Creating Value at Your Plant
The use of technology to improve in-yard time provides value to the operator by increasing the maximum potential throughput of the site. Reduced truck turn-around time also creates value for the customer. Consider a customer’s company that owns its own fleet of 20 trucks. The speed at which a truck can get into a yard, get loaded with the correct amount of the correct material, and be back out on the road ultimately affects profits. One way to look at this is simply by the cost of the truck and driver. Let’s say that the trucking costs $90 per hour. By shaving just 6 minutes off the in-yard time, a very realistic goal, the hauler saves $90 in just 10 loads. Multiply that by all the loads that run through the yard in a day and meaningful savings may be achieved. Faster turnaround might mean that the hauler can do with one less truck. Either way, savings can be passed on to the customer, either through lower cost on delivered materials or direct savings if the customer owns or hires the trucking. The producer’s systems have saved the customer money and, by extension, added value to the customer’s business. This is enhanced value. And this is what helps producers get and keep customers and justify premium prices.
Central dispatching systems are changing the aggregate and asphalt worlds. Let’s say a customer calls in and orders 40 loads of aggregate to be delivered to his job site the next day beginning at 8 a.m. and ending no later than 3 p.m. With a dispatch system, the producer can accept the order and manage the logistics of finding haulers and assigning trucks to loads. The producer can charge the customer a premium for handling the logistics of shipping. Customers are happy to be relieved of the costs of managing shipping logistics. Customers find value in “one-stop shopping” where the producer arranges the delivery, and, even with slightly higher pricing, their projects are more profitable.
Other features that enhance value are technologies that help the customers of the producer better manage their business. Take, for instance, systems that provide the producer’s customers with visibility into the location and activity of their truck fleets. GPS tracking systems communicate with the company’s computer system, mapping all the trucks’ locations, speed, and direction. Whether the producer or the customer owns the fleet, the process is the same. The investment can be cost-justified in a remarkably short time.
As one moves from the center of the value model to the outside ring, one moves from a commodity-focused (price) value to true value-added services to the customers. With a commodity-focus, customers see no difference between producers other than price. On the other hand, when a producer creates value-added services, he distinguishes himself from other price-focused producers. Customers gravitate towards those producers who deliver more than the product.
The most successful producers are those who have invested in improvements in the outer two value rings because that’s where the most opportunity and upside is found.
These systems provide value-added services that the customer is willing to pay a premium to receive. Carefully selected and well-implemented new technologies can bring significant returns to the bulk materials producer. By thinking in terms of added-value, and systematically identifying opportunities to improve site efficiency, today’s producers have an unprecedented ability to maximize their own and their customer’s return on investment.
Bernard A. Benson is chairman of Livermore, Calif.-based BMG Seltec. He can be reached at 925-373-3200, or visit the company’s Web site at www.bmgseltec.com.