WEBVTT 00:00:04.360 --> 00:00:06.160 Hello, everyone. Thank you for joining Did You 00:00:06.160 --> 00:00:09.519 Know, the ESCO HVAC podcast. This episode brought 00:00:09.519 --> 00:00:12.080 to you by Encompass Parts, one of the country's 00:00:12.080 --> 00:00:14.580 largest suppliers of repair parts and accessories 00:00:14.580 --> 00:00:17.079 for products throughout the home. Learn more 00:00:17.079 --> 00:00:23.100 at Encompass .com. Scott Pearson, how are you, 00:00:23.120 --> 00:00:27.039 my friend? Fantastic, Clifton. Super stoked to 00:00:27.039 --> 00:00:29.600 be here. Thanks for having me. No, it's grateful 00:00:29.600 --> 00:00:32.420 that we have the opportunity to get together. 00:00:32.990 --> 00:00:35.189 You know, it's interesting how our industry just 00:00:35.189 --> 00:00:37.210 kind of evolves. You know, we're all fighting 00:00:37.210 --> 00:00:40.090 this same front. You know, I just came back from 00:00:40.090 --> 00:00:43.009 the UA International Training Program, their 00:00:43.009 --> 00:00:46.090 week of competition, as well as instruction for 00:00:46.090 --> 00:00:48.520 all of the UA instructors. One of the things 00:00:48.520 --> 00:00:51.460 that they mentioned was the significant labor 00:00:51.460 --> 00:00:53.780 shortage that we have. The UA is looking at about 00:00:53.780 --> 00:00:56.939 a 30 % shortage of technicians going into this 00:00:56.939 --> 00:00:59.359 next year. And I think that is pretty common 00:00:59.359 --> 00:01:02.060 across the entire industry. So today, let's talk 00:01:02.060 --> 00:01:03.920 about some of the pain points that we're witnessing 00:01:03.920 --> 00:01:06.319 in the industry and solutions that Encompass 00:01:06.319 --> 00:01:09.700 is providing for that. What do you say? Yeah, 00:01:09.739 --> 00:01:11.780 I mean, honestly, Colton, I think it's something 00:01:11.780 --> 00:01:14.120 we've been talking about for five, six years 00:01:14.120 --> 00:01:16.900 now, right? the impact that the skilled labor 00:01:16.900 --> 00:01:19.540 shortage will have on the industry. And it's 00:01:19.540 --> 00:01:21.280 probably worth considering a lot of the variables 00:01:21.280 --> 00:01:23.400 that, that also play into the industry today 00:01:23.400 --> 00:01:28.040 to, to really create challenges. You know, we've 00:01:28.040 --> 00:01:31.379 been sitting on a fraction, very fragmented supply 00:01:31.379 --> 00:01:35.140 chain for, you know, three decades with single 00:01:35.140 --> 00:01:40.219 source brand distributing with, with, you know, 00:01:40.219 --> 00:01:43.609 a contractor having to have seven or eight. relationships 00:01:43.609 --> 00:01:45.829 across town just to get a simple day's work done 00:01:45.829 --> 00:01:48.689 you know it poses a bigger challenge now that 00:01:48.689 --> 00:01:51.370 you start to take some of that tribal knowledge 00:01:51.370 --> 00:01:53.989 out of the industry with with guys that have 00:01:53.989 --> 00:01:56.370 earned their retirement after 30 35 years right 00:01:56.370 --> 00:01:58.870 and you're left with a younger generation that 00:01:58.870 --> 00:02:01.790 doesn't have the the knowledge or the skill set 00:02:01.790 --> 00:02:04.269 today because they they just got to put in the 00:02:04.269 --> 00:02:06.950 work experience so big challenges ahead yeah 00:02:06.950 --> 00:02:09.210 absolutely you know you've mentioned you know 00:02:09.210 --> 00:02:12.840 like some of the the manufacturer supply chains 00:02:12.840 --> 00:02:15.599 and the access to it, I can remember as a contractor, 00:02:15.780 --> 00:02:18.740 that was one of the biggest challenges. I had 00:02:18.740 --> 00:02:21.139 gotten to a point where I felt comfortable working 00:02:21.139 --> 00:02:23.000 on just about any piece of equipment, but finding 00:02:23.000 --> 00:02:24.400 the parts for those equipment was not always 00:02:24.400 --> 00:02:26.740 the easiest thing. And there were some brands 00:02:26.740 --> 00:02:29.860 that even if I could find the solution, I couldn't 00:02:29.860 --> 00:02:32.879 find the OEM part because I wasn't an OEM dealer. 