Supply Chain Connect | Bisco Industries, Inc.
Id Ep Juhlich

Executive Perspectives: Josh Uhlich

July 31, 2023
Josh Uhlich, Director of Materials at Bisco Industries, Inc., discusses innovation and the integration of technologies in the distribution space, how to navigate volatility and how to prepare yourself and your organization for the future.

We are joined by Josh Uhlich, Director of Materials at Bisco Industries, Inc., in this Executive Perspectives episode as we discuss innovation and the integration of technologies in the distribution space, how to navigate volatility and how to prepare yourself and your organization for the future.

This interview was edited and formatted for clarity.

Tyler Fussner, Managing Editor, Supply Chain Connect

Josh, thank you for joining us today.

Josh Uhlich, Director of Materials, Bisco Industries, Inc.

Absolutely. I'm happy to be here.

Fussner 0:24

Thank you, and if you can please introduce yourself and tell us a little bit about Bisco.

Uhlich 0:29

My name is Joshua Uhlich. I'm the director of materials and operations at Bisco Industries. A little bit about Bisco, we are a broad line distributor. We have 53 locations predominantly in North America. We just opened our first brick and mortar off-continent in the Philippines. Right now, we're a little bit north of 300 million in revenue and have 550 employees. And we touch on pretty much every customer market segment out there – everything from mil-aero to printed circuit board, communication – you name it, we're pretty much in it.

Aside from that, we're really just looking to be able to service a customer the best we possibly can. And that's really one of our differentiators is what we really focus on is local presence, local service, local support. Especially in a time when so many other channel partners out there that we might be going head-to-head against sometimes are really doing the opposite. They're closing brick and mortars, they're rolling back to call centers, they're saying, “Go online, that's your only option.” And those are great for a lot of customers. But we also found a huge customer base who's really looking for that in-person service where they're coming out, shaking your hand and saying, “Hey, we're here to help you. What do you need solved?”

Fussner 1:40

Excellent. And I think having that ability to get facetime is always helpful for everyone involved.

Uhlich 1:47

Absolutely. And that's something we've seen change in the last couple years. During COVID, I believe everybody thought that it was going to go the exact opposite – 180 degrees the other way – that everything was going to be all digital and no more facetime, and people were going to be locked in their houses. And it really has, in our opinion, gone the opposite way. People were locked up for a while and they realized, “Hey, we don't really love this; we want to get out and talk to people and shake peoples’ hands and see people face to face.” And for us, it's been really good for the last 24 months.

Fussner 2:21

I'm sure everyone has had the Teams call burnouts. It's helpful to be able to shake hands and meet in person. I wanted to ask you, touching on a little bit about coming out of the pandemic, what have been some changes that have been implemented by Bisco over the past few years that have really helped you untangle the supply chain backlog?

Uhlich 2:42

This is a pretty complex question, but I want to home in on one part of it. And really, what it comes down to for us is procurement models. Procurement models are often only as good as the data they are built on. Scenarios like COVID are difficult to predict. And until the data is able to be collected and built into a model, that current model is insufficient and can't react properly and usually quick enough. Because there's usually these long tails that lead into, “Hey, how do we get all this information? And then what do we do with it?” And it takes some time to be able to get that information and actually take action or make decisions on it.

One of the main changes that Bisco made over the last few years was to adjust and update many of our procurement models to be able to include all those new data points and utilize those in our ROI and decision processes. Another change that Bisco made was to refocus on our customers’ problems and how we solve those problems. We wanted to utilize our existing network and expertise. We really weren't looking to do an extreme pivot and say, “Okay, this is now our new business model.” We wanted to say, “Hey, this is what we've been doing for over 50 years. We're good at it. There are customers out there who need that.” And that's really what we wanted to double down on. Lastly, Bisco has grown customers, projects, supply base – you name it, we're more diverse than previously before the pandemic. And it's really helped us to be able to weather some of that uncertainty, selling into so many customer market segments.

At the onset, in 2020, you would have thought aerospace would have fallen off of a cliff because there was no more commercial travel and the 737 issues. And the problem is that took a little while to unwind. So, were some of the stuff that we saw on the industrial front, like by April of 2020, that had evaporated. Well, some of the aerospace stuff had a little bit longer contract period, there were essential businesses, these items like aerospace and medical still took a while to be able to see those impacts. And it wasn't really until 2021 that we saw aerospace truly crater. And when I'm talking about aerospace, I'm saying mil-defense and all those different items that we clump into this one segment. And at that same time in 2021, the industrial side, or the things that are not the kind of aerospace and defense, started to make the shift.

