BUSINESS DEVELOPMENT

When major companies apply big data insights to their waste diversion efforts, they open the door to sustainability and profit

possibilities. More importantly, they protect their brand reputations.

By Anthony Dilenno

Increasingly, businesses are looking to gain end-to-end control of their supply chains. Whether they are in the business of retail, food service, electronics manufacturing or

consumer packaged goods production, they are seeking insight into the entire supply chain – not just from distribution centers to restaurants and stores, but all the way through a product’s end of life. There are multiple reasons driving this need, including changing legislation, consumer demand and potential for financial gain. But the underlying motivator is reducing risk – specifically, brand risk.

As some of the world’s largest companies begin to harness the power of data analysis and bring innovative strategies to their waste spectrums in the name of brand protection, they are experiencing significant gains when it comes to materials diversion. It would be well worth the time of sustainability leaders, both in the corporate and municipal spaces, to better understand the materials management shift taking place at many major businesses.

Collection and processing challenges in the residential arena are well-documented and plenty of tough decisions lie ahead in that realm. Perhaps one answer to lifting North American recycling rates can be found on the corporate side, where many factors are actually pushing toward reliable streams of clean material.

Credibility concernsWhy are corporations giving renewed interest to the waste segment? Lack of visibility across the entire supply chain exposes an organization’s most valuable intangible asset, its brand, to risk. And the consequences, in terms of damage to reputation and credibility, as well as loss of consumer trust and loyalty, can be severe.

Consider the risk to brands posed by product or packaging end-of-life regulations, new hazardous waste regulations or other legislation affecting the waste stream. A manufacturer might struggle to keep up with changing national EPR regulations, while a restaurant chain with multiple retail locations may face various municipal food scrap and organics recovery laws. In either instance, end-to-end oversight of the supply chain, particularly the waste stream, and knowledge of disposal laws is crucial to ensure compliance with all regulations and avoid the financial and brand risks associated with violations. One oversight or infraction could result in steep fines and damage to a company’s reputation, especially if the situation is promoted across traditional and social media channels.

We saw this recently when a national brand found itself unwittingly in the news after a civil lawsuit filed against it claimed it had violated state and federal environmental protection laws

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because it improperly disposed of hazardous waste at some of its retail locations. The company agreed to pay a fine and continue to implement new procedures intended to ensure compliance with all laws regarding disposal.

The company took a financial hit, but the real damage came to its reputation. Some consumers may have been pushed to question if the brand really cares about the environment, or to wonder if they might be supporting a business that is not committed to promoting sustainability. Consumers want to be assured their patronage is not contributing in any way to environmental harm.

Despite all of the risk inherent in waste streams, businesses generally have surprisingly little insight into them. Brands often do a great job analyzing and managing their supply chains, developing a strong understanding of how raw materials are sourced, how products get to distribution centers and where customers are most effectively reached. But the same level of data as well as predictive and historic analysis typically is lacking when it comes to waste. This is an irony of sorts: A customer’s last interaction with a brand comes at the end-of-life stage, yet businesses too often do not know where or how the product or packaging is ultimately disposed of.

Missed opportunitiesMore often than not, businesses also do not know what is in their waste streams. They may know that packaging, supplies, food scraps and even hazardous materials exit their factories, stores and restaurants, but most do not know pound-by-pound what makes up their respective streams. Very few national companies have conducted detailed comprehensive audits to determine this information and many do not know what happens to materials after they leave the facilities. Who is handling their recycling commodities and trash? Is it shipped overseas? Is it handled in accordance with all federal, state and local laws?

One of the key challenges preventing a clear view of a corporate stream is the complexity of gathering data from so many disparate entities. A big-box retailer or quick-service restaurant chain, for instance, may have 2,000 retail locations across the country and relationships with 1,000 or more different waste haulers and recycling firms. When different vendors use different reporting tools to capture different sets of

data, it can be nearly impossible for brands to consolidate all of this information on a monthly basis and extract any meaningful insights from it. As a result, they are unable to get an accurate measure of their environmental footprint beyond the local or regional level.

This lack of holistic knowledge puts a brand at risk. As the example of the national brand referenced earlier illustrates, a major company could end up breaking the law without knowing it.

