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Making your business work more efficiently

Date: 12/09/2014 | Author: Jason Fazackerley and Paul Sanderson

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Ahead of RWM, Resource Efficient Business and Prodware will be publishing an article every day on the Top Ten Drivers for Recycling Change.

We would like you to share your views on which of these 10 ideas you think will be the most significant drivers for recycling change. Come to the Prodware stand at RWM (4F106-G107) and show what you believe will be the key drivers on the 'Cool Wall' or tweet your Top 3 to @ProdwareUK and/or @ResourceEBnews using #TopRecycling

Today, we look at business efficiency:

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The National Institute of Economic and Social Research (NIESR) in its latest quarterly report said that UK labour productivity was still 4.5 per cent behind the pre-crisis peak of 2007.

In 2012, while UK employment was beginning to rise, output continued to fall. If you calculate GDP per hour worked, the UK falls well behind countries such as Germany, France and Ireland. So are we really less productive than our peers? And if so, why?

A harder question to answer would be how efficient and productive is the UK waste and recycling industry compared with others across the western world?

It is fair to say, we are still playing catch-up with our peers. The UK industry has made great improvements in sorting and treatment technologies, we now get the Quantity versus Quality versus Value paradigm. But are we efficient? Or does this nation of shopkeepers continue to compete beyond economic reason?

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Taking a look at the waste industry process from end to end, it is easy to identify great areas of inefficiency, and sometimes commercial suicide. Start with the sales process: you put your reps on the road with revenue or tonnage targets and their job is to steal business from the competition, often at any cost. Are they the right measures? Wouldn't it be better to target reps on route profitability and material margin?

Straight away, the sales function in the business has caused problems for the transport team - they are running inefficient routes, and collecting the wrong materials. That baton is then passed to the guys running the treatment facilities - they are receiving the wrong material in the wrong quantities. This continues and the cycle starts again.

The fundamental problem is that we are too busy competing (on price) and not spending enough time working on our own businesses. Spending time making our businesses efficient and effective is the more sustainable way to increase our margin, and the better way to look after our stakeholders.

We should not compete, we should be different and to do this we should start by analysing and reviewing our business, but not from start to finish, but from finish to start. The countries around the world that perform better than the UK are those that observe, adapt, and then sell.

One UK company that works hard on being efficient is SWR. The company has specialised in areas not always seen as a priority for other waste management companies such as automotive garages, garden centres and the hospitality industry.

“A key ingredient in being an efficient business is doing what your customer wants you to do in the bounds or what is realistic,” says SWR finance director Andy Butler.

“Margins are getting slimmer all of the time, so as a business we have got to be efficient looking at things such as the overheads we have while still delivering the service our customers want.

“But we have to recognise that efficiencies are happening through technology. When I first started in this business, we were printing invoices, franking envelopes and then posting them. This is inefficient and now technology means that we are able to digitally create invoices and email them and it takes minutes for the whole process that used to take days.

“Without technology and our IT system, we wouldn’t have been able to make as many efficiencies as we have and as a business we are always looking at ways in which technology can help us to protect our margin.”

He adds that the increasing cost of landfill makes it increasingly difficult just to collect waste, and so companies such as SWR have to provide a wider recycling service to make collections worthwhile in terms of profit.

While this isn’t unusual for waste management companies, higher income happens as a result of the most efficient treatment of the material in the waste stream.

He suggests that further changes will be required to ensure efficiencies emerge across the industry and that further legislation could help businesses be more efficient.

“A lot of our customers are in the hospitality industry and create a lot of food waste and packaging materials. In England, we need to go down the same route as Scotland to introduce separate food and other materials collection from businesses.

“That way we can re-educate the waste producer in a way that makes it more efficient for us to collect the material. Even though we look to do this, legislation makes it easier for us to do this.

“In the case of food waste for example, if it is separated we are able to send it to an anaerobic digestion plant, which is a more efficient way of treating it than traditional methods such as landfill and also is lower cost for us.”

He suggests that while businesses can make savings in overheads, extracting value from the material rather than driving down costs offers more opportunity for companies like SWR.

 

 

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