Season 2: Episode 4 Disruptions in the Supply Chain

Small business is at the heart of the Texas Economy.

This week on the show we break it down, and talk to our business owners about Disruptions in the Supply Chain caused by Covid. The Economy, when it’s humming along nicely, is a complex and delicate ecosystem that we take for granted most of the time. It is a system that works based on Buyer’s fluctuating needs, wants and demands — Needs, wants, and demands that got thrown into a tailspin in 2020. And not only was the tailspin because the American consumer didn’t spend nearly as much as anticipated on suits for the office and ladies dress flats to complete that business professional looks and their dollars shift to things like ring lighting and new additions to the house or remodeling that now essential “home office”, but it was an even bigger dilemma, because due to Covid international trade was halted, shipping yards were being temporarily closed, the price of gasoline crashed then skyrocketed, the demand for long-haul truckers ballooned, and we’re not even going to get into the toilet paper thing… to say it’s been difficult to navigate is an understatement. Tracking the effects of a disruption in the supply chain can be dizzying and it can hit you where you least expect it! 

Like i said, it gets complex! And we’re all riding on this rollercoaster every day since the pandemic started! Remember the shortage of hand sanitizer and PPE? Or the price of a barrel of gasoline going into the negative because no one was commuting to work or flying on airplanes?? This is tricky stuff!  So this week, we explore the ups and downsides of Disruptions in the Supply Chain with 4 of our business owners:

Leif Benavides, master plumber and owner of Good Leif Pluming, in  San Antonio. From Episode 2, Laura Del Villagio, master milliner and owner of Milli Starr, based in Austin. Handyman Matt, the human Swiss Army Knife and from Episode 1, Bob Lee, co-owner of The Big Texan Steak Ranch in Amarillo,  TX.

Each one of them will give us a first hand look at how the disruptions in the supply chain has affected the way they do business as they navigate the recovery. 

This episode of Emerging Texas Strong is sponsored by Texas Mutual Insurance Company, a leading worker’s comp provider in Texas, and is a production of Earnest Media.  If you are interested in sponsoring a heartful podcast focused on the journey of Texas business owners for a focused market audience email, contact@EmergingTexassStrong.com

Episode 4 Guests:

EPISODE 4 TRANSCRIPT:

TXMI Commercial: 00:00 Support for the emerging Texas strong podcast comes from Texas mutual insurance company. A workers’ comp provider committed to helping companies build a stronger, safer Texas. On this episode, Texas strong

Leif Benavides,…: 00:13 COVID has really impacted us by giving us more work and more headaches, because we don’t know if we’re going to get any material.

Host, Linsey Li…: 00:21 Welcome back to Emerging Texas Strong, a growing collection of stories, lessons, and advice from small business owners in Texas, working hard to survive this pandemic economy. We follow a collection of businesses and weave their stories together as we navigate a full season of big picture topics like emotional intelligence at work, the border and the Texas economy and the business of bringing business back to the office this week, we break it down and talk to our business owners about disruptions in the supply chain caused by COVID the economy. When it’s humming along nicely is a complex and delicate ecosystem that we take for granted. Most of the time it’s an ecosystem that works based on buyers’ fluctuating needs, wants, and demands; needs, wants, and demands that got thrown into a total tailspin in 2020. And not only was the tailspin because the American consumer didn’t spend nearly as much as anticipated on things like suits for the office or ladies’ dress flats to complete the business professional looks. And not only that, their dollars got shifted to things like ring lighting and new additions to their house or remodeling the new now essential home office. But it was an even bigger dilemma because due to COVID international trade was halted. Shipping yards were being temporarily closed. The price of gasoline crashed and then skyrocketed. The demand for long haul truckers ballooned. And we’re not even going to get into the toilet paper thing… To say it’s been a difficult year to navigate is an understatement tracking. The effects of a disruption in the supply chain can be dizzying and it can hit you where you least expect it. Like I said, it gets complex and we’re all riding on this roller coaster every single day, since the pandemic started, remember the shortage of hand sanitizer and PPE or the day that the price of a barrel of gasoline went into the negative because no one was commuting to work or flying on airplanes. This is tricky stuff. So this week we explore the ups and the downsides of the disruption in the supply chain with four of our business owners, Leif Benavides master plumber and owner of Good Leif plumbing in San Antonio. From Episode 2, Laura Del Villagio, master milliner and owner of Millie Starr. Handyman Matt, the human Swiss army knife in Austin, Texas. And from Episode One, Bob Lee co-owner of The Big Texan Steak Ranch in Amarillo. Each one of them will give us a firsthand look at how the disruption in the supply chain has affected the way they do business as they navigate the recovery. Our first guest Leif Benavides of good life plumbing explains the difficulty of running a business that is having a boom and could have all the work in the world, if only there was enough materials to make it happen.