Aside from the brand risk factor, corporate entities often miss the waste-stream opportunity to save money, identify new revenue streams and promote the success of their efforts to stakeholders – for example, in a consumer-facing sustainability report. There are recyclable commodities such as plastics, metal, paper and obsolete materials that businesses are overlooking in their waste streams and these recoverables can be extracted and sold. Furthermore, untapped composting and waste-to-energy opportunities may exist in their organic waste.

Another plus to developing insight into corporate waste streams is that doing so gives businesses greater forecasting ability. A company will be able to accurately predict its total waste spend several years out based on its waste stream volume, and it will be able to determine how future initiatives might reduce such costs. A brand can also forecast the value of its recyclable materials. Because these analyses are based on actual monthly and annual figures, the company builds a clear view of its waste stream that is comparable to the comprehensive perspective that likely already exists in regards to its supply chain.

Finally, by committing to waste measurement and programs, businesses make good on their commitments to sustainability in a demonstrable way to stakeholders. They are walking the walk.

Data to the rescueThe key to identifying and mitigating risks and uncovering opportunities in the waste stream is data. The current era of big data has opened the door to insights and tools that facilitate smart decision-making. A commercial waste and recycling management consultancy, such as the organization I work for, can offer businesses a centralized data collection team that can gather and analyze information from multiple sources across the country

and around the globe to predict trends, anticipate legislative changes and propose logistical improvements.

In one instance, a national retailer with 2,000 locations was able to remove more than $12 million over three years from its system by gaining insight into the composition of its waste stream. The process began with an analysis of the brand’s distribution and logistics system. When products arrived on trucks at stores from distribution centers, employees unloaded the trucks and sorted recyclables – plastic shrink wrap, corrugated packaging, hangers and other items – for later pick-up by a hauler. Recognizing an opportunity to curb empty miles, our team designed a reverse logistics program for the company, whereby sorted recyclables were loaded back onto the trucks that had delivered the merchandise to the stores. Material was returned to distribution centers where it could be aggregated with recyclables from other stores for much greater volumes. This saved the brand money and helped reduce carbon emissions that would have resulted from a second set of trucks traveling to individual stores to collect the recyclables.

In parallel to this, our team analyzed the brand’s waste stream volume and composition. We determined that containers at each retail location were typically only one-half to three-fourths full during pick-ups so we proposed changing the frequency of pick-ups from once a week to once every two weeks, thereby reducing the amount of hauls and associated CO2 emissions as well as waste spend. Additionally, our team was able to ascertain that as much as 25 percent of what the brand was sending to landfill could actually be recovered and sold. We proposed better signage to help dock employees improve sorting, and as a result, the brand increased its diversion efforts and added revenue.

The brand also involved customers in its efforts, encouraging customers at checkout to give back clothes hangers for reuse, rather than take them home with their purchased clothing. Customers were not inconvenienced by this request – the decision to leave the hanger behind was voluntary – and, if they chose to leave the hanger, they could feel good about helping to make a difference.

In short, a big data effort gave the brand insight into where inefficiencies and missed opportunities were having a negative impact on the environment, the bottom line and potentially the brand’s reputation.

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Growth via collaborationWhile the above example highlights a commercial enterprise, there’s also plenty of potential for big data to play an important role in optimizing municipal waste streams. With more than 60 percent of U.S. municipal waste streams headed to landfills or incinerators each year, opportunities exist for municipalities to leverage analytics within their programs and significantly improve decision-making.

We have witnessed the power of data in managing supply chains, and now more brands are looking to extend that insight through to product and packaging end of life. Managing waste effectively can enhance a brand as well as improve profitability. Data and analytics play key roles in making this happen. And collaboration will be critical as this trend matures – to find lasting success, businesses and their recycling and waste partners will need to work together to share valuable information.

Anthony Dilenno is the president of HAVI Global Solutions Recycling & Waste Solutions business. He is a third-generation recycler with 30 years of recycling and waste solutions experience. Recycling & Waste Solutions enables businesses to achieve their sustainability goals, increase efficiency while reducing costs and keep ahead of growing regulatory demands for greater environmental responsibility. Find out more about the company at havigs.com.

Reprinted with permission from Resource Recycling, P.O. Box 42270, Portland, OR 97242-0270; (503) 233-1305, (503) 233-1356 (fax); www.resource-recycling.com.