We really see it in a few different ways that one customer segment might be down, another up. And overall, we're able to be able to see a little bit slower and steadier growth compared to if we were in one customer market segment and we were going after one small niche of products; if we were in just aerospace and focused on just electronics, then you can have some pretty big fluctuations based on market conditions. I'd say our big takeaway: diversify and use the data.

Fussner 5:30

And having gone through these latest trials and tribulations – the future isn't always certain. But with these changes that you guys have implemented, how do you feel it's set up Bisco to weather the storms of the future?

Uhlich 5:45

I believe that there has been a lot that we have done, but there's still so much more we could do. And that sounds like one of those like canned responses, but that's in all honesty. No business is perfect. And I'll be honest, we are not. But the one thing that we really try to do is take lessons learned; say, “Hey, we didn't do the best at this. How do we look at it, look in the mirror, and say what do we do better tomorrow?” That is something that's part of our company culture; we meet, look at different items. This really came partly from our quality side, where everyone's going together, looking at root cause analysis and going, “How do we make it better next time?” That culture is part of what I would say has helped set us up and will allow us to be able to continue to perform going forward.

There's definitely going to be some difficult times coming up over the next 36 months with a lot of uncertainty, because there's so many factors. Anybody who tells you that they know exactly what's going to happen is either lying, or they don't know what they're talking about.

The government, individuals and industry, what's going to happen with the commercial property market, interest rates… there are so many variables that I don't think anybody has a really good crystal ball, so to speak, of what's going to happen, but I can tell you that there's going to be a lot of uncertainty going forward, especially in certain customer market segments. We're already starting to see this; markets don't like uncertainty; businesses don't like uncertainty. And during uncertainty often, especially for public corporations, it's, “Hey, what did you do for me this quarter?” They want to see profits. I think we're going to see a shift in who really holds all of the power. Employees really had it for quite a bit of time, and some of that's going to shift back to the employers. There's definitely going to be some changes. It'll be a very interesting time, but I think all the businesses that are really set up, have a good infrastructure in place and really stick to their core competencies will weather the storm.

Fussner 7:44

I think that's a strong point: understanding who you are and being able to execute on that.

Uhlich 7:50

Absolutely. If you're trying to shift what your business model is every few years, it's going to be difficult.

Fussner 7:58

I wanted to talk to you about technology and something you had mentioned about updating your procurement models. I'm curious, is Bisco implementing any new technologies into their processes? Maybe AI or any ML? And if so, how's that helping you improve your distribution?

Uhlich 8:15

One of the things we're actually focusing on right now is some of the algorithms that we have in place. We're utilizing our internal programmers. We have an internal team of in-house programmers who work on our MRP, ERP and CRM systems, all of our W-mass stuff on the warehousing side, and really what we're looking at is improving some of those algorithms that we already have in place, using our data analytics side, to be able to help empower some of the teams as well as offer more information to all the IoT stuff. So, in warehousing, we will have all kinds of pieces of technology that don't necessarily replace human beings, but they make them more efficient. And that's really what we're searching for.

When we're looking at cost centers throughout the business, we want to find out how can we make them as efficient as possible? And how can we aid in all of those different departments? That's what we're really focusing on lately, especially over the last few years where we we're able to build a little bit of cash, we say, “Okay, what can we do with some of this? And how do we want to invest it?” And in algorithms, that's really one of the things that we're seeing. We've already had some of the technology in place; when we're coming to the hardware side, but we want to say, “How do we build out some of those?” This goes back to the procurement models as well, because a lot of that is based on mathematical models. We're saying, “Okay, how do we use this to be able to purchase better? How do we use it on the warehousing side to be able to pick, pull, put away all of these things as efficiently as possible?”

We're constantly looking at new technology, seeing what's out there, comparing some of our offerings. We recently just switched most of our wearables, so the items that the team members are wearing as they're going through and doing the pick, pull, put away process. They have these scanners that they're utilizing so that they can have access to the system anywhere throughout the network in the warehouses. We recently switched to some new Honeywell products. Those are awesome. I am really, really in love with those so far. And we're just re-focusing on our processes and saying, “How do we take these? How can we do them better? And what are some of the new pieces of technology that are out there that enable us to do it better than we were already doing it?”

