Transcript

Adam Honig: Hello and welcome to Make it. Move it. Sell it. On this podcast, I talk with company leaders about how they’re modernizing the business of making, moving, and selling products. And of course, having fun along the way. I’m your host, Adam Honig, the CEO of Spiro.ai. We make amazing AI software for companies in the supply chain, but we’re not talking about that today. Instead, today we’re talking with Chad and Ryan Howard from RMH Systems, which is probably the most successful material handling company that I’m aware of at any rate. So Chad and Ryan, welcome to the show.

Chad Howard: Thanks Adam, good to be here.

Adam Honig: Yeah, it’s great to talk to you guys, it’s not often I get to talk to two brothers on the podcast at the same time. Ryan, I’m sure you’ve got a lot of stories about Chad, but we’ll save that for later, after the podcast when we can talk about him, just you and me maybe.

Ryan Howard: Yeah, you only gave us 15 minutes, so I don’t think we’re gonna have enough time. 

Adam Honig: Yes, I understand, there’s a lot to talk about there. So Ryan, you’re the president of RMH systems, Chad’s the general manager, and I know that there’s a lot of focus on your business in the culture, and how you develop the team, the staff, and so on. Chad, maybe you could just give us a quick background on the business and a little bit about some things that you guys are really focused on.

Chad Howard: So RMH systems, our family took over, bought the company in the early nineteen nineties, and we’re primarily focused on the industrial automation world. And that spans across material handling, which would be conveyors, rack equipment, and cranes. And then there’d be packaging equipment as well, and line packaging equipment then also robotics too. And Adam, as I’m sure you’ve seen in the world, in the labor force it’s hard to attract and retain labor. So robotics is becoming more and more prevalent in different manufacturers across the US.

Adam Honig: Yeah. Now I’ve got a question, so your family bought the business, did you guys all sit around and were like “Dad, I really wanna go into the material handling business. I’ve got this thing, I think it’s gonna be big, and there’s a lot of people who need it.” Like how did that happen?

Chad Howard: I’m sure Ryan will say the same thing, but both growing up, we were both active in sports and I don’t even know if we knew what material handling really was or is, and so it took a little convincing. We went to college, both had finance degrees at the University of Iowa, and then we both went and did our own thing. Ryan was in healthcare, he got a master’s in healthcare, I went to a software consulting company in Chicago. And then I think we saw the benefits of being an entrepreneur and working within the family business. We had more and more conversations with our dad and I guess we networked pretty well with him, he was nice enough to bring us on board.

Adam Honig: Well that’s great that you’ve got that great relationship with your dad, would be kind of sad otherwise. So Ryan, how does that come into the way you guys work with employees being a family business at all?

Ryan Howard: Well it’s certainly a different dynamic in a family-owned business, family-owned businesses can be very small and there are very large family-owned businesses out there in the world. And for us, it’s an important piece to our culture. We have worked hard to maintain that family feel to the business as we’ve grown. Since our grandfather took over in the early nineties, it’s gone from about 15 people to 115 people and I think we’ve tripled in the last 10 years. So it’s grown quickly and we now span over five states. So it becomes difficult to maintain that same corporate culture, I shouldn’t say corporate culture, just maintaining that same company culture across branches, across states as you grow quickly. And we work pretty hard and make it a priority for not only our various management teams across the branches to uphold those cultural values, but we put a lot of onus and ownership on the entire team to be a part of it. And a lot of it comes down to our hiring and interviewing processes, we don’t want just talented folks, we want people that will uphold and adhere to how we like doing things. And being a part of the team in the right way, and doing things the right way that we’ve done now for 30 years. And so it permeates through a lot of the different things that we do within the business.

Adam Honig: Yeah. Now do you use a particular hiring approach? For example, we use the “Who” methodology, it’s kind of a goofy name, but it’s by this guy, Jeffrey Smart, who wrote this book about interviewing and so on and we found it to be very effective. Is there a similar methodology that you guys use for that?

