How to profit from sustainability efforts
June 26, 2012
by Lucy Sutton
"One man's trash is another's treasure" is an often-used phrase with real-world applications. In 2006, Schulze and Burch Biscuit Co., Chicago, IL, joined the Chicago Department of Environment’s launch of its byproduct synergy program, known as the Waste to Profit Network. After seeing some ups and downs of the program, James McBride, vice-president of quality assurance, helped draft the new Waste to Profit charter to improve the system and ensure success this time around.
Currently serving as the chair of the network's member advisory board, Mr. McBride joined Schulze and Burch as a summer intern in 1981. He has held positions in operations, sanitation, project management and facilities, and he now leads the company's sustainability program. Mr. McBride offered his insight into the Waste to Profit Network exclusively for Baking & Snack's Operations Update readers.
Baking & Snack: How did you get started with the sustainability bug?
James McBride: The original kickoff came in 2006 or so, when the city of Chicago launched a Waste to Profit Network. At the same time, Wal-Mart had its scorecard and PepsiCo announced that it was going to be expecting sustainability throughout its supply chain, starting with its co-manufacturers. So I started working with the Chicago area network, helped them get started and was one of the founding members. It's an area I like, and so I've been able to add value to what's been going on.
What is the Waste to Profit Network?
The Waste to Profit Network is a collaborative network of Chicagoland area organizations looking for opportunities to turn underutilized resources into feedstock for others. Those resources can be actual waste, or byproducts, or energy, storage capacity, transportation, workforce, etc. The Waste to Profit name comes from the fact that it's looking to take one organization's waste stream output, which had been an expense to dispose of, into somebody else's input.
The city of Chicago is jointly funding the network along with funding from the US Business Council for Sustainable Development (US BCSD). Eventually, the goal for the network is to be self-sustaining from membership dues.
What are the goals for the network?
A classic example of a waste stream converted to cash would be recycling. Baled-cardboard recycling would be something that everyone would understand. Instead of going to landfill, you put a little effort in, and you can get some value out of it. The network looks at low-hanging-fruit recycling opportunities as well as more complex ones.
Another goal of the network is to help the various businesses exchange ideas and information about best practices. It's a network for exchanging your outputs and rethinking your feedstock, but it also functions like a trade association or cooperative. It’s a member-based network and not like an open craigslist, where anybody can get on there. The vendor members — the recyclers, the resellers — have a code of conduct to adhere to. If they don't treat one of the members fairly, the rest of the network would know that, and there's also a mechanism by the administration of the network to remove them. So it helps ensure the members, when they do get a call or interaction with one of the recyclers or a reseller in the network, it's someone who's vetted.
Another advantage of the membership in the network is education. By being a web-based network, it allows a forum where you can post questions and others can help answer them. The members of the network are made up of organizations like ourselves — Baxter Health Care, Goose Island Beer, Procter and Gamble — organizations that produce a steady stream of materials. The network also conducts physical meetings.
The goal is to reach out in several methods. Your highest value to your waste stream will come from someone who can use your waste stream as a direct input. One example we always use is there's a member organization in the network that makes glass oven windows. When they break, there are small pieces of coated glass, similar to when a car windshield breaks. They were just landfilling that. There's an another member in Chicago who actually makes countertops out of recycled glass, so he now has an input for this. For the architects, when designing for LEED certifications , they're able to use a locally produced countertop that has a high content of recycled material in there. The counters have a very small carbon footprint because the waste is generated in the south side of Chicago, they're made into counters in the north side of Chicago, and then they are installed in downtown buildings.
One of the other parts of the web-based network is it allows people to get in and out and interact with the system at their time convenience. You don't have to travel somewhere. We're also starting to build a library of information. There's a lot of how to tune up your boiler or your air compressor. These small manufacturers in Chicago aren't going to send their plant engineers or plant maintenance guy to a conference somewhere, but they do have these available to them. They're webinars — people are very visual learners now — so that way you can save it and play it back when you need it.
How does the network go beyond businesses in its membership?
In Chicago, we have the Illinois Institute for Technology (IIT)'s professors and students involved in this network. If you come up with a challenge, some kind of an output and nobody knows what to do with it, that's what the professors are looking for: challenges for their students to see what could be made out of this.
We also have some public institutions in the network in Chicago, such as the aquarium and zoo. Not only are they a generator of unusual waste streams, but also they allow the network to have a platform for sharing information. Here's a very public entity, so as we do projects, we can get the word out to the average consumer out there, and also draw in some more potential members because they're getting exposed to the message.
One of the things we found is there's a building in Chicago that has a lot of artist tenants. They have an association, and we're trying to figure out how the association can become a member. Because these artists are using odd industrial output as their pieces of art, but they're going to maybe use one or two pieces. We are trying to figure out how they can participate because it allows them to get their materials they want for their art and it's a different channel for getting the word out about the network.
