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January 30, 2013

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Spotlight on Leadership
3VR



The Age of Intelligent Connectivity: 3VR Moves One Step Farther in 2013


By Al Shipp
3VR's CEO


As another year goes by, I find myself reflecting on the past year while beginning to anticipate what lies ahead this coming year. Throughout my career in technology, I’ve had amazing opportunities to work around some incredible people such as the late Apple CEO Steve Jobs and witnessed how innovation can transform businesses and economies. As an engineer, I have always been fascinated by how a simple idea can grow to change people’s lives. Here in Silicon Valley, the notion of ideas changing the world is part of the fabric and why I live here.

Early in my career, I joined IBM – this was at a time when the IBM Personal Computer had just been announced and was flourishing. We weren’t the first company to build a personal computer, but IBM helped PCs become mainstream. The company, founded in 1911, populated homes and offices throughout the world with its little beige boxes, running on what was then the most powerful 16-bit Intel processor and MS-DOS. I was part of the team that designed the first group of IBM PC printers and it was a rare opportunity for me to manage product development from design to putting the product into the market. It was never just about the bottom line or one-upping competitors. It was, to me, about seeing an idea from concept to design to reality. When you see your products being used by thousands of people, you get a sense of deep satisfaction of having been a part of that creative process of innovation impacting our culture and society.

From the IBM PC 5150 to the Apple iPhone, many of the great product innovations in the last century has enabled us to become more connected regardless of where in the world we live. The last several years has only seen this connectivity accelerate. Concept, development and deployment of new products now happen simultaneously, and through the Internet, businesses have profound influence on cultural development and access to virtually any customer in the world. When I travel around the world, and this may just be me, I feel a sense of familiarity and comfort when I see people using the same devices I see back home. Connectivity has become a fact of life, and I feel fortunate to be a part of the industry that continues to enrich and empower our lives through a global sharing of ideas and intelligent enterprise.

Four years ago, when I left my position as Apple’s Head of Enterprise Sales for 3VR, I spotted something very special. Here was a Silicon Valley start-up with major backers – one of them being the CIA – that had incredible technology. It had already made a name in the industry for its patented forensic video search capability, which cuts fraud investigations from hours to minutes. Yet, like every intelligent product or technology, it also bridges the gap between the past, the current, and the future. Apart from making current functions much easier, businesses can get so much more from 3VR’s innovative analytics that are built into its video security system. Without the need to watch video, you now have access to quick, actionable information that takes you from what you think you know to what is really happening inside your business environment. In 3VR, I saw an opportunity to help people, possibly save lives, and make a difference.

Fast-forward – four years later. Everyone is talking about “Big Data” and the enormous value of the large amounts of data being generated every second, but the honest truth is nobody is really leveraging this capability… yet. We at 3VR have been evangelizing the message to our customers and partners for a while now – there is a wealth of useful data that can make your business better in your video. But data itself is useless, unless you translate that data into easy-to-understand and helpful information for the common user. Most organizations only have a limited view of their enterprise, resulting in an inability to centrally manage or mine their video resources for information. What 3VR has done, and will continue to do, is to provide an easily configurable solution that solves enterprise-wide problems today. Not only that, we’d like to help businesses build an intelligent enterprise, maximizing the same, extensible video investment to access previously unusable video, and provide intelligence for operations, marketing and merchandising.

In 2013, 3VR is moving one step farther in the age of connectivity, with a series of exciting developments, such as our Analytics Dashboard, mobile apps, third-party integrations, and yes, there is even something looming in the Cloud.

Today, we are just scratching the surface of what’s possible. Someday, I imagine you’ll have the ability to measure every metric imaginable. I believe 3VR will be a key part of the revolution in creating a more open, transparent and safe world.

 
News Brief
Sponsored by WG Security Products, Inc.