Leif Benavides,…: 03:17 Hi, I’m Leif Benavides. I own Good Life Plumbing in San Antonio. We’re strictly a residential service and repair company, and we’ve been open for about four years, now.

Linsey Lindberg…: 03:25 Tell me about how you became a plumber and what made you want to start your own business?

Leif Benavides,…: 03:30 Well, I knew from the time I was teeny tiny that I was going to be a plumber. My grandfather had his own little construction company and I would help him since I was the oldest grandson and I always ran with him. And when I was 14, I knew I was going to be a plumber. I lied on my application, got a job as a helper. And, uh, that’s where it all started. I just, I love it. I love plumbing. It’s not even a job. It’s like a hobby. It’s just something that I love. COVID impacted my business in the sense that everything has gone up. Material has gone up in price. Gas has gone up in price. You just have to be a lot more cautious when entering people’s homes for your safety, for their safety. It’s made us really, really busy because people are stuck at home. And so they see the drips and the running toilets and they don’t have as much hot water as they thought they did. And so COVID has really impacted us by giving us more work and more headaches because we don’t know if we’re going to get any material.

Linsey Lindberg…: 04:49 So you mentioned the supply chain disruptions. Can you tell me more about the different factors that are keeping you from getting the equipment and supplies you need? Supply chain and supply demand?

Leif Benavides,…: 05:03 We had a shortage because of COVID from what I hear from my suppliers, a lot of the truck drivers that were bringing material back and forth and there’s different levels on material there’s imports material coming from China. We’ve got material coming from Mexico. We’ve got material coming from the United States. They put a halt on material coming from other countries. There’s been a slow down in material coming from the United States. From what I hear from my suppliers is a lot of the truck drivers were older, they retired, they didn’t want to get sick. And so they just went ahead and hung up their keys. And so there’s a search for truck drivers, or there’s a need for truck drivers to get the material from point A to point B. And so that’s hindering in trying to get material. So there’s no material. Of course the price on supply is going to go up. And so that hurts us too, because we have to in essence, move that to the consumer. And I hate it because I feel like all my customers are family and I wouldn’t want to raise prices, but that’s the way everything’s going. Everything’s going up the gas prices, uh, the material. And it’s a hinder in what I have to do. I don’t know if I have to go higher on my prices or if I can come down, I really don’t know the supply houses. They tell us we have material coming, but it’s slow. It’s slow in coming. So I don’t, I hope the prices come down so that way my customers don’t have to suffer. So I just have to plan ahead and, and conserve on what I do have and save on what I do have and try hard not to make any mistakes so I don’t have to redo or reorder. I hope the prices come down, but I don’t have a clue. I don’t know. I wish they would. And all of that is just stressful, but we make it every day. We make it. We’re trying to get as many jobs and calls done as possible. I know we’re pretty booked, but we’re moving, we’re moving and we’re doing the best we can with what we have. We’re trying to get material in. We put orders in for material. We’re just looking real positive. We have a lot of work. We’re just trying to get to it.

Linsey Lindberg…: 07:33 Are you having to make decisions on which types of jobs you’ll say yes to and which ones you’ll say no to based on these factors?

