Aggregates Manager Digital Magazine
Issue link: http://read.dmtmag.com/i/878969
16 AGGREGATES MANAGER / September 2017 Maintain consistent communication P lanning for production at Chicago-area Ozinga Mate- rials & Logistics (OM&L) can be likened to examining legs of a stool. "We look at residential, what is public, what the state and Illinois Department of Transportation (IDOT) are doing, and what commercial is doing," explains Ed Van Poucke, chief operating offi cer for OM&L, noting that they also talk to their customers to get their perspective. All this information translates into what each operation is going to produce. The market outlet and these "legs of the stool" are key, Van Poucke says, to how his team makes material production projections and how they begin the planning process. The forecasting process for the next year is typically started in October. In addition to using historical data, Oz- inga developed its own tool that shows the past 12 months activity by location and by product. "We can adjust from there, including broader 'global' adjustments of volume and/ or ASP (Average Selling Price) adjustment factors specifi cally developed for forecasting," says Steve King, executive vice president of sales and business development for OM&L To coordinate sales and production, each salesperson works with the customers in his region/geographic loca- tion. "Strategic customers, especially if they are fi xed plant operations — which includes concrete, asphalt, and pre-cast customers — will have their own forecast put together," King says. "They may tell us that it's softer in some parts of the market and stronger in others. We take all this into account to get a real feel for industry geography." Once all the numbers are in, they are compiled and ana- lyzed, often through several iterations, to arrive at an accurate forecast, King says. "Once we get what we believe is a reasonable forecast, we can then apply market logic," he ex- plains. "We can see which parts of the business or materials will increase or decrease and what the pricing trends will be. We can apply a global increase or decrease and then come up with a reasonable expectation of what may happen." Joel Galassini, regional president – Texas Region, says Cemex breaks products into two different categories. The fi rst includes those purchased on a regular basis, including aggregates for concrete and asphalt producers. "General- ly, the demand for these products can be predicted using statistical and seasonal trends," Galassini says. The second group, including most base materials and materials for spe- cial one-time projects, needs to be forecast separately. "It is useful to develop a true backlog for these projects and keep track of what has shipped," Galassini says. "It is always surprising to see how many of these special projects either overship or undership the original amount. It always seems that contractors are in the hurry up and wait mode, which creates a lot of inventory headaches for the aggre- gate producer." With large projects, communication is particularly import- ant. "The aggregate producer needs to understand where the contractor is in the schedule and if any signifi cant changes have occurred," Galassini says. "Don't stop commu- nicating when the purchase order has been signed." Communication and Relationships Impact Forecast Accuracy Ensure everyone involved in the production process is involved in the material forecasting process. This means talking to customers regularly to get a feel for how the various segments of the market have been and what they expect. Review any data points key customers provide, and analyze historical data as well. Be sure to regularly communicate with sales personnel, equipment operators, and trucking companies hauling aggregate from your operation for input. 1