How long should it take? There are different guidelines in establishing concrete delivery intervals

Concrete Producer, The, August, 2004 by Joel M. Ungar

If you ask 100 different producers what guidelines or rules of thumbs they use in establishing delivery intervals, you're likely to get 100 different answers. Ask these same 100 producers, "How long should it take?" and you are likely to get the same answer: "It depends."

For measuring the overall efficiency of a delivery operation, cubic yards delivered per driver hour is still their best measure of efficiency, says Tim Green, ready mix operations manager with Hanson Aggregates in the Phoenix area.

Using information from their Jonel dispatch system and their time clocks, Hanson is able to track yards per hour on a per plant basis and a per driver basis. Using a benchmark of 3.5 yards per hour, Green and his team can quickly pinpoint problem areas as they develop.

When it comes to establishing delivery intervals, Green says they consider many factors--delivery distance, expected loading and washout times, their history with the customer, and yards ordered per hour. Green has nine locations and 12 plants, enabling Hanson to keep delivery distance down and more tightly control delivery schedules.

Truth In scheduling

Stonehenge Concrete & Gravel in Richmond, Ind., continues to struggle with determining optimal delivery intervals. "You always tend to be overoptimistic when scheduling an order," says Matt Jetmore, president of Stonehenge. "For example, when you schedule a bridge pour, you generally think that a bridge deck is going to pour out fast. But you have to remember to factor in testing and other factors that tend to slow you down. We've also found that using five minutes per yard tends not to be a reliable indicator on smaller jobs."

Unlike Hanson in Phoenix, Jetmore's three plants are in smaller, mostly rural markets in eastern Indiana. While delivery areas do have some overlap, Stonehenge doesn't have the flexibility that Hanson has. To counteract this, Stonehenge uses several factors to establish its delivery intervals, including mix, expected average load size, job type, delivery distance, truck availability, and customer history.

Jetmore also finds that the bigger the load, the quicker it pours out. "The bigger loads generally go to customers who are better able to process the load," he says. "The smaller loads may go to homeowners trying to do the job themselves and they aren't able to take the concrete off the truck that quickly."

M&M Concrete in Wisconsin has one plant in North Milwaukee, and two each in Madison and Fox Valley. This gives director of operations Tom Horsman a different set of challenges compared with Green at Hanson and Jetmore at Stonehenge. "We can look at our schedules and see if we need to move a truck from one market to another," says Horsman. "But because each of our markets is about 70 miles apart, it doesn't make sense to send a truck from North Milwaukee to Madison for just one load."

M&M uses its truck tracking system to give information for scheduling deliveries. The producer uses an active statusing system that interfaces with its dispatch system. From this, they are able to focus on several factors that influence their scheduling, including average delivery time by specific contractor, average pour time, and average washout time.

Perhaps most importantly, M&M shares information gleaned from this process with their salesmen. This allows the salesmen to learn which customers are more profitable, and who holds their trucks and who doesn't. "This gives the salesmen more insight on which jobs to bid and how to price them," says Horsman.

Two types of costs

While the operational statistics are all-important guidelines, Green, Jetmore, and Horsman agree that delivery costs also factor into the equation. Producers face two basic types of delivery costs--variable and fixed.

Variable delivery costs result from delivering a load of concrete; you wouldn't have to pay these costs if there wasn't a delivery. Usually the largest variable delivery cost is driver wages and fringe benefits. These are generally predictable; you know what your drivers make per hour.

Repair and maintenance is usually variable, as this cost often moves with volume levels. Producers need to consider mechanic wages and fringe benefits, inside and outside repair costs, lubricants, and similar costs related to their fleet.

Fuel costs have risen dramatically throughout the United States this year. This is a variable cost, but the unpredictability of fuel costs can make this a difficult factor to consider.

When fuel costs $1.50 per gallon, you average 6 miles to the gallon, and you have a 20-mile round trip, your fuel cost is $5.00. If gas prices increase 20% to $1.80 per gallon, your fuel cost rises is $6.00. The additional $1.00 may not seem like much, but it can take a big bite out of what may already be a tight margin on the job.

Fixed delivery costs do not vary with volume. Fleet depreciation and lease payments are usually the largest fixed costs. Included in this category are dispatch salaries and fringe benefits, fleet insurance, truck tracking, two-way radio, and miscellaneous delivery costs. Fixed delivery costs can usually be reasonably estimated and a cost--per-cubic yard can then be determined.