Because of Tulsa’s central location in the U.S., it is a hub of what has become a global logistics industry.
More than a dozen third-party logistics companies, as well as asset-based logistics organizations, have offices in the Tulsa MSA. Thanks to a strong local manufacturing sector, said Dan Case of the Oklahoma Trucking Association, Tulsa leads the region in both the amount and quality of logistics services.
“You’ve got so many logistics firms with a presence in Tulsa because you’ve got about 350 shippers there,” said Case, who is the executive director of the OTA, “whereas in Oklahoma City we’ve got about 75.”
So how does a logistics firm stay competitive in Tulsa when there are several vying for similar market share? The answer depends on whom you’re asking.
Logistics About Control,
According to Case, logistics companies that are tied to trucking companies – a.k.a. asset-based logistics firms – fare best in an increasingly global manufacturing and distribution sector.
Locally based Zeeco Inc., 22151 E. 91st St. in Broken Arrow, ships large volumes of material every day, said shipping coordinator Rebecca Howry.
Howry manages domestic shipments in-house, she said. For international freight, however, she relies on the relationships her department has established with local trucking companies.
“If you outsource your domestic shipping to a logistics company, they can’t normally get the rate you can get by going to a local trucking company with which you have a business relationship,” Howry said.
Bill Crookshank, logistics manager for Tulsa’s Bama Companies Inc., said Bama’s strategy of contracting in-house carriers, as well as his close proximity to the customer service department, boosts cost efficiencies and saves time.
“Coordination of in-house carriers give us a control factor,” said Cookshank. “It’s a savings in rate negotiations and in that it’s a control for your customer for an on-time delivery. That’s really important when we have large customers.”
“We’re sitting right in here with the customer service area,” Cookshank said. “That one-on-one is very important, and if you want something set up or something delayed, in just a second that’s done right here.”
The advantages of being a large company with the leverage to set up competition between carriers are numerous, said both Howry and Cookshank. Kyle Burchart of Melton Logistics at 808 N. 161st East Ave., Ste. 100, and Dan Taylor of Melton Truck Lines Inc. agreed.
“I’m able to deal with hundreds of different carriers, and we know how to play that to make ourselves more marketable and attractive to carriers,” Burchart said.
“In this industry, traffic managers are looking to work with fewer service providers. They want to pick up the phone and make one phone call and know all the freight will be moved by one company,” Burchart said. “And we can do that.”
Visibility and Itemization
In-house logistics departments, asset-based logistics companies and third-party logistics firms all agree that logistics has grown more complex as global markets have made goods more available and competition has stiffened.
Vince Boatright, President and CEO of Corporate Logistics Group at 10126 S. Memorial Drive, Ste. 299, said ever-changing markets and competition necessitate implementation of logistics systems in every sector of a business by an experienced professional. Logistics software, providers that combine trucking services with logistics management, or methods that don’t expose each cost for analysis in the movement of products doesn’t cut it, Boatright said.
“I think there are a lot of transportation and logistics experts who have philosophies that have been in place for a long time. But the logistics industry is changing in sync with the business world, and that’s obviously changing at a dramatic pace,” Boatright said.
Though emphasis on real-time inventory is prevalent in the logistics industry today, Boatright said he sees some companies and financial officers still unwilling to take a look at freight and supply chain management in order to implement such an inventory strategy.
“If a company minimizes inventory levels, cash flow will improve. That should ultimately lower materials cost, which can enhance the sold-good cost to the customers to enhance the seller’s market share,” Boatright said.
“One of the biggest challenges here is getting senior management to realize there’s a need. But their responsibility is for the financial strength of that company. If they can enhance their company’s operating costs to improve profits, they should get involved with that. But they see it as getting involved with freight,” Boatright said.
Boatright said the main plagues of the logistics industry are lack of good training that enables value-added negotiation and lack of visibility of true costs in moving product.
“When many companies start to look at the management philosophies of their in-house transportation people, they find they are basically being trained by the carrier sales reps,” Boatright said. “That is like sitting down to play a poker game – you’ve never played before, but I’m teaching you the rules as we go. Guess who leaves with all the money?”
“In some purchasing philosophies, when I’m buying material from you, I want to keep things really simple for me. I want to buy pre-paid or pre-paid and add shipping, all built into my material purchase price. But to manage your true costs, you have to break each portion of that purchase down,” Boatright said. “Otherwise, you basically issue the transportation providers a blank check, saying, ‘bill me.’”
Boatright argued that only third-party logistics companies have the market knowledge, leverage and ability to create that visibility for companies.
“That’s true logistics management – to have the visibility and the method to ensure you’re getting the lowest possible cost from supplier to end user at the highest levels of service and efficiency,” Boatright said. ?