The big numbers behind Retail’s BIG Show 2013  Two weeks ago in New York, more than 27,600 retail professionals from around the world gathered to find solutions, network with their peers and move the retail industry forward, making this year’s show the largest Retail’s BIG Show in the event’s 102-year history. 82 countries represented. Outside of the U.S., the most attendees came from Brazil with 1,736 attendees. Countries sending one attendee included Kenya, Montenegro, Sri Lanka, Vanuatu and Zambia. $21+ million in economic impact for New York City. •125 educational sessions •298 speakers (Source nrf.com)

Partnering to Secure the Super Bowl 
Jeff Miller, VP/Chief Security Officer for the National Football League, tells Security magazine, "We begin detailed planning and hold stakeholder meetings more than a year in advance of the Super Bowl. While this may seem far in advance, it is necessary to bring together all of the disparate details and groups necessary to build a cohesive rapport and clear understanding of roles and mission in support of the event. Remember, Super Bowl is more than just game day; it encompasses many other events that occur in and around the game itself." (Source securitymagazine.com)

Tiffany’s four month process of making the Super Bowl Trophy.  The entire process to build the Super Bowl’s Vince Lombardi Trophy takes four months and is handcraft by Tiffany’s master craftsmen in Parsippany, New Jersey. The value of the silver used is only $3500, but to the teams and players who win the special price it is priceless. Tiffany’s has made the Vince Lombardi Trophy since it was designed in 1967, and yes it is delivered in a blue box. (Source cnbc.com)



Amazon hits $61B in sales but posts a net loss  It was another banner year for sales growth for Amazon.com. But in 2012 the world’s biggest online retailer swung from a healthy profit to a nearly $40 million loss as it continues to invest in its Kindle business and global infrastructure. And 15 years ago where were these sales? In the brick and mortars. Last year there was an article that predicted they'll surpass Wal-Mart's sales in 10 years. The company says it has been investing a lot of its income into enhancing its distribution network, its shopping website and its Kindle business as part of a long term growth plan. It opened 20 order fulfillment centers in 2012, bringing the total to 89 worldwide. (Source internetretailer.com)

Supervalu's 8 month CEO leaves with $12.8M, more corp. cuts may be coming
Wayne Sales' "golden parachute" was disclosed Friday after Cerberus announced they're buying Supervalu's four largest supermarket chains, and it plans to purchase up to 30 percent of Supervalu's stock at $4 a share. Sales was hired last July when former CEO Craig Herkert was terminated abruptly. Sales will leave the Eden Prairie-based company after the Cerberus deal closes, which is expected before March 31. With Supervalu selling its Albertsons, Jewel, Acme and Shaw's chains, less corporate support staff is likely to be needed. The "remaining" Supervalu can reduce corporate overhead by about 30 percent, according to a recent report by Karen Short, an analyst at BMO Capital Markets. More cuts coming? (Source startribune.com)

McKee Foods Pledges $27.5 Million to Buy Portion of Hostess Holdings.  Hostess Brands, Inc., announced that the financially-ailing company has selected McKee Foods Corporation in Collegedale as "the stalking horse bidder" for its Drake’s snack cake brand and certain equipment. As stalking horse bidder, McKee Foods sets the bar for bidding in a future auction process to be set by the bankruptcy court, officials said. Other interested parties will be able to bid at that time, but their bids would have to exceed the one made by McKee Foods. (Source tulsaworld.com)

2012 Cost of Cyber Crime Study: United States  This white paper gives a clear and detailed account of cybercrime in the U.S. for anyone interested in conducting research and learning more about it for your retailer. The third such annual study of 56 U.S. companies in various industry sectors. Ponemon Institute has also conducted cyber crime cost studies for companies in the UK, Germany, Australia, and Japan in separate reports as well. With cyber crime costing $8.9M per year for each company the rising cost warrants study even for the retail Loss Prevention executive as you need to be aware of this increasing threat and how it can impact your organization. Sponsored by HP Enterprise Security and independently conducted by Ponemon Institute LLC, Publication Date: October 2012. (Source knowledgevision.com)

10 Romanian's steal $2.68M U.S. in Armani merchandise from trading post in Verona  The haul - believed to consist of more than 1,300 garments in total from the brand's spring/summer 2013 collection - was stolen from a trading post in Verona. The goods were smuggled from Italy to Bucharest in December. (Source vogue.co.uk)

Latin Kings gang member accused in 32 credit card skimming thefts granted bail in Orlando.  An Orlando man who was arrested for allegedly stealing credit card information from people at local restaurants was granted bail Tuesday morning. Josue Morales, 33, was using servers at local restaurants to skim people's credit cards. Detectives said they determined Morales used a waitress at the restaurant to skim credit card numbers and then made fake credit cards to go on spending sprees, buying clothes and jewelry. Police said 32 additional victims have come forward since the news broke the story Monday night. (Source clickorlando.com)