00:02:33.199 --> 00:02:36.319 And so there's a lot of struggles. Especially 00:02:36.319 --> 00:02:38.860 as we move into products that are more sophisticated, 00:02:38.960 --> 00:02:41.020 like inverter driven products and modulating 00:02:41.020 --> 00:02:43.460 gas furnaces. You know, there are parts that 00:02:43.460 --> 00:02:46.379 you would hope would be readily available, but 00:02:46.379 --> 00:02:49.259 you don't want to spend your day just sorting 00:02:49.259 --> 00:02:52.780 through different supplies and supply houses 00:02:52.780 --> 00:02:55.120 trying to locate those parts. You know, if I've 00:02:55.120 --> 00:02:59.139 got a component and I have troubleshoot this 00:02:59.139 --> 00:03:02.680 thing, I've found what it is. It's pretty disheartening 00:03:02.680 --> 00:03:05.860 to know that if I call that distributor and they 00:03:05.860 --> 00:03:07.819 say, oh, well, yeah, but you're not a dealer. 00:03:07.879 --> 00:03:09.120 You don't have an account here. I actually can't 00:03:09.120 --> 00:03:10.479 sell you that part. I got one on the shelf, but 00:03:10.479 --> 00:03:14.560 I can't sell it to you. That's tough. Or maybe 00:03:14.560 --> 00:03:16.860 they don't even have parts for that generation, 00:03:17.039 --> 00:03:19.180 even though they're available. So there's a lot 00:03:19.180 --> 00:03:22.300 of challenges that are out there that I think 00:03:22.300 --> 00:03:28.189 could be simplified. Yeah, our thesis has always 00:03:28.189 --> 00:03:30.490 been release the information to the people in 00:03:30.490 --> 00:03:32.770 the field because I think gone are the days that 00:03:32.770 --> 00:03:34.949 you could be just a good mechanic and get the 00:03:34.949 --> 00:03:40.030 job done. It used to be that the parts were readily 00:03:40.030 --> 00:03:41.710 available in the supply chain. You could go to 00:03:41.710 --> 00:03:43.969 a lot of different distributors and find a correct 00:03:43.969 --> 00:03:46.530 part. I think distributors did a great job of 00:03:46.530 --> 00:03:50.210 somewhat genericizing solutions, but it may have 00:03:50.210 --> 00:03:51.889 gone too far because to your point, we're at 00:03:51.889 --> 00:03:54.870 a crossroads where equipment's more sophisticated. 00:03:55.479 --> 00:03:59.439 because it has to be. And parts aren't necessarily 00:03:59.439 --> 00:04:03.639 the common focus for most OEMs pushing down the 00:04:03.639 --> 00:04:06.900 supply chain. So it puts distributors in an awkward 00:04:06.900 --> 00:04:09.280 position, puts contractors in a much more awkward 00:04:09.280 --> 00:04:12.500 position. And the impact that has on the homeowners, 00:04:12.560 --> 00:04:15.680 almost a recessive tax. I mean, I think it ends 00:04:15.680 --> 00:04:19.439 up having impacts on pricing, impacts on speed 00:04:19.439 --> 00:04:22.970 to the solution. And Mrs. Jones doesn't want 00:04:22.970 --> 00:04:25.670 to wait three more days with sweaty sheets to 00:04:25.670 --> 00:04:29.189 get the job done. She's ready to have air conditioning. 00:04:29.350 --> 00:04:32.029 Yeah, exactly. You know, in price in particularly, 00:04:32.029 --> 00:04:35.990 I was listening to a podcast last week from a 00:04:35.990 --> 00:04:40.810 person who was a previous parts manager for a 00:04:40.810 --> 00:04:43.430 manufacturer. And he was discussing the cost 00:04:43.430 --> 00:04:45.910 of inverter control boards for one particular 00:04:45.910 --> 00:04:49.730 product. And he said because of the supply distribution. 