Success in the New Normal | Episode 4
Full Episode Details
The positive challenge of transforming manufacturing and our supply chains in 2021
In This Episode
- 0:36 – Initial thoughts on 2021 and the “new” normal
- 1:43 – Will buyers and sellers that moved online, go back to the old ways?
- 5:52 – The Culligan Water Man as an example of the importance of interpersonal relationships
- 9:30 – As vaccines roll out, what does the return to normalcy look like?
- 11:00 – The importance of work/life balance and personal barometers of normalcy
- 14:49 – The political change and its impact on the economy
- 17:40 – Greg bets on Tariff’s to remain as US increases manufacturing investments
- 20:38 – Small retailers diversifying their supply chain to lower their costs
Quotes From This Episode
“If [sellers] can figure out how to continue to grow and develop those personal relationships through digital channels, that the buying process is just so much more efficient that ultimately, it’s something that they’re going to see is a benefit and just keep going with business in that new way.”
– Michelle Edwards-Lanham
“My barometer through this entire pandemic has been the general traffic in the city. How quickly can I get from the island on which I live to Downtown Seattle? And so that’s how I’ve been measuring the ups and downs. “
– Michelle Edwards-Lanham
“So I’m actually betting that tariffs will continue. I believe they will continue because they are already helping to establish almost a different type of supply chain where it’s resulting in increased investment in manufacturing right now.”
– Greg Raece
“One business I spoke with recently, actually, I think was a really great success story. They found a tribe of Native Americans in the Southwest that produce beautiful jewelry and other goods. And so they now have this new relationship with this new vendor that does support a domestic industry.”
– Michelle Edwards-Lanham
Greg Raece (00:07):
Hello and welcome to the Metal Press podcast. I’m Greg Raece, President of Online Metals.
Michelle Edwards Lanham (00:12):
And I’m Michelle Edwards Lanham, the E-commerce Marketing Director at Online Metals.
Greg Raece (00:17):
And today, we’re going to talk about the future, how to succeed in the new normal of 2020 and beyond. I know all of us have been excited to put 2020 to bed. And now that we’re in a brand new year, what does it look like? So Michelle, putting on your prognosticator hat, what do you see as some of the changes that are happening in this new normal of this new 2021 year?
Michelle Edwards Lanham (00:43):
Yeah. Well, I think that new normal still feels like it’s a ways out. We’re going to have to be pretty careful still as far as the virus goes. And even if we do get a vaccine, it’s not going to quickly turn things back to the way they were. And I don’t think anyone is going back to business as usual anytime soon. But even with that said, when we do get over these major safety concerns and go back to having more of our interpersonal interactions, I think as far as business goes, when the buyers who previously were resistant to taking their transactions online, they’re going to be so accustomed to doing business that way, that it will really turn out to be a regular part of their business. And they’re just going to want to continue to work that way.
Greg Raece (01:38):
That’s a lot of change that’s come to folks this past year. And do you feel like they’ve gotten over the learning curve of working online? I mean, it’s a lot of time that it takes to get something down and learn something new, and that prevents us from changing how we do things. I’m curious what you think about that.
Michelle Edwards Lanham (01:58):
Yeah. I do think that a lot of the buyers who are new to purchasing online are going to have gotten over that learning curve and figured out how to keep their businesses going and actually learning that it’s a more efficient way of doing business. And once they’ve worked out the kinks in their processes, they’re going to see that it’s a benefit and not really want to go back to the doing business offline and kind of the old way. I think that one issue might be that they miss the relationships that they had with a salesperson in their local market. And if they can figure out how to continue to grow and develop those personal relationships through digital channels, that the buying process is just so much more efficient that ultimately, it’s something that they’re going to see is a benefit and just keep going with business in that new way.
Greg Raece (03:13):
Well, how about the sellers in that case? Do you think it’s going to be easier or harder for them in this new model that we’re in?