Greensboro man burglarizes the same Sam’s Club four times.  Antwan Raschard Bason was arrested by Greensboro Police in connection to burglaries he is accused of committing on November 28 and 30 and December 4 and 30. Bason was stealing X-Box game systems, security surveillance equipment, computers, something a little different each time and selling the products to a pawn dealer. (Source news-record.com)

Portland computer whiz gets 18 months after selling fake IDs across U.S.  Nicholas Nasser Aliabadi, of Gresham, was indicted by a Multnomah County grand jury back in May 2012 for 102 counts of identity theft and 82 counts of forgery. Yesterday he was sentenced to serve 18 months in prison in Oregon. Aliabadi was living off the profits that rolled in as he sold the IDs through the mail to customers nationwide, from California to New York. His counterfeits were particularly convincing because he was able to duplicate data on magnetic strips that some states use on driver's licenses. (Source oregonlive.com)

Woman charged with slashing another woman's face at Fayette Mall.  Nicole Bewley, 21 turned herself in at the Fayette County Sheriff’s Office, she was wanted on an outstanding warrant and believed to be the person responsible for slashing a young girls face at the Fayette Mall on January 15. Bewley and another suspect grabbed the victim outside of Dillards in the middle of the day and held her down and cut her face with a razor or box cutter, no one intervened. (Source kentucky.com)

Police seek 'Buckhead Bandit' in 10 armed robberiesPolice are working to catch a man linked to nearly a dozen armed robberies targeting businesses along Peachtree Road in midtown, Buckhead and Bookhaven, Georgia. (Source wsbtv.com)

Hemet jewelry store robbery took 9 seconds  It took 9 seconds for four thieves to smash several display cases at a jewelry store in Hemet, Ca., and make their escape Monday night. (Source pe.com)

Ohio man out of jail for just over an hour commits shoplifting, turned robbery.  Travis Gay of Shadyside was only out on bond one hour and two minutes before he had allegedly re-offended and was on his way back to jail. This time he's charged with two counts of theft and two counts of assault, because of the scuffle with mall employees. Gay’s father had picked him up, posted his bond, and at his son's request had taken him to the mall. (Source wtrf.com)

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ORC News
 
110 people involved in large retail theft ring that stole at least $750K, could be millions in merchandise, in West York, PA  Police announced Wednesday morning charges were filed against those involved after a roughly four-month investigation. Giuffrida headed a highly organized theft network active since 2009 whose activity started to branch out and grow in late 2011. "We believe it went up to a million (dollars) and that's just an estimate," he said. Ring members worked in crews of three to four people and targeted 92 businesses at more than 300 locations in five counties in Pennsylvania and two in Maryland, Kahley said. Each member of the crew had a particular role and targeted several stores in a week, making between $1,500 and $5,000 a day, according to Giuffrida's charging documents. One crew member would drive other members to a store where another member, dubbed a "booster," would steal an item. Another person, called a "refunder," would either return the item to the same store or have the driver go to another store where it was returned in exchange for gift cards, Kahley said. Of the 110 people who have been charged so far, about 90 percent are from York County. "We're anticipating filing charges against at least 18 more (people)," he said. (Source yorkdispatch.com)

Rack Room Shoe employees busted selling over 200 pairs of shoes from Rockvale Outlets in Lancaster, Pa.  An employee has been charged with taking about 200 pairs of shoes worth $13,000 from a Rockvale Outlets store, police said. Edna Marie Nazario, 23, of Lancaster, rang up the shoes at Rack Room Shoes for less than their sales price from September through December, East Lampeter Township police said. She also reportedly sold shoes on the side for cash. Another employee of the shoe store, Rebecca Lynn Watson, 21, of Marietta, also has been charged with similar activity. (Source lancasteronline.com)

Stockton, Ca., woman sentenced to 4 yrs and 3 months for stealing over $1M in designer clothes and selling them online The sentencing of the 34-year-old Wagner comes after she pleaded guilty in October to charges that between 2002 and September 2010 she shoplifted the clothes from department stores, then collected more than $400,000 by selling the merchandise to people in California and other states on eBay. (Source modbee.com)

North Carolina group busted for drugs, search turns up $5000 in stolen merchandise.  The Edgecombe County Sheriff’s Office and Tarboro Police raided the home of a suspected heroin dealer; they did find 49 bags of heroin and other illegal drugs. Surprising the Task Force was the recovery of $5000 in stolen merchandise, including 20 stolen weapons, items from Walmart, Lowes, JC Penney and others. (Source dailysoutherner.com)

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Press Release
 


RILA's Retail Asset Protection Conference is
Just Three Months Away!

