Report reveals how to trim the #1 most often overlooked expense category

First reported 5/11/2006
Report reveals how to trim the #1 most often overlooked expense category

In today’s market, waste disposal costs should be triggering some alarm bells. Companies like Waste Management Inc., and Allied Waste Systems, the two largest companies in the waste industry are focusing on return on capital, a big part of which is coming from price increases. What’s more, all businesses have seen a significant run up in their costs of doing business over the past three years due to the rise in materials, transportation and fuel costs.

Fuel in particular is a pass through cost that adds anywhere from seven to eleven percent on top of the standard service fees that hauler’s collect. Virtually all waste vendors’ contracts have a clause that allows them to pass through their diesel costs. “If you’re obliged to buy them their diesel, then it’s just smart business to see that you get the service you need, at a fair rate, in the fewest amount of trips possible,” says Tim Johnson, President of cost containment firm Midas Management Consulting LLC.

While every business generates waste and recyclable materials, Johnson says most firms have not yet awakened to the cost containment opportunities available in their waste, recycling and by-product disposal programs.

This disturbing trend is the rationale that led Johnson, to publish the just-released report, “5 Warning Signs of ‘The Sucker Punch’, How to make sure your solid waste management program isn’t hitting you where it hurts!”

“It’s a classic vicious circle that has most firms unintentionally limiting their profits,” says Johnson. “Senior executives and small business owners view waste as an afterthought because it’s a comparatively small expense – they see it as an inescapable cost of doing business. Meanwhile, line management doesn’t pay waste much attention because it’s not on senior management’s priority list. Consequently, this low hanging fruit is ignored.”

The report is designed to help executives establish, improve, and benchmark waste and recycling cost containment initiatives. It contains an original analysis designed to help executives understand:

* Why relying on haulers for industry expertise is often expensive.
* The myth of “national purchasing leverage” in the waste industry.
* Benefits of maximizing recycling opportunities.
* Three basic options available to executives the benefits and risks associated with working internally, hiring a broker or hiring a consultant and who chooses which model.
* Four case studies from different sectors.

It’s clear from the report that those firms that move to create or improve their initiatives now can look forward to hefty returns on their investment. For firms that fail to address these expenses, their costs will continue to spiral, unnecessarily limiting their profits.