A guide to indirect spend #5: Waste management
Every Other Day Diet 0″ height=”100″ />We are approaching the end of this series looking at the top indirect spend categories but there are still two key areas to focus on. This week we’re turning our attention to a category that has grown more than most both in importance and complexity within the sourcing specialist’s portfolio, waste management.
Organisations are under constant pressure to minimise the environmental impact of their operations. For some – such as large retailers, manufacturers and other consumers of energy – this can mean taking some obvious steps in the reduction of energy use and emissions. But waste is an issue for all businesses and its mismanagement can cost both corporate purse and brand dearly.
Through pressure to reduce environmental impact waste management has become much more than getting rid of your rubbish cost effectively and its growing complexity is reflected in the accuracy of approach required in sourcing the right company to handle it.
With the price of managing waste a significant one for organisations, obtaining a cost effective service is critical but only the tip of the iceberg. A high level of variance between the services of providers, added to a skip full of regulations that companies must avoid infringing, means that cost needs to be balanced against high and clear specifications.
Supplier key performance indicators (KPIs) should aim to reflect the various objectives associated with waste management. In terms of cost efficiency there should be clear and well-planned targets. An initial period of cost reduction followed by maintenance of that reduced level throughout the contract, with incentives for further reductions, works very well. Other performance targets should reflect recycling policies as well as industry and national regulations. It’s your waste management partner’s role to work with you in meeting these, such as a specific reduction in landfill volumes.
As this is an outsourced contract area, clear definition of key performance indicators, reporting and management information requirements should also be well specified with clear penalty and possible reward clauses included too. Consideration should also be given to the synergy of potential suppliers and your own organisation. Which is the best fit for you in terms of culture, attitude and brand values? They may be responsible for helping educate your staff on environmental practices so there needs to be a good fit.
Waste management as a sourcing category is growing in importance more quickly than the average landfill and sourcing experts should seek to uncover its opportunities. How much effort have you focused on waste and is this a rising cost that you need to address?
☛ Temeena Hussain is a sourcing consultant at Wax Digital. Next week: Recruitment and temporary staffing
![[Bloglines]](http://blog.supplymanagement.com/wp-content/plugins/bookmarkify/bloglines.png)
![[del.icio.us]](http://blog.supplymanagement.com/wp-content/plugins/bookmarkify/delicious.png)
![[Digg]](http://blog.supplymanagement.com/wp-content/plugins/bookmarkify/digg.png)
![[Facebook]](http://blog.supplymanagement.com/wp-content/plugins/bookmarkify/facebook.png)
![[Google]](http://blog.supplymanagement.com/wp-content/plugins/bookmarkify/google.png)
![[LinkedIn]](http://blog.supplymanagement.com/wp-content/plugins/bookmarkify/linkedin.png)
![[Twitter]](http://blog.supplymanagement.com/wp-content/plugins/bookmarkify/twitter.png)
Thanks for these indirects guides, they’ve been good so far. I’m an IT category specialist but working in a generalist indirect role, so I’ve found the breadth of these to be useful.
On waste management, I just came a cross a ten year old contract, still in play in my business, no SLA, and the vaguest exit provisions in the world – which the supplier is now positioning as a commitment throigh to about 2015. A sharp play on supplier’s part, which they clearly try with all their clients who were silly enough to sign the supplier’s terms. Can be costly, so if any readers have compactors, you might want to get your facilities team to show you the contract before you end up in the same ridiculous negotiation that I’m in the middle of!
Hi Graham,
Great to hear that you’ve found this blog series of interest and use!
You’re correct to say that SLA’s should be clearly defined prior to signing a contract and they should also be well-aligned with the supplier KPI’s. Organisations should be mindful of the contract period terms, 10 years is far too long as typically the contract should be re-visited within 3 years. In addition always take legal advice before accepting suppliers terms.
My last guest blog post this week covers recruitment and temporary staff, feel free to post any queries or comments, or get in touch directly.
Temeena
Even I would like to first appreciate you to have a series of nice information.
Here, I agree with you that earlier waste management was not an issue of much concern .However, with the growing time. This has been perceived as and is truly a matter that is needed to be properly taken care of.And the businesses and other has very well realised this need.