Fussner 10:25

I think it is important to understand, and you touched on this, that maybe there's some hesitation or trepidation for some with integrating these newer technologies – but it's not about the displacement. Like you said, it's about reinforcement to the workforce you have.

Uhlich 10:37

Exactly. One of the things we're finding, let's say, on the warehousing side: Throughout our network, we have 70-ish warehouse team members; we're not looking to cut down on that, we're just looking to slow down the hiring process. Instead of needing another 10 next month and so on, we're saying, “Okay, how can we continue to do with the team members we have? How can we make them more efficient, more productive?” Because at Bisco, we're looking for tenure. We want team members to stick around; we want longevity. You can see that in most of our policies and processes. We give sabbaticals, we do all these things.

It takes a long time to train and bring somebody up to speed. We really are not looking to gut a workforce and then bring them back based on whatever economic cycle is at hand right now. And we want to be able to have team members for the long haul, and say, “How can we make them as efficient as possible?” And then look at that again next month, next year and say, “How can we do better?” And that's, I think, what some companies don't necessarily do great. And then there are some companies that do amazing at that, where they're constantly looking in the mirror and saying, “How do we look at this process and make it better?” Because many times, there's always new things that you can do, especially if there's a fresh set of eyes that look at it, if there's a new piece of technology. It's to this portion that we're talking about now, as all of these things become available, you don't know what you don't know, and nobody can ever be a complete expert. It's really about fostering this lifelong learning, of being a master of your craft.

I tell this to all of like my team members. My warehousing team, I want them to be better at warehousing than I could ever be. My procurement team, I'm like, “I need you to be better at procurement than I could ever be.” Leaders who really think that they know everything… that works if you have three team members and you're focusing on one really specific item. But when you have hundreds of people and offices all over the place, and you're touching all these things, you can never know everything. And you really need to make sure that you put people in place who know more than you do, who can be better than you can be, and also that they're going to be continual learners. And it doesn't just have to be formal education. It can be anything – if they're reading, if they're figuring out how to be a better manager, if they're asking, “What's the newest technology?” or reading all the different periodicals, white papers, doing exactly what we're doing right now – interfacing, finding things out. That's, in my opinion, what makes a good leader all the way down to even an individual contributor.

And this leads me to one last segue; when we're looking at hiring new team members, skills are awesome. And we do have some where we're like, “Okay, these are qualification-type thresholds.” But what we really look for is character. It's hard to train and ingrain character. But if you find team members who have awesome character, they're going to kick butt at anything you want them to do. And that's what we really try to look for. And that kind of cycles back to all this.

Fussner 13:24

And I think, to that point, you can bring someone in and set them up for success when you're integrating these technologies to help them succeed.

Uhlich 13:33

100%. Because if you set people up with technology to fail, then many times they will do just that.

Fussner 13:40

I also wanted to touch on what you're hearing from your customers. It sounds like you're very in-tune internally, but what are you hearing from the outside in? What are the pain points or the struggles that your customers are facing today?

Uhlich 13:53

One of the main pain points is going to be customer service itself. When we speak to either a new or returning customer, they're frequently discouraged with the state of the industry right now. Imagine that you're a customer and you see that the lead time is four weeks for a product and you need it in three weeks. Sure, the supplier might be able to say, “Well, that customer needs to plan better.” Yeah, that's awesome for next time. But how do you fix it this time?

At the end of the day, everybody is doing sales, everybody's doing customer service, whether it's internal, external, whatever, you always have stakeholders and customers that you're needing to satisfy. We're finding the customers are saying when things are out of control, when there is a problem, that they feel that there are less people to try to help solve that; that it has become more transactional and less solution based. I'm not saying we have the answer for that. I am just bringing up – that's one of the pain points that we see. Much different than over the last few years where it was material costs and human capital and all these different items – all those factors are still playing in, but it's when they're saying, “Hey, we have a problem and we're looking for somebody to solve it, but we can't find somebody to solve this problem for us.” That's probably one of the items that we see from our side.

And then again, it's all of those other items that we're seeing, it's material costs going up. I've been in this industry almost 16 years, and during that time period, except for the last few, inflation wasn't as critical into looking at your overall growth. You could say, “Hey, we know it's a couple percent every year. It's been pretty flat over the last decade and a half.” When you're looking at year over year increases in revenue, you were able to distill that out. Now, if an organization’s costs went up 10% on the material costs, and all of a sudden they're just passing that along and they're like, “We did so great. We're up 10% year over year.” No, you didn't sell any more pieces, you didn't ship any more lines, you didn't get into any more customer projects… And that's another pain point that we're seeing from our customers and supply partners; everybody we're talking to, the growth that they are often seeing right now is inflation based. And that's a different issue than we've had for quite some time.

