Alex Schuessler and Ron talk about the history in the Industry of Technology and process effectiveness.

sure has. It's been a really interesting time. So I was thinking about this coming into it. I think we left the last podcast with you suggesting, well... We've had kind of a meandering look back and I think meandering in a constructive sense. And we were going to continue. And what does it mean for the, where are we now? And what does it mean for the future? So last time, what got us here and now where are we going? And it's been interesting because really thinking about this and knowing we're going to have this conversation, I thought about that. You know, there are three things really that happened. One is our conversation. meaning that it really made me think back. And especially it made me think back that when we started the company, which is now coming on to 22 years ago, there were, as I thought about, there were about 16,17 other startups around our time, all in this industry. And I started researching them and none of them actually are around today. And I sort of started wondering why. We were certainly no smarter than they were. At least we certainly didn't think so. We weren't any better funded. In fact, we were among the sort of low funded companies on the block. And where are they? And one thing that occurred to me is one of the big differences was they were kind of offering spot solutions to problems. They were doing things like, hey, here's a new way of doing parts catalogs electronically. Let's move everything you used to do on paper. and let's move it onto glass others were looking at service management and so forth and so i think what happened is they filled the need that was part of the traditional workflow of how you look at information to do service and find the right parts and so on and they just moved into electronic area and a lot of them didn't make it which was typical for any kind of startup company and others did but then became commoditized so there wasn't much of a reason for them to continue so so anyway so one one of the one of the um things that happened is just thinking back to what happened and I have a bunch of thoughts, which I'm looking forward to getting your responses to that I wanted to share with you. So that's one thing that happened. The other one, which is actually closely related and a complete coincidence, is I had been invited to give a talk to at the European Rental Association. I'm a member of the technical committee there. They were having their large annual convention in Amsterdam. I knew that I wouldn't be able to go there for travel restriction reasons and other stuff. So I taped a presentation to them. And that too required a backward look right on the heels of our conversation and really opened my eyes to what's happening. So when I said earlier, there were all these spot solutions that were starting up when we started the company, such as parts catalog and service management and so on. But there were spot solutions because they were trying to fit new solutions into the old workflow. that service and parts guys were pursuing. But what's so interesting is, as I was preparing this presentation, I realized that the big change was not that more and more spot solutions are coming along, which they are, and I'll talk about those, but also that now we're finding a tremendous increase in operating efficiency and transactional efficiency and all kinds of business efficiencies because people are starting to string these different solutions together into a very, very new workflow. It was sort of redefining what the whole parts and service workflow is. So that's the second part that sort of happened to come together since we last spoke about a month ago. And the third thing, as you know, is our company got acquired. And we were acquired by Ritchie Brothers. And that in itself has been a tremendous case study over the last several months going into that. Richie is a company itself that is very future-focused. They are known as, I believe, the largest auctioneer of construction and industrial equipment and some other areas as well, on-road and off-road. And they too are going through a transition. They have a new leadership team, a very impressive leadership team. And they have looked at all of this and said, look, and this is now, I'm paraphrasing this, these aren't their terms, but what we have done traditionally, we as Ritchie in the sense, is that we've looked for these moments of equipment disposition or acquisition, so changing hands, in other words, and then we've waited for that to happen again, if you look at it on an individual equipment basis. And in a sense, what they're doing now, they've really laid this sideways and said, hey, we can support equipment across this entire life cycle. And they've done some other acquisitions in the past to go ahead in that direction in the recent past. And I think in that sense, it made a great deal of sense now for SmartEquip to be part of this equipment support side. So the idea being that as you do, for example, and again, there are many case studies and use cases, but for example, you go ahead and you acquire a piece of equipment at auction. And the moment you have it, you have electronic support for it. You're put back in touch with the responsible OEM and dealer that otherwise has lost touch with you once equipment goes through its second and third lifecycle and so forth. So there's a lot of interesting stuff coming together all at once. And the overarching feeling, and I think I wouldn't have come to that conclusion if we hadn't had that last meeting. The overarching feel I have is that all of a sudden the world is going through it. The world that we live in, you and I live in, the equipment lifecycle world, is really coming to a new maturity where all these developments that have happened over the last 20 years are all suddenly fitting together in this new world and there's a lot of efficiency to be had. How's that for a very universalist?