1:1 Ratios of Retail Individuals and Exhibitors Means Face-Time with These Companies:

And, titles like these executives who have already signed up*:

Vice President, Loss Prevention
Vice President, Loss Prevention & Safety
Vice President, Loss Prevention, Global Supply Chain, International Stores
Vice President, Loss Prevention, Field Audit & Risk Insurance
Senior Director, Compliance, Safety & Asset Protection
Senior Director, Global Investigations - Retail
Director, Internal Audit & Compliance
Director, Corporate Investigations & Crisis Management
Director, Safety & Environmental Programs
Director, Loss Prevention - Supply Chain & Corporate Facilities

To top it off, RILA added an additional hour of Exhibit Hall time on Monday, so you have more time to showcase your solutions to these senior level executives!

In addition, RILA exhibitors gain access to all of the educational sessions - giving them a a first-hand look into what retail asset protection departments see as obstacles and opportunities. Program highlights include:

"AP Executive Panel"
Chris Gillen, senior director of loss prevention at Toys R Us
Dennis Klein, vice president of loss prevention at Abercrombie & Fitch
Robert Vranek, vice president of loss prevention at Belk


"Lessons Learned with Mobile POS Technology"
Minday Rector, director of innovation at Walmart

"Partnership Approach to Developing an Effective Store Audit Function"
Paul Petrucci, manager of internal audit services at PETCO
Steve Price, senior auditor at PETCO


"FCPA - How Big is Your Risk?"
Hannah Kim, vice president, assistant chief compliance officer and assistant general counsel at Lowe's

"Workplace Safety Forum"
Libby Rabun, vice president of loss prevention at AutoZone
Ryan Williams, senior manager of environmental health and safety at the Home Depot


"Research in Action: Actionable Findings from Offender Interviews, Data Modeling and Experiments"
David Lund, vice president of loss prevention at Dick's Sporting Goods
Tim Fisher, director of asset protection and safety at Best Buy
Brian Bazer, assistant vice president of loss prevention and risk management at Ascena Retail Group
Read Hayes, PhD, director at the Loss Prevention Research Council


Access to these top decision-makers and cutting-edge programming comes at a great price: 3,500 USD for a booth space, which also comes with: 3 complimentary full conference registrations and an option to purchase a fourth, a listing in our on-site mobile app and on our website, and complimentary access to two pre-conference and one post-conference attendee list.

Space is filling up. Sign up today!

Have questions or interested in sponsoring? Contact ashley.vandebunte@rila.org.
 

 

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Thought Challenge
 

Thought Challenge Review


The Freshness Window
Understanding Perishable Sales


By Adam Smith, CFE, CFI
Senior Regional Asset Protection Manager
Winn Dixie Stores

as published on August 21, 2012

Each day companies around the world engage in the sale of perishable goods, which are like a ticking clock that counts down to a point when the product must be sold or the product will be lost. The most common perishable goods purchased by consumers are fresh foods sold by grocers. Another common perishable good is live plants. These goods have individual spoilage timelines; if not met, will result in losses.

Perishable goods have a freshness period of a number of days from harvest, which vary by specific item. In this freshness period, the product is considered at its peak quality regardless of the point within the freshness period. After the freshness period ends, quality degrades by each passing day. For example, a banana one day beyond its freshness period is considered much fresher than a banana four days beyond its freshness period. During the degradation period, customers will be increasingly dissatisfied with the quality of the product. If too many days pass beyond the freshness period, the product becomes spoiled. At the point of spoilage, passing days are irrelevant. Fresh foods illustrate this point best, but the concept is applicable to perishable goods following the described model.

