Hard Work Wins

March 1st, 2021

Our son, a freshman in high school, is trying out for his high school lacrosse team.  His high school fields a nationally competitive lacrosse team year in and year out.  Before tryouts, the coaches announced that due to the anticipated number of kids trying out, they would be cutting from all teams, not just the varsity team. 

I picked him up from tryouts one night and of course asked him how it went.  He said, “It went OK.  I did some things well, learned a few new things, and know what I need to work on.”  He paused and said, “Dad, whether I make the team or not, I know I have to work my butt off if I want to play next year.  I’m going to work harder than I ever had.”  I almost shouted with joy.  I told him that is the key life lesson sports teaches:  if you want something, you must work hard. 

Especially in today’s work from home environment, it is easy to fall into a routine.  It is easy to say, “I’ll do that tomorrow.”  Challenge yourself.  If you are in sales, make an extra phone call.  If you are in operations, finish that Kaizen project.  Work your butt off.  Your competitor is. 

A Great Reminder About How Lucky We Are

February 22nd, 2021

I recently switched optometrists and had my first appointment last week.  My new optometrist is an immigrant.  We did a perfunctory introduction and she started my eye exam.  She used some fancy equipment to check something in my eyes and remarked, “This technology is wonderful.  It is amazing that we get to use the technology on everyone in this country.”  I asked why she said that.  She replied, “Most of the world does not have what the US has.  No access to technology, no freedom.  Yet most Americans are unhappy and complain.  Most of us don’t have real problems.  I volunteer at the VA.  A lot of those people have real problems.”

I thanked her for volunteering at the VA.  She then asked if I had been to this location before.  I told her that we had recently moved and this was my first visit.  She replied, “Oh, it’s great here.  Great community.  But be careful of the police.  They pull you over for speeding.  I get pulled over a lot!”  She paused and said, “I feel like a real American.  I’m complaining about something that I should not complain about.  In fact, I should be happy that the police keep us safe.”  We both laughed.

Her message hit home.  We are certainly living in challenging times.  It is easy to complain and be dissatisfied with how things are.  If you take a step back, most of us should be very grateful for where we are. 

Order Early (and Order Often)!

February 15th, 2021

I was ready to write a positive, uplifting blog. It probably would have been something about the winter doldrums are ending soon, vaccines on the way, blah, blah, blah.  Then one of our executives forwarded an email he received from a major material vendor.  This line was included:

We are full, full, full, out through Oct 1st for 1st delivery with an order today, crazy I know…

This email was dated February 11th!  Please re-read.  Again.  One more time.  Thank you. 

I have read it numerous times.  It still has not sunk in with me that we have an EIGHT MONTH LEAD TIME for materials.  This is a major component for a major product line we sell.  This email came from a sales rep at a significant company.  I know we are not their biggest customer but we purchase a good amount of product from them.  I do not think we are the only customer to get an email like this.  The company might be doing some hedging on the eight months but “months” is not a word normally associated with lead times for materials in our business.  We are not having custom equipment built.

We are trying our best to explain to our customers that the days of short lead times are gone, at least for now.  While 8 months is a little extreme, we are seeing lead times that were normally a day or two stretch to three to four weeks.  We are doing our best to adjust inventory levels and production schedules.

The next several months are going to have their challenges.  Start contingency planning with your suppliers today.  Talk to customers about their forecasts.  Buckle up.  It is going to be a wild ride. 

2021 is Going Fast. Are You?

February 8th, 2021

As I write this, it dawned on me that we are 10% through the year already.  It is hard to believe.  That means we are also almost halfway done with the first quarter.  With everyday feeling the same due to covid, it is easy to fall into a rut and lose sight of what needs to get done. 

Years ago, we did training with Christine Comaford and the Smart Tribes Institute.  (www.smarttribesinstitute.com).  I highly recommend you check out their stuff.  One of the exercises we went through was tracking time we spent doing Low Value Activities (LVA) and High Value Activities (HVA).  LVAs are day to day things that need to get done.  HVAs are more strategic and focused on the future.  Every role has some component of both types of work but the goal is to spend more time on HVAs.  Take a look at where you are spending your time.  Especially at year end and the beginning of the year, it is easy to get bogged down in LVAs. 

Are you 10% done with your goals for 2021?  If not, you better shift your focus soon.  Time slows down for no one.  Do not dig yourself a hole. 

A Small But Very Big Deal

February 1st, 2021

Last week, UPS announced it is selling its LTL (less than truckload) business to TFI International.

From The Wall Street Journal:

The move shows how booming online consumer demand is reshaping domestic shipping, pressing package carriers to invest in business-to-consumer delivery capacity while trucking companies cope with fractured industrial markets. UPS is giving up the bundling of parcel and freight sales for big customers… (Emphasis added)

https://www.wsj.com/articles/ups-to-sell-freight-trucking-business-to-tfi-for-800-million-11611592797?mod=djemlogistics_h

UPS Freight was a relatively small player in the LTL market and not a large part of UPS overall.  Like many manufacturers, a vast majority of our shipments are sent parcel and LTL.  UPS bundled its parcel and LTL services.  Based on the operating margins of its LTL business, UPS subsidized LTL with its parcel business.  In other words, it competed on price in the LTL market.  Do you think the new owners, who do not have a parcel business, are going to do that?

We are already dealing with capacity issues in freight.  While this transaction does not take capacity out of the market, over time, it will change dynamics for UPS customers.  Just dealing with two different carriers adds transaction costs.  It will also change market dynamics as I do not expect TFI International to be a low-cost provider.  I know I am a broken record:  freight costs are going up.  Remember, every product we buy is on a truck at some point.  While transportation costs are not large relative to most products, they will eventually lead to the costs of everything going up. 

