In the area of waste management, contracts are traditionally awarded to collect waste across a geographical area. As part of this contract there is a charge for emptying a bin on an agreed schedule. There are also usually extra charges for bin weight over a certain level.
The pricing structure a waste management company proposes to try to win a contract will include assumptions about the costs of running vehicles, including fuel, staff, time, servicing and the costs to dispose of waste across the entire geography specified by the customer.
Once the contract is signed, bins will be collected on the agreed basis, whether they are empty or full. Sometimes the waste management contractor assumes that because they’re being paid to empty a bin regardless of whether it is full or not that it is profitable to clear empty bins – after all they’re being paid to pick up air. However, our increasing data collected around the world suggest that in wider physical collection areas, such as rural locations, the costs of collection may actually be larger than the costs charged back to customers – especially on bins that aren’t full.
Travelling over distances to collect a number of empty bins can run up higher costs than the waste management supplier is being paid to collect. Running waste trucks and their associated costs is a key expense for waste management.
In contracts where there is the extra charge for weight over a certain level, the most profitable way of clearing bins is to clear them when they are nearly full. Routes optimised to clear bins when they are full will maximise the amount of revenue chargeable under the terms of the contract, whilst also minimising the cost of collection. Any other way is sub-optimal and will not be maximising profits for the waste management supplier.
A key challenge to operating under this optimum efficiency model is that you need good data. Waste management businesses need to be able to determine the optimum fill level in each bin for maximum efficiency and profitability, whilst minimising both the cost and environmental impact of making these collections. Until recently it’s been hard to do this but the technologies needed are now working in the field and transforming the economics for a number of waste management companies.
As well as it not making sense financially to travel long distances to collect nearly empty bins, it also doesn’t make sense from an environmental or sustainability point of view. Waste collection vehicles are large and heavy with a range of impacts including fuel use, road wear, safety for other road users and effective use of resources.
The good news is that it’s now possible to fully and accurately assess all of these impacts using technology, which means it’s possible to determine the most efficient model for waste collection in almost every context – from wide scale rural situations to complex dense urban environments. Collecting accurate and real-time data can help you collect only those bins that need it on a route that’s optimised for every collection day. Not only that but the data can tell you where the bins really need to be, so that you’re also ensuring the entire collection area is as effective as possible.
If you’ve thought collecting empty bins is profitable – it might be time to double check this using data.