Well, and the other thing you raised last time we spoke is how do the dealers feel? And I shared with you that in the very beginning, just because we were a technology solution that enabled transactions, the very first reaction, often a knee-jerk reaction, among them was that we're here to disintermediate everybody. And that was never the business case. If anything, it was to tie the dealer closer, more closely to the equipment lifecycle process, to parts and service, and so forth, to allow them to provide higher levels of service, equipment-specific, serial number-specific, but at a much reduced cost. So the old term used to be high-touch and low. low cost. And what's so interesting is Richie is very much in the same vein in going through this merger. It's very much the same idea that it's quite OEM-centric and it's really allowing the dealer to reattach to the asset that previously they had lost through the second sale, through its second life. And that is really what we used to call orphaned equipment. Once the first owner has it, it's related to the dealer still. And then if it moves again, typically through an auction, sometimes it goes offshore and whatever else, that's when the manufacturer and the distribution chain lose touch with it. And I think that's reversing with all of the stuff that's going on right now. Yeah,

You know, the other thing that's very interesting as I hear you speak, I'm having flashbacks to all the work that you've been doing for the past decades. And, you know, there's always this notion still. And it's ingrained in us that the best way to reduce the cost of ownership is by reducing the cost of acquisition for the equipment itself, the cost of parts by finding less expensive alternative sources and so forth. And that's, I think, where also the disintermediation fear comes from. I want it directly from the OEM because I don't want to pay the dealer cut and so forth. But what's interesting is every time we've had the equivalent of a move from paper to glass, which we should really come back to, I think it's a nice way to phrase it. But every time we've had one of those moves, I think they've really shown that the extent of savings that can be had from operational efficiency improvements is always a massive multiple relative to any savings you can get from negotiating another discount or finding that part a little bit less expensive somewhere else. And that's been interesting. And I think with these new developments that are coming out of technology and as these previously existing spot solutions such as parts catalogs and telematics and service optimization and all these things, as these now start all being put together into a new type of workflow. it is becoming far more. Once again, it's becoming a much higher ratio of savings you can have by becoming more efficient operationally by using fewer labor hours per repair service and so forth versus saving another 5% or 10% on a part that you need.

