CEO Chris Kempa shares his thoughts on labor, supply, inflation and more.

True Value steps up to the challenge

CEO CHRIS KEMPA SHARES HIS THOUGHTS ON SOME OF THE BIGGEST ISSUES IN DISTRIBUTION By Ken Clark

Supply chain. Labor. Inflation. Check, check, check.

In an interview with HBSDealer, True Value CEO Chris Kempa didn’t miss a beat tackling the three big issues facing the business of distribution. The industry veteran – whose resume includes leadership posts with other Chicagoland distribution giants, Grainger and Essendant — fluently described in detail the interconnected (and unprecedented) global challenges facing the industry.

Boiling it all down to brass tacks, he delivered a positive assessment on the state of post-pandemic distribution.

“We just continue on a monthly basis to assess where we’re at,” he said. “The good news is: we are in a better place.”

More good news from the True Value CEO is based on the health of its customers, as well as its customers’ customers.

“The pandemic drove feet into our customers’ stores, and they keep coming back” Kempa said. “So the independent hardware retailers, and specifically our hardware stores, know how to manage in their markets. They know how to serve customers. They had a lot of them come back through their doors and they’re keeping up.”

Supply-chain challenge

Kempa listed the challenges facing the business of moving products across land or sea: Closed ports in China, container shortages, truck availability, driver shortages. On top of it all looms the threat of a strike at ports along the U.S. West Coast, where members of the International Longshore and Warehouse Union are working without a contract.

And through it all, “There is no playbook,” he told HBSDealer.

For True Value, rising to the challenge of supply-chain uncertainty begins with its people . “We have over the last couple years, built the best-in-class team that really manages the end-to-end supply chain,” Kempa said. “And so we have gained an advantage based on our team. We are doing everything we can to move and get goods. And from my perspective, our team has done an incredible job.” That job includes building diverse options into the supply chain, finding dual sources, looking at new countries of origin and preparing for the unexpected. “And we’ve been doing that from day one,” he said. Among those leading the charge is Jennifer McNeill, True Value vice president Chris Kempa, CEO, of logistics and one of the True Value driving forces behind the distributor’s participation in the White House FLOW program. That’s the Freight Logistics Optimization Works program, a data-sharing group of distribution leaders created to ease supply chain congestion and share perspectives. “Our perspective is easy,” Kempa said. “Please help me get goods so that I can take care of my customers.” [See sidebar: Distributor in the FLOW]

A distributor in the FLOW

True Value Company is one of a small number of U.S. companies asked to share their expertise managing the supply chain crisis. The distributor has been working with FLOW, the Freight Logistics Optimization Works program.

Set up by the Department of Transportation, FLOW aims to improve congestion and speed up the movement of goods by establishing a baseline supply chain data infrastructure to significantly improve goods movement coordination. True Value will contribute critical data about the supply chain to help give a clearer, real-time picture of the flow of goods and where infrastructure improvements should be focused.

CEO Chris Kempa, who joined a roundtable discussion at the launch of the task force, said it was an honor to participate.

“These have been exceptional times, and I’m very proud of the innovative solutions we employed to help our retailers remain in stock so they could effectively serve their communities during the pandemic,” he said.

True Value’s Vice President of Logistics Jennifer McNeill is spearheading True Value’s role in the high-level program, including

The distributor contributes to the Freight Logistics Optimization Works program.

participating in a live discussion with Transportation Secretary Pete Buttigieg.

“By now the confluence of factors is wellknown: raw-material shortages, factory closures, vendor service-level disruptions and allocations, port congestion — the list goes on,” she said. “What we learned in mitigating all of this should prove valuable in helping to plot national strategy moving forward.”

Inside the True Value regional distribution center in Wilkes-Barre, Pa.

“We’re also helping leaders understand all the challenges we go through, to try to make this work better,” Kempa added. “Now, things are getting better. But better is not normal.”

Naught without labor

With so many moving parts in the distribution industry, there are even more moving people. People are needed to run warehouses, receive shipments, pick orders, pack orders and drive trucks, to list a few. Filling those positions is similar challenge for the distributor, its customers and the industry as a whole.

Kempa described the labor shortage as the “biggest hangover from the pandemic.” The situation demands looking inward at pay scales, benefits, work environments, and assessing all the little things that lead to retention and recruitment of employees.

“It makes you examine the basics of just god environments, good leadership and good engagement with your teams,” Kempa said. “And so we have put a lot of emphasis on that.”

Inflationary times

Anther unpleasant industry talking point is the “I” word.

“The inflation the end consumers are feeling now is all interconnected to everything we’ve been talking about, and we’ll continue to manage through it,” Kempa sad.

One particularly important area of inflation felt by True Value is the rising price at the pump. “Fuel is applying tremendous cost pressure,” Kempa said, and there’s not a lot of hope for short term relief for fuel or other rising prices.

“As disruptions continue, as the labor shortages continue, as the wage escalation for labor continues, there’s no relief on those in the short term,” he said. “Once consumption and demand start to dry up, normalize, or slow down, then I think you’ll see it start to normalize the rest of it,” said Kempa, who added that his was the view of a distribution industry veteran, not an economist.

“And meanwhile, we’re doing everything we can to absorb costs, and not pass them on,” he said.

From a sales perspective True Value nation has enjoyed the pandemic-induced home improvement spending boom with sales in line with the rest of the industry’s growth in the go-go year of 2021 and continuing into 2022, despite the recent cooling of the economy.

“Do I feel optimistic? Absolutely. We can see a two percent to three percent increase in do-it-yourself improvement projects in 2022, based on the industry reports and Cleveland Research.

“Those stats indicate that there will be consumer demand, which is great,” he said. “We absolutely believe that in the market where we sit, there will be demand.”

Tapping the value of local e-commerce

Last year, True Value rolled out a new approach to its role as an e-commerce facilitator. It’s called Local Omnichannel eCommerce. And through it, True Value stores can provide customers an improved buying experience by showing them their local store’s available inventory and pricing.

It’s part of a hyper local approach to competing on the web.

Since Oct. 8, 2021 TrueValueCompany. com has no longer supported online ordering, but has continued to serve as a brand and information site directing customers to shop on their store’s local website.

“Today’s shopper is demanding more options and convenience on their path to purchase with the Internet serving as a primary resource for information,” said Jean Niemi, True Value Company SVP of marketing and communications. “The COVID-19 pandemic has significantly accelerated consumers’ reliance on digital and e-commerce for both product information and ordering. To provide consumers with the best possible local shopping experience, our marketing should be centered around driving visits to our retailers’ local sites where they can see their local store’s inventory and pricing.”

Under the new Local eCommerce program, retailers can show their in-stock inventory and pricing on their websites with an additional option to allow for online ordering and buy online, pick up in-store capabilities.

According to True Value Company CEO Chris Kempa, described Local Omnichannel eCommerce as “one of the most successful initiatives we’ve had.” More than 1,000 customers have signed on.

The key consideration is to what extend does the customer in their market want to participate, and the most important ingredient is inventory availability, real time,” Kempa added.

From there, the independent retailers’ decisions revolve around search, BOPIS, shipping, drive up — The customer determines how much of that they want to do. And then we have a solution, and we can help you with that.”

“It is a local eCommerce model to allow that brick and mortar store to enable what elements of the omnichannel experience they want to offer in their market,” Kempa said.