00:04:50.710 --> 00:04:54.990 What they paid for that at the OEM level versus 00:04:54.990 --> 00:04:58.870 what it ended up at the local distributor, it 00:04:58.870 --> 00:05:01.550 was a $600 part of the local distributor that 00:05:01.550 --> 00:05:05.329 cost the manufacturer $11. And we're trying to 00:05:05.329 --> 00:05:07.370 walk through that whole process. And he said, 00:05:07.389 --> 00:05:09.930 but you got to realize that part, when it left 00:05:09.930 --> 00:05:11.990 my warehouse, it stopped six different places. 00:05:13.040 --> 00:05:16.220 Six different people were in that process and 00:05:16.220 --> 00:05:18.759 everyone had their own amount of time and labor 00:05:18.759 --> 00:05:21.220 involved with that, including the person in the 00:05:21.220 --> 00:05:23.120 warehouse that was just putting that on the shelf 00:05:23.120 --> 00:05:27.199 and stocking it. And so we've seen that with 00:05:27.199 --> 00:05:29.959 that profile, it has increased some of the parts, 00:05:30.079 --> 00:05:32.439 many of the parts on these inverter driven products. 00:05:32.920 --> 00:05:38.100 And it's left a lot of technicians leery to work 00:05:38.100 --> 00:05:41.350 on them. Because of that potential for high costs. 00:05:41.410 --> 00:05:43.310 Because you'll have technicians go, but why is 00:05:43.310 --> 00:05:44.790 there so much a difference in these costs? This 00:05:44.790 --> 00:05:47.449 manufacturer is X and this manufacturer is Z. 00:05:47.490 --> 00:05:49.730 And they really look very similar to each other. 00:05:49.970 --> 00:05:51.550 And they might have different components, but 00:05:51.550 --> 00:05:53.990 they're really, really close. And I don't understand 00:05:53.990 --> 00:05:57.110 the difference in that. And I'm hoping as an 00:05:57.110 --> 00:05:59.550 industry, we can solve some of those solutions. 00:06:02.170 --> 00:06:05.230 Yeah, I mean, my general opinion is that it is 00:06:05.230 --> 00:06:08.810 about the supply chain. commonality between those 00:06:08.810 --> 00:06:10.970 two parts is probably there there's probably 00:06:10.970 --> 00:06:13.350 a distinct difference from a designer engineering 00:06:13.350 --> 00:06:16.629 standpoint we know that um you know each engineer 00:06:16.629 --> 00:06:19.829 has its own own flavor of how he designs a piece 00:06:19.829 --> 00:06:22.310 of equipment and it's important that the true 00:06:22.310 --> 00:06:25.189 oem part goes back in as a replacement so that 00:06:25.189 --> 00:06:28.790 it doesn't segregate the life of the system however 00:06:28.790 --> 00:06:34.009 how manufacturers decide to get parts to the 00:06:34.009 --> 00:06:37.259 market changes the price drastically. I mean, 00:06:37.279 --> 00:06:39.399 I think your example of it being touched six 00:06:39.399 --> 00:06:46.019 times, that's a little bit excessive. We talk 00:06:46.019 --> 00:06:48.540 about a fragmented supply chain, but six steps 00:06:48.540 --> 00:06:52.779 to get to the local market is a very costly exercise. 