Addressing Unstable Economic Influences As a Company

This week on the Making Connections series presented by Brennan Industries,  Executive Vice President Brad Rico got a chance to sit down with Chuck Connors, the CEO of Omni Services. They shared major changes that the hydraulics industry has undergone in the past few decades, and how their companies have sought to address various unstable economic influences to continue serving customers and building strong teams together.

 

 

HOW HAS OMNI SERVICES CARVED OUT A PLACE FOR THEMSELVES IN THE HYDRAULICS INDUSTRY?

Omni Services is a North American distributor, fabricator, and manufacturer with a focus on transferring and conveying liquids such as gas, oil, or water. “Many companies are also involved in the propulsion or powering… too,” Chuck explained. “As a result, fluid conveyance takes on kind of a secondary status.” However, issues can arise when general liquid transference isn’t considered as high a priority as production of the pumps or motors that are doing the moving or powering. Omni, on the other hand, consciously made the decision years ago to make liquid conveyance their primary focus.

“Ultimately we will have been successful… when the customer views Omni as being on their staff.”

For Chuck and his team, the other key element of their work is the valuable relationship they build with the clients who come to them for assistance–– transforming a general business arrangement into a trusted partnership over time. “Ultimately,” he added. “We will have been successful as a company with a customer when the customer views Omni as being on their staff.”

Building a relationship like that certainly hasn’t always been easy. One of the most noticeable developments in the hydraulics industry that Chuck has witnessed is the evolution of distribution from being a ‘dirty word’ and a necessary evil into a major value. In the 1970s, companies seemed to resent paying a ‘middleman’ and preferred to purchase directly from manufacturers–– but at that time, delivery wasn’t nearly as world-reaching as it is now.

“When it was a USA market and we made everything, that was one type of existence,” Chuck admitted. “But now in the global market distributors are now delivering value. That’s the big differentiator.” Distribution is now considered to be very progressive as a result. Their hard assets and delivered value makes them an attractive investment to shareholding companies.

 

WHAT ARE THE TOP CHALLENGES TRANSFORMING THE HYDRAULIC COMPONENTS AND SUPPLY MARKETPLACE RIGHT NOW?

From Chuck’s view, there are four central issues that the hydraulic components and supply industry has encountered:

1. Personnel Shortages
2. Raw Material Shortages
3. The COVID-19 Pandemic
4. Logistics Delays

“I’ve never seen logistics jam-ups like we’ve had now,” Chuck observed. These delays impact both inventory as well as cash flow. On the positive side, things like the labor shortages have caused companies to be more vertically-integrated and strive to do more of their process in-house as far as they possibly can.

“So many original equipment manufacturers (OEMs) are now shifting to what I call ‘design and assemble,’ so that they run more lean, and they get their product arriving just in time,” he explained. Within that process, companies like Brennan and Omni Services help to manage their channels and deliver those products. They’re already seeing more clients and more manufacturers becoming more flexible in their processes, as well as innovating in new and exciting ways. “I think that out of confusion can come progress,” he concluded. “I really mean that.”

“I think that out of confusion can come progress. I really mean that.”

“If you look back over the last 20 years of us being in business, I think they’re going to be writing books about some of the things that we’ve had to overcome and to get through,” Brad agreed. From the recession of 2008 to the 2020 pandemic, to say nothing of the rise of internet and IoT, the technology, economic, and logistics hurdles faced by manufacturers in the past two decades are, to employ a vastly overused term, unprecedented. Facing these challenges and putting together strategies to address them has certainly been difficult.

 

WHAT KEY STEPS ARE OMNI AND BRENNAN FOCUSING ON TO MITIGATE THESE OBSTACLES?

“That flow of information between the manufacturer, between the distributor, between the end customers… it’s all critical that we play a vital role in that,” Brad concluded. “We have to be on the same page now.” Companies like Brennan and Omni Services have built their schedules around that regular, clear flow of information. With the logistics of delivery times stretching out from 12 weeks to 24 or even 50, cohesive partnerships with reliable inventory are key to timely delivery.

Another key step to those timely deliveries is the possession of extra inventory. For a long time, Chuck recalls, customers were expected to hold much of the inventory in the hydraulic supply industry. However, the more one thinks about it, the idea of a customer being expected to sit on that much of an investment is actually somewhat of a waste. “It’s not good business,”  he admitted. “Part of the value we provide to both our end user and to our supplier like Brennan is that we share in the burden by keeping inventory.”

“Omni needs to share in the burden… by keeping inventory.”

Keeping inventory stocked is a great way for distributors to help both manufacturers and customers in this ongoing era of supply chain delays; and it also helps distributors to prove their value in a time of delayed deliveries and acutely-long lead times.

And as for the labor shortages, Chuck has a seemingly-basic solution to recruiting and retaining good talent.

“Run a good company,” he admitted easily with a laugh. “Because your people talk.” Whether they be suppliers or employees, the people who work with you will establish the most consistent elements of your reputation when they talk about you. Chuck considers Omni’s every employee to be a recruiter for the company as a result.

One of the factors that he sees as a powerful draw for Omni Services is their practice of rewarding all team members with at least some amount of performance-based pay. Whether that pay is driven by error reduction in warehousing or an amount of a quota achieved or some other merit altogether, that leads to employees performing their work both with pride and with a confidence that they’ll be recognized for the effort they’re putting in. Whenever anyone is looking at a position at Omni, Chuck and his staff have a simple strategy: “We have him speak to our people.” The culture and environment that they find is one of positive rewards and genuine acknowledgement.

“Run a good company, because your people talk.” 

 

WHERE DO THEY SEE THIS INDUSTRY AND MARKET HEADED?

According to our two guests, the hydraulics market seems to finally be on its way toward catching up with other industries. Whereas for some time hydraulics have been considered slower or less sophisticated technologies than others, there are now major changes on the horizon thanks to the introduction of new elements like electrification, and artificial intelligence that is enhancing decision-making processes to generate intelligent systems.

Those items may not sound like normal hydraulics products, but –– as Brad pointed out –– this field goes far beyond mere piping. “It goes into the processes and the systems that are driving our industry right now.” All of these developments are vital to keep pace with current demand, as well as to meet the future needs of the industry in the coming years.

And, if their adaptability and commitment to building strong communities is anything to go on, Brennan and Omni will be present to face that future when it gets here.

 

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