Russell Shaller: Yes. So, it’s €“ first, it’s not super significant. I mean it’s a relatively small distribution channel. But we continue to look at supply chain on-shoring where possible, getting products hub-ed closer to the customers. If we were to look at pre-pandemic, shipping, global shipping and global transportation was a pretty drama free event. As we have went through the pandemic, and we had uncertainty in shipping time, shipping rates, it caused us to rethink how we deploy some of our products. And what opportunities we have to have them hub-ed closer to our customers. So, in the case of this particular location, we used to hub it in Asia and partially in Malaysia and partially in Singapore. And by bringing it back to the U.S., it becomes obviously much closer to the customer, since that’s the principal.
That’s principally where this product is sold. And it gives us a little bit faster lead times, and we were able to do it in this case. So, we continue to look at all of our deployments throughout the globe and how we have products situated where we have our inventory. And I think we have a general desire to both do manufacturing and have our inventory as close to our customers as possible. And this was part of that strategy.
Steve Ferazani: So, should we expect to see more of these types of developments?
Russell Shaller: It will be gradual. And again we don’t have like a block upgrade, where we are saying, we are going to move a huge part of Chinese manufacturing to the U.S., for instance. But we are comprised of literally dozens of locations and dozens of distribution centers. And we look through this. And one of the reasons why we actually have now a Chief Operating Officer is to look at all of our locations and say, are they really appropriate for the business and the business model we are running. So, like we did with this code distribution center, which again is pretty small in the scheme of things. I can imagine other smaller ones in the future. It’s all towards being both more operationally efficient, driving down our cost position, as well as making sure that we are serving our customers optimally.
Steve Ferazani: Great. Thanks Russell. Thanks Aaron.
Operator: Our next question comes from the line of Keith Housum from Northcoast Research.
Keith Housum: Good morning guys. Just following up on the previous question, Russell, what are the changes to your incentive comp plan in the quarter? I noticed you have mentioned both R&D and SG&A, that was a contributor to the client expense this quarter compared to last quarter.
Russell Shaller: Yes. No, there has been no change to our plan in terms of kind of the total envelope. We have made it I will say slightly easier to get a little bit of incentive compensation, and definitely harder to max out on the incentive compensation. We think that is more indicative to the current environment where there is more uncertainty. If you look back to Brady, a few years ago, you could draw a ruler across some of the businesses in terms of gross margin and operating profit and what have you. I think our scheme now is more reflective of I will say changes in dynamics. Now, I will say at the 100% level, so the nominal bonus structure that hasn’t changed a penny year-over-year. So, we are keeping the base the same, but we are kind of stretching it out low and high.
Now, we do like I think most companies, every quarter, we true it up, and we look at it. Last year was absolutely phenomenal. And we are at the very high end of the range of the bonus structure. As we are coming into this fiscal year, we think it’s going to be a lot tougher to hit some of those targets. And so we revised it down. So, you do see an impact from Q4 to Q1. But I think we are €“ nominally we are going to get back into what I consider a more stable range. It’s just the swing from Q4 to Q1.