Michelle Edwards Lanham (03:22):
So I think for the sellers, it is a much bigger challenge. When we’re looking at the business from a buyer’s perspective, we have in our personal lives, were already accustomed to ordering food from Amazon, ordering services online for our homes. All of that is we’re accustomed to that. But for sellers, there is a much larger hurdle to get over. Not only do the sellers need to develop a user interface in their digital platforms that are easy for their customers to use, but then they also have all of the technical and operational challenges from the backend of getting the infrastructure in place that’s required to actually get these physical products put together and out the door and to their buyers in a way that works for their buyers business. They need to figure out how to optimize their fulfillment infrastructure.
Michelle Edwards Lanham (04:29):
And going back to this idea of the relationships and building relationships with their customers in a digital space, this is also a challenge and it is important to a lot of buyers to know who they’re buying from to get customized services. That’s a big challenge in our industry. And how do you enable those virtual relationships? So that buyers know that they have a person that they can go to within an organization to help them with their special, unique business needs. Because in business, we do tend to have more personal challenges or unique needs than you would have as a consumer. So as a consumer, if I’m going online to buy a sweatshirt, it shows up, it looks like the picture did, I’m happy. But in business, I may need special services done. Unique products, unique finishes, unique services. And so from a seller’s perspective, they do need to figure out how they are going to communicate on a regular basis and keep those relationships going with the customers that they are not going to see face to face.
Greg Raece (05:52):
That’s really interesting. In fact, it reminds me of something that just happened at our office. So our office is still closed, but periodically, we do let in suppliers and a lot of the suppliers, they’re kind of the feet on the street representatives of the business. So in our case, it was the Culligan water man. He came by with a delivery. We had scheduled that, and it became an opportunity where he was asking me questions about our business. He was asking me questions about, hey, does he expect us to see people coming back soon? How has the actual pandemic impacted us as a business? Is there a return to normalcy for us?
Greg Raece (06:33):
And he was also able to troubleshoot some of the things that we’ve just let linger. So we had a row of empty water bottles. I think it went from one side of the wall to the other because we haven’t had the service come in and replenish for a while. And he was able to pull out problem bottles for me. And I thought, “Wow, that’s actually something that that kind of level of service is something we’ve been missing.” Also, we found out there was a problem with our cooler too. So again, it was that really tight relationship I experienced that I really enjoyed it and missed it. And as a seller on their side, they got a ton of information about us that I just don’t think they’re able to get right now by being so remote. So.
Michelle Edwards Lanham (07:15):
Yeah. And so for that business, wouldn’t it be great if they had a way for you to interact online and provide the feedback about, “Hey, here’s the situation in our office? We’re drowning in water bottles. Maybe you can have, as the seller, and interface where the customer takes a picture of their environment and says, ‘Here’s my problem. What do I do with all of these bottles?'” And then has a way to easily send that information to the service provider digitally, where the person who’s coming to the office then knows what to expect, and they can reach out to you and say, “Hey, I’m going to be there on this particular day. And thanks for sharing your problem with us. Now we know how we’re going to resolve it. And here’s how we’re going to get it done quickly and efficiently and safely.”
Michelle Edwards Lanham (08:08):
And all that communication could be done digitally if there’s a portal, so to speak, or some kind of an interface in a way to digitally share that information from you as the customer, to the business that is trying to support your office. And those types of infrastructure developments could really help these relationship building and the service applications go much smoother. So I think we’re going to see a lot of businesses really creating those kinds of communication pathways and relationship building tools online that are going to help them get back into a place where they can start to return to a position of growth, because then they’ll have these tools that they can even promote out into the marketplace to get new business and be ahead of the competition that has not been able to put those digital tools into place for customer relationship building.
