Supply Chain Shipping Madness & Section 301 Tariff Exclusion Update – Mark Adkison EP99

How to Navigate the Current Supply Chain Challenges and Production Costs

How are you navigating the current increase in demand and huge challenges in the supply chain? It is no secret that 2021 will go down as a difficult year for business due to increases in shipping costs and material costs. But, are there alternative options to make things easier?

In this episode of the Page 1 Podcast, Luke Peters speaks with Mark Adkison on the current shipping and material cost increases, plus the supply chain challenges. Mark is the current President of Kuhn Rikon Corporation and has got 19 years of experience in the housewares industry, leading highly successful new business development initiatives and ventures.

Listen in to learn some ways you can adopt to mitigate production and shipping costs while still producing quality consumer goods. You will also understand why the demand might slow down if the current prices continue to skyrocket.

Key Takeaways:

  • Why the supply chain issues will continue being challenging even after 2021.
  • How to use the current manufacturing challenges to think of options outside of China.
  • How to evaluate all avenues to continue offering good quality products.

Episode Timeline:

  • [21:07] Mark on the types of houseware gadgets and tools they sell at Kuhn Rikon and where they sell.
  • [4:19] How the current economic status is helping Mark gauge ways they can mitigate the production costs.
  • [6:02] How the market is shifting as it starts to open up, especially in eCommerce.
  • [8:15] The product exclusions reenactment bill for 2022 and the benefits of it for business.
  • [19:13] The supply chain challenges and why they might not ease down due to demand.
  • [23:34] The struggle of shipping costs and material costs going up at the same time.
  • [25:50] How Kuhn Rikon have shifted their manufacturing options to deal with the challenges they’re encountering.
  • [30:06] Why the increase in consumer goods will greatly impact demand as we move forward.
  • [33:04] Mark explains the options they’re looking at to make quality commodities while mitigating prices.

Luke Peters: Thanks for joining us on the Page 1 Podcast. I’m your host, Luke Peters, CEO of Newair Appliances. And in this episode of the Page 1 Podcast, we’re going to learn from Mark Adkison. And we’re going to talk about 301 Tariffs, it’s crazy, worldwide supply chain problem we’re in right now. And we’re going to talk about his new role with Kuhn Rikon. Before we get into this great episode and super timely episode, let me just try to pitch you guys on this new charitable organization I’m starting up If you have a vacation rental home, we need your help here. If you want to help out a military family, we’re connecting with veteran families trying to give them a dream vacation. But what we need are more vacation homeowners to kind of contribute their homes. And that’s what we’re doing Swing on over there and check it out or find me on LinkedIn if you want to get more information on that. It’s a great cause and you’ll really be helping out some families. And I know if you have one of these vacation homes, you’ve got plenty of open bookings, busy season may be full, but you’ll have open bookings in between season. And that’s kind of the point here, help out some of these families that way. Great. So moving on, let’s get into this episode with Mark. Mark is the current president at Kuhn Rikon Corporation. He’s got 19 years of experience in the housewares industry for so many brands. He knows all the companies, all the brands and the government affairs as well. And he was recently VP at the International Housewares Association where I got to know him a little bit. He’s got deep know-how in the supply chain, all the customers that are out there in the brand, universe of IHA and all things tariffs and government affairs. So we’re going to dive into some of those things today, especially this crazy supply chain. So Mark, welcome to the Page 1 Podcast.

Mark Adkison: Thank you, Luke. Happy to be on.

Luke Peters: Awesome. So, hey Mark, why don’t you just give everybody a little bit of context, a little bit about Kuhn Rikon and your role over there and what you’re working on?

Mark Adkison: Sure, sure. So Kuhn Rikon is a global company based at Rikon Switzerland with subsidiaries. We have in Great Britain, Spain, and of course the USA-based subsidiary that I lead here. We are overall of the sales into North and South America. Products sold in more than 40 countries. Basically, our strategy is to provide innovative high-quality tools to kind of book the home chef and the enthusiast cook that’s out there on the market. So we’re excited to provide gadgets, cookware, a lot of different tools. And then of course, based on that Swiss designs, with quality to the market.

Luke Peters: Great. And what are some of the key customers Mark that you guys are selling into?

