Legendary football coach Lou Holtz once observed, “Life is 10 percent what happens to you and 90 percent how you respond to it.” These days, that figure likely feels inverted to Larry White.
Toshiba America Business Solutions
As the president and CEO of Toshiba America Business Solutions, White finds himself having to deal with many circumstances that are out of his control—an uneasy feeling for the cornerstone executive of any major corporation, particularly one the size of Toshiba. But the trial by fire that’s confronted White, who took the helm in July following the retirement of Scott Maccabe, has given the exec ample opportunity to flex his leadership muscles.
But for all the challenges 2021 bounced off White and the entire business landscape—supply chain delays, difficult-to-source (and increasingly expensive) raw materials, and shipping costs that have reached epic levels, among others—he relishes the great unknown that each day offers. Still, don’t get the impression that White’s days revolved solely around crisis management.
Toshiba is on the verge of a complete line refresh, in addition to reinvigorating its managed print-as-a-service (MPaaS) offering. A ground-breaking innovation on the solutions side and a thermal barcode product that he terms revolutionary may just cast the manufacturer in a different light.
We spoke with White about how the company has been able to reconcile that heavy 10 percent of what happens to you during a year such as this and search for ways to enable dealer partners to continue down the path of revenue diversification in the face of dwindling office clicks. He also shares insight into how Toshiba’s team members have risen to the challenges, the future of the LEAD Conference and the drive to execute on the company’s game plan.
Provide some insight into Toshiba’s financial performance during 2021. What were some of the variables that played into how the company performed?
White: There’s no denying the impact of the supply chain issues and the ability to manufacture products due to the chip shortage. Because of the pandemic, we’ve seen shortages throughout the supply chain. Semiconductor chips were a big part of it and got all the notoriety, but it’s really throughout all aspects of the manufacturing side. Then there’s the issue of the increased cost of manufacturing. Shipments have gone up, as have raw materials and the costs of goods. That’s compounded by the supply chain woes, where it takes 75 days to get from the manufacturing facility in China to Long Beach, California, and our warehouse in Horn Lake, Mississippi. This is if we’re lucky. It’s truly a roll of the dice in terms of how long your container ship sits in the harbor, waiting to get unloaded. When you fly into California, if the plane goes over Long Beach, the Pacific Ocean looks like a parking lot. Huge container ships are anchored in the ocean, and some are drifting because there’s no place to anchor—they drift north, turn around and come back. It’s bizarre, probably the strangest thing I’ve ever seen in my career. It’s taking longer and costing us seven times as much to get product shipped over here than it did a year ago.
During the last quarter, we spent $11.4 million to fly products in instead of shipping them. That’s a huge number. On some of the products, it cost more to fly the product in than what we sold it for. That may seem like a dumb decision, but there are customer contracts we have to fulfill, and at the beginning of the shortage, there was nothing out there. We had to get ahead of it a little bit, so we spent the money to bring in the product. This quarter, we spent about $2.4 million just on product logistics. That has a huge impact on P&L.
Also, I think many of us overestimated the amount of the rebound in the aftermarket side of the business. We planned anywhere from 85-90% (of pre-pandemic levels); right now, we’re still in the low 80s for our aftermarket business. We haven’t seen the rebound we anticipated because many people are still working remotely instead of in the office, particularly in a state such as California.
In terms of the supply chain, is there a light at the end of the tunnel? Do you have any gauge for when the situation might ease?
White: While it is all relative, the supply chain does seem to be easing a little bit. I believe we had 76 container ships out on the coast last weekend, so that number is trending down. Two months ago, 46 was a record. It’s still bad, but it does seem to be getting better. My best guess is in about six months, we will start normalizing. The same thing for the product availability issues; I think we’ll see the semiconductor industry catch up to a more steady flow. It won’t be back to normal in six months, but it will begin easing after that. The caveat is COVID remaining in a normalized state. If we get a variant that closes factories in Asia or other parts of the world, it could slow things back down again. There are a lot of variables at play, but if we normalize, there’s a light at the end of the tunnel.
What were some of the highlights for Toshiba during the past year?
White: Over the most recent quarter, we set a record for market share, which is great, especially when you don’t have enough product out there, anyway. Our order rate is exceeding what we did two years ago. We had a tremendous fiscal year 2019, and our order rate now is much higher, which is phenomenal. I certainly wish we could fill all those orders, but we can’t. We won many large transactions in both the public and private sectors, so we’re capturing a lot of deals. On the employee side, we won the Best in Class Award from The Cannata Report, which speaks to the dedication of our employees. We’ve always been known for our customer service, but this award shows that our team members are making an impact in providing the highest level of customer service possible. I’m proud of that because it’s been a tough year for all of us. Despite the pandemic issues, our employees have stepped up tremendously.
Our business and the industry are transitioning, and it’s more than just the MFP side. We are focused on doing a lot of cool things on the solutions side, and in 2022, we’ll share some interesting news on developments in this area.
— Larry White, Toshiba America Business Solutions
You took over the president/CEO helm from Scott Maccabe at mid-year. What has been your focus during the first six months in the top role?