Greg Raece (09:12):
And that’ll put them in a good spot because 2021 will be the recovery. This is the time when things start to come back, where office buildings start to get repopulated, where maybe there’s this hybrid model that gets to be formalized a little bit between working remote and work in person. That there’s investment, maybe in these industries that have had a lot of challenges to date. So as the vaccines get rolled out across the country, really a question is what does growth look like? And what do you think a return to normalcy will look like, Michelle?
Michelle Edwards Lanham (09:47):
Yeah, I think we’re going to see the transition with a lot of people in the industries, soul searching and figuring out what do they really want out of life. And there’s going to be a look at the work-life balance. There’s going to be a challenge for the HR teams. As you mentioned, this need to understand whether or not it’s required to even have your entire team in the office all the time, or could there be a blend of working remote and working from home? And that will be a challenge for businesses overall to figure out how they’re going to organize themselves and work with their HR teams to build solid teams that are safe and healthy and in a position to really focus on work. My heart has really gone out to those coworkers of mine who are parents as well. That’s a really big challenge, having your kids at home and trying to juggle working, and parenting, and schooling. And this issue may continue to go on in 2021. And a lot of businesses employers really need to take a look at that and figure out how they can support their teams.
Greg Raece (11:18):
Right. Because as a parent of three children, the way it works is I actually, I manage one of them during the day and my wife manages another one and one of them actually goes on campus. They go for learning right now. So it’s been an interesting experience just to see how that works. And exactly, it can be very challenging to manage a child who is jumping from Zoom meeting to running around, back to Zoom meeting with the teacher, back to homework. And it’s happening in lots of places and lots of situations. So it is part of the recovery because who knows when the schools are going to completely reopen? I mean, it will probably be in the fall when we see everybody going back and we’re back to that model of, “Okay, get ready in the morning, get the kids ready, take them to school, drop them off, go to work. They go to maybe an extended day or some kind of aftercare, come back, pick them up.”
Greg Raece (12:14):
And that whole rhythm has been broken. And getting back to speed, I think, yes, I think that’s going to be key to the recovery, is that that rhythm is back in place. I’ve also heard another interesting theory is that we will know things are back in shape when business travel has returned. And what’s interesting about that theory is it, again, opens up the idea that if people are willing to travel and meet one another, that that’s an indicator that things are going good. And I’m kind of curious, Michelle, do you have any maybe indicators of things that you see, “Hey, when that returns back to normal, maybe we are back in a normal mode of coming out of this recessionary pandemic?”
Michelle Edwards Lanham (13:01):
My barometer through this entire pandemic has been the general traffic in the city. How quickly can I get from the island on which I live to Downtown Seattle? And so that’s how I’ve been measuring the ups and downs. And when we first started the lockdowns, it was eerie how quick one could get from one side of town to the other. And as time went on, the traffic came back, and things started to slow down a little, and traveled times became longer. I did notice recently that it seems like those travel times have gone down again. So I think there’s people that are tightening up staying home a little more. Another indicator will be the actual businesses downtown in the urban areas. I have noticed that in the very dense urban locations like Downtown Seattle, there’s blocks and blocks of businesses that they’re just boarded up because the workers, the businesses, are not there to require the ancillary services that support those individuals in person. The food services, the shopping.
Michelle Edwards Lanham (14:30):
So it’s going to take quite a critical mass of people returning to their offices, I think, before those small businesses that rely on the in-person customers can really come back. It does seem to me like the more remote suburban areas are actually not as hard hit by that lack of customer base. And I guess that’s because people are at home, they’re still going out and purchasing food and other things that they need to support themselves in person. But when those dense areas of business start to reopen physical infrastructure and the services that support them, I think we’ll know that we’re close to returning to business as usual in the new normal.
