mixed with water and sand. People interact with concrete
every day. It is often the building material of choice for sidewalks, curbs, basements, bridges, and municipal pipes. Cement is manufactured at billiondollar continuous-process plants by mining limestone, crushing it, scorching it in a kiln, and then milling it again. About 24 companies (CEMEX, Holcim, and Lafarge are some of the biggest) manufacture cement at 90 U.S. plants with the capacity to produce 110 million tons per year. Plants serve tens of markets distributed across multiple states. Companies regularly benchmark delivered costs to understand whether their plants are cost leaders or laggards. Delivered-cost benchmarking studies typically subdivide manufacturing and logistics costs into five parts: fixed-bin, variable-bin, freight-to-terminal, terminal operating, and freight-to-customer costs. These cost components are estimated using different sources. Fixed- and variable-bin costs represent the cost of making a ton of cement and moving it to the plants storage silos. They are the hardest to estimate. Fortunately, the cement industry association PCA publishes key data for every plant that features plant location, age, capacity, technology, and fuel. Companies combine the industry data, satellite imagery revealing quarry characteristics, and news reports with the companys proprietary plant-level financial data to develop their estimates of competitors costs. The basic assumption is that plants of similar size utilizing similar technologies and raw- material inputs will have similar cost performance. Logistics costs (including freight-to-terminal, terminal operating, and freight-to-customer costs) are much easier to accurately estimate. Cement companies use common carriers to move their product by barge, train, and truck transit modes. Freight pricing is competitive on a per-mile basis by mode, meaning that the companys per-ton-mile barge cost applies to the competition. By combining the per-ton-mile cost with origindestination distances, freight costs are easily calculated. Terminal operating costs, the costs of operating barge or rail terminals that store cement and transfer it to trucks for local delivery, represent the smallest fraction of total supply chain cost and typically vary little within mode type. For example, most barge terminals cost $10 per ton to run, whereas rail terminals are less expensive and cost $5 per ton. By combining all five estimated cost elements, the company benchmarks its estimated relative cost position by market. Using this data, strategists can identify which of the companys plants are most exposed to volume fluctuations, which are in greatest need of investment or closure, which markets the company should enter or exit, and which competitors are th