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Blog July 2019

Adopting best practice in cement distribution

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Lasse Jiborn Commercial Director Intelligent Optimisation Solutions

Cement distributors face especially difficult challenges, with the cost of transportation constantly fluctuating.

Around 30—35% of the price of cement comes from the distribution costs.

The good news for the cement manufacturers and distributors: cities around the world are booming. Currently, around 55% of the world’s population lives in cities. The UN projects that number to grow to 68% by 2050.

Urbanisation requires modified and new infrastructure and residential properties, creating opportunities for companies to break out. But in order to do that, and stay on top, they need to create value.

Cement distributors face especially difficult challenges, with the cost of transportation constantly fluctuating.  Around 30—35% of the price of cement comes from the distribution costs. To protect margins and stay competitive, it’s critical for distributors to lower those costs – unpredictable as they are—and not let customer service suffer during your cost-saving measures. The key is following best practice.

Digital planning

Digital solutions are how you create efficiencies that translate to real value for you and your customers. What we’re talking about here is actually very simple: a best-in-class fleet planner, which gives you real-time transportation optimisation and a management system. This is dynamic planning, enabling you to meet everyday demands and complexities, from planning distribution in both bulk form on tanker trucks and packaged in bags to handling orders with narrow time windows.  Or through integrating the collection of for example fly cash orders in the planning to minimise empty driving.

Full transparency

Consider the traditional way of working, starting with decentralised planning. Wherever your sites are, you have a planner, or several planners, handling multiple trucks. You also have a decentralized order receiver. You will even have a deadline for when orders have to be placed for next-day delivery. Like most companies, this will be noon  or early in the afternoon. Trucks stay in their local areas and often have to run empty.

Best practice is knocking through those silos for complete transparency into what’s happening on different sites, even within your supply chain. This is what a good fleet planner should offer. It will know where all your trucks  are, the qualifications necessary, and the distances to the sites, before intelligently determining the most cost-efficient location to deliver from.

Digitalised workflow

For a modern and agile operation, it is crucial that relevant IT systems are seamlessly integrated to create an efficient and logical workflow for your staff. This is achieved through real-time integration between your ERP system and the fleet planner as well as an automatic exchange of weighing data from the weighbridge system to the fleet planner.

Agility

The situation just described is an example of agility. Agility gives you a competitive edge. You can respond right away to real-time data, gaining an end-to-end view of your transportation.

You can build your plans incrementally, monitor execution and re-plan as needed, including redirecting a load already on route . Furthermore, a frequent cause of operational disruption is when orders are being cancelled after having been loaded on the truck. With a best-in-class fleet planner solution you get automatic redirection suggestions in order to minimise the impact of late cancellations.

With a best-in-class fleet planner, you will  have a tool that automatically builds more efficient next day routes. But this is about agility, so as new orders arrive or traffic reports come in, you can optimise your routes to deliver outstanding customer service. No more order deadlines. Minimal empty driving . This is how you create value.

Forecast

With historical data, the forecasting module of your fleet planner – and again, this is assuming you’re going with best-in-class – will forecast when stocks need to be replenished or collected. This defines efficiency, as it also automatically generates orders, which are moved into your planning system for route optimisation. Even with just a week or two of data taken from sensors as you’re getting started, best-in-class forecasting can spot trends so that you can make informed decisions.

Be prepared

It’s worth using an analysis module with your fleet planner, which will also enable you to simulate what-if scenarios. This allows you to analyse and determine plans of action for potential events, such as site structural/location changes or customer conditions. It can be anything. What you get out of it is the ability to estimate long-term demand on resources, the ability to define your desired customer service level, determine KPIs and budget accurately.

Best-in-class AMCS Fleet Planner

AMCS Fleet Planner is ideal for every situation you’ll encounter in cement distribution. It helps simplify all the steps in your journey. If you want to be best-in-class yourself, without a word, this is where you start.

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