Leif Benavides,…: 07:42 We do as much work as we can. I try to help everyone. If you’re calling me, I’m going to help you in one way, shape or form. It might take me a little longer to get to it. We might have to work scheduling. Um, but I try not to turn anyone down. I just, it is hard. It is hard because if you have to change a tire, but you don’t have no tire, it’s going to take a little time. You know, I want to fix your plumbing and I will fix it, but we’re just going to have to schedule and give or take. And there’s just nothing I’d rather do than fix it. But if I don’t have the material, then we’re going to have to work around it.

Host, Linsey Li…: 08:25 When your plumber can only give you water to half your house, because he doesn’t have enough materials to do the whole job this month. That’s one clear downside of the supply chain that directly affects the way the customer lives. But what about in an industry? That’s more of a nicety and less of a necessity. We talked to master milliner, Laura Del Villagio about how the global supply chain was affected in the military world, right When all the milliners took to hosting virtual classes in order to stay afloat.

Laura Del Villa…: 08:53 Hi, my name is Laura Del Villagio. My business is Millie Starr. I’m a master milliner, which means I make hats for women. I make hats for special occasions like the Kentucky Derby weddings, galas, luncheons, theme parties, anything where someone wants to dress up and wear something really special on their head.

Linsey Lindberg…: 09:15 Let’s get into supply chain, because I know supply chain has been affected even right now. It’s still being affected. How did you see it in the millinery supply?

Laura Del Villa…: 09:28 The supply chain? I mean, millinery is a very niche market. It’s a global market. It is not like all the materials are available from us suppliers at all. We’ve got very few actually in the U S so when shipping was affected, um, whether that was just from consumer to business or consumer to consumer, you had to get incredibly patient. I just now reordered something because a company in the UK stopped all international shipping for a year because things were just taking too long or getting lost or getting sent back. And that was a wire order. But as far as like the straws, you know, things were not shipping out of Australia. It might sit in Melbourne for three or four weeks before it ever got on one of the few planes coming out. It’s it definitely affected things. In fact, that’s one of the things I really hope is alleviated soon is I’ve because of shipping issues. I’ve lost a lot of my international customers because they’re wary of ordering from abroad and whether or not it’ll get there in time. Even things to Canada have taken just months where it used to take weeks. That’s been really tough.

Linsey Lindberg…: 10:51 Was it affecting the prices of things too with inflation?

Laura Del Villa…: 10:56 Inflation is definitely factored into cost. And again, the issues and changes with the supply chain. It hasn’t been too, too bad as far as what I’m seeing right now. However, a lot of my materials come from Australia and the exchange rate is highly in our favor right now, the Australian dollar versus the us dollar. It’s quite a difference. So I’ve, you know, my Australian buyers, aren’t buying hats right now, but it’s a good time for me to buy hat blocks or supplies from Australia. The thing where I’ve seen the most changes are in shipping cost, overall that number that’s added on just for shipping and freight and in fabrics and notions. And more often than not, a lot of things are just out of stock, unavailable and slow to restock. So buying ahead and kind of keeping an eye on when things are dropping has become really important.

Linsey Lindberg…: 12:03 I’ve found for us. I can’t count on the things that I used to be able to just run to the store and get and think, uh, well obviously that paint that I need for my bronze statues will be there. We did a bronze statue for Derby and I ran to my local hobby lobby; none of the bronze paint, no problem. They have it at Michael’s, they have it at JoAnn’s. I went to all of them… None of them. I go online. There’s not any within in Texas, there was maybe one or two bottles in Round Rock, but I was like, okay, great ship them to me. And they said, you’re out of our shipping zone. And some, there was like one person on line who had three bottles and they jacked the price up to like five times the normal price. Oh, wow. I just thought who would have guessed, who would’ve guessed that COVID brought us a shortage of bronze decor paint. Like it’s just you and you can’t plan for that when it’s part of your business structure. And you just know I charged this much to build the costume because I can go down the street and buy the paint I need.