Ryan Howard: I’ve read the book by Mr. Smart, it’s a good book, I like the model. We’re trying to grow up quickly, and we’ve gone from being a pretty small regional family-owned business to now, I like to say we’re a big, small business. But things like HR and marketing, those things kind of are on the tail end of your growth because you’re trying to figure those things out with a few management level people that maybe don’t have backgrounds there. And I think we’ve gotten better at it over the last couple years. We’ve added an HR manager, which has helped formalize our process quite a bit. I don’t think we adhere to a very specific methodology that’s defined in the market, but we’ve become much more particular in our hiring process. We used to just rely on our gut instinct quite a bit and it wasn’t bad. We’ve had a good run of hires, but now we involve a lot more people in the process to bring different perspectives, even if it has nothing to do with the actual role. And I think there’s a lot of commentary about shortening the interviewing process out there on the market right now. We’re actually lengthening our interview process, adding different layers, we add in a social aspect just because it’s so hard and so costly to hire someone that doesn’t fit. If you have to flip that person over or replace that person because they left or they didn’t work out, it’s expensive, time consuming, and it hits morale too. So we’re pretty thoughtful in particular in the interviewing process and we make sure we get a lot of perspective on that person beforehand.

Adam Honig: Yeah, that totally makes sense. I know a lot of people that I’ve been talking with are worried about employee resignations and it feels like this whole period that we’re in is really causing people to rethink what they want from their careers and their jobs. Our former head of sales decided that she wanted to move to Vermont and open up a women’s clothing boutique and that’s what she did. It was just like one day, that’s what she did. I think the pandemic in particular has caused people to revisit these choices. Chad, maybe you can jump in there, have you guys been seeing that in your company or with suppliers or customers or how’s that been going?

Chad Howard: We’ve been seeing it a lot with our customers, I would say mostly. A lot of our customers are in the manufacturing industry. So they’re hiring workers to work for hourly wages and they are struggling to find that labor, and struggling to find people who want to come in and do repetitive jobs for eight hours a day, and let’s face it, probably not the best conditions. It’s pretty much summertime and warehouses can get pretty hot in the summer.

Adam Honig: There’s not a lot of air conditioning in those factories I’ve seen.

Chad Howard: No, there’s not. It can be a grind for a lot of these workers, and so some of them are going to other industries. Some of them are going to the manufacturer across the street who has a sign out front that says they’ll pay them $1 extra, so it’s a struggle. So yeah, we’re definitely seeing the great resignation and in our industry we’re doing a lot of things to keep people within our company, granted we’re selling to these manufacturers. But somewhat going back to Ryan’s point about the interviews too, that process for us doesn’t stop once they sign on board with RMH. We’re doing our best to make sure that they’re thought of first, you know, throughout their whole career, but those first 90 days, we’re staying with them. We’re giving them a gift basket when they show up that first day as some of their favorite things. We’re setting them up with a buddy system, if you will, where nothing will get reported up to management, but they just have a place to go where they feel they can talk about whatever they wanna talk. I guess basically talk about management, so if they wanna talk about Ryan and Chad probably.

Adam Honig: Let’s ask you this, most of your staff is coming to one of your facilities today, do you have a flexible work program or how does that work for you guys? 

Chad Howard: Yeah, we don’t have anything written in stone, but we do have people who are working remotely or have some sort of hybrid approach. So we still like to see people come to the office, we still value and think that there is value in people showing up. You get good communication and things just seem to happen at an office, but we do understand people have lives outside of work. Some days they might need to take their kids to a doctor appointment. Sometimes they’re able to just get more done from home, so we are flexible in that nature. We don’t have anything written in stone, but we just like to keep the communication lines open.

Adam Honig: Now, I’m curious, when you think about the different initiatives at your business, how big a deal is, I don’t wanna say HR, but I’m talking about employee relations with like the team and retention and hiring, where does that rank? I mean, you guys are obviously in a business with physical products and a lot of people think about inventory levels, and stuff like that, but I kind of get the sense this is a top priority for you guys.