00:06:53.680 --> 00:06:56.740 And quite frankly, it's probably something we 00:06:56.740 --> 00:06:58.800 can solve for. It's something we can definitely 00:06:58.800 --> 00:07:01.750 solve for, for speed to market. When it comes 00:07:01.750 --> 00:07:04.449 to pricing and availability of true OEM parts 00:07:04.449 --> 00:07:07.189 to a technician, that's something that we've 00:07:07.189 --> 00:07:08.790 got to consider because of the skilled labor 00:07:08.790 --> 00:07:11.410 gap that's about to be in front of us. Yeah, 00:07:11.410 --> 00:07:12.750 I mean, think about ways that we can get that 00:07:12.750 --> 00:07:15.170 part to that technician faster. I can remember 00:07:15.170 --> 00:07:19.389 back in the old days, if you didn't have a universal 00:07:19.389 --> 00:07:21.470 part on your vehicle, you were going to the parts 00:07:21.470 --> 00:07:25.060 house. You were making trips for almost every 00:07:25.060 --> 00:07:28.240 job. And think about all of that lost time in 00:07:28.240 --> 00:07:30.980 transport. And as a contractor, it's the same 00:07:30.980 --> 00:07:33.220 way. I look about all of that lost revenue as 00:07:33.220 --> 00:07:36.660 that technician is driving, getting parts, and 00:07:36.660 --> 00:07:38.939 maybe going through a couple different parts 00:07:38.939 --> 00:07:40.899 houses before they actually get the one that 00:07:40.899 --> 00:07:42.779 they're looking for. That's a significant amount 00:07:42.779 --> 00:07:44.759 of downtime and wasted time that could have been 00:07:44.759 --> 00:07:49.850 focused on getting to other customers. Yeah. 00:07:49.910 --> 00:07:51.829 I mean, the simple math is it's going to impact 00:07:51.829 --> 00:07:53.930 price, right? If there's wasted time that you 00:07:53.930 --> 00:07:55.889 can't necessarily get revenue flowing from a 00:07:55.889 --> 00:07:58.529 contracting perspective, you'll have to make 00:07:58.529 --> 00:08:01.730 it up somewhere. So right there, immediately, 00:08:01.949 --> 00:08:04.949 you've got an impact on inflation and pricing. 00:08:05.430 --> 00:08:07.870 If you go beyond that and start to look at the 00:08:07.870 --> 00:08:10.910 efficiency of a business or the efficiency of 00:08:10.910 --> 00:08:13.490 getting the jobs done for consumers, you really 00:08:13.490 --> 00:08:16.470 are just wasting jobs per man day, right? I mean, 00:08:16.509 --> 00:08:19.779 if you're traveling. let's just say an hour out 00:08:19.779 --> 00:08:23.300 of every day to go shopping because ultimately 00:08:23.300 --> 00:08:25.639 you aren't sure where it is or where it's going 00:08:25.639 --> 00:08:27.300 to be, or you've got to call around to six different 00:08:27.300 --> 00:08:30.240 people to get it. You know, that hour times five 00:08:30.240 --> 00:08:32.940 days a week, that's another job on the book, 00:08:32.980 --> 00:08:35.980 right? So if you can put another job on the board 00:08:35.980 --> 00:08:39.340 for tech across, I don't know, 10 techs in a 00:08:39.340 --> 00:08:42.279 company, now all of a sudden you've got a real 00:08:42.279 --> 00:08:45.039 impact to not only revenue, but an opportunity 00:08:45.039 --> 00:08:47.120 to become super competitive when it comes to 00:08:47.120 --> 00:08:50.330 pricing. and still get more jobs done for consumers, 00:08:50.529 --> 00:08:54.990 which is, to me, a huge impact on your goodwill 00:08:54.990 --> 00:08:56.990 and brand in a local market if you're a contractor. 00:08:57.590 --> 00:08:58.809 That's what I'd be thinking. Oh, yeah, yeah, 00:08:58.809 --> 00:09:01.470 for sure. I look at that because I was at a distributor 00:09:01.470 --> 00:09:05.350 level for quite a while, and on the premium products. 00:09:06.440 --> 00:09:09.019 Those premium products were fantastic units and 00:09:09.019 --> 00:09:11.360 they attracted some of the best contractors. 