Laura Del Villa…: 13:13 Yes. And I think, unfortunately, because so few things are made in the us from us materials, like just across the board, whether it’s still or hats or, you know, building, we just don’t make it here. And if container ships are not, not getting into port and being unloaded quickly enough, if factories are shut down somewhere else in the world, because of COVID spikes, it affects everybody. And yes, even the small things like paint or, you know, um, there’s been several notions. Like I said, the wire that I needed, I haven’t been able to restock. It took forever. Yeah.

Linsey Lindberg…: 14:02 It’s very clear that we are a global economy and even more than a global economy, the pandemic has shown us that we are a global human civilization just to see how quickly with air travel and with, with all of it that the pandemic was able to spread. I think one of the things I hope that we all learned from this is that we are not borders and countries. We are, we are a whole world of people together getting through it.

Host, Linsey Li…: 14:32 As we can see, there are downsides and upsides to this whole supply chain kerfuffle. And when we come back from break, we’ll meet a handyman in Austin who seen high demand on his home repair and renovation services, but find out why he’s turning down big jobs in favor of those that don’t require him to rely on out of stock or items. And then we’ll check in with Bob Lee from The Big Texan Steak Ranch, and discover an unexpected gem of the supply chain disruption that can be a big win when you’re the right buyer. But first a word from our sponsor.

TXMI Commercial: 15:11 Support for this program comes from Texas Mutual Insurance Company, a safety focus workers’ comp provider, supplying information and resources that can help Texas employers stop accidents before they happen more@texasmutual.com.

Host, Linsey Li…: 15:26 And now back to our show. Our next guest on today’s show is Matt McCorkle, a residential handyman and lifelong Texan. I was excited to chat with Matt for this episode to see inside the boom in home renovations and office expansions, and specifically to find out more about the supply chain issues we’re dealing with, like that crazy price of lumber. Matt was happy to lend an insider’s perspective.

Matt McCorkle, …: 15:53 I’m Matt McCorkle. My business is Handyman Matt, LLC. Pretty self-explanatory. I do handyman work. I have a reputation as being a human Swiss army knife. I’m just a guy with a truck and a ton of tools and years of experience, and pretty much anything you throw at me, I can fix it, rebuild it, whatever. So, a good guy to know.

Linsey Lindberg…: 16:17 What does business look like for you in the recovery?

Matt McCorkle, …: 16:22 There’s no shortage. People are working from home a lot more nowadays. They want to customize their house, not only for working from home, but also being in the middle of raising your family in the same place that you’re trying to work. And so I’ve done a lot of isolation of certain parts of the house, building walls and insulating them for sound and fixing lighting, and making a lot of people’s houses, both a home and an office. And I’ve also done a ton of decks and screen porches because people want to be outside all the time and not get eaten alive by mosquitoes. So that’s been, that’s really been bread and butter during the last year and a half.

Linsey Lindberg…: 17:02 Are you experiencing any supply chain disruptions? And if so, how are you?