Fussner 16:27

We touched on this in the beginning with Bisco's regional setup; do you feel like that has helped you address these customer service concerns – being able to have different locations to deal with different customers face to face?

Uhlich 16:39

Yeah, absolutely. And there's never a one size fits all. There are customers who might not necessarily love our business model. But that's the awesome thing about the free marketplace. Customers can choose where they want to go. And I'm not telling any customer how they have to buy; we just want to offer a solution. And if that's the solution that works for them, that's awesome. It definitely has helped us with a fair amount of customers. But I'm sure there are customers who are like, “No. We want to be able to one-click something; I don't want to talk to anybody.” And that's awesome, too. And there are wonderful channel partners out there to be able to fulfill those customers’ needs as well.

Fussner 17:16

I wanted to move on and ask you something on the larger scale. Amidst all the geopolitical discussions that are taking place around the trade and supply chain, there seems to be a great deal of resolve on the part of business leaders to solve their own supply chain issues. What have been some of the key understandings that have come from the chaos as of late? And is the industry better for it?

Uhlich 17:44

The last few years have been challenging for businesses, horrible for some individuals. People have lost family and friends and all of these things, so, I won't just brush by that. I'll make an acknowledgement to that.

The one thing I will say, and I wholeheartedly believe, is that businesses have come out stronger because of it. Challenges usually foster growth. It's rare that I see a business, a person, go through a difficult situation, and not take away something from that. Everyone and every business can decide what they take away from that. And if they're looking inward, and they're evaluating all these things, there's usually some pretty good insights that can come from it.

Over the last few years, organizations have learned, “Hey, we have these holes in our supply chain; we have these holes in our logistical infrastructure; we have these holes in all of these different places. How do we kind of patch those up?” That's where I talked about the lesson learned scenarios a lot at our organization. We found out and said, “Hey, there's this problem that there wasn't; a scenario that came up in the past and all of a sudden, when it did, we go, ‘Okay, how do we solve that and put that into our toolbox?’” And a lot of organizations are doing that and have done that over the last three years. They've said, “How do we take this information that we've learned and adjust so we can do it better next time?”

And again, we'll probably never have this exact same scenario happen. If there is another pandemic with $11 trillion put in by the government and all these crazy factors… it'll never be exactly the same, but it's being able to say, “Okay, we've seen this. And that just gives us a little bit better crystal ball next time.” Not a good one, but a little bit better.

Outside of that, we've seen just in time for a long time. Every business school was pushing this; all the B schools were saying, “Oh, it's just in time. This is awesome! Lean manufacturing!” There's still a place for that. But what a lot of customers, manufacturers – anybody who needed product – they realized that there are certain things that that doesn't necessarily work for. You have to find out and a one-size-fits-all-approach is usually not the right one.

And when the JIT stuff was across the board, “We're going to bring everything in one day before it needs to be on the production line, and we'll just hold our suppliers accountable.” Yeah, that's awesome, but what kind of stick do you have if they don't have that product ready and waiting? And because it is that upstream process where it's not just that supplier; there are five other suppliers and logistics companies and all these other things that people might not necessarily have thought about, all the way back to the smelters and the miners, and all these steps and pieces in this puzzle.

People didn't necessarily think of that. And they just said, “Listen; these are our terms and conditions. And you're going to have this here on this day. Thank you.” And once that broke down, organizations started realizing, “Hey, just in time is awesome for certain things that might not shut down our production line or be flight critical.” And it's just adjusting the procurement models; it's adjusting the business processes going forward.

That's one of the good things that, I think, came out of all this. I like to look at a scientific approach when I look at things. And we come up with hypotheses and say, “Okay, this is, we believe, our explanation of how the world works, or how this process works, at this time, but it should be continually evaluated and evolve.” And this goes back to the lessons learned thing. Scientists do a great job at this most of the time. And we really want to look at it, as business leaders, from the same standpoint, and say, “How do we look at what we did – find out what was good, what wasn't good – make the changes, and then update our theory of how everything connects?”

Fussner 21:47

I think it's a powerful perspective to stand behind. There were certainly many lessons taught, but it was the businesses that were able to learn those lessons, take a reassessment and adjust accordingly that were, and are, going to continue to be able to succeed and learn from that.

