The industry's early adopters of online dot-com services are still in the minority.
Maybe because this is not a high tech industry, many, if not most solid waste managers, have greeted the arrival of online waste dot-com services with a wait-and-see attitude.
Independent haulers and recycling companies are investigating and sampling these services, but so far they haven't wholeheartedly endorsed these new management approaches. At the same time, some of the large publicly held waste management companies have expressed doubts about the value of many online services. However, others, including small- to medium-sized operators in other areas such as recycling, see more opportunities in this new medium.
Of course, building an online service doesn't simultaneously build an online market. In other words, the dot-coms have more work to do before the waste management community will transform them from startups into successful and valuable service-providers. While some waste dot-com services are gaining some acceptance, others, apparently fearing failure, have clicked offline.
The most ambitious of the services offered by dot-coms - auctions designed to bring service buyers and service-providers together - seem to be generating mixed reviews.
Waste company executives express less, although still noticeable, skepticism about application service-provider (ASP) Internet uses.
When it comes to online procurement services that have been available for more than a year, waste management companies offer more favorable comments.
In other words, Internet use, similar to the use of any new product or service, probably will develop slowly over time with applications that have proven themselves entering common use gradually. As in other industries, waste companies will cull through available electronic services, experiment, evaluate and slowly, but surely, adopt.
The culling process has only just begun, however. As a result, the views expressed by waste management companies trying dot-com services probably make the most sense when seen as opinions related to what dot-coms offer today, in our largely offline world. Five years from now, those views could be substantially different.
Auctions to Find Customers "Clicking on Garbage," a report issued by Solomon Smith Barney (SSB) in July 2000, detected little enthusiasm among large public waste management companies for online auction services. The report quotes executives from Allied Waste Industries Inc., Scottsdale, Ariz., as doubting the ultimate claims made by dot-com auction houses. Specifically, CEO Thomas Van Weelden notes that Allied does not permit salespeople to quote prices over the phone, let alone the Internet, because the company wants to avoid situations in which numerous haulers compete to underbid each other.
Van Weelden also told SSB that salespeople must assess prospective customer needs onsite to insure that any price and service offer matches the customers' needs and the company's capabilities.
Executives with Republic Services, Ft. Lauderdale, Fla., largely agree. "I think it would be a mistake for us to bid online for a request to, say, pick up a two-yarder twice a week," says Tom Newman, director of special projects with Republic. "We need to understand more than that about a customer."
About six months ago, according to Newman, Republic lost a medium sized manufacturing customer through an E-commerce auction. The customer had gone online to price shop and received an attractive bid from an independent local hauler. The bid was too good to turn down.
"Three months later, the customer came back," Newman says. "When the new provider began to understand this customer's needs better, it found that it couldn't provide services for the bid price because the waste was too heavy.
"The point is that setting waste service fees requires many decisions. How much does the waste weigh? How long does it take to get into the facility? Once in, do you have to wait for the materials to be separated? Do you have to pick up the waste at a special time? Can you use a front-end truck? Do you have to sign in at the front gate? Is there a chance the gate might be closed?
"When you sell products, electronic commerce is great," Newman continues. "You can take and fill orders all day long. But, when you start bidding waste business online, you can only be wrong most of the time."
Small- to medium-sized companies in other segments of the waste management industry express more optimism about the potential benefits of online services. Envirosolve LLC, Tulsa, Okla., is investigating online requests for proposals (RFPs) and currently evaluating one. "We got the proposal through environ.com," says Scott Logan, the company's CEO. "It is for a chemical waste disposal contract."
Envirosolve is a hazardous and non-hazardous waste service provider with offices in the Midwest and Southwest. "I think online services will be good for certain kinds of service-providers," Logan says. "In our case, we go nationwide to pick up exotic types of waste. Nationwide reach is important to us, and these services may be good for finding opportunities and negotiating contracts because they help to deal with geography."
Recycling companies, too, see a role for online auctions, a role that so far remains ill-defined. "We are always looking for opportunities to market tons of paper that aren't spoken for," says Randy Wolf, site president of the Dallas operations of Austin, Texas-based Balcones Recycling. "In any given month, 80 percent of our tons are spoken for by existing accounts. The other 20 percent are unusual grades or an over abundance of a standard offering. We think the Internet may be a good way to let companies know, anonymously, that these tons and grades are available."
Balcones is testing the idea with paper2paper.com, an auction site. According to Wolf, the concept offers several potential benefits. Paper2paper allows Balcones to identify companies as possible buyers. Balcones, for instance, doesn't want to conduct online business with existing customers to avoid having to do business in two different ways with individual companies. In addition, the system enabled Balcones to avoid companies considered to be bad customers.
Several months ago, Balcones posted old corrugated cardboard (OCC) tonnage on the paper2paper.com auction site. "There was no market," Wolf says. "The market had been more or less in balance for several months in the grades we posted. We're selling nearly everything we produce, and the mills are buying nearly everything they need. Consequently, no one has much of an incentive to do anything other than use the existing channels.
