A well-attended PASA CONNECT virtual Roundtable recently addressed the state of the art in the waste category for procurement managers and was professionally facilitated by guest expert Mick Pearsall from Supply Clusters. Of course, all waste issues are indelibly surrounded by sustainable procurement questions as well as waste-supplier demands; ever more so since the arrival of Covid-19. For instance, how do we best dispose of used personal protective equipment (PPE) and consumables? Jonathan Dutton, who chaired the PASA Roundtable, explains what was covered for SUPPLY CLUSTERS members:
Waste is increasingly becoming a very complicated category – one you cannot BUY well until you have a clear waste strategy first. Some waste is free to dispose of, yet other waste is very expensive to remove, manage or dispose of. Some waste disposal is regulated and some not. And, some jurisdictions have different solutions to others.
Guest expert presenter for this PASA CONNECT virtual Roundtable www.pasaconnect.com was Mick Pearsall, from Sydney based spend aggregator SUPPLY CLUSTERS, who outlined the key issues in the waste category both pre and post Covid-19. Many large organisations buy waste services through Supply Clusters and Mick has been hands-on with the Waste category for many years.
THE TOP SIX ISSUES IN THE WASTE CATEGORY
Mick’s fundamental point was perhaps the most telling – that the perfect waste management company does not exist; they all have strengths and weaknesses which make it more likely than not, that most buyers will need more than a single waste management supplier to meet their wider waste needs.
Further, he identified the top 6 issues the waste category currently faces:
Primarily, Mick described waste management as a “non-transparent industry” with much going on ‘beneath the waterline’ including; rollover clauses, high surcharges & levies, price-increasing post-tender, overcharging time blocks for agreed tasks, minimum charge catches and the like. Some buyers reported Covid-19 surcharging already.
This point led to a question on the best way to structure a tender/RFP to isolate all likely charges downstream? The data structure is the primary key; structure your RFP primarily to the data streams you have to allow better measurement it was advised.
Interestingly, in this category, waste service providers often buy and sell from each other – especially geographically, as different waste providers own different landfill sites, frequently offering different recycling options. Indeed, suppliers often make money from landfill than collection services explained Mick. A case study on food waste illustrated the point. Sometimes increasing recycling increases cost. Often suppliers divert waste strategies to their different product/service offerings to maximise profit. One firm was mentioned for charging a client weekly for a fortnightly service! Another marking up state levies on waste removal, it was mentioned.
Waste contracts are often geared to site level. And therefore compliance levels can vary substantially by site and by jurisdiction. Local needs can also drive local solutions and, therefore, localised cost. This can create significant national or state contract management issues and widespread variance. This can be exacerbated by using larger vendors (tier one national providers) versus local suppliers (mum’n’pop firms) or just waste consultants or specialists waste managers calling off different suppliers – effectively a broker model. The key is to choose a solution that is fit-for-purpose for your own collective waste management needs at needs vary across multiple sites, boundaries and types of waste. The group recognised these different forms of supplier models as options.
Cost is always a key driver on waste, as few organisations make money out of their waste – it is often a dead cost, an unwanted overhead. But service levels are also key, as waste so often gets in the way of production/service. It is also a very real safety issue – even more post Covid-19. The key drivers for you are best mapped by buyers – your locations, your waste policy, your waste categories & sizes, your waste risks, your waste data availability – historical data or live data or tracking information. For example, bin optimisation embraces all the best principles of supply chain management in bin size, pick-up ratios, safety/security checks, reverse distribution chains and service-chain optimisation.
Indeed, reporting standards were criticised by buyers, which can lead to inaccurate and sometimes over-zealous invoicing warned Mick. This can be exacerbated by sub-contracting and using different recyclers and service providers. Investing in an audit process can reward diligent buyers. Weight reports can often be revealing as well.
The complexity of waste management undermines good category management and, sometimes, standard procurement approaches which can be proved sub-optimal – including simple tenders. This category demands a higher level of attention from procurement. And, especially post-Covid-19 if PPE is to be included into waste strategies. PASA Recently offered a free webinar on how to BUY PPE (personal protective equipment) – today and tomorrow.
Integrating waste management within any sustainable procurement policies is key for many procurement teams. Organisations can have different sustainable procurement priorities – whether modern slavery, indigenous support, carbon reduction, social procurement, job creation or other ideas. Waste can straddle many policies; with, increasingly, safety-first being the number one priority for many companies.
Aligning waste strategy with sustainable procurement can lead to the ‘circular economy’ philosophy – that is, considering disposal at the time of sourcing. Planning a full life cycle for whatever you are buying, and incorporating waste reduction strategies at the outset. This approach fits well with many organisations ideals and aims. Even the ZERO waste aim, embraced by a growing number of organisations.
These links between procurement strategy, waste management plans and contract management become more obvious the more you think about the waste category and offer a causal chain in developing your core waste plan:
Compliance – Policy – Needs – Data – Supplier selection & management – Service plan – Disposal & Recycling – Payment
This approach dictates how best you can go-to-market in this category, with a thought through WASTE PLAN. One thing seems certain, however, that there can be much waste in the waste category; often a wasteful category even.
Jonathan Dutton FCIPS, is an independent management consultant in procurement www.jdconsultancy.com.au and a Brand Ambassador for PASA as well as a non-exec at Supply Clusters.
PASA CONNECT members can view the recording of this online roundtable and access the notes and slides from the event at any time through the PASA CONNECT Member Resource Centre, available through the www.pasaconnect.com website once logged in.
Members can also join any of the 20 or so interactive online PASA CONNECT Roundtable discussions each month to share experiences and insights on a wide range of relevant topics.
Mick Pearsall is a Waste Management guru for SUPPLY CLUSTERS based in Sydney. Supply Clusters offer aggregating buying services across over 35 INDIRECT categories with pre-agreed off-the-shelf template agreements that utilise others’ volume and deliver high quality spend data for members – WASTE is a core specialised category offered by SUPPLY CLUSTERS.