Moving forward, I want to hear your perspective on any upcoming trends that have been impacting the traditional supplier-distributor networks, and if any best practices have risen as of late.

Uhlich 22:19

This question reminds me of something that many of us forgot until recently. And this has to do with inventory in-channel and throughout the entire network – everywhere from the manufacturers to the customers, and the distributors in the middle. If we look back to undergrad supply chain, and you talk about the bullwhip effect: the customer needs 10 parts. The next link might order a little bit more than that with anticipation that there's going to be future growth. Then the next step, it's going to get a little bigger and a little bigger. And sometimes that can cause some unintended consequences. Because organizations are looking and reacting (sometimes in a positive light). That has caused a build-up for some suppliers, and for some distributors, and some customers, of inventory.

From our side, we feel that our inventory is pretty fit. We have pretty rigorous ROI practices. Sure, there are always things that can be tweaked here and there. But where we stand, we don't really feel that we are over inflated in our inventory. We are pretty confident in where we're at. We've actually even lowered a few of our procurement model numbers that allow us to bring in a little bit more inventory. And that sounds crazy to do right now, but we really want to make sure that when we're looking at conversion ratios and things of that nature that we're going, “How can we keep these conversion ratios up?”

Inventory is easier to sell than a promise. And we want to make sure that we're doing it but in a responsible nature. That is one of the things that I have seen over the last few years that is coming to a head now; that there was an anticipation that demand was going to continue. But some of that demand was based on a lot of money from the government that came in and helped boost all this. Whether it was on the individual level, on the corporate level. And then how do we look at some of that stuff critically and say, “Hey, what do we really believe it's going to be for the next 18 months?” And again, like I said, nobody has a crystal ball. Everybody's taken a stab at this based on all the information they have. But that's definitely something that I have seen as a trend lately that there has been the bullwhip effect propagate probably a little more than there has been at least in the last decade or so.

Fussner 24:55

I think it's helpful to understand because everyone's trying to look and see who's succeeding and asking, “What are they doing that's making things work for them?”

Uhlich 25:04

Yeah, for sure. I think all good companies should look and see across the aisle, “Hey, what is going on? What are they doing? What works well?”

Fussner 25:14

I also wanted to ask you, from the end-user perspective, as more and more users are researching or going to online purchasing models, how has that impacted the role of the suppliers or distributors?

Uhlich 25:27

We have actually experienced a little bit of the opposite. And that sounds crazy to say, but coming out of COVID and this lock down phase in 2020, and then as life got a little bit more back to normal in 2021 and 2022, and then, now, finally, with some of the full lifting of the government orders in 2023, we've seen individuals, sure, they might still want to work from home some time and they might want to have flexibility, but we have seen individuals, when they run into a problem, especially if it's a lead time problem, if they're like, “Hey, this price that is listed doesn't work for us, what can we do? Can we give you a target price?” All of these different items – the internet can only do so much on that, at least for now.

In the future, there's probably all kinds of cool solutions that will come available. But right now, what we're seeing is customers needing to talk to somebody. They're saying, “Hey, I have this, and this is what it says, but I need it a week sooner. And $1 less.” Or at that time, we might be able to say, “Hey, based on costs, we can't get it for you for $1 less; how can we come up with a creative solution to say, here's the next price break, here's this.” And all these things, just to be able to try to help educate the buyers on the other side. That's what our sales teams and customer service individuals are doing; they're really trying to help educate and solve a problem for them.

If I look and I go on Amazon (Amazon is awesome and they do a great job), but then there are some things where it's not perfect. If I go on there and I order water, and I'm like, “Okay, I need this six-pack of water and need it to be here tomorrow.” Well, when it doesn't show up, who do you call? If you're a business and all of a sudden, that was critical to your project, and the water doesn't show up, sure, you can go to a customer service center, but how much interest does that individual that you've probably never talked to in a customer service center have to be able to help you solve that problem? You're having to go through all of these different hoops.

And that's one thing. (This will sound like a sales pitch for Bisco) But that's what differentiates us a little bit. And what we've seen go the opposite way during this time period is that we would say you have a dedicated individual who you're going to work with. Our reps are inside and outside, which seems crazy, but that's part of our business model, where the same person that's coming out shaking your hand is that same person a day, week, month later that you're talking to on the other end of that phone. So, it's not somebody coming out and promising you something and then there's a completely different team trying to help you fulfill that item. It's one individual saying, “Hey, we've got your order, womb to tomb. We'll figure it out for you, whatever it is, whatever your problem, we’ll help solve it.”