Your Marketing Tactics Are Counterproductive

January 25th, 2021

I am fed up with receiving voicemails that say, “Hi Brian, this is Bob.  I have some important information for you.  Please call me at XXX.”  Bob does not identify his company, his product or service, or anything else.  Why would I call you back?  Do you really think being secretive is the way to start a potential business relationship?

I also am not particularly fond of the emails that have “Re:” in the subject line and start with something like, “Brian, Getting this to the top of your inbox since you did not respond to my email last week…”  I know I am getting old and forgetful; reminding me of that does not make me want to do business with you.  If your mass email were of importance to me, I would have responded.  You are insulting my intelligence by sending me a fake email indicating you have already emailed me. 

Covid has not changed this irrefutable fact:  people buy from people.  I will add to that: “People buy from people they trust.”  Your marketing tactics should support that truism.  Do not leave cryptic voicemails.  Do not lie in emails.  Before you get a sale, you need to develop trust.  Any action you take that reduces trust reduces your chances of a sale. 

Are You Having a FANTASTIC Day?

January 18th, 2021

A few weeks ago, my wife and I were walking our dogs.  A young man was walking towards us.  We stopped and waited in a driveway to let him pass us.  He stopped and said, “Are you having a FANTASTIC day?  Isn’t it a FANTASTIC day?  I’m having a FANTASTIC day!”  He emphatically said fantastic each time.  He put a huge smile on our face.  We went on with our walk and turned around.  We passed him by and he said, “Isn’t it a FANTASTIC day?”  We smiled again. 

The young man has Down syndrome. 

Last week, I was driving with our son in the car, dealing with teen angst.  Our new friend was walking on the sidewalk.  I slowed down and honked and waved.  He passionately waved back at us.  I do not know that the teen angst completely subsided, but I did see a slight smile come across my son’s face.    I am smiling as I think about him waving at us.

As one of my close friends reminds me all the time, “We are all subject to the human condition.  The human condition includes happiness, joy, suffering, pain, and every other emotion.”  It is much easier to deal with the human condition with a positive attitude, especially in today’s environment.  Have a FANTASTIC day!

Did Anyone (Other Than Our Vendors) Notice the Price of Oil?

January 11th, 2021

In April 2020, oil prices briefly turned negative.  You had to pay to sell oil.  Oil had started 2020 at $63 per barrel.  Oil ended 2020 at $48.50 per barrel.  Last week, oil briefly crossed $50 per barrel.    We also started to receive notifications from vendors about fuel surcharge increases.  Funny, I do not remember any prices going down when oil plunged.  Fuel (gas and diesel) went down slightly but not very significantly. https://www.eia.gov/dnav/pet/pet_pri_gnd_dcus_nus_w.htm  In fact, we were warned about potential shortages and price increases of oil related products as refining volumes plummeted. 

The government is going to continue to tell us there is no inflation.  When you owe $27 trillion and counting, you have a vested interest in keeping interest rates low.  As I have said before, I would like the ivory tower economists at the Federal Reserve and Treasury Department to step into the real world.  In the last six weeks, we have received price increase notices for freight, corrugated boxes, , and cores.  To my knowledge, we did not do any year end salary decreases and no employees came to us voluntarily asking their pay to be cut because inflation is low.  Eventually, cost increases will get passed on.

Government officials think inflation is good.  They are going to get to test their thesis in 2021.  Get ready.

Challenge Yourself to Think Differently This Year

January 4th, 2021

I was recently in the car with our son.  We were talking about something and he remarked, “Dad, you sound just like me.”  We ran our errand and got back in the car.  Another conversation occurred and again, he said, “Wow, Dad, you sound just like me.”

Part of me felt bad (OK, not really.) bursting the bubble of a 15 year old that knows everything but I had to say it, “No, Logan, the sad truth is you sound just like me!  You’re turning into your old man.”  A look of horror came across his face.  I laughed and said, “It happens to everyone.”  After I thought about it, I did have to admit one of my comments was greatly influenced by a previous conversation with him.  We talked about how the people you listen to the most influence your thoughts and words.  

In this pandemic environment, our social circles have shrunk.  We spend more time with the same people than we did pre-pandemic, whether it is in person with our families or virtually with colleagues and clients.  We are not in situations where we can easily meet people outside of our circle.  In an environment in which we do not have different experiences or meet different people, we can become stale. 

Challenge yourself to talk to someone outside of your normal circle.  Read the news from a site you normally disagree with.  The only way to change your thinking is to be exposed to something different.

2021: Cash is Forever King

December 28th, 2020

Like many others, I am bullish about the 2021 economy.  Pent up demand will be unleashed as vaccines are rolled out.  Already, we are seeing signs of companies preparing for an increase in demand.  Inventories are being built.  Job postings are up.  For a lot of industries, meeting demand will be a challenge. 

For anyone that has experienced business growth, a familiar refrain will be played:  growth requires cash.  It is common for businesses to underestimate the working capital (inventory and receivables) required to fund growth.  A business needs to build a product before it sells it.  Once a product is sold, it takes time to get paid.  In the meantime, employees expect to be paid.  Rent needs to be paid.  Suppliers generally like to get paid too (hint, hint to any customers reading this!). 

Cashflow will be a challenge for a lot of businesses in 2021.  Many small businesses are still struggling to meet cash requirements.  As demand increases, so too will their needs for cash.    Many large businesses take advantage of the situation by demanding obscene payment terms. 

An old business adage says, “Nothing happens without a sale.”  That is true but it needs a caveat:  “Nothing happens without a sale but really bad things happen when a sale occurs and cash is never generated.”  Sales are necessary but not sufficient to have a viable business.  Pay attention to your cashflow.  Here’s to a HEALTHY and prosperous 2021.