New Math For Our Industry
to navigate trucking & material shortages, we have to agree “five” can actually be greater than “ten”
By: Jason Campbell
Commercial Director, Sysdyne
POP QUIZ:
• Plant 1 has 300 tons of cement on hand and 500 tons of capacity
• Plant 2 has 75 tons of cement on hand also with 500 tons of capacity
Which plant needs the cement?
We may look at the above scenario and think that obviously plant 2 needs the cement because after all…. it’s 425 tons down or it’s only 15 percent full. Meanwhile plant 1 has “plenty” of cement. But if we automatically think it’s Plant 2, we’re missing an opportunity and could be unnecessarily straining our already strained material supply.
What if I use the same two plants and change the way I look at it?
• Plant 1 has 1.5 hours of cement on hand
• Plant 2 has 18 hours of cement on hand
Now which plant needs the cement?
We’re an industry that deals in time. Yes, volume is king but our day to day lives are run by measuring time. How fast do they want it delivered? That’s cubic yards per hour. How efficient are we? That’s yards per driver hour. How is the plant running? Well, how many yards per hour is the plant producing? How many hours are our drivers working? How many hours can they take off and what time can they be back tomorrow? Engine hours, how old is the concrete, spec is 90 minutes, etc.
So why wouldn’t we take all of this “time” and apply it to our material orders? Especially given we have a finite number of loads available every day which increases the pressure to eliminate wasted loads.
– BACK TO OUR POP QUIZ –
Does plant 2 need the cement? The most popular answer in every supply chain and logistics scenario is “that depends.” And here, yes, that depends. To truly answer that question, we need a few more data points, beyond “how much do I have” or “will the load fit?” We need to combine those two questions with:
1. How much cement is the plant going to use?
2. How fast is the plant going to use it?
Now the equation got a little more complex. But put those 4 data points together and you start to get a true look at your inventory.
“Why are we sending a load to a plant that has enough cement to last until Wednesday?”
That question was asked one time many years ago when I was managing dispatch and it always stuck with me. It stuck with me because across town, at the same time, I had a batch plant operator getting a little nervous about his cement supply. Now multiply that by 20 plants. I probably “needed” 80 loads of cement that day in total and was given 60. Meanwhile orders were moving, plants going down, orders growing, some shrinking, etc. This was just a typical busy day…not one of those four alarm fires we’ve been through.
What this demonstrates in the context of our little pop quiz is simple and shows why we need to look at our inventory replenishment differently. Bottom line: if the low-level plant has a slow day tomorrow and we are on cement allocation or bulk trucks are tight, why would we want to take one of these constrained resources and put it there? On the other hand the higher level plant may appear to have “plenty” of cement, but if it’s pouring a high sack content mix and the plant is producing at a high rate per hour… the definition of “plenty” changes fairly quickly. When you factor time into the equation, 75 tons of cement is actually “more” than 300 tons of cement.
In our day to day, most of us already know the answers to the “data points” I’ve raised. And there are already ways to monitor all of this, reports you can pull in your dispatch system, plants you can call to get inventory updates, access to tracking screens to watch how orders change throughout the day…but doing that effectively for 10, 30, 50 plants is nearly impossible because we’re planning a day ahead for demand that changes by the minute.
Servicing our industry for over 40 years, the pain points of our industry are Sysydne’s focus. The single database between Sysdyne CloudBatch™ and dispatch consolidated the data sources. The BI dashboard built on top of the consolidated data provides the real time visibility of the material demand and inventory by the hour. A dispatch manager can get his inventory level for 10, 30, 50 or more plants at a glance and prioritize the material delivery accordingly.
Re-prioritizing our plants based on looking at inventory in terms of hours versus tons will allow us to weather this material crunch because it allows us to better place our material loads. We can make the same concrete or even grow our concrete deliveries with fewer loads of cement. We can take pressure off our supply chain, haul more loads with our own bulk trucks, cut back on the need for 3rd party haulers and improve our inventory management. We can INCREASE capacity in an industry that is stretched to its limit. We just need to use our existing capacity a little better and changing the way we look at ready mix raw material inventory is a good first step.