No, it sure is. It absolutely is. But, you know, what's interesting is some things, some of these metrics have remained the same, but some of the efficiency gains that you can now, unleash have changed because of technology. And I'll give you a specific example. It's always been the case that if I have a choice between paying 5% to 15% less for an average spare part or part, I keep saying spare part because I'm spending all this time in Europe, but spending 5% to 15% less on a part has always been less expensive or has always been less in terms of order of magnitude and savings than being able to do the repair. and save two hours of labor cost. And those, by the way, are real numbers. Those are the sort of orders of magnitude of what's at stake. That's always been the case. What has changed is it used to be the case that it had to be the fleet owner, that if the fleet owner is doing their own service, not the complicated repairs, but just overall service, it's always been on the fleet owner's shoulders to find ways of becoming more efficient. And there were natural limits to that. Whereas the dealer could say, look, we'll be more competitive in our labor rates for the repairs we're doing. We can see if we can find less expensive parts for you. But that was sort of all very limited. What has changed with technology is that the dealer can now directly support the service activity of the fleet owner. They can deliver operating efficiency, not just transactional savings, but they can now deliver operating efficiency. And that's really what we've been in. for a very long time. And the idea here is, for example, and I'll just make stuff up now, is a piece of equipment comes back at a rental company and they check it in like they always do. They have their own asset number for every piece of equipment they use. They have hundreds of different OEMs in their fleet. And hundreds is not an exaggeration. They usually do. The bulk tends to be concentrated among a few dozen, but they have hundreds. And then they may have hundreds, if not thousands, of different suppliers, depending how wide they go to and how much they were in that past of saying, hey, we can save another 1% or 2% on this supplier as opposed to another one. So they have this very fragmented fleet. And in the world that we live in today, a piece of equipment comes back, and it has the so-and-so rental company asset number 12345 on its side, and it checks in just like it normally does. And then systems like in this case, it's our system, but there are many different versions of this. Our system sits there and because we're dynamically integrated with their systems, it'll say, oh, wait, Joe's rental company, one, two, three, four, five. That's a JLG 1932 E2 scissor lift with the serial number 54321. And the diagram, it'll serve up. is not just the right diagram for that manufacturer or for that make and for that model. It's actually the right, it goes all the way down to the serial number. So when you click on the coil that's in that particular drawing for the valve assembly, it'll say, huh, you need a 20 volt coil, not a 24 volt coil, because that's what's associated with that particular serial number. And where does it come from? It comes from the supplier. If it's manufacturer direct, then they're the ones that are serving it up. But typically, if there's a distribution chain, such as a dealer, as you then click on that part and touch that part on your iPad or whatever the device is, it'll then go ahead and say, hey, don't get this one because you still have two in inventory in your own stock. But there are these two other items that you've just added and you don't have them. Here's your local dealer and we'll go ahead and fulfill it with them. Don't worry about filling out a purchase order. The system will do it in your existing PO system. It'll create the work order and all that stuff. So you're taking all the administrative work away from the service technician. But if you take a step back, the people who are taking the administrative work away are the people that are selling the part, which is the OEM-designated dealer. So they're now delivering to the end user a saving in labor hours. And that is always going to be so much more valuable than anything they can do by cutting them a special deal on a part. And that gulf between the two saying, on the one hand, let's make it less expensive. Literally, let's reduce the cost of the part. Versus here are these new technologies coming along and we can actually dramatically reduce the service costs are just becoming wider and wider. And then the very last part I'll add to that is, and I think we talked about that last time, every time you take one hour away from the service cost, sorry, from the service time requirement for a particular repair, that piece of equipment is available for that additional hour. So whether it's a rental fleet and you actually get another hour's rental out of it or a half hour, whatever it is, whatever your time utilization is, or whether you're a contractor and you can put it back to work, or you can do the same amount of work with a smaller fleet because you're now getting more of a yield, a productivity yield out of it. It doesn't really matter which way you go. That is always going to be larger than any other save you can do by buying a cheaper part somewhere.

