A cement maker cuts the cost of every tonne delivered
Freight is one of the largest costs in cement. Planning which plant serves which customer, by which route and vehicle, from data instead of habit lowered the cost per tonne without slowing deliveries.
An illustrative scenario. The company is fictional and the figures show how the method works; they are not a client result.
The situation
A cement producer runs several plants and grinding units and ships to dealers, project sites and depots across a wide region. Freight is one of the largest costs per tonne. Dispatch decisions were made each day by plant logistics teams, mostly from experience: the usual plant, the usual route, the usual transporter.
What we looked at
- Two years of dispatches: origin, destination, tonnage, vehicle and freight paid
- Plant capacities and production costs
- Transporter rate contracts
- Road and rail options, with distances and transit times
- Customer delivery windows
What we found
| Finding | Effect |
|---|---|
| Customers served from a plant that was not the cheapest delivered option | Higher cost per tonne |
| Part-loaded trucks on high-volume routes | Paying for capacity not used |
| Spot hiring on routes with contracted rates available | Premium rates paid |
| Empty return trips that could carry inbound materials | Two trips paid where one would do |
| Rail used less than it could be on long routes | Road cost on rail-friendly lanes |
What changed
- Daily plans from ToS. The transport optimisation system suggests the plant, route and vehicle for each order, within capacity and delivery windows.
- Planners decide. Logistics teams review the plan and override it where they know something the data doesn't, with the reason recorded.
- Freight audit before payment. Transporter bills are checked against the plan and the rate contract.
- A monthly review of cost per tonne by plant, route and customer.
Why it works
Each decision is small. Thousands of them a month, made a little better, add up to a lower cost for every tonne delivered.
See freight and logistics, or read how a logistics business audits every freight invoice.