Mark Adkison: We typically sell into the mid to high-end parts of the market. So we’re happy to sell to customers like the Tobs, Williams-Sonoma, of course our products are sold through Amazon. We do great business with QVC. So a lot of our products are able to be described and told, how to operate, how they solve issues and cook wise. So QVC is also a really great partner for us.

Luke Peters: And then just the overall size of the US subsidiary that you’re going to be leading?

Mark Adkison: The overall size of it?

Luke Peters: Yeah. The people, the footprint, anyway that you want to kind of share the scale of the organization over here.

Mark Adkison: Sure, sure. I slowed down a little bit because obviously we’re family-owned out of Switzerland, so private organization, but we’re widely distributed all across the US. You can find us in most of the major independent retailers, even the small stores, but we have representatives all across the country, typically independent representatives. Our internal sales force is located here in Novato, California, and and pretty much we service the entire country in that mid to high end parts of the market.

Luke Peters: That’s awesome. And then, Mark, with your background, you have such a varied background. And like I said, kind of what we were talking, you know more about things like tariffs and government affairs than anybody I’ve had a chance to work with. Looking at your broad background, how do you think that’s going to help you be a better leader at Kuhn Rikon?

Mark Adkison: Well, I think it just gives me that macro view to be able to look at it because obviously tariffs impact us here dramatically. A lot of the current Section 301 Tariffs are levied on our products that are coming in from China. I think what it does, it gives me kind of the ability to understand and keep up with the current developments that are happening at a governmental level and watching those and also to try to help influence those in certain ways. Because certainly, like I said, it’s a direct impact to us here in our bottom line, to our consumers, to our retailers that are enduring the higher prices. And right now the US consumers have paid over $80 billion in the Section 301 Tariffs. It’s a big impact, no matter who your company is if they’re being levied on your products. So for me, I think it just helps me understand and also helps me gauge ways that we can try to mitigate those costs, look at why are we manufacturing products? Are we going to be able to take advantage of any exclusion processes that have been in the past? And are also being hopefully looked at based on some new bills that are out there in the very near future. So being able to help lead that with our organization, understanding those processes should help me here try to mitigate some of those problems.

Luke Peters: And what do you see as the most significant challenges facing companies today? I mean, we’re talking about it now, supply chain and tariffs, but we even have consumer shifts, resulting from COVID. I want to ask questions about how you guys are seeing that, some companies are seeing leveling out on sales, others are not. Just overall, would like to hear you talk about that significant changes facing companies and kind of what the next six months holds.

Mark Adkison: Sure. I think for us, like most companies that were in our industry, in the kitchen housewares industry, we’ve benefited through COVID, honestly. The consumer demand shifted toward our products, not away from it. People were not going to restaurants. They were eating at home more often, cooking, learning new methods to cook. Because we have products really all across that spectrum from cookware to gadgets, to baking, a few baking products, we were able to benefit from that. Now I would say that in recent weeks, last month, month and a half, we’re seeing some softening of that demand. I think, to be expected as the markets begin to reopen fully, even here in California, June 15th is supposed to be an important date that we’re supposed to reopen as a state. I think there’s pent up demand to get out, do things other than stay at home and cook. Restaurants are beginning to reopen all across the country. So we’re seeing a little bit of softening of that, but it’s still a really good dynamic market for us. I think the shift to e-commerce has been a good thing for us because we’re heavily engaged with the key e-commerce retailers. So seeing a softening, but I think still long-term, I think that we will still see a benefit from those consumer habits that have shifted to doing more cooking at home. I think they’ll soften for a period, but some of those won’t go away for the longterm. I think people will continue to cook more at home for the near future.

Luke Peters: Yeah. And in some of it, it’s just hard to tell because of the supply chain where, maybe they’re softening, maybe there isn’t, but not everybody has the same product that they had before, and prices had to change. There’s been all these dynamic changes, right? It’s not just one thing changed. So it’s really, really hard to measure, but I kind of feel the same way. I think, my expectation is we should continue to see growth over last year even, because there’s a lot of other things in the mix, and kind of that’s our plan until that I saw container prices were going to be costing over 10 grand or more. So we’ll talk about that later. But before we get into it, let’s talk about tariffs. There has been… I forget what the group is, the national manufacturer association.