You know, you just reminded me, we started the company around 2000. And I'd been watching technology for a while and just looking back at what had happened. And there was this whole big revolution. You mentioned that the microfiche started arriving in different formats. And the same, by the way, it got much worse. That was then replaced by something called CD-ROM, which you're putting in a computer. And if you had different brands of machines, they would all come different CD-ROMs. You always had to install the readers. And then they would crash the system because they didn't get along with one another. These were all attempts at going from paper to glass. And by the way, and I say this after having looked at this for a long time back then, none of them were designed to make... the end user's life easier. That was not the organizing principle. It was to save money on the production side. These manuals, I remember back then, back in 2000, the typical manual by the earth moving dealers were 200 bucks a piece. And I remember speaking to one of the suppliers and said, why does it cost $200? And he said, and the answer, the completely honest, sincere answer was, well, we're subsidizing it. That's why it would cost more if we didn't. So, of course, microfiche and CD-ROMs and all that were a great saver, but they were really shifting the cost downstream because people hated it. Because all it was doing is you now had to go back in, find a computer somewhere, or find a screen of its microfiche, put a CD-ROM in it, hope it works, learn how that worked, and so forth. Meanwhile, when I had looked back and seen what had happened in technology, there was this big revolution that never happened, and it was supposed to be called the. NET revolution. We still talk about. NET quite a bit or used to. And the idea then was that we would come up, we, the sort of technology industry would come up with a standard that would allow every ERP system and every other system of record to talk with any other system of record. And that never came even close to coming true. What did come out of it is something called web services. And that allows... that there's a set of standards out there so that actually doing an integration from one system to another was made much easier than it ever was before. So you could actually, if you wanted to get the information from your manufacturer or dealer and have direct access to it as opposed to having to re-key everything, that was now made easier. But it wasn't the big revolution, but it was at least you suddenly getting access. And then we started the company and we said, look. If the model, and nowadays that seems so obvious, back then it didn't, we cannot try to work in a world where everybody is going to change their ERP system. Everybody is going to just converge on some standard. Instead, we have to find some ground in the middle where we can essentially map anybody's standard onto anybody else's. So it was very much in that initial. NET philosophy. But the idea was that, again, going back to the example, when you, in your fleet and Ron's rental fleet, type in 12345 and your system has that map somewhere onto that JLG 1932 E2 scissor lift, that that automatically delivers and connects that with JLG systems or the distribution systems and pulls the right information at the right time. So that's possible nowadays. And that's sort of moving from paper to glass. But what is so exciting now is now that that's possible. you can form all different kinds of workflow around it. And that's when you go from not just saying, hey, we don't want to ship you a book anymore for information. We ship it in electronic format. You've now instead gone quite a bit farther and said, hey, because of these connections we now have, because it's on Glass and because there's integration, we can now actually make your service guys more efficient. And by the way, and I mentioned this before, because the pricing is now automatically always going to be right. We can, on both our sides, retire a large part of our accounts payable and accounts receivable group because all of that stuff is now connected in the world.

Yeah.

