Latest / The Operations Podcast with Fexingo: Process, People, and Profit in Modern Business / How a Concrete Supplier Cut Logistics Costs by 20 Percent
Transcript
- Lucas: Let me start with a number that stopped me when I first read it: concrete — the stuff sidewalks and foundations are made of — is the second-most-consumed substance on Earth after water. Luna: Second only to water. That's wild when you think about it. Lucas: And it's also one of the hardest products to move efficiently. Concrete has a shelf life of roughly 90 minutes from the moment water hits the mix. After that, it starts setting. So you can't just warehouse it and ship later. Luna: Which means logistics is the entire game. You're not just delivering a product — you're racing a chemical reaction. Lucas: Exactly. That's why when I came across a case study on a mid-sized concrete supplier in the US Midwest — we'll call them Midwest Mix — I wanted to dig into how they cut their logistics costs by 20 percent over twelve months. That's a real number. They went from spending about 16 million a year on distribution to just under 13 million. Luna: That's a 3-point-2 million dollar saving. For a company that probably does, what, 50 or 60 million in revenue? Lucas: About 55 million at the time. So 3.2 million straight to the bottom line. The really interesting thing is that they didn't invent new technology. They just got much better at using what they already had. Luna: Okay, I'm curious. Where did they start? Lucas: Dispatch. Previously they used a first-come-first-served approach — trucks would go to whatever job called first, regardless of location or urgency. So a driver might deliver to a site 30 miles away, then deadhead back past three other job sites that called ten minutes later. Luna: That sounds incredibly inefficient. How did they think that was working? Lucas: Honestly, it was the industry norm. Concrete is a local business — almost every supplier operates within a 30-mile radius. So they assumed efficiency was baked in just by virtue of short hauls. But when they actually looked at the data from their telematics systems — which they'd installed for insurance discounts, not route planning — they found their trucks were empty 45 percent of the miles driven. Luna: So almost half their miles were wasted. That's the kind of number that gets a CEO's attention. Lucas: Right. The first fix was simple: switch from first-come-first-served to time-window scheduling. They gave each customer a one-hour delivery window and grouped orders by geography. So a truck heading to the north side of town would handle all north-side orders in that run, even if a south-side customer had called earlier. Luna: I can imagine some customers pushing back. 'I called first — my job is waiting.' Lucas: And they did. But the company made a trade: they offered a modest discount — 2 percent off the order price — for customers who accepted the time window. Within three months, about 80 percent of customers opted in. The savings on fuel and labor more than covered the discount. Luna: It's like surge pricing in reverse. You're paying customers to shift their demand to match your capacity. Lucas: Exactly. In operations terms, that's demand smoothing. And it's the same principle airlines use with early-bird fares or utilities use with time of use electricity pricing. The second piece was driver behavior. The telematics data showed that some drivers were idling their trucks for up to 45 minutes per shift between loads. Luna: In a concrete mixer truck, the drum has to keep turning to prevent the mix from setting. But the truck engine doesn't need to run just to spin the drum — most modern mixers have a separate hydraulic system for that. Lucas: Right, but the drivers were used to keeping the engine on because that's how they'd always done it. The company installed simple dashboard indicators that showed real-time fuel consumption per driver. Then they gamified it — posted weekly fuel-efficiency rankings across the three depots. Luna: And I'm guessing the competitive nature of drivers kicked in. Lucas: Big time. The top quartile of drivers reduced idle time by 70 percent over six months. Combined with the route changes, the company cut total miles driven by 12 percent and fuel consumption by 18 percent. That alone was about 1.1 million of the 3.2 million savings. Luna: The other 2.1 million — where did that come from? Lucas: Overtime reduction. When you're running a first-come-first-served dispatch, you often have drivers sitting idle in the middle of the day, then scrambling to finish orders in the late afternoon. That means overtime. By smoothing demand and grouping runs, they cut overtime pay by almost 60 percent. Luna: So the drivers actually worked fewer late hours, which probably improved retention too. Lucas: That's exactly what happened. Turnover among drivers dropped from about 40 percent annually to 22 percent over the next year. And if you've ever tried to recruit a qualified concrete mixer driver — it's not easy. Each new hire costs several thousand dollars in training and certification. Luna: So you've got a compounding effect: better scheduling reduces overtime, which reduces turnover, which reduces hiring costs, which further lowers overall logistics spend. Lucas: If today was actually useful to you — and I think understanding how a traditional industry found 20 percent savings just by rethinking dispatch and driver habits is genuinely valuable — the way this show stays ad-free is through listener support. You can find us at buy me a coffee dot com slash fexingo. It's a simple way to keep these conversations going without any sponsor breaks. Luna: Yeah, and it really does make a difference. Every bit of support helps us keep digging into stories like this one. Lucas: Now, the third piece of the puzzle — which I think is the most interesting — is that they changed how they managed returned concrete. When a job uses less than the full truckload, that leftover mix has to go somewhere. Traditionally, it gets dumped at the plant, hardened, and hauled to a landfill. Luna: Which is both costly and environmentally wasteful. Lucas: Exactly. Midwest Mix started offering a 'short-load' discount — customers who ordered within 10 percent of their actual needs got a 3 percent rebate. They also used leftover mix to create precast blocks and barriers, which they sold to construction sites and municipalities. That recovered about 60 percent of what had previously been waste. Luna: So they turned a cost center — waste disposal — into a revenue stream. And it probably improved customer relationships because people hate being charged for concrete they don't use. Lucas: That's the thing about operations thinking: once you start looking at one part of the system, you find inefficiencies in adjacent areas that you hadn't noticed before. The waste reduction added about 400 thousand dollars in savings and new revenue, pushing the total logistics savings to 3.6 million by the end of the second year. Luna: It's almost like the first 20 percent was just the beginning. Lucas: Right. And the key takeaway for me is that none of these changes required a huge technology investment. They already had telematics. They already had GPS. They already had the ability to create time windows and track driver behavior. The missing piece was just the willingness to challenge the default way of doing things. Luna: I think that's the real story here. It's not about the concrete industry specifically. It's about the fact that many companies in traditional sectors are sitting on data they're not using. The tools are already installed — they just need someone to ask the right questions. Lucas: And that's a good note to end on. For The Operations Podcast, I'm Lucas. Luna: And I'm Luna. See you next time.