Mark Adkison: There’s a number of them, even when I was at IHA, and then now here at Kuhn Rikon, I’m involved with a group called Americans for Free Trade, which really brings together 160 trade associations across the entire broad spectrum of business in the United States. But also individual companies like ours that are interested in what’s going on legislatively, and what’s happening in DC to try to combat some of the tariffs trade policies that have resulted in significant increases in cost to US businesses. So Americans for Free Trade maybe who you were thinking of. And that’s one that we really stay involved with now just to try to keep updated on what’s going on and there’s daily happening that’s going on right now. There’s a bill right now that’s being voted on today actually with the Senate that is addressing some of the trade challenges that we have in the tariffs, the Section 301 Tariffs.

Luke Peters: Yeah. And that’s what I wanted to get into. I mean, there definitely are some developments happening and some of the comments have been favorable. It seems to addressing at least… I don’t know about rolling back tariffs, but maybe rolling back some of the exclusions or even to current day. Maybe not retroactive, but on a go-forward I think are some of the language that I’ve heard that they’re pushing for. But do you have any additional thoughts on that or predictions about, where this seems to be going? Especially with the exclusions, I guess.

Mark Adkison: Sure, sure. I think exclusions are a big part of this. The process was mostly flawed, honestly, and some of the original exclusion procedures that happened with the various rounds of tariffs, they changed with each round. And how the decisions happened was not very transparent or even logical in some cases. But the bill that’s out today, the US Innovation and Competition Act, which is being voted on in the Senate today does have a component that specifically addresses the Section 301 Tariffs. And it was added what was originally the Trade Act of 2021, was added as an amendment to that bill that’s being voted on today. And that amendment vote was bipartisan at 91 to 4 votes, which is impressive. And it really sets up a couple of things. It sets up a new exclusion process for the existing Section 301 Tariffs, but it also specifically requires the USTR to reinstate all exclusions from the tariffs for entries filed on or before December 31st of 2022. So there is some retroactivity based on certain liquidations or re-liquidations, but it’s not overly broad where it includes everything, but what’s important is this probably will pass today. But of course it goes to the House and there’s not real good information out there yet on what the House plans to do with this bill. But certainly we would be very supportive of the passage of this bill. And also including the Trade Act of 2021 as part of it. That would be very, very beneficial to our company and I would assume almost anybody else situated similar to us.

Luke Peters: Yeah that would. Do you know, if this is a Democratic proposal? I mean, they have the majority in the House, or I wonder who’s pushing this one.

Mark Adkison: The ranking member, Senate member from Idaho, Republican, actually forced to vote to include the amendment. But at 91 to 4, there was broad support. This addresses other issues, and there’s not just based on the exclusion process. There’s a lot of really good trade language and enforcement in there. I think some of the things that the previous administration wanted to address, would be addressed. And I think legislatively is the right way to approach this. Instead of just doing things from either administration from the top down and through presidential orders, I think doing things legislatively would be the best way to approach this. And this bill is a very good start.

Luke Peters: Okay. And then let’s break it down a little bit more. So if this bill were to pass and again, it’s got a ways to go. If it were to pass, it would re-enact exclusions for products only hitting in 2022, or would it have any effect on 2021?

Mark Adkison: No, it’s basically reinstating all the exclusions from tariffs prior to that December 31st, 2022. So of course all dates prior to that. So those previous exclusions would come back and I don’t know the exact language on the retroactivity of it. Certainly it would help us from here forward, up until the end of 2022, that would help us all. Because if any of us enjoyed any of the exclusions that were out there, we would be able to come back and get those again, which would be good. I’ve got to look and see for our company, which exclusions were applicable. But I do know from an industry side, because I was involved at IHA that we had some real key product categories in the industry that had some exclusions out there that were very, very beneficial in some very large categories. So it would help our industry as a whole, certainly all of us, if we have any exclusion opportunities out there. We would want to go back and look at those and make sure that we take advantage of them. If this bill is passed in its current wording.

Luke Peters: Yeah. That’s incredible. Now what about the timing of it? How would this work on the next step? So if it did pass today, we’ll find out, there’s no way to predict this, this is just a conjecture, I guess. But what would be the timing of when it could actually be passed by the House?