And if they're not the subject matter experts, then we'll call on our manufacturing partners. We’ll bring in our reps. We’ll bring in all these other people to be able to help them solve that problem. And that's really what our sales teams do best: customer service the heck out of a problem. Then they rely on their connections and network to be able to say, “Hey, I can critically think about this. I'm not the expert, but I got this manufacturing partner, I'm going to bring them in, and boom!” And that's how we've really touched on so many items in a bill of materials for our customers. That's one of the other things they like, we can sell them everything from a connector to an externally threaded fastener, adhesives and everything in between.

Fussner 28:52

The human element is as important as ever, and I think technology is only as far as it is, but there's the problem-solving aspect, which you touched on. You need the human integration.

Uhlich 29:04

And that's where, AI – in the future, there's probably going to be a lot more that is going to come out of this. Definitely good and bad. I'll stand on the same line as Elon Musk on this. I am apprehensive to see what comes out of it.

We are always looking at things like ChatGPT and all the other items to see what is on the forefront out there. Are these things cool and gimmicky and they can help you write an email at this time a little bit faster? Or are there some real, interesting items that can come out of this?

IBM Watson was all the rage for a while. And then, now, I'd say people are like, “Oh, okay, cool. That was interesting, but what’s next? What can it really do for me?” And that's what I'm waiting to see. And there are probably people who already know the answer to that, and I'd love to be able to talk to them. Over the next decade, we're going to see very interesting things, in my opinion, especially on the AI front.

Fussner 29:58

Absolutely. And no one really does have that crystal ball, right? We don't know what's coming. And for the time being, I think being set up to have that human interaction is of paramount importance.

Speaking of technology and the advances that we're seeing, have those accelerating advances and maybe a lack of in-house engineering departments caused end users and even system integrators to rely more so on the distribution and supplier side?

Uhlich 30:27

It depends on what segment we are talking about. On the electronics side – yes. The manufacturers that we're meeting with here, they absolutely want more technical expertise on the distribution front; they want individuals to help with that solution sell and not just to customer serve it, but they're looking to say, “How can you help us design something in?” Because they might have a few FAEs and a few reps, but they can only touch so many accounts. So, they're looking, definitely, for that help.

It's a little bit the opposite of what we see in some other industries. And that's where it's pretty diverse. I can say the people that we're meeting here at EDS are on one end of the spectrum, and if you're at the fastener show, it's maybe on the other end of the spectrum. It also depends on the products, the complexity, how many different variables can change in that product offering. That is, in my opinion, aside from just industry alone, one of the things that we see. An externally threaded fastener versus an enclosure; the externally threaded fastener, there are a few different things that you can do to change that. We might have a different finish, or all of these small, nuanced-type items. But then on the enclosure side, there are so many variables and so many nuanced items that can change on that, that's where as you get more toward product complexity, then technical expertise does become more and more important in being able to get that in the hands of the customer.

This goes back to the customer service side, not just for us, but for everyone out there. You could have one million things listed online, but if the customer can't figure out from all of that information how to solve their problem, then they're probably going to go to something else to try to solve it. This is where organizations do a really good job, being able to find what that mix is in between just being able to say, “We're just going to put a bunch of parts in inventory and sell those,” versus “We're actually going to go in and try to design in all of these different items.”

There's probably a pretty good middle-ground on that. We really do, from our side at Bisco, rely on our channel partners on the manufacturing front. We need them to help focus on what they do best, which is design and develop products. We really want to look at the reps to be able to help bring that technical expertise when it's needed. And then from our side, we want to do the best that we can to be able to inventory, act as the bank for the customer, all of these different items, and if everyone really refocuses on their piece, I think there are some pretty good things that could come out of it. And with each supply partner, whether it's manufacturer, or distributor or rep, there's always going to be some shifting areas in that. It's who is best at what, and how can we make that work the best for that relationship there.

Fussner 33:24

It sounds as though you really need to understand any customer that you could be dealing with, and you need to understand how to provide the solution to a whole array of different customers. But in that vein, is Bisco offering any new capabilities or skills or services to help these users and help these users manage their projects?

