Waste disposal costs have seen a steady rise over the years. The price changes are mainly due to increased landfill costs, enhanced disposal processes, and rising taxation. Companies can control these costs by negotiating their waste collection contracts. Managers with the best procurement negotiation training can use their skills to cut costs in key areas of waste collection. To reduce your waste collection bill, you can do the following.
A procurement manager’s first step in negotiating the waste collection bill is to research the waste collection providers in the local area. Talk to as many of the garbage haulers in your area as you can. Get quotes on price and even ask the ones you shortlist to send their standard contracts. You are not obliged to sign, so review each and pick the one with the best terms. Negotiate once you have rates and favorable terms to compare against.
Bargain Container Costs
There are questions you can explore to find out how much you’re spending on your waste collection:
- How many containers does your firm need to manage the weekly garbage?
- Does the waste disposal company provide garbage containers?
- Will independent procurement reduce your collection costs significantly?
- If the waste disposal company offers roll-off containers, can they switch to front-loading boxes?
- Will cheaper boxes reduce the monthly charges?
Often, the waste collection contract might include a surcharge for makeshift containers holding excess waste. You can negotiate to have extra containers for free up to a limit.
For instance, if your contract is for a weekly 20-yard box container yet some weeks you add one 8 lbs (1 gallon) makeshift, then you can negotiate to have the extra load disposed of without surcharge. Otherwise, you may incur hefty extra charges for unplanned-for small additional containers. For weeks when you add more than one more makeshift or a bigger makeshift container, then you pay the surcharge.
If you plan on maintaining the services of the disposal company for more than two years, explore the possibility of buying the garbage containers. Buying may be cheaper than renting in the long term. If you own your collection container, the collection rates should reduce.
Negotiate the Fine Print
Some waste collection contracts contain hidden charges. A trained procurement negotiator can discuss a reduction or elimination of these extra charges. The expenses may include:
- Key Charge: Levied per collection dumpster where the driver uses a key to unlock a locked container.
- Long Walk Charge: Applies when the container location is far from where the truck’s access point is.
- Dismount and Push Charge: Applies when the driver has to get out of the truck to push the garbage dumpster to the access point.
- Gate Service Charge: Levied if the driver has to open a closed gate to access the garbage container.
Reduce Collection Frequency
Waste collection rates increase with the frequency of collection. If you run a hygiene-intensive facility such as a hotel or restaurant, it may make sense to have daily collections. For most businesses, reducing the frequency can cut costs without hygiene risks. Work with your team to create on-site storage space for your garbage then arrange for fewer collections and lower charges.
Talk to the Right Person
The waste disposal company may send a sales rep to pitch you their services. Often, the sales rep probably doesn’t have much say in offering cuts and discounts. Negotiation training prepares procurement managers to get past gatekeepers and access decision-makers. Find out who in the disposal company has the authority to adjust rates. The sales manager may be the person to talk to for quick and binding decisions. If you operate from multiple locations, a regional manager or C-Suite executive could authorize an even higher discount.
Meet on Your Turf
There’s a lot to be said about having home advantage. You may feel more confident when discussing the waste collection contract from your premises rather than at the waste disposal company. Plus, you can back up your arguments during an on-site visit. For instance, you can debate the long-walk charges by showing the disposal manager how short the walking distance is.
Have a BATNA
Negotiation trainers advise that you be ready to walk away if the waste disposal company is unwilling to reduce rates. Having a best alternative to negotiated agreement (BATNA) can strengthen your resolve to walk away from an unfavorable deal. A BATNA could be one of the haulers you identified from your research. Your BATNA could also be a disposal company firm that offered less attractive initial terms but showed a willingness to be flexible on terms.
To Sum Up
Procurement managers may often disregard the fine print in waste disposal contracts. Yet, a detailed view may result in significant cost reductions. Carry out research to identify possible areas of negotiation. Talk to competing firms to source competitive quotes. Simple actions such as reducing collection frequency or changing the type of container can result in cost savings that go straight to your bottom line.