Mark Adkison: That’s a good question. I don’t have the answer for that. It would depend on whether they put it on to bring it up, it would probably have some committee first. Because it has the Trade Act included in it, it would almost have to go or at least be involved with the House Ways and Means Committee. So it’s going to hit some committees first and then who knows how it would be butchered up from that point forward. But again, I think the most positive aspect of this is the bipartisan nature that, that particular act was included, but it certainly will pose some challenges in getting the overall US Innovation and Competition Act pushed through. And there’s going to be some challenges ahead. I don’t know that it would come through in its current wording, but certainly we hope that key pieces, is left in the bill.

Luke Peters: Yeah, exactly. It’s so hard to predict these things, but at the same time, at least overall, everything… I always like to look at momentum and it seems like the momentum is moving this direction. But like you said, a lot of things could get butchered. And I think in the financial analysis, it’s going to be a lot of dollars going back to businesses, a lot. And I don’t know if that’d be looked at favorably or negatively given the climate right now. A lot of those are small companies that need that revenue back, but I guess we’ll have to wait and see where it goes. But I like the momentum, at least it’s kind of coming in the right direction here. And then, we all just have to keep running our businesses and this would just be a really nice plus, I guess, something that could happen, we’ll have to keep a close eye on it.

Mark Adkison: And I think it does align. You’d ask kind of whether who proposed it and what’s the push, whether it be Democrat, Republican, whichever. The other thing that happened, it was the administration released its key findings under the executive order of the America’s supply chain order. And that really was laying out some of the steps forward that the administration was going to take on key trade issues. And specific ones that were trade-related is the administration’s plan on how they’re going to deal with the unfair trade practices. And so they’ve created this trade strike force that’s led by the USTR. That’s going to be able to propose unilateral, multi-lateral enforcement actions against these foreign trade practices. So they’re actually setting a team in place that’s going to be able to kind of provide those recommendations and have some enforcement ability on some of these trade practices that the Section 301 Tariffs were designed to give leverage to attack these things. Hopefully they’re going to find other methods to do so. As I look at that, I think it’s positive and the fact that let’s put a team in place that can find other mechanisms, including trade agreements, including working with the other regional partners. Let’s find other ways to provide leverage against China versus just tariffs, which companies like yours, mine, others in the industry are paying.

Luke Peters: Yeah. And I think that’s what people were kind of thinking about from the very beginning. We’re the ones kind of bearing the brunt of this. It’s hard though. I don’t know. We’ll see what they come up with.

Mark Adkison: I think the problem was that no one had another really great suggestion. But what else would you do if you were the one leading this? [Inaudible 00:17:08]. I don’t know. It is a very, very difficult issue and I think tariffs, were at least some leverage for a period of time, the problem is now they’re kind of acclimated into the system. And at what point do we get to get that back? Or is this just now part of our supply chain gone?

Luke Peters: Well, I don’t know what they’re thinking, but I don’t think there was a better answer, if people were kind of trying to change up the supply chain and change up where products were coming from. Because we all complained about it, but there wasn’t another good answer. And I think maybe they’re just trying to hit a big enough number where hey, it would make sense to nearshore, but we’re just not there right now. So I don’t know how much was accomplished. Hey Mark let’s move off of tariffs, probably my least favorite subject, but an important one. Onto my next least favorite, and that is crazy supply chain. This is literally the craziest supply chain in the last 40 years, but people are saying at least in my last 20 years, for sure. I’ll just go back in time a little bit and tell you. So at the beginning of this year, I think we were looking at some container price going up in like $4,000, maybe $5,000. And then we had this crazy situation where we couldn’t get stuff offloaded. So we were paying demurrage fees and we couldn’t get it out of the port on time. All that happened at the beginning of the year. And I thought, “This is ridiculous. This is the worst thing I’ve ever seen.” And the predictions, people were saying, “Well, okay, it’s going to be fine by summer. We just got to get through the next couple months.” So that was kind of the approach we took, it’ll be fine by summer, and thinking it’s going to roll over. But now it looks like this is going to get worse. It’s going to get worse into the end of the year and worse into maybe even Q1. Why don’t we just start there? What is your supply chain prediction as far as cost go and the ability to even get goods to the end of this year and into next year? What are you thinking?