Matt McCorkle, …: 17:07 Absolutely. How am I managing it? I’m managing my expectations and coaching people to manage theirs also., Tell them, okay, yes, I can do that. But for instance, the cost of lumber right now is absurd. Seriously. You’re going to pay three times more, at least for the same materials that you would have just a few months ago. I’m turning down those jobs now because I feel bad that these people are so desperate to improve their situation, that they’re willing to pay three times more. I mean, my profit isn’t much greater, obviously. So much of what people are paying is getting eaten up with materials now, but say you want do a composite deck, you know, instead of traditional lumber, the order time on those things is ridiculous. Nobody has stuff in stock. The weirdest things I walk into home Depot or Lowe’s or something to get one simple deal, like a junction box, you know, for your light switch or something like that. They want to move this switch over here. Well, I can’t find any, I mean, there are shelves and shelves and shelves where all these blue plastic junction boxes are in bins of them, right? And there’s four on the shelf, not four bins, four junction boxes. The, I mean, this is a, I don’t know, a dollar a piece and they’re gone and nobody has them. So I’ve got to change my plan. We’re going to do something else and convince somebody that I just simply can’t do it right now. There’s nothing available. So those are two examples that pop into my head immediately. And still after all this time, I mean, that started shortly, shortly after the pandemic started, which is understandable because people are home and there’s a rush for these things. But a year later, and I’m still finding the same kind of shortages. Sometimes we’ll have them in. Sometimes they won’t and they have no idea when the next shipment is going to come in as a simple example of shortages, a two by four to eight foot long two-by-four, you build every house out of nowadays. Number one, there were very few in the store. Normally a two by four is around $2 a piece during the most extreme part of the shortage. They were almost $9 a piece for a two-by-four. Now think about all of these, although, you know, architects, builders, whatever that have already got these projects in the works. And then this pandemic hits and a simple two by four is four times more expensive. You know how many, two-by-fours go into a house? So, I mean, I can’t speak for them because I’m not directly in that industry, but their costs just to build the house that they’re already contracted on is easily quadrupled. Just from two by fours, you know? And then again, the, the shortages of junction boxes and wiring and plumbing, parts, all of that stuff. I would not want to be a builder right now.

Linsey Lindberg…: 20:06 Man. So interesting. And it’s, so it’s such a big question as to when it’s going to resolve itself because nobody knows. All I know is I’m not building a porch on my building until this is over!

Host, Linsey Li…: 20:22 And our final guest, with the fun Texas trivia fact of 2021, is our friend, Bob Lee, with The Big Texan Steak Ranch off I-40 in Amarillo.

Bob Lee, The Bi…: 20:33 My name is Bobby Lee and I’m the co-owner of The Big Texan Steak Ranch. My dad opened it in 1960 on route 66, my brother, Danny and I are the owners, the second generation owners and operators of it. We serve thousands and thousands of people a year. This year we’re on track to do about 500,000 people. Uh, it’s in the middle of nowhere in the Texas panhandle, but it’s one of those things that just, it’s the phenomenon. It’s a perfect crossroads of the highways going to Dallas, to Denver, to Oklahoma city, to Albuquerque. We’re kind of in the very center of it and catching all the wonderful people want to come through and experience the Texas mystique. That’s what the big Texan is all about.

Linsey Lindberg…: 21:12 Are you guys having any problems, fulfilling food orders? What is your supply chain look like right now?

Bob Lee, The Bi…: 21:17 At The Big Texan we’re able to forecast and hedge on buying box beef. And my brother, Danny is tremendous at being able to look at the market and know when to buy top sirloin, know when to buy inside round. Now when to buy a T-bone, I mean, he’s able to do that during the year. And we were able to buy large amounts of it. We’re talking about, you know, 200 cases at a time and have a place that we could store it and freeze it and age it in. So we were able to not have to undo our hatches and we were able to stay underneath that one under underground to where we were. We had plenty of food. We even had people offering to buy steak from us for two or three times what we paid for it. So it was, it was one very unique, one of a kind and in 60 years you’ve never seen that before. So thank God that we were able to keep that as far as some of the stuff you, that you do here there was sliced pickles. We couldn’t get sliced pickles at one time and we could get the pickles, but they were slicing them and I’m going, you know, how do you deal with something like that when you’re told that? I mean, it’s just like we can’t get sliced pickles, but once again, the stakes, those items were readily available and we would get calls from food brokers all over the country that would say, Hey, I’ve got, you know, a hundred cases of ribeye. That’s got about 60 days age on it. Do you want those? Uh, my brother, you know, we serve calf fries, mountain oysters up here, and everybody knows us for how good our calf fries are up here. So we put a campaign together, marketing and Danny who had an opportunity to buy 49,000 pounds of bull balls. And, uh, we nobody in this country, he has 49,000 pounds of calf fries. We did. So we bought those and we have been selling so many calf fries and orders of that because you know that there are opportunities that come along through the purveyors on certain items that, that there’s an abundance of. So we were able to buy those and had a great time with them and all this that’s a wonderful thing to eat. And when you get a chance to, with our beer is calf fries and our beer. It’s wonderful.

