Concrete Producers Should Work Smarter, Not Harder – By Karan Ahuja – Managing Partner
Technology helps producers run more efficiently, instead of running into the ground.
When I ask concrete producers what keeps them up at night, a common fear is losing business to competitors. If one supplier can’t meet a customer’s needs, another will. The flipside of today’s strong market is that most producers are running near capacity. So how can you increase your chances of being able to say “yes” to customers more often?
There are two approaches to this problem: internal and external. Both are made easier by applying the right technology.
Operate more efficiently
Demand for concrete is always in flux, and out of producers’ control. What producers can control is how smoothly their own operations are running. When you’re struggling to produce and deliver high volumes of material, lost time can never be made up. You’ll never recover a bad batch of concrete or regain an hour of plant downtime. Any process that causes your company to slow down needs to be eliminated.
For example, there is typically room for improvement in the quote-to-order cycle. Customer pricing and quotes need to be recorded and easily accessible to those responsible for entering orders. (Do customers call to order, and there is no quote available?) Dispatchers must have quick and reliable access to customer data.
(Do dispatchers waste time hunting for an address or project information?) An integrated customer relationship management (CRM) system keeps data flowing smoothly.
With the technology available on mobile devices, there is no excuse for delays in any part of the communication chain, from dispatch and drivers to sales and accounting. Pertinent information should be available on cell phones and tablets via cloud-based business management software, so your employees can handle their day-to-day responsibilities quickly and accurately.
Redefine your “best” customers
It seems counter-intuitive to turn down a potential order. But when you’re struggling to keep up with high demand, you may be spending too much time meeting the demands of the wrong customers. Every business has customers with whom they have special relationships. Perhaps a business partner is offered lower prices, or a certain customer screams the loudest so they move to the front of the line. In any case, why prioritise a difficult customer when you already have more business than you can handle?
Customer volume vs. profitability (sample ready-mix customer analysis)
Maybe you can relate to the statement I’ve often heard: “Our best customer loses us the most money.” A data-driven approach will clarify who your best customers really are. Invest in an internal review, which will be easier with specialized financial reporting software, to discover and rate customers’ profitability. Critical data includes: number of order changes; order cancellation rate; late order confirmations (the less time you have to activate an order, the more demand on your operations); claims & disputes; and of course, your profit margin on orders compared to the cost of materials and trucking. (See chart, ‘Customer volume vs. profitability.’)
Monitor the behavior of your customers, aside from the relationships, and take a hard look at anything that falls outside of your profitability range. Focus your efforts on the customers who consistently make you money. Give less attention to the bottom performers – those who account for your lowest margins or actual money lost – and allow them to take their business to your competitors.
There is generally room for improvement in any part of the ready-mix business process, from improving driver efficiency to equipping your sales force with better tools. Producers who commit to making data-driven decisions will amplify the returns in an up-market, and also soften the blow of the next downturn.
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