Effective Dispatch and Decision-Making

September 13, 2018 Karli Langner

There are many areas that are ripe for improvement at most ready-mix operations, many of which are directly impacted by the quality, timeliness, and consistency of dispatch decision making. Utilizing an industry specific optimization tool can enhance and deliver consistent dispatch decision making that considers specific market and company factors, along with the customer’s specific needs and requirements. Stay on track with proactive delivery planning as well as real-time re-planning with the assurance that the variables that impact costs, revenue, service factor and utilization of valuable resources are taken into consideration in each decision. 

The typical ready mix concrete producer averages having their drivers/trucks performing productive tasks 64% of the time.  At an average variable cost greater than $1 per minute, this results in a large amount of money and time being lost to non-productive activities.  Improving this utilization can provide benefits in a couple of ways. 

For a producer who is operating in a strong market with the opportunity to increase market share, improved decision making could enhance resource utilization enough to get additional loads per truck per month.  One extra load delivered per truck, per month equates to approximately $900 in additional revenue per month for the average ready-mix producer…and that is for just one truck.  With an average fleet size of 115, that equates to over $100,000 a month in additional revenueFor producers who are not in a market where there is great opportunity to gain market share, then they should be able to do the same volume while using fewer resources (drivers, trucks, plants, etc.) daily allowing for a lowered variance cost.

Most operations put little emphasis on how variable material costs are impacted by daily dispatch decision making.  The main reason for this is that even though most dispatchers have a general idea about which mixes are “cheaper” at some plants, very few consider this criteria in their dispatch planning and decision making.  The mathematics are just too complex for them.  Given that the average cost of materials is approximately $57 per cubic yard and the average load size is just under 9 yards, that would equate to $500 of opportunity in each load.  If a mix design cost varies by just a couple of dollars between plants, that is almost $18 of opportunity for choosing one source versus the other.  This small variance alone provides the opportunity to achieve greater profitability by balancing delivery cost, material costs and customer service.

Based on these examples, it’s clear that enhanced dispatch decision making can impact specific costs and revenue. Combine these with a variety of other areas that lend themselves to improvement, including: transportation costs, volume increases, labor costs, and marginal contribution.  The most progressive producers are learning how to change the way they approach their dispatch operations and adopting dispatch optimization technology, like COMMANDoptimize, to remove the barriers that limit utilization of their resources and recapture efficiencies and dollars that were previously untapped.

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