastructure. You know, these are all things that are, you know, they, we've just started to see some of the things and some of 'em are farther along, but gosh, if you look at the pieces, um, you know, climate change, alternative energy, I mean, there's just so many areas and there's a lot of challenges in navigating these kinds of transitions.

But I, I just believe that, uh, you know, that's where the supply chain here is gonna change very quickly, and there's just a ton of opportunity.

Todd Reed: So how can a leader differentiate what is noise versus what is valuable information and to inform their decision? [00:23:00]

Tom Gale: I don't think there's any substitute for just reading and, and absorbing as much as we, as you can.

I mean, it's the leaders who I really admire, they are very disciplined about blocking out, you know, some of 'em block out an hour to two hours a day or more. and often that's early in the morning or late at night, and they're, they're reading, they're digesting not just what's on, you know, on the cable television stations, it's, they're really also very disciplined about their own self-education and, and learning.

And so I think, um, to me that's kind of a key of leadership that I've always seen that I, I admire a lot and I think is really a key to. kind of being able to maintain that North star instead of getting wrapped up in the, in the day-to-day. You know, there's a saying about the, uh, urgent getting in the way of the important, and, and I think we're just in that environment.

I think that it's really easy to get wrapped up in that.

Todd Reed: So we like to, Tom, close every conversation by refocusing on the why of what we do. So what [00:24:00] motivates you to do this day in and day out? What keeps you excited and passionate about what.

Tom Gale: I am such a core believer in the strength of the economy. I've been studying this for more than 30 years, and the current environment, you know, I'm, I'm just learning something every day because it, it's so heavily fragmented, but the, the fundamentals of it really are. And what makes this, I think, the strongest.

And most adaptable economy in the world is the strengths of the supply chain and the distribution networks that are in place because you have this combination of both, you know, small localized, uh, supply chain providers, and then you have the nationals, I think. You know, the same applies in terms of the end markets that they serve, you know, across manufacturing, construction, and all the, you know, utilities.

All, all of the other kind of core essential industries that really make up the fabric of, of the economy. And I, [00:25:00] I really believe that, that, uh, it really is the complexity and the variety of it. And the, the adaptability that makes it the most entrepreneurial. You know, you know, when a market condition change, somebody sees an opportunity, that vacuum's gonna be filled.

And very quickly, you know, there's a new solution, there's a new innovation that, that solves a problem that we've been trying to solve. So what, what I see from the, just the last couple of years is, you know, we, we just have had one challenge after another being piled on. And I, I think that's just going to really foster.

Innovation in ways that we haven't seen, honestly in, in decades. We haven't had the same level of disruption. So, you know, out of all this, I really believe these next couple years are gonna be fascinating. So that's just a really motivates me here over the next couple years to really pay attention and, and, and see how we evolve in all of this.

Todd Reed: Awesome. Tom, thank you for coming onto the show and sharing a perspective that I think is great for our audience to see and from an angle [00:26:00] that they're not used to seeing it from. So it's been great to have you on the show.

Tom Gale: Thanks, Todd. Uh, very much a pleasure. Appreciate the opportunity.

Todd Reed: Well, that was my conversation with Tom, Gail, CEO of MDM.

We talked a lot about strategy and tactics, and while those are important, there are two topics that really stood out to me. One was the importance of focusing on what will move us forward, like striking that balance between digital transformation and personal relationships. The other and most meaningful to me was learning to filter out the noise and instead focus on the innovative ideas that you'll bring value to our customers.

If you enjoyed the episode, you can help us grow the show by leaving a five star rating in Apple or Spotify and learn how you can connect with Tom and MDM by checking out the links in the show notes.

Thanks for listening to this episode of Keeping the Lights on. We'll see you next time.[00:27:00]