Old dog, new tricks

Since getting active in the propane industry 31 years ago, Richard Ely, founder of Ely Energy Inc. of Tulsa, Okla., has worked to learn as much as he can about the national and international propane retail business.

During that time – and to his great dismay – one particular fact has become obvious to him.

Small, medium and large propane retailers in every area of the country have been squandering huge amounts of money by doing business the old fashioned way – using outdated distribution practices that are no longer practical or viable.

Convinced there was a way to improve the efficiency of a propane dealer’s distribution method and enhance its bottom line using wireless technology, Ely last August organized LpgCentral, Inc. Joining forces with him were Josh Fate, director of product development, and data center guru Travis Spencer, the company’s chief technical officer. Ely serves as the firm’s chief executive officer and is responsible for sales and marketing.

LpgCentral provides propane retailers with the ability to remotely monitor the level of their domestic tanks by using the firm’s Single Source Solution, a family of four linked “smart products.” They include:

• SmartSignal, a wireless tank-level monitoring system developed by Robertshaw
  Controls for which LpgCentral has exclusive world-wide marketing rights for
  the next 10 years;
• SmartRoute, a comprehensive map-routing system that prioritizes delivery
  schedules and lays out the most efficient, time-saving routes for bobtail
  drivers;
• SmartFill, a hand-held, on-board computer system that prints invoices and
  updates accounts; and
• SmartAccess, a data center that downloads data into the retailer’s
  current accounting system.

“In recent years, propane retailers have been jumping on the technological bandwagon,” Ely says. “They’ve been using advancements in computer hardware and software to improve their bottom line.”

In general, Ely says the propane industry has made few changes to its distribution methods over the years.

“The average propane retailer will dispatch an $80,000 bobtail, which costs over $2 per mile to operate, to fill a tank that is less than half full. Some even have drivers selecting the route they’ll drive each day,” Ely says.

“Surprisingly, many marketers still have drivers filling out hand-written forms at each drop. This is a time-consuming practice that often leads to data entry errors at the office and, in turn, lost revenues.”

The LpgCentral team includes Casey Zandbergen, director of operations; Gabriela Barlow, manager of international business development; general manager Lee St. John; Mark Lucas, manager of key accounts; regional sales managers Michel Murphy; Dan Brook and Jim Ferguson; Devon Brandes, technical support, Matt Reiswig, graphics design and sales; Jennifer Zandberger, office administrator; and receptionist Dana Spencer.

Ely, a 58-year-old Tulsa native and mechanical engineer, is no stranger to the propane industry. In 1970, he launched a manufacturer’s rep firm (R.J. Ely Co. of Tulsa), specializing in the sale of blowers, burners and air handling equipment. In 1973, he expanded into the propane market, organizing Ely Energy to sell and install commercial and industrial propane-fueled back-up systems.

Judging by LpgCentral’s sales, solidifying it’s position in the industry is a fairly simple task.

“We’re well ahead of our sales projections. To date, we have taken orders for 32,000 units. We also have some of the LP-gas industry’s top distributors selling our systems and expect to line up several more by year’s end,” he says.

The firm’s retail clients include a mixture of major marketers, large independents and a few small dealers. Heritage Propane Partners, the nation’s fifth largest retailer, has placed an order for 10,000 units.

Why the hot interest in LpgCentral’s product line?

“Due to unseasonably warm winters during five of the past six heating seasons, tough competition and higher wholesale prices, propane retailers found their once-healthy margins and volumes shrinking. Consequently, most have awakened to the fact that the only way left to remain profitable is by handling their business more efficiently,” Ely says.

“It can be done by reducing the miles driven to deliver product, minimizing the man-hours it takes for distribution, increasing data accuracy and shortening times of collections. We have expertise in those areas.”

In June, Ely invited 60-plus propane retailers, wholesalers and equipment distributors to Tulsa to attend the U. S. Open golf tournament as guests of LpgCentral. The response was eye-opening.

“It was a win-win experience for us,” he says. “For our guests, most of whom were seeing their first major Professional Golf Association tournament, it was a memorable and educational experience. We were able to showcase our product, get to know everyone on a first-name basis, bond with key individuals, and learn a great deal more about their company’s distribution systems and problems.”

During a continental breakfast at the firm’s plush offices, located just four blocks from the Southern Hills golf course, staff members conducted brief presentations on LpgCentral’s four products.

Once at the course, guests were allowed access to the Champions Pavillion-North where food and beverages, including gourmet breakfasts, lunches, snacks and open bar services were available to them on a complimentary basis. Ely purchased a tournament sponsorship that featured all of the above amenities and, in addition, hosted dinner each evening and provided lodging for everyone.

Where did Ely, who doesn’t play golf, come up with such a gem of a promotional idea?

“Sitting next to me on the plane was a sales rep whose eyes lit up when he learned I lived in Tulsa and had offices near Southern Hills. He asked me if I could get him a couple of tickets to the U.S. Open. Not knowing anything about golf, I asked him why the U. S. Open was such a big deal. He spent the next few minutes briefing me about the tournament, pointing out how a number of major companies host big customers and prospects, and suggested that we could pull off a public relations coup doing the same thing.”

LpgCentral did just that.

“In a sense, we’re trying to teach propane marketers some new tricks about distribution efficiency.So, it was only fitting this old dog learn a new trick about how to promote and sell the family of smart products that make up our Single Source Solution system.”