00:09:11.460 --> 00:09:13.879 But the downfall as a supplier, you know, I had 00:09:13.879 --> 00:09:17.700 to focus on, you know, turnover of supply and 00:09:17.700 --> 00:09:21.000 the actual demand for certain parts. So I would 00:09:21.000 --> 00:09:23.220 typically when a new product would come out, 00:09:23.259 --> 00:09:26.120 I would have about a 30 to 40 percent product 00:09:26.120 --> 00:09:30.100 parts order in place. So that would mean that 00:09:30.100 --> 00:09:33.100 60 to 70 percent of the parts available for a 00:09:33.100 --> 00:09:36.409 new unit, I could not stock. I couldn't carry 00:09:36.409 --> 00:09:39.570 that many components. I could stock 30 to 40%, 00:09:39.570 --> 00:09:41.809 which meant I was looking for the most common, 00:09:41.889 --> 00:09:45.210 but the rest of those, I just physically couldn't 00:09:45.210 --> 00:09:46.870 stock. I didn't have the overhead and the capability 00:09:46.870 --> 00:09:50.909 of doing that. So I relied on other forms of 00:09:50.909 --> 00:09:52.970 distribution to get those parts to the contractor 00:09:52.970 --> 00:09:54.909 when they were looking for them. So it was typically 00:09:54.909 --> 00:09:59.309 from the OEM direct or through a OEM distributor. 00:09:59.450 --> 00:10:03.250 So even as a distributor myself. I was having 00:10:03.250 --> 00:10:05.730 to source a pretty significant amount of products 00:10:05.730 --> 00:10:08.649 from other locations, which adds additional time. 00:10:10.809 --> 00:10:13.070 Yeah, I mean, it's the same thing we highlighted 00:10:13.070 --> 00:10:16.409 a few minutes ago. It's the nature of how it 00:10:16.409 --> 00:10:20.909 was designed from the get -go. Back when demand 00:10:20.909 --> 00:10:24.870 truly outran supply, distributors and OEMs locked 00:10:24.870 --> 00:10:27.669 up and created singularity in the supply chain, 00:10:27.830 --> 00:10:30.529 right? So if I wanted true, genuine OEM parts, 00:10:30.730 --> 00:10:33.700 I was... bound to one or two brands, tops, as 00:10:33.700 --> 00:10:37.539 a distributor. And now that's having the impact, 00:10:37.659 --> 00:10:39.879 like you mentioned, of if you want to take care 00:10:39.879 --> 00:10:43.100 of your good contractor and make sure that they 00:10:43.100 --> 00:10:45.879 have a process they can build math around with 00:10:45.879 --> 00:10:48.259 a single source, you've got to go elsewhere to 00:10:48.259 --> 00:10:53.759 get the parts. So it creates a nuance for having 00:10:53.759 --> 00:10:57.179 too many cooks in the kitchen, right? As far 00:10:57.179 --> 00:10:59.879 as pricing goes, availability goes, but to your 00:10:59.879 --> 00:11:03.549 earlier point. Maybe it's not the responsibility 00:11:03.549 --> 00:11:05.830 of that local distributor to carry everything, 00:11:06.029 --> 00:11:09.529 but maybe have access to something, a single 00:11:09.529 --> 00:11:11.269 source so that they can take care of their customer 00:11:11.269 --> 00:11:13.509 at a competitive price and give them genuine, 00:11:13.730 --> 00:11:16.429 true OEM parts. I mean, what do you think that 00:11:16.429 --> 00:11:20.769 has on a basic level impact to the end user if 00:11:20.769 --> 00:11:24.009 we swim down channel a little bit? Yeah, absolutely. 00:11:24.330 --> 00:11:26.830 You know, if you think about a distributor, you 00:11:26.830 --> 00:11:28.990 know, a distributor stocks parts because they 00:11:28.990 --> 00:11:32.570 have to. A distributor, they're really in the 00:11:32.570 --> 00:11:37.070 job of moving boxes. That is the direct path 00:11:37.070 --> 00:11:39.509 to market for the manufacturers is through the 00:11:39.509 --> 00:11:43.470 distributor. So carrying supply parts is kind 00:11:43.470 --> 00:11:45.149 of like an ancillary. It's kind of like technical 00:11:45.149 --> 00:11:47.669 support. It's something you have to have, but 00:11:47.669 --> 00:11:50.769 it's not really a profit generator. There's a 00:11:50.769 --> 00:11:53.509 lot of stocking, a lot of labor, a lot of transportation 00:11:53.509 --> 00:11:57.250 into an individual parts. And so I would imagine 00:11:57.250 --> 00:12:01.639 many distributors. would be very open to that 00:12:01.639 --> 00:12:08.120 partnership of working with a parts supply contact 00:12:08.120 --> 00:12:10.480 that could get those parts to that contractor 00:12:10.480 --> 00:12:14.259 quickly so that they could focus on what they 00:12:14.259 --> 00:12:16.580 were really designed to do, which was move a 00:12:16.580 --> 00:12:20.019 lot of boxes. And I think you're right. I think 00:12:20.019 --> 00:12:23.139 selling equipment and selling parts, it's two 00:12:23.139 --> 00:12:25.379 different businesses. It is. If you think of 00:12:25.379 --> 00:12:28.029 the mechanics behind it. The inventory planning, 00:12:28.350 --> 00:12:32.970 the general buying and reselling of relationships 00:12:32.970 --> 00:12:37.090 across parts, it's much different than the planning 00:12:37.090 --> 00:12:39.690 associated with equipment. And to your point, 00:12:39.830 --> 00:12:41.789 they're in the business to sell equipment. That's 00:12:41.789 --> 00:12:45.250 where their high -stakes revenue is. That's where 00:12:45.250 --> 00:12:50.450 their good margins are. If it's going to make 00:12:50.450 --> 00:12:53.429 you more money and keep you on a balance sheet 00:12:53.429 --> 00:12:56.360 healthier. to invest in equipment inventory versus 00:12:56.360 --> 00:12:58.720 parts inventory you know it's the natural go 00:12:58.720 --> 00:13:05.440 -to right my thought is is if they're so distinctly 00:13:05.440 --> 00:13:08.139 different businesses you know why not separate 00:13:08.139 --> 00:13:13.039 the two why not want to have equipment as a business 00:13:13.039 --> 00:13:15.399 and parts as a separate business because think 00:13:15.399 --> 00:13:17.059 about it it's not just the technicians in the 00:13:17.059 --> 00:13:21.490 field that we're missing in the next five years 00:13:21.490 --> 00:13:24.289 on, on skilled labor, it's upstream too. It has 00:13:24.289 --> 00:13:26.509 an impact on the distributor, you know, the talent 00:13:26.509 --> 00:13:28.429 and experience and those roles at the counter 00:13:28.429 --> 00:13:33.190 manufacturers, you know, our group talks to parts 00:13:33.190 --> 00:13:37.309 teams every day at OEMs. And you can see the 00:13:37.309 --> 00:13:40.809 difference today versus 10 years ago with the 00:13:40.809 --> 00:13:43.730 talent on the teams. It's not as, it's not as 00:13:43.730 --> 00:13:47.080 healthy as it used to be. Well, if you think 00:13:47.080 --> 00:13:50.600 about, you know, a common or typical parts counter 00:13:50.600 --> 00:13:53.179 employee, you know, many of the parts counter 00:13:53.179 --> 00:13:56.019 employees were technicians, right? They came 00:13:56.019 --> 00:13:58.100 out of the field because they've got the parts 00:13:58.100 --> 00:14:01.259 experience, which means for every person that 00:14:01.259 --> 00:14:04.100 I put on the counter, I have now removed somebody 00:14:04.100 --> 00:14:07.039 from the technical side. I've removed someone 00:14:07.039 --> 00:14:10.320 from installation versus in the warehousing. 00:14:10.940 --> 00:14:13.659 If someone has experience in warehousing from 00:14:13.659 --> 00:14:16.580 other industries, they've already got good experience 00:14:16.580 --> 00:14:19.519 in organization and in management of inventory. 