Greg Raece (15:25):
And I can’t wait to start being able to go downtown again and having it active and lively. It will be great when that happens. I think that’s a fantastic barometer. It’s something I’ll keep an eye out for it as well, too. The other interesting note is we had a political change. So we had an election in 2020 and a smooth transition. Or I shouldn’t say that. We had an election in 2020, and now we have an administration which has markedly different policies towards economics, towards the environment than the previous one. And what’s interesting is it also puts a new normal, I guess, towards how these industries operate. And there’s potential for changes with environmental restrictions that impact industries like forestry and petroleum. But on the flip side, you could say these open up opportunities for investment in conservation and our carbon fuel industries like electric vehicles. So potentially, it’s an opportunity for Tesla. I’m curious if you see any other industries where just that political shift might mean an industry is moving up or down, depending on how they respond to those shifts.
Michelle Edwards Lanham (16:42):
I agree. The political change is definitely going to have an impact on business in 2021. And going forward, as you mentioned, there will be a difference based on where the government wants to invest in business in the United States. So is the government going to be a government that supports small businesses, and local businesses, and continues to provide loans and relief from those loans for small businesses to get those people back on their feet and opening those shops that have closed? Or are we going to have a government that focuses more on big businesses and bailing out larger industries? Which was definitely a tactic that we saw at the end of the Great Recession?
Michelle Edwards Lanham (17:37):
So it remains to be seen, but as you mentioned, are we going to kind of go back to supporting the petroleum industry, or are we going to shift to investing in new, clean energy and making jobs that way and supporting businesses that are working on new, innovative technologies that are more environmentally friendly? Those decisions are definitely going to have a major impact on where we see growth in the future. And there could be that some jobs go away because they are not seen as the way of the future. There are old technologies are dirty technologies. So that definitely remains to be seen.
Greg Raece (18:23):
One area I’m really curious about will be with trade protection and whether or not tariffs on materials will remain, increase, or go down, because you can position that in lots of different ways. You can position it as protecting businesses. You can also position it as getting rid of them, opens up opportunities in a free market for materials to sell for less, and therefore, more businesses can actually use those materials in the United States. So I’m actually not sure what’s going to happen. However, if I were forced to wager on it, I believe the tariffs will continue. I believe it will continue because they are helping to establish almost a different type of a supply chain where it’s resulting in increased investment in manufacturing those materials in the US, and I think that strategically, that will be seen as we will want to continue that.
Greg Raece (19:16):
And at the same time, I think tariffs and these economic tools, they’re used as carrots and sticks more so than ever. I mean, as we’re seeing, and we’ve seen in the past few years, tariffs definitely get the attention of different countries that are out there, and they cause them to either do what you want or not do what you want. And I think we’ll see more of that in the future. So probably that leads to materials getting more expensive for the consumer, because the cost of manufacturing them with a tariff is as much higher than without. What do you think about those costs for smaller manufacturers? Is that posing a major challenge? Are they able to pass along those prices or what do you see?
Michelle Edwards Lanham (20:01):
Yeah. Since the tariffs have come into place, we’ve been living with those for a while now. Before the pandemic started in 2019, there was a lot of tariffs in our particular industry that have definitely impacted our customers. And that is in the form of the materials becoming more expensive. So we are buying materials at a higher price. We’re then having to sell them to our customers at a higher price. And a lot of our customers are these smaller and medium-sized manufacturers who are taking those materials and really doing the work of the value add processing. So in turn, everything they’re making, then they’re going to have to pass on the prices to their customers as well, that are much higher. And I agree with you. I think we’re going to see those tariffs and expenses remain for a while. It does take quite a long time to turn the tide of a relationship from one country to another.
Michelle Edwards Lanham (21:02):
So, as you said, where we are trying, or the government is trying to get another government to behave in a way that they want, that can take a while. So I agree. We’re going to see these tariffs stay for quite a while. And some of the other industries that I have seen hard hit by the tariffs and having a pass on the additional cost to the consumers, because it is the American consumer who ultimately is paying the tariffs, is the clothing industry. Personally, I’ve made some purchases where in the digital marketplace, I have seen sellers actually explain to their customers that “Here’s an extra line item of tax. This is due to tariffs. We have not passed on the entire cost to you, but we can’t absorb it all.” And so they’re trying to explain to their customers through the purchase process of “Why are my clothes more expensive now?” And I don’t see that going away anytime soon.
