How Smarter Waste Management Protocols Cut Costs

CFOs and finance teams searching for ways to help their companies run more efficiently shouldn’t overlook a potentially significant expense sitting at their building's back door.

As landfill tipping fees and other waste-handling expenses — including dumpster rentals, hauling contracts and labor — continue to rise, the total cost of waste management can add up quickly. These waste management costs are often viewed as fixed, uncontrollable overhead, but they’re a lot more flexible and controllable than many finance teams realize.

The larger a company is, the more opportunity there is to find savings hiding in plain sight by examining waste handling costs and assessing whether they line up with current needs.

Understanding waste handling expenses

At first glance, waste handling might seem to fall into the same category as other fixed costs like rent, software licenses, security monitoring, insurance and common area maintenance fees. Depending on the business and industry, waste expenses are often found as a line item in a business’s selling, general and administrative (SG&A) costs, typically under facilities or store operations.

Unlike those expenses, though, the waste capacity needs of businesses naturally vary. During the opening of a new store or an expansion, a higher amount of waste is produced than during periods of regular operations. Similarly, during the holiday season, many businesses receive, sell and handle more products, generating a higher amount of packaging, cardboard and other waste.

Waste vendors typically charge a fixed base fee for a dumpster and minimum number of pickups, but a customer’s monthly bill might be higher based on specific needs, such as increased dumpster capacity or additional pickups.

These are some of the common components of a waste management bill:

Equipment size. There are a variety of equipment sizes and types (open top versus closed top, for instance). A larger dumpster might be needed to hold a store’s increased waste at certain times of the year or during extended periods, such as a remodel. But during regular operations, that extra space might result in an unnecessary extra expense such as having a 40-yard dumpster when you really only need a 20-yard.

Pickup frequency. Along with dumpster size, waste vendors charge by pickup frequency, whether they’re picking up waste from a full dumpster or a half-filled one. Businesses should be examining how full their dumpsters are at the time of pickups and consider reducing the frequency of pickups as a cost savings measure.

Waste type. Understanding the type of waste generated by stores can be an important factor in determining waste handling needs. If the waste is a light material that takes up space, using a compactor to crush it could reduce the amount of space it takes up. With food waste and chemicals, there are also different protocols needed to eliminate contamination.

Accessorial fees. Waste handling rates often include a variety of built-in fees added to the base charge, such as a hauling fee, a fuel surcharge fee, an environmental fee and a heavy equipment fee. Businesses are sometimes surprised to learn about all of these extra fees, but the good news is that they’re often open to negotiation. When talking with a vendor, make sure they’re quoting the fully loaded cost that includes these fees.

Where to start

The most well-run mid-tier and large organizations have a specialized utility function within their facilities, engineering or store operations group. That team or individual is best positioned to take the lead on any waste cost-management efforts.

If your business is looking to cut its waste bill within the next 90 days, your Day 1 step should be to capture and begin analyzing usage information, which is tracked by waste vendors’ online portals.

Using the portal, determine fill rates and frequency of pickups and determine whether those match the actual waste being created. If you have multiple stores, check for outliers or hotspots.

By Day 30, after determining where your hotspots are, try to establish why they exist — do they inherently have a larger amount of waste? Is the structure of their waste-handling somehow different from other stores? Learn the nuances.

By Day 60, ideally begin adjusting equipment type and pickup schedule to a level that suits you. Set up quarterly meetings with a waste vendor to keep tabs on the utilization of your equipment. By Day 90, with these changes in place, you should start realizing the value.

How waste costs add up

For a single store, the reduction in costs from making these adjustments might seem small. But for larger companies with hundreds or thousands of stores and a lot of spend, the savings from improved waste management can easily reach into the millions. Companies that set up long-term contracts and don’t actively manage their waste expenses may be surprised to learn how much money they’re spending unnecessarily.

While the level of savings will vary across companies, it’s never a bad idea to understand your company’s waste plan and make sure it’s aligned with your actual needs.