1. Getting to the Right Price 

Price is a producer’s single most impactful way to drive margins. It’s a producer’s opportunity to maximize revenue, minimize job risk, encourage customer loyalty, and reflect the local market’s overall capacity to service the demand.

• To determine the right price, there are many factors that must be considered.
• Understand the customer or segment to which the product will be sold.
• Determine if it’s a commodity or specialty mix, as well as the associated risk.
• Assess the customer delivery process.
• Evaluate competitors’ likelihood of accepting the work at a lower price.
• Determine whether the business needs or wants to take on a new customer.
• Calculate the total anticipated costs and determine whether an acceptable target margin can be generated.

The main obstacle ready-mix producers face in setting the right price is getting the data needed at the speed required to price a job competitively. Producers need data points on latest and

forecasted material costs, customer delivery behavior, product and job behavior, and market capacity—and they need the data instantly to price jobs quickly before customers go elsewhere.

Often, this information is siloed across delivery, batch, quoting, and ERP systems, making gathering information quickly enough to provide an accurate quote a daunting, nearly impossible task. Information needs to be available instantly to make sure the quote reflects the company’s risk and reward target.

As a result, producers often express pricing as one of the bigger opportunities to improve profitability—as well as one of the most difficult business components to change.

2. Identifying Revenue Leakage

One common form of revenue leakage is situations in which a producer fails to charge for site delays (waiting time), which are listed on the quotation but often don’t get applied. These charges are often missed for three reasons.

1. The extra time on site often goes unnoticed or unreported and therefore is overlooked.

2. Charging waiting time can be a contentious issue depending on a producer’s own performance versus that of the customer.

3. Most sales teams are not equipped to have these customer conversations and support them with data

High delivery costs resulting from long unloading times, and their impact to MoMD, can drastically reduce profitability. Worse, it can put a producer into negative profitability.

When pricing a job, producers make assumptions about the site efficiency. Charging waiting time can become a game of “who can back-charge the other person the most,” and the ready-mix producer often loses this fight. However, that does not mean those charges should not be applied; produces should apply waiting time charges but must take a careful and pragmatic approach on how they are applied.

To avoid revenue leakage, ready-mix producers need to receive timely (real time, or within one business day) information on which loads delivered to which projects exceeded the contractually included time-on-site allowances so additional billable revenue can be identified and invoiced. However, because contract parameters often are not entered in a system, they can be difficult to compare and reconcile against delivery performance data.

Having the consistent and transparent delivery performance history of the producer as well as customer performance allows producers to pinpoint situations that warrant ancillary charges—especially where the producer’s performance can be improved. Understanding historical performance can prevent profit leakage. This can be done by equipping sales professionals with the data at the time of pricing and contract negotiation to accurately base performance assumptions and pricing.

3. Optimizing Material Usage

Materials are the single biggest cost for a ready-mix producer. Any material cost optimization—no matter how it’s achieved—can have a comparatively sizeable impact on the bottom line.

Outside of sourcing cheaper materials, there are three main ways that producers can reduce their material costs. First, producers should regularly review the theoretical yield of their mixes – with frequent mix design tweaks occurring to address raw material changes, performance, and finishing characteristics, it can be easy for mixes to drift out of yield, giving away more concrete than intended. A lack of a simple, fast, and effective way to identify out-of-yield mixes means yields often don’t receive the focus they deserve.

Second, optimizing mixes for cement content based on strength performance can provide enormous cost savings, but can be a complex and difficult task. Producers may feel overwhelmed by specification constraints, or simply lack the right tools, people, and technical experience needed to properly evaluate and design appropriate over-design in their mixes. Improving cementing efficiency using advanced admixtures and mix design techniques to get more strength out of less cement is a specialized skill that many producers do not have the right personnel or experience to carry out.

Third, monitoring and improving batching accuracy is key to both eliminating raw material wastage and producing a consistent product. Some producers may feel their equipment limitations force them to choose between production speed and accuracy. Especially for producers with multiple plants spread out over a wider area, tools to review a consolidated review of batching accuracy may not be available, leaving

owners and managers unaware of the impact that over-batched materials may be having on their bottom line.

Failure to optimize costs through all three of these levers can put producers in a non-competitive position with regards to their single biggest cost input.

4. Getting the Most From the Fleet 

Delivery costs make up about 30% of a producer’s overall costs and are the next-largest profit improvement opportunity after materials. Producers seek to pinpoint the fleet size that strikes the right balance between customer service and availability—minimizing the number of trucks without sacrificing customer service.

All ready-mix GMs ask themselves how they can deliver the most concrete with the smallest fleet, as well as which customers and projects are helping or hurting their delivery cost, and how they can better manage those clients.

They are continuously asking themselves if their scheduling is efficient and minimizing the fleet size, as well as whether they are maximizing annual utilization and load sizes. If utilization is falling, is the problem related to the customer or the way the producer schedules orders?

A lack of data showing the factors driving utilization and overall delivery costs enhances the challenge. With incomplete insight into whether the inefficiency is due to a customer, project, or scheduling efficiency , it’s not possible to drive change. The challenge is exasperated by a lack of tools to identify and manage high-cost customers and projects, as well as a lack of tools to help dispatchers make the right decisions to optimize upcoming order schedules.

With more accurate delivery performance predictions, producers could schedule more accurately and cost efficiently.