BY NUNO DOS SANTOS
Organisations are facing increasing pressure on their sustainability and savings targets, and currently looking to identify a readily achievable procurement strategy for their waste management category.
Here, we outline 5 key strategies which you can use to elaborate a procurement strategy and in view to achieve a double-digit order reduction in the waste management category spend:
1. BREAK DOWN COSTS
Some waste management companies charge a bundled fee for their services, allowing them to hide costs and rebates. These bundled fees can make it difficult to understand which waste collection activities are driving the costs and can be almost impossible to benchmark. By breaking down the different cost components and making them clearly identifiable on invoices and reports, your business will gain the transparency needed to benchmark the rates applied vs “best in the market”, “should cost” rates or across units. Where appropriate, having visibility into the typical waste fees below will enable you to better understand where the opportunities are. Examples:
- Equipment: rent, bought, etc: by type/time period
- Pick up/Collection costs: by pick up/volumes/weight/type/frequency
- Disposal costs: by volumes/weight/type
- Levy charges, Landfill Tax, Gate fees, etc: by location/volumes/weight; often a proportion is included in the disposal costs – the least probable to breakdown
- Rebates: by type/weight
2. KNOW YOUR WASTE
Waste management services are a volume and location driven category, therefore the knowledge of your business’s waste (by type, volumes/weight, location) is critical to optimise the service and right-size your equipment. In fact, a higher collection frequency will result in bins being picked up half-empty and higher than necessary costs. One too low will result in waste overflow and negative Environmental, Health & Safety implications. Furthermore, this could lead into an opportunity to negotiate volume discounts or rebates of specific materials (type and quantity). Therefore, it would be of relevance to ensure that your waste management provider is sophisticated enough to create detailed periodic data reports, for example by using “in-cabin management systems” and digital documentation. If these are not available from the provider, be prepared to periodically spend some time on-site and manually monitor and document the required information, or alternatively conduct a waste audit (in house or sub-contract a company to do so).
3. CHOOSE YOUR SUPPLIERS – LOCAL VS NATIONAL? OR A WASTE BROKER?
Similarly, to other industries in the United Kingdom, the market of waste management services consists of a handful of tier 1 and 2 national or local government players and a very large number of small local providers. The choice of a local versus national supplier should take into consideration a number of factors, such as:
- Lower overheads versus lower economies of scale•
- Ability to generate accurate, timely, standardised reports
- Ability to comply with complex regulations and certifications
- Account management complexity
- Investments on equipment and technology
- To be fully registered with the relevant Environmental Agency A waste broker could also be of relevance to be mentioned. A waste broker delivers waste management services and help clients looking for an efficient service. A competent waste broker will organise for collection, recycling, recovery or delivery of waste between all parties and may even buy or sell materials themselves. They offer: reporting, single invoicing and a dedicated relationship manager.
4. MATCH THE EQUIPMENT TO YOUR NEEDS
The choice of “fit for purpose” equipment greatly influences the service level required to meet your needs and as a consequence the total final cost paid; without control, may end up paying too much for a sub-optimal service or having equipment sitting underutilised in the yard. Too many bins/skips? Not enough? Could you use one large skip instead of many smaller ones? For example, smaller bins will require more frequent pick-ups while larger bins will incur a more expensive rent; or the use of a waste compactor may drastically reduce the number of pick-ups, justifying its higher rental cost. Therefore, it is highly recommended to understand your waste management needs and request active support from the potential supplier in order to identify the required equipment and service levels and adjust accordingly.
5. RECYCLING AND HUMAN BEHAVIOUR
The United Kingdom is increasing their disposal levies and taxes to encourage the practices of reducing, reusing, recycling and composting, by penalising landfill disposal. Therefore, the more your business is able to recycle, the higher the savings opportunities through:
- Avoiding paying landfill taxes (bundled in the waste collection and other levies (e.g. packaging taxes)
- Obtaining rebates for recyclable ‘waste’ or better said ‘resources’: plastics, wood, metal and cardboard (provided that these materials are sorted and baled appropriately, usually mill size bale: typically 1200mm x 800mm x 1100mm and fit on a standard EUR pallet.
Furthermore, recycling will help reduce the carbon footprint while improving its sustainability, with benefits for the environment and an overall improved brand perception. However, to get these rebates it is critical that firstly the recyclables are properly sorted in dedicated bins/containers to avoid mixing them with the general waste headed to the landfill. This will require time, space and man-hours, which needs to be balanced. Albeit the rebate will depend on the quantity, rate and bale size of the material in question, the waste management provider should be able to transparently promote and enable this service when possible and furthermore to promote behavioural change, via for instance coaching sessions.
Waste management services are a frequently overlooked category, where both low transparency of fees and lack of understanding of the waste generated, drive sub-optimal practices resulting in higher costs and environmental impact. Considerable savings are achievable when some of the key strategies outlined above are implemented, as it will contribute to reduce operational costs, improve recycling behaviour and consequently carbon footprint reduction.