Ryan Howard: Yeah, I would consider it at the top. And it’s not one that has surfaced all of a sudden because of what’s going on. I think we’ve strived pretty hard to keep that at a top-level priority. I mean we don’t make anything, we are a distributor, we’re an equipment integrator, so we do sales engineering and service. We are completely in the service and people business, so our business thrives because of the people we have on our team. And like I mentioned earlier, to have somebody leave that’s a talented person or good at what they do is extremely costly. Both in the direct costs of then having to hire, but then the indirect costs and what’s lost with that person and the transfer of knowledge and the relationships and all that sort of stuff. So we as a leadership team spend a lot of time talking about the strategic direction of the company, where we’re going, what the next quarter looks like? What do the next two years look like? Where do we need to expand? What markets do we need to be in? What people do we need to develop and all of those decisions and all of that strategic thinking is really at the forefront guided by our culture. And we’re not gonna make decisions for growth that are gonna reflect poorly on the culture or have an impact there. 

We are completely dependent on our strong team and we have been so blessed with the team that we have. We’ve got great people that care about what they do. They care about the people that work here. And so it’s incumbent upon us to constantly be evolving, to make sure we’ve got a physical work environment that people like coming to, we’ve got a benefits package that supports people. There are flexible programs that allow people to achieve their goals that they have in life, but also live their lives with a balance with what’s going on with their families. It’s a pretty complex, robust subject, but it’s our job to keep it at the forefront and make sure we’re up with the times. And also have a good pulse of what the team needs and wants around here as far as an employer-employee relationship. It needs to be a relationship, it can’t be a traditional contract. It’s gotta be something that has life to it and is active and open.

Adam Honig: Yeah, I really get that family ethos coming out of it. I can really tell that from the way you guys are talking about it just how important it is. I do wanna shift topics for a second though, I wanna talk about material handling because this is a topic that I know there’s a lot of interest in.

Ryan Howard: That’s what everyone says, they say can you just hold on, I want to talk about material handling.

Adam Honig:  I wanna talk more about material handling. I’m sure that at a lot of cocktail parties, Chad’s out there talking about the Cubs or whatever, and he’s like no. But in all seriousness, I’m really curious, like from your experience, this whole issue with the supply chain challenges that people have been having in terms of being able to get materials, and the lead time. I’ve been talking with people about how they’ve been stocking extra inventory. Some of the people are saying we’re stocking extra inventory to deal with the supply chain. Some people are like we’re still running as lean as possible, even if that means that we’re missing out on some sales. What are you seeing from your perspective?

Chad Howard: Yeah, the whole stocking inventory thing, if you were to ask us a couple years ago about stocking inventory at RMH, we would’ve said yeah, probably not what we’re gonna do, but we’re having those talks right now. And we are starting to stock some inventory. But to your question Adam, we’re seeing that customers are struggling with the lead times, and our vendors are struggling to meet the lead times. The lead times, what used to be a two week item two or three weeks ago could be a 16 to 20 week lead time right now. So it puts a strain on our customers and where we focus then is on over communicating with our customers, letting them know weekly every couple weeks what the status is of that piece of equipment or the project; you just can’t communicate enough. And even with communication, it’s still sometimes a question mark of when that part or when that piece of equipment is going to come in. 

Adam Honig: I imagine with your solution, just one component can hold up the whole thing. I think that’s because you’re putting in like a whole line for somebody to help them build something or package something and you’re integrating these different solutions together.

Chad Howard: Correct. Yeah, so we could be integrating an entire conveyor system at a distribution center. And for your listeners, I’m sure a prime example they’ve all seen is the car issue and the car shortage with the chips. It’s something like that, we could have motors that aren’t coming in for the conveyors, and that’s the only part that we can’t get. But we can install a conveyor system without something to drive it, so it definitely could be the one part.

Adam Honig: Yeah. Now one of the things that has been coming up a lot for me when I’ve been talking with people is something like the Amazonization of customer expectations. Everybody’s so used to ordering stuff online, getting stuff quickly, being able to go online and see the status. Are you seeing that kind of bubbling up in your customer base too?

