Businesses need to get the best possible pricing and contract terms for utilities such as water, power and rubbish collection.

But once costs are minimised, improved utilisation becomes critical to extracting greater value. A formal, independent audit process is the best way of identifying quick wins.

Why perform an audit now?

In the past two years the waste services marketplace has experienced aggressive price-cutting by major suppliers. Now they are differentiating themselves with srvice offerings, and their customers need to understand how.
In recent months two vertically integrated suppliers have signalled their intention to emphasise value-added recycling and waste minimisation processes over price-cutting, going forward. Other suppliers of waste services that don’t possess their own landfills are using waste audit services as a point of difference, to avoid getting dragged into a price-cutting battle they will struggle to win.

The most efficient money-savers

Business customers will save more money by sending less waste to the rubbish dump (landfill) than they will from a reduction in the price of waste services.

From a supplier’s standpoint, waste audits are costly, requiring staff time and data analysis, with capital outlays often the consequence of the resulting recommendations. Waste audits are also self-defeating for those in the business of collecting and burying rubbish.

As we have been working with businesses to reduce their waste quantities and bin movements, as well as negotiate new commercial contracts on their behalf, we have observed the following potential pitfalls:

Staff training: New waste-handling process may require either specialised staff training or socialising of new ideas. This entails additional cost, and the purported benefits may be predicated on unrealistic assumptions.

Staff buy-in: Change needs to be adopted from the top down, however, if staff aren’t on board with a new process, you could be charged for specialist one-off disposal of spoiled recyclables should waste not be accurately sorted. It is thus important to ascertain the time pressures on your staff before a new initiative is accepted.

Hospitality customers are a happy hunting ground for waste diversion suggestions given that their raw materials often come in recyclable packaging, and food waste streams result. However, this industry is fundamentally deadline-focussed, and staff are less likely to worry about what goes in a particular bin when there are orders backing up. A suggestion to save money on waste may thus end up costing you more in staff time.

Spread the message and keep it current: Ensure you spread the waste diversion message beyond a small number of staff. This has cropped up in the education sector where a particular year/age group might push hard for an improved process, but the next year is more apathetic. A few years later a similar set of failed initiatives will be suggested by an enthusiastic set of newcomers, unaware of what was previously attempted.

Audit waste expenditure

Challenge current processes and the underpinning assumptions with an audit review process. The terms and conditions of certain supply agreements prohibit your engaging competing waste service suppliers for such reviews. This serves the interests of your incumbent supplier, whilst limiting the breadth of ideas and potential technologies available.

The Commerce Commission moved in 2015 to limit unfair contract terms, which cause an imbalance in parties’ rights in consumer contracts. Although the intention is to focus on the non-commercial sector, energy retailers have begun rolling out more end-user friendly terms to business customers.

It is our hope that the relevant waste industry participants will adopt a similar position to allow for a greater spread of waste minimisation ideas.

Waste diversion reduces cost

Other than the obvious desire to limit landfill refuse, to extend the life of these expensive assets and minimise resource wastage, there are currently obvious financial pay offs in diverting waste. These are likely to grow in future, either with a change of Government, or with a change in Government focus.

A waste levy of $10 per tonne is already in place to help reduce the amount of waste New Zealanders generate, but the levy is set at a level 10 times below that of some of New Zealand’s regular trading partners. In addition, the Emissions Trading Scheme covers methane emitted from landfills, but only for every second tonne at present.

Energy-savings initiatives by business are hampered by relatively low energy-pricing, and the same sort of thinking will undoubtedly apply with regard to waste services. However, given the current level of these charges vis-à-vis our international trading partners, we recommend business remediates as much as possible now rather than face higher costs in the future.

With the components of your waste services charges unlikely to fall any lower, diverting waste from landfill such as with increased recycling, is the best way to unlock additional savings and insulate your business from potential cost blowouts in future.

Jonathan Gardiner is a Director of Total Utilities.