True Value steps up to the supply chain challenge
Supply chain. Labor. Inflation. Check, check, check.
In an interview with HBSDealer, True Value CEO Chris Kempa didn’t miss a beat tackling the three big issues facing the business of distribution. The industry veteran – whose resume includes leadership posts with other Chicagoland distribution giants, Grainger and Essendant —fluently described in detail the interconnected (and unprecedented) global challenges facing the industry.
Boiling it all down to brass tacks, he delivered a positive assessment on the state of post-pandemic distribution.
“We just continue on a monthly basis to assess where we're at,” he said. “The good news is: we are in a better place.”
More good news from the True Value CEO is based on the health of its customers, as well as its customers’ customers.
“The pandemic drove feet into our customers’ stores, and they keep coming back,” Kempa said. “So the independent hardware retailers, and specifically our hardware stores, know how to manage in their markets. They know how to serve customers. They had a lot of them come back through their doors and they're keeping up.”
Supply-chain challenge
Kempa listed the challenges facing the business of moving products across land or sea: Closed ports in China, container shortages, truck availability, driver shortages. On top of it all looms the threat of a strike at ports along the U.S. West Coast, where members of the International Longshore and Warehouse Union are working without a contract.
And through it all, “There is no playbook,” he told HBSDealer.
For True Value, rising to the challenge of supply-chain uncertainty begins with its people.
“We have over the last couple years, built the best-in-class team that really manages the end-to-end supply chain,” Kempa said. “And so we have gained an advantage based on our team. We are doing everything we can to move and get goods. And from my perspective, our team has done an incredible job.”
That job includes building diverse options into the supply chain, finding dual sources, looking at new countries of origin and preparing for the unexpected. “And we’ve been doing that from day one,” he said.
Among those leading the charge is Jennifer McNeill, True Value vice president of logistics and one of the driving forces behind the distributor’s participation in the White House FLOW program. That’s the Freight Logistics Optimization Works program, a data-sharing group of distribution leaders created to ease supply chain congestion and share perspectives.
“Our perspective is easy,” Kempa said. “Please help me get goods so that I can take care of my customers.”
[Read “True Value joins White House task force” here.]
“We're also helping leaders understand all the challenges we go through, to try to make this work better,” Kempa added. “Now, things are getting better. But better is not normal.”
Naught without labor
With so many moving parts in the distribution industry, there are even more moving people. People are needed to run warehouses, receive shipments, pick orders, pack orders and drive trucks, to list a few. Filling those positions is similar challenge for the distributor, its customers and the industry as a whole.
Kempa described the labor shortage as the “biggest hangover from the pandemic.” The situation demands looking inward at pay scales, benefits, work environments, and assessing all the little things that lead to retention and recruitment of employees.
“It makes you examine the basics of just god environments, good leadership and good engagement with your teams,” Kempa said. “And so we have put a lot of emphasis on that.”
Inflationary times
Anther unpleasant industry talking point is the “I” word.
“The inflation the end consumers are feeling now is all interconnected to everything we've been talking about, and we'll continue to manage through it,” Kempa sad.
One particularly important area of inflation felt by True Value is the rising price at the pump. “Fuel is applying tremendous cost pressure,” Kempa said, and there’s not a lot of hope for short term relief for fuel or other rising prices.
“As disruptions continue, as the labor shortages continue, as the wage escalation for labor continues, there's no relief on those in the short term,” he said. “Once consumption and demand start to dry up, normalize, or slow down, then I think you'll see it start to normalize the rest of it,” said Kempa, who added that his was the view of a distribution industry veteran, not an economist.
“And meanwhile, we're doing everything we can to absorb costs, and not pass them on,” he said.
From a sales perspective True Value nation has enjoyed the pandemic-induced home improvement spending boom with sales in line with the rest of the industry’s growth in the go-go year of 2021 and continuing into 2022, despite the recent cooling of the economy.
“Do I feel optimistic? Absolutely. We can see a two percent to three percent increase in do-it-yourself improvement projects in 2022, based on the industry reports and Cleveland Research.
“Those stats indicate that there will be consumer demand, which is great,” he said. “We absolutely believe that in the market where we sit, there will be demand.”
