Adapting Present Tactics to Address Future Supply Chain Delays

This week on the Making Connections series presented by Brennan Industries, Regional Sales Manager Joe Carr sat down with José Goas, the Division Vice President of Hydraulic Supply Company.

 

HYDRAULIC SUPPLY COMPANY’S ROLE IN THE CURRENT MARKETPLACE

As their name implies, HSC specializes in mobile hydraulics. They’re a division housed within the fluid power solutions group of Motion Industries and are appointed to serve all customer channels–– from end users and resellers, to OEMs. “Service, solutions, and speed… that’s what the industry craves,” José observed. “That’s what’s going to set you apart in this industry… That’s really what HSC strives for.”

 

 

And given their industry, it’s also no surprise that they would often work in close partnership with Brennan Industries: a titan in hydraulic fittings and adapters that has been operating in North America for the better part of a century.

But for an industry that’s so prevalent around the world, as Joe pointed out, they both wish more people knew how fundamental it was for their daily living. “Hydraulics are everywhere,” José declared. “From the trash being picked up on your street, to the buildings going up around you.”

Without hydraulics, the world would grind to a screeching halt.

“Hydraulics are everywhere.”

One of the most recent major changes in the hydraulics industry is the evolution of customers as they grow far more investigative and involved in the purchasing process than ever before. A central aspect of this development is the deepening relationship between buyers and suppliers, as distributors become key experts and partners to the process, rather than merely collecting and delivering goods as requested.

“You’re seeing more and more customers really craving the need for an educated partner,” José explained. “Somebody who’s going to give them a solution, as opposed to just selling a catalogued part number.”

“Service is everything,” Joe agreed. If anything, he considers Brennan’s business to be one of consultation for hydraulics purchases, and not just one of selling parts. Customers appreciate the support of somebody who can come alongside them with the expertise they need to make an informed decision.

 

HOW HAVE SUPPLY CHAIN AND INFLATION IMPACTED COMPANY PRACTICES?

José’s company may not be exempt from the logistics and shipping delays faced by nearly every industrial business in the wake of the 2020 pandemic… but according to him, Hydraulic Supply is embracing the situation as an opportunity for growth, rather than a mere obstacle to be removed so that their practices can return to what they used to be.

The key to their optimism? Strong ties with distributors and other partners, which go beyond mere business arrangements. “We’ve really leveraged some of the relationships that we have with our suppliers to give us that leg up on our competition.”

“I think we definitely rose to the occasion,” Joe confirmed. Brennan foresaw some of the supply chain elements that would be impacted by COVID-19, such as their heavy reliance on the ports at LA and Long Beach. 90% of their deliveries used to arrive in the States through those ports, and so they redirected many of their shipments to travel by way of Seattle and Houston, to avoid any singular bottlenecks within their own supply lines.

“Everybody in every industry is dealing with [rising costs] right now.”

“We used to use the rail network in the United States,” he added. “Going from LA or the West Coast to Cleveland (which is our headquarters) would take about 100 days.” But now, instead, Brennan just hires their own three-day semi truck to pick up their parts from the west coast and deliver them in Cleveland directly. The new process has vastly reduced their lead time, and has greatly increased their ability to respond to customer orders in a quick and efficient manner.

And similar to reevaluating supply lines to trim excess or waste in the name of more efficient methods, Hydraulic Supply is regularly checking their own process and cost centers to determine ways to clean up or smooth out their expenses in the face of increasing inflation. “Everybody in every industry is dealing with [rising costs] right now,” José explained, so at least there is some comfort in knowing that their dilemma is not a unique one.

The only other major change that Joe foresees could be a decrease in the manufacturing of new equipment. “If costs continue to increase, people might decide to repair instead,” he predicted. Fortunately, for both Hydraulic Supply and for Brennan, their broad diversification in OEM, maintenance, repair, and operations markets will likely provide a helpful buffer for them if that kind of situation arises.

 

HOW SHOULD INDUSTRIAL COMPANIES VIEW AND RESPOND TO THE LABOR SHORTAGE?

