Businesses across all industries learned several hard lessons from COVID that apply right now.
Agility is absolutely necessary if you’re going to survive and even flourish. Change is constant, and once a business adopts that mindset – even embraces chaos – then half the battle is already won. Rather than wait out the bad times, these companies worked with the situation, developed new business models, made tough decisions, invested where necessary, and acted quickly versus acting defensively.
Economic uncertainty is a different beast, however. Even in the best of times, recyclers work with tight margins and restricted cash flows. Add recessionary pressures, current electricity costs, falling demand, and the picture is even more dismal. These circumstances play across all of Europe, but especially for the DACH region, where the additional pressure of meeting sustainability targets weighs heavily. After all, we’ve seen companies in Germany shorten their hours or turn off the lights all together.
Act before you have to
A study by McKinsey looked at how companies in Europe and North America navigated macroeconomic crises. What did resilient companies do differently than their competitors and peers? How were some companies able to emerge from downturns stronger? How were they able to maintain their momentum?
They were better prepared. After the last recession, seven out of ten companies who dominated their sectors were digital natives, meaning they were formed during the digital-native era and were tech centric. The study looked at their margin growth and found some interesting answers in their operating costs. The companies who came out on top were able to cut their costs significantly for every dollar of revenue change, while others actually increased their operating costs during the same period.
Being tech centric doesn’t mean that they operated in the tech industry. What the study revealed was that the resilient companies moved faster. They were able to pivot quickly, which brings us back to the importance of agility.
How do you become agile?
Average energy costs for recyclers have risen from around 15-20% of production costs, minus labour and maintenance, to a current average level of 70%. Cutting operational costs elsewhere is paramount.
Digitalisation is critical, but this should not be viewed as a solution to get through the downturn. Waste & recycling companies should implement digital processes to change business models and future proof their company. It enables agility, giving businesses the tools to break through the silos that exist within their company.
You might not realise it, but those silos are preventing you from really understanding what’s really happening in your business. By connecting every area of your business, you can erase those silos and collect meaningful data that gives you insight into your operations. You can spot inefficiencies in real time, analyse patterns and take action.
Everyone in your supply operation – drivers, transport planners, operation managers, management accountants, technical supervisors – can see the information they need in real time, without waiting for it to be passed on. By working with one truth, everyone is on the same page and can work productively.
This is the start of becoming agile – of gaining the ability to move fast as events change. And with regulations around sustainability constantly changing, agility will enable you to hit your targets.
Cutting operational costs and expanding margins
Digitalization can be done in small steps, but it must be done.
The ideal place to start is AMCS Platform for the recycling industry. This is an enterprise-grade cloud solution that supports your end-to-end processes, automating and optimizing, from inbound material grading to cross-border exports of raw materials, along with contamination, fraud and regulations, workflows, in short, everything.
From there, you can add modular solutions, addressing specific needs, versus investing and testing in full-blown digitalization. Modular solutions enable you to work your way to that point, allowing you to ramp up quickly without operational risks. And if you’re already working with a platform that you like, a good, robust modular solution should be able to integrate with what you’re already using.
Modular solutions that can help you start cutting operational costs right away are plentiful. You can start with intelligent optimization. AMCS Route Planner is an example.
Consider how complex and time consuming route planning is. AMCS Route Planner can significantly reduce the time spent planning. It automates drivers’ routes based on real-time data, such as rush hours by zones, traffic events and challenging time windows on orders, resources, and terminals. It takes into account driver qualifications, available resources and so on.
Current users report that AMCS Route Planner enabled these reductions:
- Planning time: up to 75%
- Reduced mileage: up to 25%
- Hours driven: up to 25%
- CO2 emissions: up to 25%
- Number of vehicles needed: up to 15%
One simple step into digitalization, and it yields large results. You can see how this would affect operating costs and margins.
A German study of waste & recycling companies already using digital tools found that 68% of operators are already utilizing a telematics system, with 69% using it to optimize processes and 17% for control purposes.
Telematics can improve driver productivity by more than 12%. With AMCS Telematics, you can track driver behavior and engine performance. Data will show you any harsh acceleration, braking and idling trends so that you can take corrective action. Telematics, coupled with these actions, has shown to reduce fuel costs by up to 14%. When the cost of fuel usually accounts for 10% of your operating expenses, this is a substantial boost.
Artificial intelligence (AI) can identify contamination in recycling material and linking it to the waste producer. For example, AMCS Vision AI analyses material composition and tells you the granular components of the resource stream being collected or processed. You can use the opportunity to educate the waste producer on separating waste properly.
Capture all revenue
Another modular solution to consider is AMCS Mobile Workforce. This is an on-board computer in the form of a tablet that provides a real-time connection with drivers. It allows you to update schedules if a new order comes in, capture data, and track events as they happen.
Drivers can also use this modular solution to take signatures, photograph proof of service and record unplanned or extra lifts, capturing revenue that is often missed when working with paper. Drivers can store necessary documents and access digital route sheets.
Digitalization is first a mindset
We’ve only given you a small taster of the modular solutions you can implement to future proof your business.
Digitalization is rightly called a journey. With it comes a mindset centered around forward thinking and innovation. In the current climate, the stakes are high. Digitalization is a culture and demands that everyone within your company gets on board. Otherwise, you’re likely to fail, no matter how many digital modules you add to your business.
Talk to us about digitalization, what it could mean for your company, and how to get started. Or download the brochure or request a demo below.
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