"For this kind of business to work, something needs to begin driving it," Wolf continues. "I think the driver will be a shortage of one material or another. Somewhere down the line, a mill will get into trouble and have to find something. In the real world, when this happens, the buyer in short supply throws money at the market to get the material. That can send prices across the market up. Online auctions may be a way to avoid that, to find tonnage without raising flags about shortages.
"Of course," Wolf adds, "it will take time for this kind of online buying and selling to develop."
Online Instead of on a Desk The dot-com world offers services beyond online trading. One of these services is called ASP, short for application service provider. Still in the evolutionary stage, an ASP will offer the services of sophisticated software through a web site.
Environ.com of Tempe, Ariz., for example, hosts a site where waste management companies can subscribe and take advantage of a variety of compliance software.
Other ASPs offer services for waste generators who might click onto a site to schedule a pickup.
Evolving ASP offerings include an array of back office services. A small hauler, for example, might subscribe to an ASP and manage the business on line, using constantly upgraded accounting and route management software designed by premier suppliers.
As the dot-coms role out these services, large waste management companies have begun to build their own.
Republic Services, for example, recently rolled out a web-based Customer Relationship Management System (CRMS), which tracks current and potential customers, reports on market penetration by zip code, and provides forecasting tools for salespeople in all of Republic's 161 collection companies in 22 states.
"CRMS is useful in dealing with leads," Newman says. "It is location-sensitive, in that it points us to where we should be selling within particular routes. It also helps to sort customers."
The system's database includes data purchased from professional demographic services as well as data supplied by salespeople who, for instance, may discover and investigate a survey site during their daily rounds. "The system is complex and sophisticated on the processing side," says Will Flower, Republic's director of communications. "It sorts by SIC codes and business types in zip codes, and allows us to target specific business groups that we would like to approach with offers of service. On the user end, however, it is very simple. You log into the company website, point and click."
While Republic has the resources to build its own ASP system, the utility of that system suggests that dot-com ASP offerings may prove attractive to small- and medium-sized waste management companies as these services develop.
Buying Hard Hats On Line Companies of all sizes seem to accept the premise that certain kinds of transactions can be handled more economically through the Internet.
Generally, these transactions include the purchase of more or less commodity products such as hard hats, gloves, safety glasses, and vehicle parts.
Barry Skolnick, vice president of All Cycle Sanitation and Recycling Services Inc., Atlanta has begun preparing files on a half dozen or so online procurement services, including Ariba Inc., Mountain View, Calif.; Commerce One Inc., Pleasanton, Calif.; and Oracle Corp., Redwood Shores, Calif. "Our purpose is to find ways to bring costs down through E-procurement," Skolnick says. "There are labor costs involved in purchasing, and there are product costs. Our idea is find faster ways to buy materials we need on a regular basis. The idea of buying bulk at a discount is important, too."
Skolnick will insist, however, that the savings available through online procurement be substantial. "We're not going to shut down a long-time local vendor for a 1 percent savings," he says. "You have to show loyalty."
Once again, larger waste management companies have other ways of obtaining E-procurement services.
Instead of evaluating the available dot-com services, Republic has built its own. "We are developing a service for our operating offices," Flower says, "through a company called E-company store, which supplies promotional items such as T-shirts. But we decided to include some practical business products on the site as well. So it will offer safety vests, hard hats, gloves and eyeglasses. When office purchasing managers need these items, they simply click onto the site and order them."
According to Flower, Republic will limit this service to low-cost commodity items for the time being.
The End of the Beginning "Quite honestly, we have other knitting to attend to," says Joe Fusco, vice president of communications with Casella Waste Systems, Rutland, Vt., of buying online. "From our point of view, electronic commerce is down the road. The models just aren't sufficiently mature."
Even so, Fusco looks forward to an E-commerce future. "We think the most exciting aspects of e-commerce technology and the ones that deserves the most attention right now involve ways of making it easier for our customers to do business with us. We would like to see systems that enable customers to log on and check the status of their accounts, to order service, to pay bills electronically, to analyze multiple locations and determine which produce the most waste and why."
While E-commerce has grown into a real business segment, the real promise of electronic commerce remains in the future. Many people simply don't care to go online and sort through services offering a raft of options.
Fusco, in fact, looks forward to software "agents" that will handle this task. "There are software agents available today," he says. "You program these agents, and they log onto the Internet to perform tasks. I think this is where the world is going. In 20 years, for example, I think a purchasing agent will send out an agent programmed to find the best price and delivery on, say, 20,000 staplers. That agent will evaluate offers made by selling agents online and bring back a deal. I think that's where the world is going."
Which means the world today has a long way to go before it gets to an E-commerce model that offers benefits in terms of convenience and price across a full range of services.
Then again, evolving technology can move systems a long way in a short amount of time.