00:14:19.940 --> 00:14:23.019 So when we look at a company that is leveraging 00:14:23.019 --> 00:14:27.279 their labor, it is much more advantageous for 00:14:27.279 --> 00:14:29.440 the entire industry to have our labor in the 00:14:29.440 --> 00:14:31.659 actual warehouse side of it versus that parts 00:14:31.659 --> 00:14:35.600 counter. Because as we continue losing our labor 00:14:35.600 --> 00:14:38.509 from the field. And we're bringing it into the 00:14:38.509 --> 00:14:41.750 parts counter. Yes, we're adding some good technicians 00:14:41.750 --> 00:14:43.610 at the parts counter that can help find the right 00:14:43.610 --> 00:14:46.570 parts. But now we've lost that additional labor 00:14:46.570 --> 00:14:50.009 force out in the field. Yeah, I mean, it comes 00:14:50.009 --> 00:14:54.169 down to, in my opinion, it comes down to the 00:14:54.169 --> 00:14:59.970 data, right? You can't teach a novice counter 00:14:59.970 --> 00:15:03.809 person how to ID parts unless they have the experience 00:15:03.809 --> 00:15:06.679 or. They have access to information that they 00:15:06.679 --> 00:15:09.779 can learn. Yeah, a lot of training. I think that's 00:15:09.779 --> 00:15:12.600 the challenge that I've seen in roles at distribution 00:15:12.600 --> 00:15:15.860 for the last 20 years is training people on the 00:15:15.860 --> 00:15:18.679 counter is tough because the access to the information 00:15:18.679 --> 00:15:23.779 to train them is hard to reach. You know, when 00:15:23.779 --> 00:15:25.419 a guy calls in and says, hey, I need part number 00:15:25.419 --> 00:15:28.000 price and availability. If you don't know where 00:15:28.000 --> 00:15:31.690 to start that research process. you're in a bad 00:15:31.690 --> 00:15:33.190 state and you won't be able to give them an answer 00:15:33.190 --> 00:15:35.830 for hours. And quite frankly, we don't staff 00:15:35.830 --> 00:15:40.070 the counter for the peak season. So hours is 00:15:40.070 --> 00:15:43.309 not something we have the liberty of. Very true. 00:15:43.830 --> 00:15:46.529 So what kind of solutions, like what can we do 00:15:46.529 --> 00:15:49.830 to expedite this process and maybe think about 00:15:49.830 --> 00:15:52.429 it from a slightly different perspective? Yeah, 00:15:52.450 --> 00:15:55.220 I think if we focus on the data component. One 00:15:55.220 --> 00:15:56.940 of the biggest challenges that I've seen over 00:15:56.940 --> 00:15:59.679 the past 20 years is related to that fragmented 00:15:59.679 --> 00:16:03.700 supply chain. You've got parts information and 00:16:03.700 --> 00:16:08.320 ID information behind 100 different firewalls. 00:16:08.320 --> 00:16:10.659 Everybody locked it up and said, this is exclusive 00:16:10.659 --> 00:16:13.639 to this distributor. If you need to ID that OEM 00:16:13.639 --> 00:16:15.879 part, you've got to call that distributor. I 00:16:15.879 --> 00:16:19.440 think that was well intended. It was a means 00:16:19.440 --> 00:16:23.639 of competition. crossing today that we've got 00:16:23.639 --> 00:16:25.879 to consider hey if we release that information 00:16:25.879 --> 00:16:28.659 it might actually help accelerate the supply 00:16:28.659 --> 00:16:33.039 chain take care of hvac in general and so my 00:16:33.039 --> 00:16:35.820 thought is release the information aggregated 00:16:35.820 --> 00:16:39.000 in a way that's easily accessible and not in 00:16:39.000 --> 00:16:41.039 a way that's guessing right we've got lots of 00:16:41.039 --> 00:16:44.000 solutions out there today that attempt to cross 00:16:44.000 --> 00:16:46.980 reference to a good degree but they're all falling 00:16:46.980 --> 00:16:50.139 short to some extent 10, 20 % of the time they're 00:16:50.139 --> 00:16:52.419 inaccurate. That has an impact on the technician 00:16:52.419 --> 00:16:55.679 and the homeowner. So let's focus on what was 00:16:55.679 --> 00:16:58.620 intended to be in that machine by the OEM and 00:16:58.620 --> 00:17:01.080 give that true information away so that we're 00:17:01.080 --> 00:17:04.039 not necessarily guessing down the line and we 00:17:04.039 --> 00:17:06.259 can create real solutions. So it needs to be 00:17:06.259 --> 00:17:09.420 more of a database like Encompass is building 00:17:09.420 --> 00:17:13.599 where it's direct access to OEM parts, direct 00:17:13.599 --> 00:17:16.740 access to the information, key in a model number, 00:17:16.839 --> 00:17:19.640 serial number. And bring back a full bill of 00:17:19.640 --> 00:17:22.839 material with parts ID, price, availability, 00:17:23.140 --> 00:17:25.039 and something you can start to build math around. 