Mark Adkison: Well, just when we think that things start easing based on one situation, whether it’s container capacity, or ship capacity, container supply, the port issues here in the US. And we here at Kuhn Rikon, we’ve endured every one of those issues, same as you. Then there’s new issues that creep up, you and I were talking a little bit earlier about the port closure in South China, Yantian. That’s a new issue that now is causing new backups, new issues that they’re saying, this is due to COVID. If some of you haven’t heard that there was a new COVID variant, the Delta variant that was identified there and it’s causing issues throughout the Guangzhou region. And it’s backing up, we shipped through that port regularly. It’s one of our major ports that we shipped through and we’re having to reroute some shipments. We’re having to just deal with the issues there and congestion, that congestion is going to last for weeks, once it gets fully open. Some of the predictions that they have, that I don’t have, but others have, is that this could cause issues, as you mentioned earlier, all the way into 2022. So just when something starts to really resolve itself, let’s say the COVID issues that we’ve had here in the US. Even though they were essential, the challenges of getting port workers, and we were having boats backing up the ports for weeks. We’re still seeing some of that by the way. Those are really kind of starting to ease a little bit, but then you have other issues that creep up like this issue in China. My prediction is it’s going to continue to be challenging all the way through, at least the end of this year and early 2022. I just don’t think we see enough things that are resolving themselves that is going to solve the supply issue. Because we, most other companies, we need more products. We’re ordering products as heavy as we can, lead times are going way out, 90 to 120 to even much, much longer, months in some cases. I think because that product need is still there. It’s going to continue to the holiday season where US consumer demand is pent up and will be unleashed this year, I believe. I think it’s just going to continue to cause issues with capacity. There’s no way for them to catch up during this timeframe.

Luke Peters: Yeah. So it’s complicated because the thing is on the long-term view, we can look at this problem and say, “Okay, well, we got to be careful and just order what we need.” But I don’t know how order what we need helps us if demand’s going to continue to be high. And if we have an order what you need mindset. And then all of a sudden we’re out of stock because the lead times expanded or because we couldn’t get stuff on a boat. So all of the, just in time, and order what you need, is kind of going out the window right now. We kind of have to, I guess, you have to make sure you’re at least making margin and then you got to order. Right? I mean, you got to keep your house full.

Mark Adkison: I don’t want to share too many competitive things, but that’s what we’re doing. I mean, we’re ordering numbers that we would have never ordered should all of this be normal. We’re pushing and at least looking at the goods that’s driving 80% of our revenue. Let’s make sure that we’re in stock long-term on these. We may be taking a few more inventory risks than we would have normally, thankfully we’re in a position to do so. The main thing is I want to be able to supply our retailers, supplier, those that are buying our products to supply consumers. And so for us, we are buying and heavier than we normally would. Where we normally keep three months worth of inventory on certain items, we’re looking at six to nine months worth of inventory on items that were flowing in orders right now. The main thing is just getting them, even though we have the orders out there, we’re still struggling to get those orders filled.

Luke Peters: Yeah. Everybody’s had to pass on a price increase but I’ve had a couple of friends who had had to pass on their second price increase. I don’t know. Our customers one way or another, there’s just no way to avoid these rising prices, but at the same time, they don’t want to see the price increase because they don’t want to pass it onto their customers, which is understandable. But something’s got to give, I guess, are we into the new world of two price increases a year instead of one a year? Where might this go?

Mark Adkison: If we’re responsibly managing our businesses, we probably are. You can only let margins erode so far. And I mentioned to you pre-call, we have some materials suppliers that are literally giving us the pricing on order by order basis. That makes it extremely difficult to manage your processes and costs. You know what we quote out, yes, we were doing annual price quotes right now. We’re dating them at least for six months, but certainly we still put in the same caveat that, they’re still subject to change depending on cost increases. So it’s twice a year or more often, depending on really what happens with the variability of these material costs and shipping costs. The struggle is both of them going up at the same time, that can quickly eat up all of your margin. And then all of a sudden you’re not profitable. I think you just have to be good partners with the retailers, good partners with those that you’re selling to. They understand that they’re buying products, they know what’s going on, but there’s only certain amounts of increases that are going to be able to be absorbed throughout the system and acceptable to consumers. And I think we’re all doing our best to mitigate those costs, but they’re a reality right now. We’re all dealing with it.

