WASTE COMPANIES DON'T necessarily fuel America's automobile industry, but by becoming specialists to automotive companies, they have been reaping rewards while helping the auto makers to refocus attention on vehicle production — not waste.
Recently, U.S. automobile companies have seen their market shares decline and internal costs increase. One cost is the expense of dealing with the waste byproducts of vehicle manufacturing and engineering. To more effectively manage these materials, the automotive industry has turned to total waste management (TWM), which is outsourcing waste management. The auto makers are finding TWM is increasing their business and improving customer relationships.
TWM was implemented around the mid-1990s and has since become a standard in most GM, Ford and DaimlerChrysler manufacturing and other facilities. The program involves outsourcing a portion of environmental engineering typically responsible for the management of waste byproducts generated during the manufacturing and engineering processes.
Prior to TWM, auto makers typically had little time to focus on waste management. They used multiple suppliers who lacked contractual incentives to operate efficiently and work together. Meanwhile, waste companies did not have an incentive to reduce waste or meet manufacturer waste goals. However, as environmental regulations became stricter, waste reduction became a priority for the auto industry. It looked to TWM to help meet waste reduction goals.
TWM works by centralizing all waste management with one supplier. The programs can be implemented and tailored to facilities of all sizes. By sharing management resources, even small facilities benefit from TWM programs through the implementation of common practices and efficiencies. The programs offer guaranteed annual savings for auto manufacturers through the implementation of efficiencies and process changes. The programs also include financial incentive programs for the TWM providers, which are able to reduce costs through efficiencies and their purchasing power of waste disposal because of their multiple customers. Additionally, TWM companies have received rewards for cost-saving programs, such as through load efficiencies and right sizing of equipment. Increasing the size of compactor receiving containers, for instance, will reduce the number of loads, thereby allowing the hauler's reduced pick-up costs to be passed along to the auto makers.
While TWM is effective, remaining competitive and continually offering cost savings to customers can be challenging. Thus, TWM contracts provide for onsite managers allowing the client to utilize their internal resources for process improvements to their core business. This improves efficiency and creates cost saving initiatives that help the auto companies to remain competitive. For example, the implementation of solid waste reduction and recycling programs, e.g. plastic, cardboard and pallets, has resulted in revenue generation and cost avoidance. Maximum value for the recycled commodities is achieved through the total waste management providers.
The partnerships between the U.S. auto makers and their TWM suppliers have been successful not only in cost savings but also in earning the companies governmental and environmental awards. Due to the auto industry's success, TWM programs have begun to be implemented in other industries as well. With guaranteed cost savings and waste reductions, TWM is proving to be too good of a program to go to waste.