The freshness period and the spoilage point vary by product. As an example, fresh lettuce may have a freshness period of 7 days and a spoilage point of 14 days. In days 8-13, the quality of the product will slowly degrade to the point of spoilage. Ideally, this product should be sold between days 1 and 7. Alternatively, onions have a larger freshness period.

The period up to spoilage represents the Freshness Window. The point when product is sold within the Freshness Window represents the level of quality a customer will experience. Providing products within the freshness period is a way for retailers to add value to perishable goods without increasing costs. Alternatively, selling beyond the freshness period reduces the value of perishable goods. Companies providing goods within the freshness period will have the highest customer satisfaction relating to quality.

Best-in-class operators will continuously evaluate and discard products early in the Freshness Window. On the other hand, struggling companies will be offering products later in the Freshness Window, up to the point of spoilage. Customers purchasing products late in the Freshness Window will have a limited amount of time to use the product before spoilage occurs. In many cases, a good operator will throw product away at a point in the Freshness Window that the poorly run operation would still have available for sale. In this scenario, customers of the poorly run retailer are eating the equivalent of the competitor’s garbage.

Shrinkage Paradox
If freshness is such a huge opportunity, why do companies leave product on the shelf outside of its freshness period? The problem is rooted in the Shrinkage Paradox. Shrinkage is the losses that occur from discarding product. Some companies have intense pressure to reduce losses resulting from shrinkage. This pressure is frequently misinterpreted by line-level managers. Often times, the line-level manager interprets reducing shrink as keeping product available for sale longer. By doing so, product is kept on the shelf past the freshness period into degradation.

Every retailer of perishable goods has a tolerance of the amount of shrink they will allow. Perishable grocers typically allow anywhere from 5%-8% of total perishable sales. As pressure to reduce shrinkage is increased, most companies inadvertently expand their Freshness Window to allow product more time on the shelf to potentially be sold. This will reduce shrinkage slightly to achieve desired levels. However, these efforts are limited to the spoilage point of the product, because the shelf life cannot be extended beyond it.

Opening the Freshness Window to reduce shrinkage will only provide small and temporary reductions. By opening the Freshness Window into degradation, customers will be dissatisfied, and some will shop competitors. This strategy will ultimately backfire due to the loss of sales. The loss of sales will cause an increase in shrinkage as a percentage to total sales. This is the position of poorly run perishable operations.

Alternately, retailers with good operations will continuously evaluate and throw out products that do not meet their freshness standards. The quality of discarded products from well run operations are much higher than poorly run operations; however, these well run operations will have shrinkage near poorly run operations. Paradoxically, both operations will have similar shrinkage figures, which ignore the quality of product discarded. This will cause many to falsely assume that both retailers have comparable operational efficiencies.

The Root Cause
Shrinkage is normally higher in poorly run operations; however, the real issue is the type of product discarded. The true sign of a well run operation is the freshness of the product available for sale. The difference lies in how fresh the product being thrown out it is, which is what compromises shrinkage. Good retailers throw out product within the freshness period before it begins to degrade. Fresher product increases sales and customer satisfaction.

Selling product within its freshness period requires the retailer to have sales to turn over the product within said period. As sales increase, this becomes easier. Assuming the freshness period for bananas is 7 days, a retailer must average selling a case of bananas per week in order to sell a case ordered within its freshness period. Problems occur when a retailer orders more perishable product than its average weekly sales support. In this example; if the retailer sells one case of bananas per week, ordering two cases will cause a problem. At this point, a decision has to be made to take a loss by throwing the product away or keep the product available for sale past the freshness period.

Shrinkage is merely a symptom of poor ordering and planning. The root cause of the issue is ordering too much product. This notion is difficult to grasp for some; precisely, because proper ordering is complex. When selling perishable goods, the best information is often in the form of projections. In the case of industrial production, factories can place just-in-time orders for a small group standardized parts. In a grocery store, there are hundreds of perishable products, which can come from different areas of the world depending on the growing season. Each of these products has a unique Freshness Window. This task can be daunting; especially, considering the limited amount of sales and inventory data available.

