Logistics firm maximizes companies' bottom lines

In a recovering economy, companies are cutting costs wherever they can. One area that is fertile ground for improvement is logistics. One company that is addressing the demand for savings is Tradami Logistics Inc.

Tradami is a 35-employee, privately held firm operating out of 8,000 square feet of offices in Tulsa, Okla. It is working with several Missouri firms to cut their transportation and freight costs.

Cutting a deal

Through negotiating truckload and less-than-truckload rates, advising on best routes and offering alternative carrier selections, Tradami seeks to cut lead time and reduce the amount of inventory a company needs to have in stock for its 100-plus clients, said Bob Moore, chief financial officer. The firm has been in operation since summer 2000.

The key is buying power. Working with manufacturers, distributors and retailers, Tradami gets "preferable rates with carriers because we control over $50 million a year in transportation," Moore said.

When companies focus on the cost of suppliers' products and not on the cost of delivery, he added, the supplier does not have an incentive to find the best rates to get the goods to customers.

Counting the costs

Tradami provides "good visibility to what our transportation costs are, more so than we were able to do internally," said John Hill, director of logistics for Moberly-based Orscheln Farm & Home LLC.

He said after all costs are considered, Tradami is generating a net gain of "13 percent to 18 percent savings."

The charge for Tradami's services to Orscheln was first determined by the base rate Orscheln previously paid its less-than-truckload carriers. Tradami then compares "each bill that they pay to the base rate and then they calculate a savings," Hill said. "They get a certain percentage of that savings each week," as well as so much per invoice to code, to document, to cut the check and to compile a report, he added.

Orscheln is a more than 40-year-old, privately held farm supply retailer, which operates 104 stores in nine Midwestern states, including 35 in Missouri, Hill said.

Rising bottom lines

Outland Sports Inc., based in Overland Park, Kan., with operations in Neosho, is midway through a three-year contract with Tradami, said Brad Strathe, corporate controller for Outland. "Year-to-date for 2002 our savings have been about 25 percent" from Tradami's services, he said.

Strathe said one of Tradami's strategies in obtaining cost-effective pricing is to offer freight carriers business from more than one company in an area when it's negotiating rates.

Outland is a privately held hunting accessories manufacturer. It operates two production plants in Neosho and one in Tallulah, La. It has been in operation since 1997 and employs more than 500 people.

Tipping the scales

Truck-scale-building company, Cardinal Scale Manufacturing Co. in Joplin, also uses Tradami for the auditing of its freight bills and for arranging carriers, said Ed Sumpter, director of purchasing for the privately held firm. He said establishing a set contract for its carriers was the biggest thing Tradami did. Cardinal employs about 400 people at its one location.