The road to success Featured

7:00pm EDT February 26, 2006
When Jim Sharp started a small trucking company in 1989, he had no idea that it would lead to a $30 million logistics company.

Sharp became interested in entering the logistics field when his customer at a huge glass manufacturer said he was impressed with Sharp’s service. When the company put the job of managing all of its freight up for bid, Sharp jumped at the opportunity.

It came down to Sharp’s trucking company and a multibillion-dollar third-party logistics firm, and Sharp won. How did he set himself apart from the competition?

“We were asked how we were going to approach rate increases,” says Sharp. “I said, ‘We will open our books to you every quarter and show you exactly how much we make. We’ll set a reasonable margin — 1.5 percent to 2 percent. If we exceed that, we will return the money to you.’”

From that promise, Magnum Logistics was born, and today, providing value to his customers remains Sharp’s top priority.

Smart Business spoke with Sharp about how he grows his company in a soft economy.

How did you continue expanding your company while the trucking industry was suffering?
The answer is great service. The biggest client for our trucking company is Lowe’s. They require 99.5 percent on-time delivery.

They have a specific delivery time for each store. They have a crew that is set up to unload that trailer when it arrives at that store because they want it on the shelves as quick as they can get it.

We told them we would put our money where our mouth is. If we failed to deliver on time, they don’t pay for the work. We made that offer five years ago.

They challenged the other companies that serve them — about 140 others — to step up and do the same thing, yet no one has stepped up.

How has your original business plan contributed to growth in down times?
When I wrote the original business plan, it was my idea that there is a seven-year economic cycle to trucking. ... I thought, ‘How do you create a trucking company that does great in the bad part of that economical cycle?’

When the economy begins to slow down, the first thing that happens is all of those manufacturers say to themselves, ‘How do we get our overhead down and improve our operating costs? We have to cut inventory. We have to get out of public warehousing and close distribution centers. We have to go direct to the customer.’

When they start going direct to the customer is when they have to have great service. And not everybody can do that. I thought that if we focus on never being late and create a culture in our company that says that anything other than on time is unacceptable, then we can be successful even when it’s slow.

They’re not necessarily going to use the lowest price carrier. They’re not going to use the biggest truck line. They are going to use whoever can get it there on time.

It doesn’t take long for your name to get around the industry if you are really timely.

How do you attract and retain employees who will carry out that plan?
A lot of it is the culture in your company where people are appreciated, where people’s efforts are recognized. Family is very important here. We want people to have a home life.

What do you get when you do that? You get happier people who are more stable. And when they are at work, they can focus more on their work.

There are no politics here. You are free to speak your mind. It’s not going to jeopardize your job, and we try to make that go through the ranks of management. I don’t care who you are, how smart you think you are, nobody does this by themselves, and nobody has all of the answers.

If you can’t have someone who is going to say, ‘Why are we doing this? I think this is a bad idea’ because they are too worried they’re going to be in hot water, then you aren’t going to get the best out of people.

If two heads are better than one, 30 heads are better than two. Everybody has something to contribute. You can get a great idea from someone, but if the boss is so insecure that they can’t stand to have someone make a suggestion or offer criticism, you’re not going to have a successful company.

You have to be willing to hire people who are smarter and better than you are.

HOW TO REACH: Magnum Logistics, www.gomagnum.com