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Blog September 2020

How to reduce operating costs

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Martijn Schimmer Intelligent Optimization Solution Advisor

With COVID-19 having disrupted supply chains, the construction industry needs reliability from building materials firms. Building materials is an industry that has always operated on tight margins. Protecting those margins is critical, which makes reducing operating costs a priority in the current environment. The question is, how do you provide reliable service while cutting costs? This is about improving customer service levels while spending less.

To meet customer demands requires agility, which can indeed be achieved even while cutting costs.  The solution – digitalisation – has, in the past, seen low levels of uptake in the building materials industry. Yet it significantly increases productivity while streamlining operating costs. If you’re one of those companies resisting digitalisation, change your mindset right now. You can no longer ignore these technologies if you want to stay competitive.

Why digitalisation reduces costs

In a nutshell, digitalisation connects your systems to each other. This enables them to exchange information while automating your processes. How can this lower your costs? Let’s take a look:

Minimising revenue leakage

Events happen throughout the day. If you can capture data on those events, you’d have a true picture of your operations. Your driver captures data with a mobile device and that data feeds back to your office in real-time. Your billing would reflect your data too. For instance, a change in order volume, if slight, can easily be missed and not billed for. If the driver’s mobile device captures these events, you can see them and bill them.

Most likely, you’re leaking revenue, but you don’t know-how. This is what digitalisation minimises. By plugging the holes where you’re losing money, you lower your operating costs. The cement sector, which often relies on third-party hauliers, often incurs surcharges along the way. Rather than eat those costs, they’re captured and can be passed on to customers.

Another benefit to sending data back to the office is that the dispatcher can see what’s happening in real-time and can re-optimise planning for the rest of the day. For ready-mix concrete, this technology has shown that companies can increase loads by up to 25%. In other words, digitalisation also increases productivity.

Optimising routes

With cement, 30—35% of the price comes from the distribution costs. The key here is in lowering those costs. Multiple stops are common and figuring out the logical sequence of deliveries can be time-consuming, as precision is key. Route optimisation automates this process, providing the most efficient routes while taking into consideration factors such as traffic and loading times. It minimises waiting times so that logistics are efficient.

This can save driving time by up to 25%, which in turn cuts fuel costs, not to mention CO2 emissions. Other material distribution types typically see up to 20% savings in these same areas.

Automating logistics mitigates risks. It enables companies to deliver loads within tight time windows. It can reduce the number of trucks needed by up to 10%, which further reduces operating costs. Fewer trucks equal less money spent on maintenance, for example.  

Automating planning

In aggregates, trucks and containers have different capabilities and requirements. Drivers, too, have to be qualified to drive certain trucks. Using manual processes, you’ve got to coordinate which driver is qualified to drive which truck and which truck can carry which container, and account for what that container requires. Digitalisation can coordinate all of this for you through automation.

You also have to plan for the activities involved, from pick-up to emptying the container and everything in between. Digital tools such as transport optimisation can easily sort these issues for you. It optimises the most efficient sequence for the activities required.

An example of how this might work: You have to pick up an empty container from a site and bring it back to the terminal. Then you have to drive to another site, perhaps with the same type of container. Transport optimisation sees this and optimises the plan so that the container goes straight from site A to site B. This is a far more efficient, thus cost-saving, way to work.

By automating your planning, you can cut the time involved by up to 75%, no matter what building materials you deal with. That might mean you need fewer planners – which amounts to more cost savings – or your planners can handle other value-added tasks.

Digital documentation

The act of handling paper is inefficient. A few minutes here and there to find and gather papers, such as certificates, adds up over time, and as the trite but true adage goes, time is money. Digitalisation keeps electronic records, and this includes documentation, photos and signatures. Everything you need is right there on a mobile device. This can save up to 65% time in registrations and follow-ups. It’s another way to streamline work and become more agile while saving on operating costs.

It’s time

The figures in time savings that we give you are what our own customers have experienced. Find out how we can help you with your digital journey. With years of experience in the building materials industry and deep expertise in developing digital solutions, we can help you save on your operating costs.

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