Michelle Edwards Lanham (22:03):
I have also spoken with some small retailers who have talked quite a bit about having to diversify their supply chain. And this can be either due to the additional costs, because some of their costs have apparently doubled in some cases. And there’s no way they can, with their particular market, absorb selling a purse or a pair of pants for twice what they used to sell. So they have had to look around and find additional suppliers, either in other countries that are not impacted by the tariffs or that have different price points. And so the stores that have been successful have told me that they have had to reinvent themselves every month, if not even more frequently. It’s like a daily basis. They’d come into the shop. They find out what supplier they can still work with and which ones they can’t. And they have a whole backup of suppliers that they’ve researched that they’re building those relationships with, getting their credit applications in with those companies so that they can do business with them, or finding new domestic suppliers.
Michelle Edwards Lanham (23:23):
One business I spoke with recently, actually, I think was a really great success story. They found a tribe of Native Americans in the Southwest that produce beautiful jewelry and other goods. And so they now have this new relationship with this new vendor that does support a domestic industry. And now they have these wonderful new products that they can share with their customers that they never would have found if they hadn’t been forced to go out and look for those new suppliers due to the changes in the marketplace.
Greg Raece (24:01):
That’s fascinating. And that’s an amazing amount of agility, and it’s a great competitive advantage for that buyer to be doing. It is a lot of extra work and it’s hard. It would be nice to have a little bit more stability. On our end, maybe in that medium kind of enterprise world, what we’re seeing is a little bit of an end to the era of spot buying. Because spot buying is buying something that you need immediately just in a small quantity sent to you. It’s hard to do, and I’m not saying that Online Metals, we’re changing our business model. In fact, we often will be spot buyers. And we’re finding that though out those spot buys are becoming more and more expensive as they go up the supply chain. So we are actually investing in doing more proactively, like you were mentioning, in opportunity buys or in pre buys, or in larger quantity buys.
Greg Raece (24:57):
So therefore, we can own that part of the supply chain and then to be able to take that inventory and sell it at the same price that we have been able to sell it in the past, but it’s requiring us to like your example, be more proactive, go after these deals, find other opportunities, just we can’t sit still. And maybe that is going to continue throughout this this entire year, is that if you don’t do that, inflationary prices just might overwhelm you and make you uncompetitive because you’re not able to give a competitive price. So that’s a really fascinating insight. Maybe we’ll come back in a year and we’ll look at how all of that has happened.
Greg Raece (25:41):
It’s been a great discussion, Michelle. I know we’ve thought a lot about this past year, and we’ve also are thinking a lot about this upcoming year and there’s a lot of, again, uncertainty. However, the difference is that there’s that light at the end of the tunnel, where there are effective vaccines that have been announced. There are maybe economic indicators showing things are turning the right way. So it’s positive. And I think for those folks and those industries that have weathered it, kudos to them. They’ve done a great job.
Greg Raece (26:12):
For those folks who have had challenges and it’s been harder on them, I hope that we’re excited to see, and I hope that they feel good that there are better days ahead of us. So while we’re still early in the recovery, make sure to stay safe, keep your business safe, hunker down as best you can, but keep that hope going because that’s what we see this year, is a bit of a challenge, but more of a positive challenge towards moving forward. So I wish you, Michelle, and everybody a happy and nice and easy new year. And we will talk to you again on our next episode. Thank you.
Michelle Edwards Lanham (26:51):
Thanks, Greg. I’ve really enjoyed this conversation. And with that, we will conclude this episode of the Metal Press podcast.
Greg Raece (27:01):
Next time on the Metal Press podcast, join us as we talk about social media and materials. This is an exciting look into the world of metal influencers, social marketing, and maybe even an interesting story about a daughter too. So talk to you then.