Luke Peters: Yeah. And just like you talked about, let’s talk about nearshoring. So first we had the tariffs up to 25%, was that going to be enough to move to nearshoring? For most people the answer was no, but definitely, some companies had to kind of diversify, move into Vietnam or other areas. And it just made sense at that point. But maybe not enough to bring it back here to the States, and maybe not enough to say bring it to Mexico. But it was definitely worth a second look. But now you’ve got this freight and not only the freight, but the lead times, and the demurrage, or the detention and all these other crazy new terms, I’m learning over here when I see the invoices. But I know in your business, you guys can make product, Swiss-made product, but you know so many other companies, you have such a large network. Have you seen companies actually be able to nearshore with these extra added costs?

Mark Adkison: You know, I think, nearshoring is still a challenge, I would say. I saw more companies when I was at IHA, that I was working with. It was really looking more to other Southeast Asian locations, looking at Vietnam, looking at Indonesia, looking at other regions there. There were the same challenges or similar challenges to shifting production into those areas. Even saw Chinese company that were setting up operations in these countries, they take advantage of that. I think that’s still continuing. And I did see companies shifting to those. We do some manufacturing in Vietnam, we also do a lot of manufacturing at our own factory in Switzerland. But also we have other relationships with other manufacturers based in Switzerland that we’re starting to shift some goods there. It’s one of those things where you can get European quality, you can get Swiss-made items that are very high quality, but at a competitive price due to all the challenges that we currently have. We already have goods flowing from our factory that’s based in Rikon. So, having that ability for us has helped. When you think of nearshoring, obviously you’d want to think of being manufactured in the US, or being manufactured in Mexico, or something very close. We’ve looked at Mexico. We still have some concerns there just for our goods, just in the ability for us to be there, to visit. There’s some concerns that we have, but certainly all the challenges that we have makes it look more and more attractive by the day. When you look at the timing, for us it’s really just has been really tough, to be able to get goods. And of course these crazy costs increases that we’re seeing does make Mexico look a little more attractive. The US MCA agreement is attractive. There’s some protections, there are some agreements in place for free trade. So I think certainly any companies that are manufacturing, need to be looking at those and we’re doing so. We haven’t found good options yet. Right now our best options are the Swiss-based products that are coming in. We’re excited to be able to launch more of those, but I think it does force companies and has forced companies to look outside of [inaudible 00:28:04].

Luke Peters: Yeah, for sure. But the cool thing is having Swiss-based product definitely could be a fun marketing advantage for you. Right? Yeah. It played up just like, made in America, made in Switzerland, definitely is going to have a positive influence on the brand quality. And I think for your brand, higher quality brand, anyways. Yeah. So that’s a little bit of a silver lining on there. So this is just a comment, this is just from a meeting I was on earlier this morning, was that the prediction on the price is like, where will the prices go from here, recording early June right now? And I’ll try to launch this in a couple of days. So, right around June 15, we’ll be launching this episode. That’ll be what I shoot for. Because I know some of this is time sensitive, but I was talking about, we were paying, $5,000, $6,000 a container, then we’re paying, $7,000, $8,000, the prediction I heard was West Coast will go to $15,000 a container or so, which by the way, I’ve already seen from some quotes. And East Coast will go up to $22,000 a container. And the thing is on some of these containers, I got friends and the value that container may only be $25,000, the goods inside. So you’re talking about just a massive increase, per unit cost. So I guess it kind of factors into it. So talking about this, do you see, okay, so prices are going to have to go up. They’re already going up. Every price on everything is going up. I was at a car dealership and they’re asking between $25,000 and $100,000 premium on cars. So you got a sticker price, add $25,000 to $100,000 premium. If you don’t want it, too bad there’s no left anyways. This is the world we’re in. So do you think that could lead to a consumer demand slow down? What if the prices go up too much, too fast?

Mark Adkison: I think absolutely. And I think, if the container prices that you just mentioned come to reality that will force all of us to think differently about how we source. We’re the same way, we have typically, even though they’re high quality, they have lower cost of goods and our gadgets and things like that. So you look at the container cost, if it gets anywhere near the $20,000 to $25,000 range, that changes the calculation dramatically for us. So we would have to start looking at Mexico or other places, because there’s no way that consumers would be willing to take on that kind of cost increase. By the time you take into account margins on top of that, for each of the steps in the supply chain, that’s a huge increase in retail prices. You mentioned cars, they’ll try to buy a used car right now. Look at the values on used cars, they are through the roof because no one can get new cars. I think this overall… I hate to say inflation because obviously how we measure inflation, things are still muted a little bit, but prices for goods are going up. And if it continues at the rate that it accelerates, I do believe it’s going to impact demand and it has to. I think it’s already starting to in the building sector, housing starts were down, I’m actually working on a remodel myself at home and it’s made me think twice about some of the things that we’re doing. And I’ll wait a little bit longer on some things just because of the cost, of putting a new roof on cost of framing. Those things are higher, and I’m the consumer for those goods. So I do believe that the rate of increase is already starting to affect consumer demand and will only affect it more as we go forward.