It’s no secret that laborers are hard to find… and according to Joe, that’s especially prevalent in manufacturing for labor-intensive jobs across the country. Many industry sectors are looking into investing more heavily in automation as a necessary response to the deficit.

When it comes to finding creative solutions, José chuckled, “I probably would have given you a different answer about a month ago.” Back then, he would have described HSC’s recruiting process as aggressive… even reckless, in some ways. But now that some larger companies consider the economy to be leveling off slightly, many practices are rolling back their efforts again as the pace of hiring lessens–– not in a drastic decrease, or trending backwards, but merely reducing the breakneck pace at which it was initially going. “We’re seeing some of that aggressiveness from our competitors come off the table,” he explained. Now Hydraulic Supply can afford to be, “a little bit more patient,” in the process than they were before.

That being said, HSC does not appear to have any intentions of keeping their recruitment process ‘the way they’ve always done it.’

“We all know that there’s an age problem in the industry, where the workforce is starting to get aged out,” José iterated. “We haven’t done a good enough job of bringing young talent in to train them up and fill some of those roles.”

“The workforce is starting to get aged out. We haven’t done a good enough job of bringing young talent in.”

There’s a necessary learning curve when new workers join a team, and there are also necessary training periods no matter how educated or experienced those fresh hires may be. But, as José and Joe have observed, fewer and fewer companies want to put in the time or the work that it takes to weather that learning curve.

Not only can this negligence cause friction in and of itself, but sometimes the conflict can merely increase when young talent comes into a job with new ideas about how the business should approach different tasks. Companies need to take on the challenge of adapting to the next generation–– even if each step in that direction is a small and gradual one. “They’re looking for different things in the companies they want to work for,” José elaborated. “You’ve really got to adjust… to hire and to retain talent.”

Similarly, Brennan is also focused on building an attractive work environment: one that not only invites collaboration and camaraderie in the pursuit of a common goal, but also invites closer friendships between employees by introducing regular holiday or staff activities on a monthly basis–– from “National Fudge Day,” parties to cancer fundraisers.

 

WHAT SEEMS TO BE IN STORE FOR THE HYDRAULICS INDUSTRY?

Going forward, in José’s opinion, is going to involve an increased focus on providing expertise and trusted solutions to customers in more of a partnership role than a mere vendor role. “We’re seeing a lot of the technical resources within some of the customer base being stripped out or not replaced,” he admitted. “They really are leaning on their suppliers… to fill that void.” Distributors and partners who aren’t prepared for that kind of role won’t be able to capture the market as these shifts become more solidified.

“We’re seeing a lot of the technical resources within some of the customer base being stripped out or not replaced, and they really are leaning on their suppliers and their partners to fill that void.”

Of course, ‘solidified,’ may not be the right way to describe it. As Joe puts it, the markets are always changing… as are the technologies within those markets.

Some new OEM applications are being tested in the green energy sector, for example, and hydraulics are very likely going to be involved in many segments of that industry as it expands in the coming years. “I think they will always be around,” he admitted.

However, that does not mean that Brennan or Hydraulic Supply can rest comfortably on their existing product catalogues. “What we’re selling today is not going to be what we’re selling 5, 20, 25 years down the road,” Joe added quickly to his observations. It’s a concept perhaps expressed most clearly by renowned Harvard professor Theodore Levitt, who reportedly coined the phrase, “Sell the hole, not the drill.”

Businesses in any industry, evergreen though it may seem, will need to continue to adapt to the needs of their customers over time–– whether that could involve leaving their own traditional products in the dust, or not.

“What we’re selling today is not going to be what we’re selling 5, 20, 25 years down the road.”

For both Hydraulic Supply Company and for Brennan Industries, they’re confident in their abilities to maintain steady business in the coming years by meeting client needs, whatever they may be. “We’ve got a great team of individuals… keeping their ears to the ground on what’s in need,” Joe shared.

And in addition to those steps, HSC plans to build a workplace environment and culture designed to attract and retain young talent. “It may take time for that talent to acclimate to the industry,” José admitted, “But it’s going to put you a step ahead of everybody else down the road, and that’s what we’re looking to do.”

 

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