Uhlich 33:42

We have the traditional part builder that a lot of the e-commerce-type organizations are putting out there. We're always looking to enhance that. How can it be better for our customers? How can the individuals that want to utilize the e-commerce front go through our web portal, be able to build parts, figure out whatever their problem is and come up with a solution. We are always building those items out because we do believe that there is a vast array of customers and different customers want different things. So, we're building that side out.

We're always working on internal trainings with our customer service and sales teams to say, “Hey, how can you get this base-level of technical knowledge?” And then what we see – and this is our business model, everyone's going to have a different threshold of how technical they want their customer service, sales teams – once you come to that line, because again, nobody can know everything, it [comes down to] how do you identify that and then raise your hand to say, “I need an expert in this.” Whether it's –we're talking about technical expertise right now – because even a lot of our CSRs, our individuals who are out doing the sales side, they might be an engineer by education but not necessarily by trade. They're not a field application engineer per se. They might have got their undergraduate degree in engineering, but they're not living and breathing it on a day to day. So, they can talk with engineers, but once something goes past their level of expertise, who do they go to? And how do they figure that out?

At Bisco, we have 150-plus authorized product lines, hundreds of others that we're supplying for customers. No person could ever really know all of that in that kind of breadth. So, it's, “How do they become technical enough to understand what they know?” And then be able to have that defining line of, “What do I not know?” And then, “Who do I go to?” That's where we're building out these vendor information files, within our ERP system, to say, “Hey, once you've gotten to this stage, if you don't know the answer, this is the person to go to. If you need to have a solution, you can go to our product management team; if they don't know the answer, then we're going to loop in somebody from the manufacturing side; the sales teams can reach across the aisle to their reps that they work with for each of those different manufacturers, and it's really being able to identify items so they can say, ‘Hey, listen, I've identified this, now I'm going to go to somebody who knows a little bit more and is a subject matter expert on that.’”

And that's what we focus on. Every organization does it a little differently. As we continue to grow, I believe that there is a shift in that. I've seen that personally. Really big organizations… if you look at your Top 50 list, the really, really big players out there, they're going to have more technical expertise on-hand available within the organization that they can rely on. Organizations lower on the list are probably going to have a more limited capacity on that front. And as you increase up there, you have more resources, more ability, more talent in the network to be able to tap on. And I think that's a sliding scale that you could look at on that Top 50 and say, “Hey, these organizations here probably focus on something; at the top, different.” And, again, this is a generalization. However, I've seen it hold true for a fair amount of them. Granted, there are people who are lower on the Top 50 who are going after certain commodities and saying, “We’re experts on this product.” And that's a little different business model than Bisco’s. Ours is more broadline, hit their whole bill of material, lower their purchasing costs. It just depends. There's, I'd say, a distributor out there for everybody.

Fussner 37:14

And it seems like Bisco is really taking the time to put themselves in the end-user’s shoes and set up these steppingstones to go through that process and have a place to turn and have someone to talk to.

Uhlich 37:25

Absolutely. That's, again, why we have so many offices. The individuals that are out there working with them, they're rooting for the same sports teams; they're going to the same grocery store right there in that person's backyard, instead of somebody 3,000 miles away that might have very little in common with the person that they are talking to on the phone going out and seeing.

Fussner 37:48

I think it comes back to what we touched on earlier with the human element and having that involvement, having that accessibility – just someone that can help you through that process.

I know we have brought it up quite a few times already in our discussion that there isn't a crystal ball that we can look into – but I'm going to ask you to do just that. And I want to hear how you think the distribution space is going to be evolving over the coming 6, 12, 24 months?

Uhlich 38:16

I touched a little bit on this, and I'll give you as much as I can give you. And again, I'll put an asterisk on this. This is based on what we see, what we're looking at, and a lot of it is applicable to our business. My crystal ball might look a little different than somebody who is just selling into aerospace.

Because we're serving such a wide range of customers, so many market segments, each of them is going to perform differently going forward. Going back to my comment about aerospace versus industrial and how we saw these 180-degree shifts, one's up the others down, and there's some big flip flops in there. But if we look at it as the aggregate of all those things, we're seeing slow and steady increase.

We are pretty bullish on aerospace and defense. And when I say that I'd say low double digits is what we're feeling for the next 12 to 24 months. In that, there are some caveats; private spaceflight, I think there are some challenges, what we just saw with Virgin Orbit – that was one of our customers – a lot of other organizations sold into that. We're seeing a similar thing, especially as capital has more places to put money when there are risk-free ways of return.

