Shipper strategies: Vulcan Threaded taking flight for logistics offerings
Jeff Berman, Senior Editor -- Logistics Management, 3/19/2008
PELHAM, Ala.—As one of the biggest threaded steel rod shippers in the United States, Vulcan Threaded Products, a 2006, LM Best Practices award winner, is constantly looking for ways to be more efficient in its transportation processes.
A little more than two years ago, Traffic Manager Steve Monson began taking Vulcan’s transportation efficiency to a new level, when he began laying down the groundwork for the company to leverage its own transportation and supply chain management processes to offer up logistics services for its existing customer base, as well as new shipper customers for a wide range of industries, including steel, food, building materials, lumber, plastics, and furniture, among others.
Like most managerial decisions, what got Monson thinking about “flipping the model around” and offering up logistics services was lowering overall freight spend and reducing costs.
“Being a shipper and manufacturer has always been our core business,” said Monson. “Logistics was not, but we realized we needed to explore opportunities to stay competitive…especially when you see how gas prices are rising and facing increased competition from China.”
That said, the idea to offer up logistics services forced Monson to think outside the box and come up with a different approach: Rather than looking at transportation and logistics as a company P&L expense item, Monson said Vulcan elected to go in the opposite direction and turn it into a revenue generator.
After doing some research and analyzing the market to see what other shippers were up to, the next step for Monson was to get Vulcan’s management to buy into this concept. Six-to-nine months later, Monson sold management on the fact that offering up logistics as a service could add operational efficiencies and become a revenue generator.
“We tried to look at things separately by looking at what we were spending on Vulcan Steel and Vulcan Logistics as separate entities,” explained Monson. “We did this so we would not lose focus on our main priority should be—moving our own freight as cheaply and cost-effectively as possible. We did not want to focus on just growing logistics and forget about our own freight.”
At that point, Monson hired a staffer to assume his duties managing Vulcan’s freight transportation operations, and he began overseeing the logistics division, which officially kicked off last August. To get started, he analyzed the market to see what his best opportunities were.
Monson first looked at his own staff and saw people with trucking, LTL, intermodal, and warehousing experience, coupled with the fact that Vulcan had been performing its own logistics operations for 30 years by managing its own freight and supply chain processes.
“We already had a customer base and a carrier base and freight brokers that were working for Vulcan,” he said. “And we were shipping thousands of truckloads of our own freight per year. Going in this direction was kind of natural, because we had our own resources and people in place. We just needed a small capital IT investment to get us up to speed but for the most part we had what we needed to get going.”
Vulcan is not a “full-service” logistics services provider at this point. It is focusing on truckload, LTL, and intermodal, with an eye on not “getting too big too fast.” Monson said it wants to build a solid foundation and grow at a comfortable rate on the truckload and LTL side and then work within a domestic market—Canada, Mexico, and in parts of North America—and then gradually expand into different areas.
He did admit that LTL is where its logistics services are most prevalent. As one of the largest LTL shippers in the Birmingham area, he said Vulcan has a lot of leverage and can offer some of that up to freight brokers it has working for Vulcan in offices throughout the U.S. (in Montgomery, Ala., Georgetown, Ga., and Palm City, Fla.) bu offering their existing customers additional LTL savings.
“If a particular agent we have is already doing business with a customer on the truckload side, we can now turn around and offer them LTL services that will help them grow their business and ultimately make them more valuable to their customers.”
And on the Vulcan steel side, as logistics operations continue to evolve Monson explained that Vulcan can serve shippers and route their freight through Vulcan Logistics. He added that it can also increase loading dock efficiency, because it will have fewer trucks coming in due to freight being pre-paid as opposed to having to collect payments. This is also likely to cut down on overhead, he noted, and reduce dock congestion by cutting down on the number of incoming carriers and using carriers with pre-negotiated rates.
Monson stressed that Vulcan does not want to be “everything to everyone,” in terms of its logistics offerings. He reinforced that the company’s original goal is to help its customers succeed, and then take its logistics resources and knowledge, share it with its customers to enable them to be successful with the transportation and logistics problems they may be having.
“The idea [with our logistics offerings] is to work with customers on a ‘shipper-to-shipper’ level and not on a broker-to-shipper level…and help reduce their freight costs,” said Monson. “It is going to make them more successful, and it is an additional service we can offer to our current customer base.”
Vulcan is currently providing non asset-based logistics services for approximately two dozen customers. Some of its largest logistics customers also double as ones that are its threaded steel rod customers. But a key overall difference is it is diversifying its logistics services for new companies with no previous business relationships.
Going forward, Monson said Vulcan Logistics has plans to get more involved with intermodal and air freight opportunities based on a large demand to diversify into different modes, noted Monson.
“We have talked about expanding into the asset-based [logistics] side to have our own trucks and fleet…but to service the logistics side we have had some customers approach us about providing them trucks for dedicated runs,” said Monson. “We see that long-term but for now we just want to take it one step at a time to build a solid foundation so we can be successful. I can see us eventually getting vans, flatbeds, or refrigerated trucks to serve our logistics customers.”
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