INFORM shares how it is helping concrete producers deal with complex logistical challenges in their daily operations and achieve greater efficiency.
In the world of ready-mix concrete production, aggregates sourcing is both the lifeblood and one of the most complex logistical challenges producers face. Whether they are part of an integrated company, rely on third-party quarries, or have a mix of both in place, the sourcing process must balance cost efficiency, supply security, and service levels.
INFORM has been pioneering an approach that combines advanced software with expert consulting to transform aggregates sourcing strategies. As one recent simulation study shows, this methodology can translate into millions of dollars in savings.
The Complex Equation of Aggregates Sourcing
Aggregates sourcing is far from a simple “buy and deliver” process. In practice, many ready-mix producers operate a mixed model:
- Supply: They are either part of an integrated company with their own quarries, rely entirely on third-party suppliers, or operate a mix of both.
- Transport: Aggregates are typically moved using a combination of in-house fleets, contracted haulers, and spot market providers.
To create an optimal sourcing strategy, producers must consider not only product costs but also transportation costs, which can be a substantial portion of the total. The balance point lies in meeting demand at batching plants without compromising service levels.
However, the reality is even more complex. Additional constraints come into play, e.g. reliability of quarry operators, responsiveness to urgent jobs, security of supply, capacity limits at depots and plants, contractual obligations, preferred hauler lists, etc. When all these factors interact, finding the optimal sourcing mix becomes a challenge that requires both granular data and sophisticated analysis.
Applying Simulation to Solve the Puzzle
This is where the simulation-driven consulting from INFORM steps in. One recent project for a large ready-mix producer illustrates the power of this approach.
- Step 1: Data Collection: The process began with gathering and validating a comprehensive dataset, including geographical data for all plants, depots, and quarries, detailed annual shipment records from each quarry to plants and depots, cost breakdowns for products and transport, contract profitability data, preferred haulier lists and capacity constraints.
- Step 2: Modelling the Network: This data was fed into INFORM’s proprietary simulation software, building a virtual replica of the producer’s sourcing network. This included 25 quarries (a mix of owned and third-party), supplying 2.8 million tons of aggregates annually to 42 batching plants.
- Step 3: Running Scenarios: The model accounted for four types of aggregates (two sizes each of sand and gravel) and evaluated different sourcing and transport combinations, always respecting operational constraints.
The Results: Tangible Cost Reductions
Before the simulation, the producer’s annual sourcing costs were $61 million, translating to $21 per tonne. The optimised sourcing plan recommended by the simulation cut those figures to $57.8 million, or $20 per tonne. That’s an immediate saving of $3.2 million — a reduction of just over 5 per cent.
While some savings could not be implemented instantly due to long-term contracts with quarries and haulers, the exercise provided a clear roadmap for progressive cost reduction. By repeating the simulation at regular intervals, the producer can adapt to market changes, renegotiate contracts, and continually capture efficiency gains.
And the example just focused on a specific region of the producer’s operational area. On a country or continent-wide scale, potential savings can easily pile up to a lower double-digit Euro figure.
A Strategic Edge in a Competitive Market
In a sector where margins are tight and transport costs are volatile, even small percentage savings translate into significant financial gains. The results of this simulation project demonstrate that an optimised aggregates sourcing strategy can provide a powerful competitive advantage, delivering cost savings, operational resilience, and supply chain security.
The Takeaway: Data-Driven Decisions Deliver Lasting Value
Aggregates sourcing requires more than negotiating prices. It demands a strategic, data-driven approach that addresses every link in the supply chain. The blend of simulation technology and consulting expertise from INFORM offers producers a clear path to measurable savings and stronger operational performance.
