Waste Wizard

Waste Wizard is a commercial waste management company with both collection and landfill disposal operations. This case focuses on the waste collection unit. Waste collection is an asset-intensive business, involving a large fleet of vehicles, and the success of the business relies on high levels of operational efficiency and asset utilization.

Anecdotal evidence suggests that the Waste Wizard collection unit contains a number of inefficiencies and opportunities for improvement. The challenge facing the management team is that many improvement opportunities require an upfront investment and they do not have a robust tool to quantify the financial benefits of making incremental improvements as an operational metric.

Background to Project

Waste Wizard is a commercial (B2B) waste management company with both collection and landfill disposal operations. It had revenues (or “turnover”) in FY2013 of over $300 million. This report covers the collection unit only, which deploys a large fleet of vehicle assets to collect waste from over 200,000 commercial customers distributed over a wide geographical area. The main business process is simple. Each vehicle leaves a depot and drives a route that covers a number of customers. At each customer location the vehicle empties the customer’s garbage bins into the back of the truck (an action referred to as a “lift”). Once the truck is full it drives to a landfill location to be unloaded. Waste Wizard’s customers are billed a fixed amount each time their garbage bin is emptied, with pricing based on the volume of the bin (in m3). The collection unit incurs a cost at the landfill gate for the amount of refuse it unloads, with pricing based on the weight disposed (in tonnes). This volume / weight mismatch between revenue and cost represents a fundamental tension in Waste Wizard’s finances that needs to be actively managed.

Analysis of Operating System

Waste Wizard’s operating system is based on deploying a number of assets and processes, as outlined in the table below. The business is asset-intensive, and it involves a simple, commoditized product with limited opportunities for differentiation. As a result, the business pursues a low-cost strategy and requires supporting strategic capabilities including maximizing asset utilization, minimizing cost-to-serve, and achieving economies of scale in indirect costs (SG&A, fleet management, and corporate overheads).

Because the business operates at thin margins, Waste Wizard has been reluctant to invest in new technologies unless a clear financial gain can be demonstrated, however the business lacks the analytical sophistication to be able to link improvements in operational metrics to financial benefits.

In the analysis below you should:

1. Build a ROIC tree that quantitatively links operational metrics to financial performance. This is best done using a spreadsheet. Then, identify three operational key performance indicators (KPIs) to be analyzed in detail.

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Status NEW Posted 30 Jul 2017 05:07 PM My Price 10.00

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file 1501435485-Waste Wizard.xlsx preview (212 words )

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