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Cost effective resources

Harvey_LaudHarvey Laud, director of Helistrat looks at how businesses that are serious about finding cost effective ways to significantly improve their resource management, and leverage the associated commercial and environmental opportunity, must start by looking at their procurement processes – and be prepared to tear up what has gone before

All too often it seems like there is a big disconnect between the way we talk about managing our waste and how we go about procuring the services to actually manage it. There is a rising swell of marketing and media noise about waste not being something we just look to throw away. Instead we now all regard it as a valuable secondary resource that we should look to integrate within more sustainable supply chains for the future. 

My experience of procurement for waste and recycling services is that it often does not reflect the stated aspiration to better manage resources. There certainly hasn’t been the same level of innovation in the procurement of waste and recycling services that is evident with other ‘higher profile’ services. Perhaps this is because waste isn’t perceived as sexy or maybe it is just too low on the list of priorities. We still see tender processes driven by pricing waste in the most unimaginative ways, which is predominantly based on the price per bin per lift. Yes we see other commentary in the procurement documentation relating to an aspiration to embrace innovation and be more ‘circular’. But the reality is, when it comes to evaluating the service providers’ solutions, cost is still king. To limit opportunity further, cost is usually measured in one dimension which is the price per service and rarely acknowledges the benefit of cost avoidance or almost never measures the cost of not changing at all.

There are two important points to make at this stage. Firstly, I do believe that this is always the intended objective. Procurement teams are accustomed to buying services in a particular way and will (understandably so when they lack specific specialist sector expertise) tend to edit and develop the brief from the previous time they went to market. Secondly I am not an idealistic tree hugger; I recognise that we are talking about a commercial environment, where businesses are operating to tight margins and costs are under constant pressure and scrutiny.

CHALLENGES
One of the main challenges we face is that there is very little middle ground when it comes to how ‘waste’ material is viewed. It is either seen as rubbish, which must be disposed of as cheaply as possible or as a resource for which as much money as possible must be obtained. There are however other important and valuable variables to be considered with regard to the way we manage our resources. These are all too frequently marginalised or overlooked completely through the one-dimensional ‘digital’ procurement lens.

Take for example Marks & Spencer’s Plan A. This is probably the best-known example of a business having realised that their environmental credentials can be a very powerful way to help differentiate and build their brand. The company’s management team had the foresight to develop a set of challenging targets and then use these to drive the development of new and innovative ways to manage the waste they produced.

Ultimately, we need to take a more holistic view of how we manage resources and encourage contracts that support the development of genuine partnerships between producers and their supply chains and service providers. We also need to find mechanisms that support the introduction of innovation, which are capable of delivering substantially lower costs over the lifetime of the contract. Still further, if we can avoid material ever going in to a bin then perhaps it will never become ‘waste’ and by default we’ll view and manage it in a far more positive fashion.

So is there an opportunity to change for the better? I certainly believe that in many cases, if we were prepared to tear up our existing waste and recycling procurement plans and start again then we would be able to realise significantly improved environmental and commercial benefits. An important element of this is to encourage unilateral engagement across the business as part of a holistic procurement process. Adopting an approach that is inclusive of Purchasing, Operations, Marketing, Finance together with those that have environmental responsibility will help ensure that all stakeholders’ objectives are met. It will also help to avoid one of the key pitfalls associated with implementing a new system where key stakeholders have not been consulted and business ‘buy-in’ has either not been sought or attained. This results in Facilities, Operations, Logistics or another intrinsic function resisting or even worse, working to undermine the solution because they resent having something imposed upon them, especially when it impacts their day job and they cannot see the wider business benefit.

About Sarah OBeirne

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