Ryan Howard: Yes, everybody’s trying to figure out how to do things quicker, faster, and more automated. And a lot of the supply chain issues stem from labor shortages and labor issues. And so yeah, everybody’s trying to figure out how to do things with less and do things in a quicker way which usually is dependent on software and equipment. So it’s a good time to be in the world that we are because we get to help companies figure out how to do that. But because of the supply chain issues, there are a lot of challenges in getting to that. And a lot of the world we work in is in the B2B world, so we do work with the Amazon retailers and all of that, but it’s maybe less of something that we’re familiar with or seeing. 

Adam Honig:  So I know you guys are in the B2B world, but even though you’re selling to businesses, I’ve been hearing from a lot of people that their business customers, their expectations have changed about communication, about delivery time because of their personal experiences with platforms like Amazon. And I guess I was just wondering if you guys have seen any sentiment changing from your customers just about e-Commerce, and all of that?

Ryan Howard: Yeah, it’s a good question, and it’s had a tremendous ripple effect through all industries. The consumer now expects a package to be delivered the same day that they order it.

Adam Honig: You were trying to figure out an item that you ordered, that you could say on the podcast.

Ryan Howard: Amazon and Target are at my doorstep every single day. So the Howard family is a strong supporter of both companies, but it’s a great question because it’s infiltrated every industry. B2B or B2C it’s the expectation that things get there quickly. And so the things that are happening right now in the supply chain, for people like us that are in the background or for our customers or you, our vendors too, it creates a lot of stress because your companies wanna do things quicker, they wanna do things more automated. And it’s because there’s an expectation of getting things done now so that they can fulfill orders and they can grow their business and make more money. And so it’s gonna be interesting to watch especially as artificial intelligence continues to take hold of the industries. And even beyond that, Web 3.0 and some other things are gonna change the way the supply chain works. And we’re kind of in a transition period of moving to a fully automated supply chain. And so we get to be at the forefront of some of that and help our customers think through a lot of that stuff. But Amazon has certainly had its impact across the board, it’s changed the dynamic of the supply chain and fulfilling orders.

Adam Honig: Yeah, I’m sure there’s somebody working on the blockchain supply chain combination right now, but not me.

Ryan Howard: Not me either.

Adam Honig: Yeah, it’s an interesting topic, but I can definitely see the solutions that you guys provide, all being crypto-ized at some point here, so just tokens coming down the packaging line or something like that. 

Ryan Howard: Yeah, 10 NFTs for a stick of conveyor or something like that.

Adam Honig: Exactly, but that’s all non-physical goods, which isn’t something that I’m super concerned about. We’re focused on companies that make real things, not this kinda crypto stuff or whatever. But hey, this has been really great, I really appreciate you guys coming on the podcast. And Ryan and Chad, what I’m kind of taking away from this episode is really a lot of good insight about how to create a great culture in the company to kind of deal with some of the issues that we’re facing about employee relations in this time of day. And a little bit about the supply chain, how people are dealing with it and over-communicating, I think Chad said over-communicating about issues and just being on top of it. And that’s been a trend that I feel like I’ve been hearing from a lot of folks about how to deal with this moment that we’re in, which is probably, by the way, gonna continue for a while. I mean you guys don’t think the supply chain challenges are just gonna clear up by Christmas or something like that?

Chad Howard: No, I think it might be the new norm. 

Adam Honig: Yeah, exactly, so it’ll be interesting as always. But listen, thanks for joining us, and as a reminder for the audience, you can find every episode of the Make it. Move it. Sell it. podcast at spiro.ai/podcast. And if you’re having trouble falling asleep, I advise you to try to say that over and over again. But when you do subscribe, if you like this episode and you thought that Ryan and Chad provided you with some insights today, please rate the podcast highly, maybe leave a comment. I don’t know, whatever else people do on the podcast platform. So please support the podcast by sharing with a friend, maybe that would be good. Don’t you think guys, people should do that?

Ryan Howard: Absolutely, I expect this to get at least seven or eight likes.

Adam Honig: All right, well that’s great. I appreciate that. 

Chad Howard: We’ll be two of them.

Adam Honig: Yeah, exactly, the three of us will all like the podcast. That’s perfect. All right, so thanks everybody for tuning in, and we will look forward to speaking to you at the next episode. 

Chad Howard: We appreciate you reaching out and having us on, that’s really cool.