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09 August 2018

Quoting for aggregates transport – are you subsidising your customer?

First publishedon www.AggBusiness.com
If you want your aggregates business to survive, you are going to have to find out how to get the right goods to the right place at the right time ... and all at the right cost. If you don't, and your transport and logistics strategy is wrong, you are going to be put out of business.


Quoting for logistics, the transporting of goods to customers, in the aggregates industry, has been found to be highly inaccurate, omitting to account for things like road tolls, bridge weight limits, traffic congestion or wait times at the quarry. This is effectively subsidising - to a surprisingly large extent - either the customer or the logistics provider, or both, severely impacting your own bottom line and company value.

Using Economic Value Add (EVA), a metric which forces you to allocate all costs as accurately as possible, is especially relevant to the quoting of logistics costs. The three key parts of EVA – sales, operating costs and capital - can be used as a framework to identify the key drivers of value.

Of course, there are many more things that need to change when it comes to logistics in the aggregates industry; we need to start charging for wait times and deliveries in peak hours as well as using ‘track and trace’ systems like the Cemex GO system.

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