It is not a secret in the waste and recycling industry that the most lucrative and sought after contracts are for collection services. Collection is the backbone of this industry, and over the years it has evolved to be more efficient, less labor intensive, and more automated. For many collection companies where great service is a tightly held value, allowing customers to not have to think about their waste after they have pushed it to the curb is a notch on the belt. This efficient, non-intrusive almost behind-the-scenes culture has cemented collection company’s identity as first and foremost a service provider. After all, garbage contracts are usually highly political in nature; maintaining the contracts requires excellent customer service resulting in limited calls to local elected officials from constituents unhappy about their waste removal services.
In the service industry where “the customer is always right” is the way of doing business, it can be difficult for collection companies to demand more than the bare minimum from their customers when it comes to managing household or business waste. But, we live in an era now where the waste stream is being commoditized and diverted to higher and better uses than disposal. Educating the customer on what happens after their carts are rolled out to the curb is not only helpful but essential to effectively recovering these commodities across the waste supply chain.
The customer’s lack of involvement in the waste management process has contributed to one of the main hurdles to economically recovering commodities out of the waste stream today: contamination. Although the industry is saturated with technologies meant to tackle contamination on the back end, there is no piece of equipment on the market today that is better at contamination removal as a well educated customer correctly separating their waste at the source. This action affects the entire supply chain in a drastic way.
Speaking of supply chains, there is probably no better scenario in which to recover, process and manufacture recyclable commodities than the vertical integration of waste collection systems and facilities. Vertical integration is the holy grail of manufacturing. In a scenario where the manufacturer owns both the supplier and distributor of the product, price, flow and inventory control can be automated and work like a well oiled machine in a company that knows how to execute basic supply chain principles well.
The one key difference between vertical integration in the waste management industry and vertical integration in say, a tire manufacturer is this: the tire maker’s supplier is selling rubber to the manufacturer. Then, the manufacturer makes the tire and sells it at a price higher than the cost of the rubber. In the waste management industry, in many if not most scenarios, the supplier is paying the manufacturer to process and manufacture a product that has less value than the actual cost of manufacturing the end product.
This scenario disrupts the buyer/seller flow in a typical supply chain model. In the example above, the tire manufacturer has buying power and can demand specifications to make a superior tire based on the fact that the supplier is competing for the manufacturers business. This is not the case in the waste management and recycling industry where the supplier has the buying power, and the manufacturer is in the position of shifting to meet the demand of the supplier.
This creates a system where the manufacturer is having to deal with the contamination at the point in the supply chain where it costs the most for separation. Think of it this way: What is a more efficient way of removing olives from your salad? Removing the olives one by one after you have received your salad? Or, educating the waiter of your distaste for olives thus eliminating your need to pick out the olives once your salad has arrived. It is obvious that educating the waiter at the outset avoids the time and effort of picking out the olives (not to mention decreases your chances of missing an olive and accidentally eating one. Gross.) Now, replace olives with contamination and salad with yard waste and food scraps and you have the problem compost manufacturers face every day – how to manufacture compost that is contaminated with garbage.
If recyclable product manufacturers had their way, specifications would be set on the supply of material coming into their plants to push the onus of contamination removal up the supply chain from the collector to the generator. However, the challenge is that the service providing culture that permeates the industry frequently conflicts with optimizing the supply chain for manufacturing of products.
This problem can be solved by changing the buying power dynamic between the collector and the manufacturer in the waste supply chain. The shift does not have to be financial in nature, rather a cultural shift within the system to align the expectations and goals of waste collection with the needs of manufacturers of recycled product. This can be done easily in a vertically integrated system where the culture shift can be delivered and executed by one enterprise for the benefit of the entire vertically integrated system, including the community at the top of the supply chain. This would take significant communication and integration of processes between the routes, transfer stations, and manufacturers of recycled products.
There are plenty of opportunities to optimize the waste supply chain for the goal of manufacturing recycled product and one essential way of doing that is by educating the customers about the waste’s life beyond the curb. But, the company that fully embraces the opportunity of switching the power dynamics between the collector and processor will undoubtedly see the financial benefit of seeing the system through the lens of manufacturing instead of service providing.
This is not to say that collection companies should stop delivering excellent customer service to meet the needs of their customers. Without foregoing their value of great service, waste companies and customers alike should reevaluate their expectation of what great service is. In today’s society, great service should be measured by how engaged the customer is with the service, not how quickly and quietly waste can be hauled away never to be thought about again. Perhaps with more understanding of the tremendous work that goes on after the curb, there would be more political will for rates that actually cover all the costs of recycling.