White: In dog years, it’s been way more than six months, and it seems that way. When I took the job, one of the challenges was having 18 direct reports, which is a little unwieldly. So we had to restructure things a little bit and get it down to a manageable 11. The supply chain crisis reared its ugly head at the time I took over. There’s not a day that goes by that I’m not involved in one meeting or another in which we’re talking about what product is coming in, the amount of it, when it’s going to get here and what the future looks like. That’s been quite challenging. Second on the list is all the COVID mandates, which cover not only the United States, but North, Central and South America as well. There are federal and state mandates to reconcile and implement, which is not easy. Plus, everyone has their own opinion on vaccinations. I’ve been vaccinated, got my booster shot recently, and I believe in their efficacy. But I also believe in the right of self-determination, within reason. I feel the private sector is really being put in the middle of all this. The private sector does a lot of things well, including managing through the COVID situation. With all these mandates, it’s more difficult for all businesses to figure out how to operate daily.
What do you hope to accomplish during your first full calendar year?
White: We want everyone out there to understand that print remains a highly viable business with many possibilities. While it is a declining market, there is a lot of life left in print and there are opportunities. One of the things we’re doing is re-energizing our managed print services capabilities—we call it MPaaS, managed print-as-a-service. That’s a big focus for us to make sure that we can capture the eligible prints that are out there in the marketplace.
Number two, we’re spending a lot of time focusing on the solutions side of our business to supplement our dealers’ revenues. Our business and the industry are transitioning, and it’s more than just the MFP side. We are focused on doing a lot of cool things on the solutions side, and in 2022, we’ll share some interesting news on developments in this area.
The last piece is our thermal label and receipt printer business, which we’re continuing to grow. We’re developing a thermal barcode product in the U.S., which we believe is pretty revolutionary and unique in the marketplace. This is slated to launch in the first half of 2022. We’re expanding our revenues and diversifying while understanding that print is still our core business. We aim to maximize all the revenues we can possibly derive.
Obviously, the rebound from COVID has been slower than anticipated for many dealers. What has been the messaging you’ve been sharing with dealers from a strategy standpoint?
White: It goes back to our key strategies with managed print. There are opportunities to be had if you’re willing to take advantage of them. Managed print is one of those things that, if you look back 12 years ago, everyone was talking about it, but very few people did anything with it. A lot of dealers transitioned to managed network services, which is great; it’s smart to diversify your revenues. When people started talking about managed services, they kind of moved away from MPS, but there’s still a huge opportunity. It’s important to get involved in professional services and selling software solutions. It can be an expensive proposition, so leverage the wherewithal of your manufacturer, whoever that is, to help you realize the potential. It’s essential to have a thriving business as we move forward, and diversification is an integral part of it.
What are some of the areas of technology focus that we can expect to see from Toshiba in 2022?
White: We will be refreshing our entire product line. We’re going upstream in color speeds, and there will be some exciting things, especially with our architecture being more open than it’s been in the past. The traditional MFP side of the business is still our mainstay, core business, and we’ll be investing in that later in the year.
Obviously, the pandemic has hobbled your ability to host the LEAD conference. What are the plans for 2022?
White: The first really difficult decision I had to make was whether to move forward with the LEAD event, which was scheduled for May 2022. It’s an expensive, multi-million dollar event to host, and given the ebb and flow of COVID—and this was August, when we were beginning to see a spike again—I decided to cancel. With such a huge investment, you want to make sure it’s perfect. If you’re going to have 2,000 of your closest friends at a party, you don’t want them to sit inside with a mask on, which would’ve been the case based on the projected guidelines. Sadly, we felt it best to drop back 10 yards and punt. Our goal is to bring it back for 2023. I love these events and I think there’s great value to them.
The other option was to hold the LEAD Conference remotely. But I don’t care what anybody says, it’s just not the same. You don’t generate the same amount of excitement and messaging that comes with gathering in-person.
Is there any virtual programming that you’ll be rolling out during the year?
White: We’ll be doing smaller-type groups to produce better interaction, which is important. A virtual LEAD Conference wouldn’t work. It’s hard to keep people’s attention for the length of time required to get our messaging across. No one wants to sit on a Zoom meeting for two or three hours. But we’ll do some targeted, precise marketing and communication along those lines.
What are Toshiba’s primary goals for 2022?
White: Profitable growth is really important, as is making sure that we have strong, consistent communication with all of our channel partners. We want them to understand what we’re trying to achieve in the marketplace. Plus, it’s critically important to make sure that we’re taking care of all our employees, who are our greatest asset. Like all manufacturers, we’ve had to reduce expenses and our cost structure over the last 12-24 months, so our employees are doing more than they’ve ever done. We need to make sure we’re celebrating our employees as well as our customers.
Obviously, 2021 was certainly a year of mixed emotions for you. How would you characterize the overall experience?
White: It’s always fun learning, and because of the challenges we face, there is never a dull moment in the office. It’s not unlike football’s two-minute drill—at the end of every day, something seems to come up that you didn’t anticipate. But if you do it right and trust in the people you have, which I absolutely do, you know it’s going to be executed correctly. When that happens, you’re going to win, and that’s the exciting part.
