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Waste & Recycling January 30, 2023 01:45:17 AM

Mitigating the Effects of Inflation and Supply Chain on Solid Waste Contracting

Waste Advantage
ScrapMonster Author
Solid waste supply chain challenges show no signs of abating in the near future.

Mitigating the Effects of Inflation and Supply Chain on Solid Waste Contracting

SEATTLE (Waste Advantage): Supply chain challenges affect all industries and nowhere is this more apparent than in the automotive and heavy equipment manufacturing space. With a constant need for new and replacement vehicles, these supply chain issues significantly impact solid waste and recycling services.

Steel and semiconductors are frequently the components most likely to have an impact on global vehicle production during supply chain disruptions, delaying the availability of vehicles and equipment for purchase. In some states, end users can wait six months to more than a year to purchase cars and trucks because vehicle assembly plants are unable to keep up with demand because they cannot get needed parts.

A Ripple Effect
The trickle-down effect of supply chain issues impacts a variety of sectors including solid waste management, which relies heavily on vehicles, especially trucks that have a substantial amount of mechanical and electrical components. Because of the timing issues with vehicle purchases, cities that contract out their solid waste and recycling services must reevaluate the amount of time required for the full contracting process when selecting a solid waste and
recycling services partner.

There are a multitude of reasons why planning early is imperative when considering a solid waste and recycling services partner. Vehicle shortages, volatile fuel pricing, an uncertain economy, and the higher cost of trucks, and other equipment can all play a role. Other factors to consider include the increase in solid waste volume, facility owners charging more for landfill disposal and recycling
services, and CDL operators driving up labor costs.

Supply chain concerns can cause a major ripple effect for municipalities, states, and regional entities that manage recycling and solid waste collection, recycling processing, and disposal services. These entities often hire outside contractors to handle solid waste and recyclables, and whenever there is a shortage of trucks available, these entities will feel the pinch.

Proper Planning is Key
It is costly to manage solid waste and recycling systems, especially during times of high inflation, although costs and services differ based on region and municipality. Long before the first load of solid waste is collected and taken to a landfill or recycling is transported to a material recovery facility, solid waste management planning must take place. Thoughtful strategic planning is essential for the success and financial performance of a solid waste management program and a livable city.

Proper planning is the key to keeping solid waste management manageable and given the ever-evolving circumstances, choosing the most efficient contracting strategy is more crucial than ever. A balanced approach to procure any combination of solid waste and recycling services is recommended. Following are key tips for cities to consider as a part of the process to procure solid waste and/or recycling collection and processing services.

Start the Contract Process Early
Procurement timelines vary based on type of services and other factors. A good vendor contract should be clear, comprehensive, performance-based, and protective of public interests. Beginning the process two to three years before solid waste management or recycling services are needed allows adequate time for the procurement process and enables the selected contractor to purchase equipment, design routes, and conduct other activities that enable smooth implementation. Previously, the procurement process for collection services required a 12-month schedule. It is longer due to the time needed to purchase vehicles. Allow two to six months for process preparation and to develop RFPs. Add another three to six months for vendors to submit proposals and to allow time for evaluating proposals and negotiating contracts. Then, add up to 18 months for implementation, which includes procuring vehicles, purchasing other equipment, and building facilities.

Do Diligent Financial Planning that Considers Rising Costs During the Contract Cycle
Systems that are integrated, efficient, and sustainable must be put in place to operate solid waste and recycling systems. Operational and capital costs need to be a prime consideration when planning. Municipalities must determine how to navigate inflationary cost increases for services and then put mechanisms in place to allow for future cost adjustments (which can go up or down). During times of inflation, building in proper adjustment mechanisms is important. See that the length of the contract is appropriate (ideally matching equipment and/or facility lifecycles to allow full deprecation), build in program flexibility and contingencies, and be mindful of statutory and environmental requirements.

Pay for Only What is Necessary and Be Aware of Vendors’ Special Fees and Hidden Costs
Remember to consider the implications of best value versus low price. While cost should be an important component to the evaluation criteria, selecting solid waste and recycling service providers should involve a much wider range of evaluation criteria. Evaluate companies based on a variety of metrics including price, method of approach, experience, references, and financial stability. Further, including a draft contract as a part of the RFP is highly recommended and local governments should require vendors to identify any requested exceptions to the agreement as a part of the proposal. Taking this approach provides local governments with a clear picture of a vendor’s financial submittal and should clearly delineate what costs and future adjustments will or will not be allowed.

Measure Program Effectiveness and Apply Key Learnings to the Future
An effective solid waste management strategy is extremely valuable when navigating supply chain challenges that affect the basics like vehicle availability. Continually monitoring what you are doing and making sure it is meeting the needs of residents can
result in greater uninterrupted service to communities. Consider using new technologies and industry-leading tools for tracking progress and monitoring contractor performance.

A Successful Experience
Solid waste supply chain challenges show no signs of abating in the near future. By being clear about solid waste management needs and distributing requests for proposals to potential contractors significantly earlier than in the past, solid waste managers will find the contracting process less frustrating and more efficient, resulting in a much more satisfying and successful experience.

Courtesy: www.wasteadvantagemag.com

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