Luke Peters: Yeah. And it’s such a fluid situation, I just try to be open-minded on everything, we don’t know what’s going to happen next. So we just have to be really agile, and be able to react. At the same time, we do have to plan because the supply chains aren’t fast, right? Like you said, products like 90 days is now fast on a lead time and it could take longer than that. So there’s kind of two sides to it. Listen, this has been a great conversation, Mark. And by the way, I’m really glad I’m getting to connect with you. So it’s really has been a pleasure, but why don’t we finish up with, I would just kind of put you on the spot here, would love to think about how you’re thinking about strategic vision. Being the president, you have to run strategy and make these decisions that are going to kind of impact the near and the long-term. Obviously, some of these things are not going to be in our circle of control. We can react to the supply chain, but at the end of the day, freight rates is kind of gone now and we just have to make decisions. So strategically, what are two or three things that stand out in your mind that you’re really, really focused on?

Mark Adkison: Well, for me, I think it’s, number one, we have to maintain quality and innovation. For us, we have to continue to invest in quality products, wherever we’re sourcing that, whether it’s in Asia, in Switzerland, in Vietnam, excuse me, China, Switzerland and Vietnam for us, other locations, considering Mexico, we have to keep quality up. We have to service our customers and our consumers are very, very high level. That’s important to our brand statement. So also we have to partner, we have to partner with our retailers, we have to partner with those that are selling our products. This volatility makes that even more important that we’re working together to keep supply up. We’re able to provide them with products, but also that we’re partners on how we’re pricing these goods and that we priced at a level that can keep everybody in business. But also make sure that we’re protecting consumer and not putting prices at a level that are not sustainable out there to the consumer. So for us, I think, it’s partner with the retailers, keep service levels and quality up to a very high level and be flexible. We’re going to have to be flexible with how we source, flexible to where we source. And just make sure that we’re looking for every avenue to mitigate all of these price increases that are coming at us, whether it be tarrifs, whether it be supply chain, materials. We’re just getting hit in all different areas, and we have to be creative in how we address each of those. So for me, looking at the top level of those things and really help guiding the organization to make sure that we’re being creative in how we address them.

Luke Peters: Well, listen, quality is always number one and living by that brand promise. So I think that’s great. Because it’s easy to kind of get lose sight of that. We’re in the middle of these tumultuous times. But at the end of the day, these things are going to pass. We don’t know how long it’s going to take, but it’s going to pass. And we have to stick to the brand, and the quality, and just to avoid being that commodity. So I think that’s a good way to finish it up. I’ll say though, this is one of those crazy things. 20 years from now, everybody will always remember, 2020 and COVID. And people leaving businesses are always going to remember it all the way through 2021 and this crazy supply chain. It’s just one of those things that everything kind of aligned to create this craziness and we all just have to navigate it. So hopefully, those listening can get some good nuggets of information here to help guide their companies. And I really appreciate your expert opinion today. And thanks for being on the podcast, Mark.

Mark Adkison: Thank you, Luke. I appreciate the invite and take care.

Luke Peters: And hey Mark, before I let you go, how can listeners find you, connect with you, or learn more about your company?

Mark Adkison: Well, just go to our website, See our products, everything from gadgets, cookware, everything that home chef needs. So I’d love for you to support our products. Thank you, Luke.

Luke Peters: You got it Mark. And we’ll have the links in the show notes. And again, I want to thank everybody for joining us. Really appreciate reviews on iTunes and hope you join us for the next interview.

Relevant Links:

Episode References:

Contact Mark Adkison: LinkedIn

Contact Luke: luke@retailband.comLinkedIn 

Listen, Subscribe, ReviewApple Podcasts + Spotify Podcasts 

Retail Band