00:17:26.460 --> 00:17:28.480 Right. And so that's the world that Encompass 00:17:28.480 --> 00:17:31.779 is moving into? Yeah. I mean, our thesis has 00:17:31.779 --> 00:17:33.759 always been, let's aggregate the whole. Let's 00:17:33.759 --> 00:17:35.720 focus on parts. You know, that's a business that 00:17:35.720 --> 00:17:38.740 we're in. You know, if you had a soundbite for 00:17:38.740 --> 00:17:41.480 Encompass in general over the past 70 years, 00:17:41.599 --> 00:17:43.720 it's really anything with a power source for 00:17:43.720 --> 00:17:47.430 the home we have the parts for. So when you're 00:17:47.430 --> 00:17:50.369 doing repairs in a home service standpoint, you've 00:17:50.369 --> 00:17:53.730 got access to 27 different verticals. HVAC and 00:17:53.730 --> 00:17:58.609 plumbing is now the capstone to that home. But 00:17:58.609 --> 00:18:03.329 one of our big focuses on self -sufficiency in 00:18:03.329 --> 00:18:05.430 the field or at the counter for a distributor 00:18:05.430 --> 00:18:09.910 to ID parts. Even if you don't buy from us, use 00:18:09.910 --> 00:18:13.210 our site today for parts ID. It's pretty fantastic. 00:18:13.289 --> 00:18:15.250 But the idea that you can drop a model number 00:18:15.250 --> 00:18:19.369 in. and get back a full parts list for that machine, 00:18:19.630 --> 00:18:23.470 there's very few places you can get that. So, 00:18:23.549 --> 00:18:27.029 you know, goodwill intended, you know, parts 00:18:27.029 --> 00:18:30.630 ID is there from Encompass .com. But, you know, 00:18:30.630 --> 00:18:34.150 hopefully as a nice value exchange, that also 00:18:34.150 --> 00:18:36.289 becomes a transaction. Because I think that's 00:18:36.289 --> 00:18:38.049 the one thing missing from a lot of the tools 00:18:38.049 --> 00:18:41.329 out there today is you can find the part number 00:18:41.329 --> 00:18:44.170 sometimes, but then where do you go to buy it? 00:18:45.710 --> 00:18:51.430 Very cool. One -stop shop. I guess. I've always 00:18:51.430 --> 00:18:53.829 hated that term, but single -source solutions 00:18:53.829 --> 00:18:56.430 that you can build back around are important. 00:18:56.430 --> 00:19:01.109 I like that terminology, too. Very cool. So I 00:19:01.109 --> 00:19:03.470 encourage everyone to start thinking outside 00:19:03.470 --> 00:19:05.089 the box, thinking from a different perspective. 00:19:05.250 --> 00:19:11.349 Try to utilize software, utilize tools and technology 00:19:11.349 --> 00:19:15.980 to... make our industry more efficient. And there 00:19:15.980 --> 00:19:17.799 are a variety of different aspects that need 00:19:17.799 --> 00:19:20.599 to be more efficient, all the way from parts 00:19:20.599 --> 00:19:25.019 allocation to distribution to just making sure 00:19:25.019 --> 00:19:28.279 that we're getting that customer satisfied and 00:19:28.279 --> 00:19:31.200 up and running in as short a period of time as 00:19:31.200 --> 00:19:33.940 possible. So I encourage you all to learn more 00:19:33.940 --> 00:19:37.140 about Encompass at Encompass .com. And Scott 00:19:37.140 --> 00:19:38.960 Pearson, I'm grateful that you joined us today. 00:19:39.140 --> 00:19:40.519 Glad to be here, Clifton. Thank you.