you know. There's another side to this papering class, and that's what I meant early on when I mentioned spot solutions. The first step, and that's a necessary one, is to find a way to change the medium. In a world of decreasing costs, like you just mentioned, for technology bits, that becomes much easier as time goes on. So moving it from a book onto a computer screen is the necessary first step. And even though it usually comes with pain, that pain is then usually one because the innovation is on the technology side that you're imposing on the user, but there's no accompanying innovation on the workflow side. So they're just trying to do with the screen of what they used to do with the book. And now they have to walk a few hundred feet to get to that screen. They're annoyed about it. They have to figure out which manufacturer handles it in which way. And then they come back and they'll be grumbling, bring back the book. But the moment you can actually bring that information to them and say, well, wait a minute, by the way, because it's now on glass, let's take it to the next level and have it do things that you could never do on paper. And that could be, have it be an interactive parts diagram. So in other words, don't just look at it statically from the page onto the glass, but now touch it. Go ahead and say, I need this part and this part. And by the way, when you do that, it'll automatically put it in some kind of cart. And it will tell you if you have that part internally or not. So that's a whole other step that you used to have to go through that's now gone. And if you decide that you want it, you still need to get permission to buy it typically. So just click on another button and that'll start the automatic purchase requisition, which used to be another conversation with a service foreman and so forth. And then when they say yes, which they do by clicking on their phone, that will then automatically populate your work order and your purchase order and submit them respectively to the manufacturer, to the supplier or to the dealer, whoever it is, on the one hand and the work order internally. So all of a sudden, because you made that move onto glass, you don't have to do these things that you used to have to do with paper or that you used to have to do with the first version of this when it was just being moved from the paper display. onto the glass display. So that I think we've gone through and that we've become really good at. And I think we've, we're sort of plateauing a little bit on the efficiency coming, coming from those individual things from these individual spot solutions where, where things get really exciting to my mind. And I've thought a lot about this in the last three, four weeks is now the, the next generation of users is finding innovative ways of putting all of this together. And so let me use the other example that you mentioned earlier, which is telematics. And that's really the machine telling you, without you having to go there, it tells you remotely, here's my oil pressure, here's what's going on, and so forth. And that, again, by the way, was the early paper-to-glass version. Instead of you running to the machine to see what the oil pressure was doing, you could go to a specific website that was for that machine and it would tell you what the oil pressure was doing right there and then, or the last time the measurement had been taken. And if you have 80 machines in the early version, you have to go to 80 different tabs or different sites and so forth. So that wasn't great. That was starting to become clunky. This was before they had exception reports and so on, because the machine could just tell you what the oil pressure was. It couldn't tell you what it was supposed to be or if there was a problem in the early, early stages. So that then became smarter. And nowadays we're in a world where all the links just need to be put in place and they're starting to be. So if the machine... is recognizing a vibration or an oil pressure that's out of the ordinary or whatever it is. There's now so much collective intelligence because all the machines are reporting their parameters. And there's enough there increasingly. And there are companies specializing in this, companies like Uptake and others, that are specializing in understanding when something is about to go wrong. And again, the original version of this is, okay, therefore, the machine will somehow contact the service technician. There's no need for that anymore. Don't contact a service technician. Go ahead and you already know, or the machine already knows, or the algorithms being run, they can determine, hey, these are the parts that need to be replaced, or this is the kit that needs to go in. And tell the Smartacrop system at that point, have one system tell the Smartacrop system to go ahead and order that kit from... the manufacturer or from the dealer again whoever is in charge of doing these kinds of preemptive warranty type repairs and so on and have it and have them ship it don't charge it yet just have it shipped and when it arrives at the customer's site just tell it hey this is for machine number one two three four five the one we keep mentioning today when it next comes back this is the repair that needs to happen and don't bother filling a work order we've already done that through the same integration channels that we've had all along so the spot solutions that are there And the integrations that are put into place to do what we've been doing traditionally, but without having to rekey anything, there are so many of them now that this can all be fully automated. And the idea is, okay, when that comes along, when the part is there and the technician is there and the machine is there, the technician gets his work order printed out by the machine, by the computer. They go ahead, do the repair. That repair is instructed through the smart equip screens. And by the way, the minute that part gets pulled off the shelf, it then automatically generates the purchase order and then actually the dealer gets paid. So there are all these different links. And we still have a human component in between all of them today because we're treating them as separate instances in the flow. And I think we're really on the cusp right now for one system to tell the next system and the next system using the same integrations that were already there all along, but changing the workflow. And that's an innovation that comes from the fleet owner side. changing the workflow to really increase the efficiency dramatically. And we're starting to see that happen. And by the way, when people say suddenly they no longer talk about telematics so much and they talk much more about IoT, that implies that there's intelligence being added to what used to be just that remote reading. That IoT, everything I just described is very IoT-ish because now the machines recognizing that they've hit a certain parameter, that this action is likely. to trigger the transaction of the part and all of that, that is that kind of intelligence that we talk about when we start calling things IoT as opposed to telematics.

I think that sounds great. That sounds great.

You know, it's, yeah, we've touched on a few highlights. What stands out in my mind are things such as coming back to the same conclusion over and over again, such as if you compare in terms of total cost of ownership. If you look at the impact of buying the less expensive part as opposed to focusing on operating efficiency, they're miles apart. And by the way, with every additional innovation, they're even farther apart. It's not closing, it's widening the gap. But even those kinds of recognitions in themselves are sort of, I think, spot realizations. I think it's hard for us to grasp fully, and this to me has been such an eye-opener, especially over the last year and thinking about this a lot more. It's such an eye-opener how much efficiency is now revealing itself or the opportunity for efficiency is revealing itself, not because we will continue to pump out new technology, which I'm sure we will, but because of how all of these are being stitched together. I think that's the biggest. So in a way, it's a little bit of another paper to glass renaissance where we're going from, hey, we used to do this manually. Now we do it electronically to now saying, well, wait a minute. Now that we're doing all these different spots electronically, look, if we combine them into a chain, we have another order of magnitude improvement. And that's what excites me the most. We've always been told that ours is a backward industry. Part of that is earned. historically. But I think on the other hand, with where we have with the components that we have right now, it is just remarkable what we can do going forward and improving things right now, in the near future, not by buying new technology, but by finding smart ways to having them work together.