To a lesser extent, other procedures such as "cold chain" can similarly reduce the freshness of perishable products. Cold chain is a procedure to keep products at required storing temperatures during transportation, which can occur when a store receives product and when a store moves product from storage into selling areas. If perishable products are allowed to lose temperature during this time, quality is reduced corresponding to the amount of time without temperature control. Here again, following these procedures serves to maintain the quality of product that has already been purchased; not doing so, decreases the value of the goods.

Quality Costs
Many retailers selling perishable goods choose to look the other way as it relates to shrinkage, so long as the number is within their tolerance. These companies are falsely assured by their shrinkage figure being near the industry average. However, as mentioned earlier, the product thrown out (shrinkage) can vary in terms of quality. The real issue concerns the quality of product that is available for sale.

In a highly competitive industry, quality of goods is a significant differentiator. Especially, considering that improvements in quality can come at no additional cost to the company. The goal is to maintain the freshness of the product that has already been purchased, which is accomplished by proper ordering. Ironically, few retailers commit resources to improve this operational area of their business. Perhaps, the Shrinkage Paradox is masking their perception of the problem or the organization does not truly understand the impact of the problem.

Nevertheless, quality has a significant impact on customer satisfaction. In a recent survey conducted by the Food Marketing Institute in 2010, customers noted product quality as the second leading consideration in selecting a grocery store, which was only 2% less than the leading consideration of price. In 2008, as part of the same survey, customers identified product quality as the leading selection criteria. As economic pressures relax, retailers can expect product quality to take center stage with customers.

Building a Structure for Quality
Addressing the quality issue is not simple. Sales serve as a feedback loop for product quality, so poorly run operations will struggle most because of fewer sales. Since products are sold by cases and packs, a retailer needs enough sales to cover at least the smallest quality available to be ordered within the freshness window; anything else will be shrinkage. Increasing quality will improve customer satisfaction, leading to sales; however, there will be a lag period. In the meantime, accepting the unsold product at the end of the freshness period as shrinkage will be difficult. Consumer demand for variety will add to this pressure, because many niche varieties have low sales.

Complicating the ordering problem is the absence of good sales data from these products. Some retailers stock hundreds of different perishable goods, all of which have a unique Freshness Window. Companies rarely have item specific data regarding amount sold, ordered, and discarded; if they do, the data is rarely uniform between each measurement. This type of data is instrumental in measuring each product’s Freshness Window against the amount of inventory on hand. Retailers need to know where their inventory levels relate to the Freshness Window at all times. Reporting on this metric will uncover ordering issues which may be causing poor quality products to be sold. Understanding which products have the largest freshness opportunity will allow for strategic focusing on the problem. Additionally, the retailer will be able to use this data to measure the impact their Freshness Window is having on sales, which may justify investments in training or technology.

In some cases, a product may be identified as having unavoidable shrink. Unavoidable shrink may be caused by average sales within the freshness period that do not cover the amount of product in a case or pack. Under these circumstances, the retailer can choose to accept the losses in order to provide variety for its customers. If this option is chosen, the retailer should keep track of all unavoidable shrinkage and include it in budgets. In some cases, it may be possible to work with suppliers to reduce case size to accommodate the Freshness Window of the product. This would not be possible without having the granular data to identify these opportunities. As a last resort, a retailer may choose to eliminate the product from its offerings.

By attacking the quality issue at its root, retailers can improve the quality of perishable goods they have available to their customers, without increasing costs. An increase in quality will lead to an increase in customer satisfaction, which will increase total sales. Sales increases will allow the retailer to consider stocking a larger variety of products that would not be profitable at a lower sales volume. Retailers may need to invest in new technology in order to capture the data needed to develop successful freshness strategies. In highly competitive industries, quality strategies are critical to delivering exceptional value to customers.

 

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Tip of the Day
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Making it new every day and getting energized - pumped up every day can be difficult at times. But it's important to try to find that spark each and every day to make sure you're adding value, getting things done, and motivating the people around you. It's always great to drive home and think - where did the day go because you were so busy and had so many things to get done, which usually means you were pumped up and energized. But it's a terrible feeling when you can't get out of first gear and the day drags on forever. Just remember, oftentimes it's merely mind over matter and you make your own day and, quite frankly, you're also making the day for a lot of people around you and they're looking to you to set the pace.

Just a thought,

Gus Downing


Gus Downing

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