When you could say, “Hey, I can get a risk-free 4.5% right now, why do I want to put it in something that's extremely risky that might not have the payoff when the risk-free rate of return is close to zero?” Yeah, people are going to take some flyers on some things.

This is where, over the next few years, I think there's going to be a challenge for organizations that are trying to do things outside of the box. I'm not saying that's good, this is kind of what we're seeing. Funding is going to be more difficult to get; people are becoming more risk averse, whether it's on the individual consumer side or on the business-leader side. So, all of this tightening will make it more challenging for people that are trying to change the world.

That's one thing that we do see, and that goes from the aerospace items that I was talking about. Again, in each segment, we're going to see a little bit of their own nuances. There's going to be more volatility. Absolutely. We look at lots of different trends, everything from all the Dun & Bradstreet information to public company disclosures, and we really try to be good stewards of the data, collect it all, evaluate it.

My boss says this, I try to live by it. I'm a data guy at the end of the day; I love math. He says, “If you can't measure it, you can't manage it.” I believe that that is very true, whether it is parenting children or running a business. If you can't measure it, you can't manage it.

There are lots of variables, but there are more variables that look slightly concerning than they did 12 months ago. Again, that doesn't give you an answer to what we see; we're public, so I can't give you too much on what our internal items are. Individuals can go out there and look at our 10Q or 10K; our fiscal year will be ending soon; we end August of this current time period of 2023. So, our forecasting and budgets are a little different. We're not in lockstep with a calendar. Midway through the year and this will end our 2023.

We're pretty confident that things will continue to hold through the end of our fiscal year. Going into next fiscal year, I definitely think there are going to be more challenging times ahead. For anybody out there. Smart businesses, businesses who take a look inside, will continue to do well, continue to perform, especially organizations when you look that only have a small percentage of the market share. Because you can always capitalize and grow by pivoting and going after market share. So, that's one thing to think about.

But again, back to my point about the innovation, there will definitely be some slowing over that as the risk-free rates of return are as high as they are and so many variables: what does the Fed do? What happens on the industrial market for property? The vacancy rates… Right now, if you look at all the different individuals in that front, they're trying to say, “Hey, how do we lock people in for the longest lease period we can? Because, right now, it's probably the most money we're going to be able to get.” There's going to be some changes. Much of that was financed by regional banks.

It comes back to uncertainty. We don't know the answers to all these things. But over, your question, the next six to 12 months, I think we're going to get a lot more answers. Depending on what happens coming up all the way until the presidential election. We'll see what transpires. But now, lots of interesting things ahead. And a different uncertainty than during COVID. Where that was single-sided, it’s, “Hey, can you keep your business up and running? How do you get capital?” And then, “What's happening with all these lead times and price increases?” In that order. All of those different things I think will happen over the next 12 months. It's, “How do you get capital?” Based on that, “How do you keep your business up and running?” All these things, some organizations will experience and it's going to be interesting. I'm excited to see how it plays out.

Fussner 43:56

Absolutely. And there's a lot of unknown, a lot of variables to consider. But I'd like to keep that perspective in mind of ‘if you can't measure it, you can't manage it.’ I think that's a strong consideration to take to heart.

Uhlich 44:09

It is for sure. And it helps you to be able to look at lessons learned, modify things, continually adapt and grow. And the businesses that do that, I believe, will weather almost any storm.

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About the Author

Tyler Fussner | Managing Editor - Community Manager | Supply Chain Connect

Tyler Fussner is Managing Editor - Community Manager at Supply Chain Connect, part of the Design & Engineering Group at Endeavor Business Media.

Previously, Fussner served as the Associate Editor for Fleet Maintenance magazine. As part of Endeavor's Commercial Vehicle Group, his work has been published in FleetOwner magazine, as well as Bulk TransporterRefrigerated Transporter, and Trailer-Body Builders.

Fussner's May 2022 print feature 'The dawn of hydrogen trucks' was named the best single technology article in B2B by the judges of the 2022 Folio: Eddie and Ozzie Awards. Fussner was also awarded Silver in the Technical Article category for the Trade Association Business Publications International (TABPI) 2021 Tabbie Awards.

Fussner previously served as Assistant Editor for Endeavor's Transportation Group on the PTEN, Professional Distributor, and brands.

Fussner studied professional writing and publishing at the University of Wisconsin-Whitewater. He has experience in shop operations, is a Michelin Certified Tire Technician, and a Michelin Certified Tire Salesperson.