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What Kind of Animal Is Tandet?

Posted: August 1, 2014 by Peter Carter

In the late 1970s, when John Tilley wanted to name his new vehicle leasing company, he thought that the word “tandem” suited the enterprise. The only problem? Another outfit piped up to say they had the name first.

Tilley was nothing if not accommodating. Except that he had already taken delivery of 500 signs with his Tandem company name on them. Accommodation’s one thing, but he wasn’t about to toss money out the door.

How he handled the situation speaks clearly about Tilley’s entrepreneurial reflexes and the way the Tandet Group was going to be run from then on.

According to his son, Kirk Tilley, now co-president with brother Scott, Tilley Sr., dad just took half the signs and clipped the first “t” off the word “tandem.” Then, from the 250 remaining signs, he lopped off the final “m”. (You still with me here?)

He replaced those ms with the ts, and wound up with 250 signs for his new fleet of rental vehicles under the name Tandet.

Essentially, Tilley leveraged the sign situation and made it work to his advantage. Which is the strategy the Tilleys have taken to many of their business decisions and probably one of the chief reasons why — between the time of that sign decision and John Tilley’s retirement — Tandet’s revenue grew from about $750,000 to almost $90 million and was named one of Canada’s Best Managed Companies.

Those first 250 signs would not even cover half the fleet now — Tandet has 600 trucks with its name on the side. Also, the company leases and maintains another 2,000 vehicles for clients. Further, in 1986, an expanding Tandet acquired its first Kenworth dealership, in Kingston, Ont. They later acquired dealerships in Ottawa and Peterborough.

“So now,” Kirk Tilley explains, “when we talk to customers, we go in with a blank piece of paper. All we know is that they’re moving freight.

“We can either sell them a truck; we can lease them a truck; or move their freight in a dedicated operation. We can put a contract-maintenance program together for them. We can provide them with a truck, a trailer, or a driver.

“The only thing we don’t have,” he says, “is warehousing — yet.”

These days, about 25 percent of the Tandet Group’s revenues come from the dedicated fleet side; about 25 percent from the dealership; another 25 from the bulk-hauling enterprise; and the final quarter from the leasing company. (Those percentages are a bit misleading because the revenue from a single truck sale can be $150,000, which would be quite the spike in the haulage division. But the breakdown is reasonably accurate.)

“The four divisions don’t,” Tilley says, “fire on the same cylinders. When one side is booming, another side might not be. The Canadian dollar has impacted our north-south stuff into the U.S. mainly on the bulk side, but the dealership is booming. That wasn’t the case three years ago.”

Many of Tandet’s managers rose from junior positions

It started when Tilley Sr. was in his mid-40s with already one career notch on his belt. He had supported his family working in the mining-resource industry, which meant being away from home and moving from city to city.
The company he was with wanted him to move the family to Calgary but he opted out instead.

He purchased a small car-and-truck rental operation in Oakville Ont., with 10 cars and about a dozen trucks, called Oakville Drive Yourself Ltd. Step two was joining NationaLease. Based in Chicago, NationaLease is an organization of independent lessors across the continent.

The Tilley appetite for growth was whetted. Explains Kirk, who joined the company in 1988 after a brief career as a corrections officer: “We started buying small, mom-and-pop regional lessors that really didn’t have family to turn their business over to. My father would buy it, and we’d get anywhere from 30 to 100 trucks.”

The first foray out of strictly leasing and rental came when the Tilleys purchased an LTL carrier called Rennie Transport. But, as Tilley explains, the decision to move into for-hire trucking wasn’t borne of sheer ambition.
“It wasn’t like, ‘let’s give this a try,'” he says. “We bought the company but it was all strategically set up. We had a big lease operation with Imperial Oil out of Sarnia and they had a driver-leasing group they got their drivers from and they leased their trucks from us and they said we’re looking at bringing these operations together.

“We bought Rennie so we could understand drivers and freight. We knew trucks, but we needed to understand the driver side of it.”

Eventually, the Tilleys sold off the LTL part of the enterprise but by that time, they were deeply into the dedicated contract end of the business. With dedicated contracts, Tandet owns the trucks and hires the drivers and manages the fleet, but to the outside world, the vehicles and drivers appear to belong to the client.

The Tilleys own trucks; they lease trucks; they sell them. They maintain their own fleet and now, with their new Fleet Maintenance Services, Tandet will also deliver a comprehensive maintenance program for other people’s vehicles. Confusing? To be sure, admits Tilley.

However, he says, there are two main reasons this “Rubik’s Cube” of a company works, and they were both cited when Tandet was named one of Canada’s Best Managed Companies. They are Tandet’s system of internal staff promotion and its deft use of technology.

“It’s difficult bringing people in from the outside to teach them our philosophy,” he says, “We have a lot better success at taking someone and growing them internally. The majority of our managers have come from within. One of our district service managers came in on the wash bay.”

Then there’s the technology. The IT equipment has to be spec’d as carefully as the specs on one of their Kenworths. Indeed, the new Fleet Management Services (FMS) is based almost entirely on effective software applications. This is what trucking has become. The software’s as important as the transmissions.

That’s why, as Tilley says, they don’t invest in any technology unless they can leverage its potential for future use. It’s the same reasoning John Tilley used when purchasing Rennie Transport — not to get into the LTL market, but rather to expand his leasing know-how.

Eric Richer is president and co-founder of Richer Systems, of Calgary. Richer specializes in software packages so equipment lessors can track trucks, trailers, financials, maintenance records and inventories. Kirk Tilley’s division of Tandet relies on Richer’s patented “Enrich” system to make sure all the components of his company talk to each other, provide each other with necessary data, and ensure that the deliveries are made on time, on budget, and with minimal hassle.

“We can track everything down to the nut,” Tilley says.

But again, as Richer says, “From what I understand, they [Tandet] have been very successful at using their software as a competitive advantage.”
Tilley says their most recent offering, the Fleet Maintenance System, is a new revenue stream that flowed strictly out of their core software capabilities.

Under FMS, Tandet manages, maintains, and tracks trucks belonging to third parties.

Explains Tilley: “You join our program and if one of your trucks breaks down or you need to get service work done in, say, the Yukon, we have a vendor up there. The truck goes in, we manage the entire process; they bill us and we bill you and put it into our computer system.”

And with Customer Web Accessibility (CWA), clients can log in at their home-base computers so they can track everything that happens to their vehicles.

It’s early days still with the Fleet Maintenance System, but Tilley’s confident that it’ll have the Tandet fingerprint of success imprinted on it. After all, they’re following the proven method of using what you have to build from within.

“All we did was take what we do everyday in our own shops, use the technology and say ‘we can do it for companies where we don’t actually own the trucks and run it the exact same way.'”

Take a look at what you’ve got to work with — and innovate. Just like what John Tilley did with the plastic signs.

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