Linsey Lindberg…: 23:17 I love how ingenuitive you’ve been to tie the opportunities you had to buy in bulk because of whatever circumstances, even bull balls, and then to tie it to marketing you. Bobby Lee are a true Texas legend, my friend.

Bob Lee, The Bi…: 23:34 Well, thank you. Like I said, we were very fortunate and like I said, we, we know our product and, uh, God, you know, we know we know how many pounds of potatoes to have in the oven, how many busboys to on any day of the year. And, and we’re able to, you know, forecast and predict that because in the restaurant business, it’s, it’s a business that is, if you don’t control your controllables, you know, they’ll put you out of business. And that’s the one thing after 61 years of doing this, we’re really good at it. And like I said, even in this type of situation, we really benefited from the pandemic probably probably better than most cities in Texas. So it was we’ve. We’ve done well.

Host, Linsey Li…: 24:13 Thank you for joining us on this episode of Emerging Texas Strong, let’s take a second and review a few things that might be useful to you from this episode. 1) the supply chain is a complicated network that depends on everything happening just right in order to flow. Anything that throws a wrench in it from shipping containers, not getting filled to postage delays and even retiring truck drivers will cause a ripple down the line. 2) there are supply chains associated in almost everything we produce or consume from plumbing parts to millinery supplies, all the way down to bull balls. It’s soup to nuts, as they say! 3) inflation is a natural occurrence. When supply chains are disrupted, it’s simple supply and demand. When there’s low availability, the cost per item goes up two-by-fours, go from $2, a piece to $9 a piece and that additional cost has to get absorbed somewhere. 4), the word of this year is “uncertainty”. And in the meantime, we business owners are all just doing our best to fulfill orders and make it all work in the most uncertain market we’ve all ever seen. And 5) remember to look for the upsides, to all these supply chain disruptions. Be ready to take advantage of the moments where international exchange rates are in your favor. So you can stock up on supplies for the future, or when a meat broker has a proposal for you. That will make you the most rich man in America in the currency of bull balls. If you have enjoyed this podcast or have found it useful, please share an episode with a friend. We want to grow Emerging Texas Strong as a free resource for business owners. So send it to somebody who could use these lessons to be happier and healthier business owners. Join us next week for Episode 5: Labor shortages and its effects, where we’ll talk with business owners in a number of different fields to find out how labor shortages are disrupting their recovery and what they can do about it. Podcast production, interviews, edits, sound design, and office snacks for the Emerging Texas Strong podcast are done by Linsey Lindberg. Bios and business information for all guests featured in season two can be found on EmergingTexasStrong.com. Find out how you can work with them and support Texas small business. To share the hope journey struggles and the advice, be sure to follow like rate and subscribe to Emerging Texas Strong on the web so that each episode shows up directly in your podcast feed. And if you’re enjoying the show and want to show us some love, leave a five-star review, it’ll totally help more people find us. Follow us on Facebook and LinkedIn @emergingtexasstrong or Twitter @Texasstrongpod, where I’ll be posting ways to connect with our guests and gems from episode four mentioned in today’s show. And if you’d like to be interviewed, please reach out to me, contact@emergingtexasstrong.com. Emerging Texas Strong is a production of Earnest Media. If you are interested in sponsoring a heartful podcast, focused on the journey of Texas business owners for a focus market audience, we’d love that email contact@EmergingTexasStrong.com. And remember, you’ve got a friend somewhere in Texas, who’s rooting for you. I’m your host, Linsey Lindberg. Join us next time for more stories of Texas small business on Emerging Texas Strong.

TXMI Commercial: 28:02 Support for the Emerging Texas Strong podcast comes from Texas Mutual Insurance Company, a workers’ comp provider committed to helping companies build a stronger, safer Texas.

Linsey Lindberg…: 28:13 I just don’t want to keep you here too long, either.

Leif Benvides, …: 28:16 No, I can stay as long as you want. Just wait until you get the bill.