Waste Vendor Management should be part of your proactive procurement efforts to help drive spend to preferred vendors, control costs, and reduce risk. Let’s start by defining waste vendor management. Cass identifies six components in vendor management:
- Sourcing vendors
- Risk assessment
- Negotiating contracts (rates, terms and conditions)
- Managing relationships (includes support, assessment and audit)
- Resolving disputes
- Timely and accurate payments
As your company grows, there is a strong case for centralizing and standardizing the vendor management process. Waste might not be top of mind in many procurement teams, but if you have multiple sites, the complexity of managing multiple vendors across many locations, combined with rising waste costs and increasing pressures in compliance reporting, creates a perfect storm of opportunity.
Benefits of Waste Vendor Management
Consolidating and formalizing vendor management around your waste and recycling environment can deliver many benefits. In particular, if your industry is rapidly changing, whether consolidating, or expanding through either rapid growth or merger and acquisitions, your vendor ecosystem can be highly complex since most waste is handled at a regional level. On top of that, if you are in an industry that’s regulated, you are dependent on critical specializations in service such as the ability to handle hazardous materials. Even if you have a national waste hauler agreement, your company can benefit from formalized waste vendor management.
Why hiring a broker is not the same as vendor management
If you have a broker, their approach only cover two of the six components for managing vendors – picking vendors and negotiating contracts. Brokers have one objective and that is getting the lowest price for themselves. Four of the six essential components are not provided by brokers. And if your industry is undergoing rapid change or M&A, haulers face additional challenge of maintaining a consistent payment flow as assets change hands. Developing a relationship with quality waste providers is not among their goals and this can put haulers at a disadvantage. This can put your company at risk if payments are not made on time or other areas that are critical in properly managing your waste or contributing to your sustainability goal. In addition, haulers are not working with brokers on a strategic level like Cass is – The Cass model creates a symbiotic, value added relationship between all parties that ensures optimal service levels and competitive market rates.
Vendor management is a form of risk management
The lowest cost service isn’t always best for your company. Businesses need to look at ways to extract more value from suppliers that include managing risk and upholding quality service. In waste, risk can come in many forms. Here are just a few examples:
- Risk to your brand reputation
- Being out of compliance for local regulations
- Penalties or fines related to improper discarding of hazardous waste
- Cyber risks to the privacy or security of your patients / customers
- Late payments resulting in termination of services
- Health code violations
Today’s changing waste and recycling environments combined with landfill shortages mean additional fees and rising costs. Centralized vendor management is a key to providing spend visibility and controlling costs over the short and long term. Even if you negotiated good rates, pressure from all sides are resulting in new fees showing up on waste bills. Cass has seen new recycling fees being added to base rates that range anywhere from 10% to 40%. It depends on the hauler and the market.
In particular companies, are experiencing fees stemming from pressures to manage contamination. Cass is seeing dramatic increases in contamination fees with a 400% spike in contamination fees in the past few months alone. For contamination fees, we’ve seen charges range from $150-$250 per contamination incidents per container. This is a big waste expense driver for the foreseeable future. Another concern is the ability to negotiate new contracts as terms are about to expire. Vendor management allows your company to get control of and manage contract lifecycles. We are seeing rates rise in the double digits at when contracts are expiring. Waste expenses have seen much volatility in the current environment and Cass predicts that waste costs will rise 47% over next 5 years. This scenario can mean taking a hard look at your overall waste ecosystem and gathering that insight now in order to be in a better position when that time comes.
Vendor Management is mutually beneficial to both parties
Managing vendors effectively is a two-way street. It’s not just about getting a good vendor and quality service. It also gives vendors the opportunity work with educated buyers and customers. Are your locations all optimized? Do you know the right amount of service and equipment across all of your locations? Are service requests being made ad hoc at the regional level or do you have a consolidated vendor team who handles all requests after validating and prioritizing them? A centralized customer support team helps eliminate unnecessary, redundant, and “nuisance” requests saves time and money as well as creating stronger vendor rapport. Centralized vendor management will give you better insight to establish baselines and goals across all of your sites so you are better prepared to have a productive relationship with your vendors.
Build an effective vendor management strategy for managing your waste vendors and gain the insights to control risk and costs in your waste environment.
Cass Waste Expense Management has the time, talent and technology to manage your waste vendors.
- Cass is a strategic business partner to our clients
- Our dedicated customer support staff has extensive industry experience
- We managed $50 billion of our customers’ expenses in 2018
- We process over 245,000 invoices each day
- We manage over 110,000 units of equipment last year
- We maintain and provide extensive waste data and analytics each market
In short, our job is to provide you with a closed-loop, procure-to-pay waste expense solution so you don’t have to focus on it.