Also, there are government agencies involved in the network. The first version of the network crashed, primarily due to overreliance on public funding. And this time, the city is only providing some of the relaunch money. We've expanded to include the US BCSD, which is part of an international organization, so by having that entity help manage it, we're able to tap into what they're doing in Columbus and what they're doing in Mobile and Seattle.
In Chicago, we have a large number of members, and with IIT we're unique; not all the networks have that high of a level of mechanical and environmental engineering support team. Each group is developing slightly different, but that's a good thing because that's how ideas flow and grow. It's not dictated down from the top. But we do have various government agencies because there's a lot of help available and a lot of people don't know how to tap into that — they're not exposed to it — so this allows a forum.
Could you tell me more about why the first attempt did not succeed and how is it different this time around?
Unfortunately, it fell victim to good intentions but too much politics. The original NGO that was managing it was new, Chicago-based but inexperienced. When they began the new version, the city came to the remaining members of the collapsed network and said, 'OK, it's not going to just be the government writing the request for proposals this time.' They took the input from the original member companies, so we were able to have input, to correct some of the institutional issues it had before.
We were able to strengthen parts like making sure they understood that while the recyclers are needed, they shouldn't dominate what was going on. During the first version of the network, too many decisions were driven by them. One of the ultimate goals for the Waste to Profit Network was actually to help people reduce their energy usage and reduce their input usage too. It's not just get top dollar for your waste stream, but when it was recycler-dominated in the first one, they kind of wanted you to continue to put out that waste stream because it was their input. So we're trying to take a more sustainable look at it in the new version of the network.
We've set up a steering committee made up of the government agencies, US BCSD and business member companies, so we're able to get to the table and help direct where we think the network needs to go rather than a less democratic management of the group. We were able to bring on board the person who administered the actual network part, the staffer who was in the trenches of the original network: Libby Allen Augustine. She had built relationships with member companies; she knew very well what went wrong and what went right.
It's a stronger network; it's a better network. The new web-based exchange is not open to the public. It provides technical support to developing these opportunities, confidentiality for the participants and assurances other avenues cannot provide. We built a lot of features in there that help address some of the concerns that had been popping up not only in our first version in Chicago, but what's been going on in the networks in Columbus and Kansas City and Houston. We were able to learn from that. We're a little more adaptable now. It's like the US Constitution. We put in ways to grow the network.
What are some concerns companies might have about connecting with such a network?
When I'm trying to explain to people what the network is, people are concerned that if you post too much information about your plant — if you put on the website that your plant generates 50 drums a week of a certain material — your competitor could back-figure and know what you're running then. And if you drop or increase the your number offered , they would know production's gone down or production's gone up.
While we have strict confidentiality agreements in place with all participants, we let members know that it's also OK not to put the exact number. We explain to people it's like a service on these dating sites. You're posting your profile out there; you don't have to tell them everything, but when you get that exchange going with your potential buyer, then you disclose a little more information.
Also, the network is set up so the transaction is like a dating service. The network organization doesn't get involved in it. It's a business transaction between two companies; all we're trying to do is help bring them together, but the rest of the transaction is theirs. There's no contract work with the network, so all that is between the two companies. That's why the quickest way to explain it is that it's like a dating service. We don't know where it's all going to go, but if you bring enough people to the table, something will work out.
How can smaller operations partner with large corporations to pool their waste streams?
In Chicago, there's a number of local industrial retention initiatives (LIRIs), government agencies whose job is to try to retain business, and different cities have different names for these groups. They're helping organize what we call milk runs, so when you do have a number of small entities that do not produce enough of any one item, if we can collect them all together then we have something.
One of the things we're doing on the new version of the network is we have several membership price points. Large companies like Schulze and Burch are “Gold Level” members, so that means we can participate in the steering committee and all of the governance of the group. We also have unlimited access to posting materials, consultative support, and working meetings. But then there are a number of smaller members that may not have the budget or the resources to help support the overall organization, so we have a lower price point membership called the “Silver Level.” They have full access to the online tools, but a limited number of postings, and limited consultative support. It's like an introductory level. And some people's business might be so small that they only stay at that level. You can participate in the network, you can exchange ideas, you can benefit from the things at a lower price point.
What kind of price point are we talking about?
Gold Level members pay based on their company’s annual revenue — either $6,000 for very large companies or $3,000 for mid-sized companies, nonprofits and public-sector participants. The Silver Level of membership is $500 per year.
In terms of return on investment, a company could recoup their membership fees by offsetting the landfill tipping costs of about 100 tons of waste for the large companies, 50 tons for smaller companies. This is a very small volume for a manufacturer. Reduced transportation and material handling costs as well as potential profit from the waste make even easier to break even. Beyond byproduct synergy, the networking, marketing and educational value of being a part of this community-oriented network are a very good investment as well.
Other benefits of the Gold Level, formerly the Innovation Level, include an annual membership in the US BCSD, and they can participate in both technical and networking meetings. This level is for companies with high volumes of waste, complex, mixed stream, and/or hazardous byproducts.
There's also a price for national members, because some of the larger folks who have a plant in Chicago and a plant in Cincinnati, they didn't want to buy full memberships in each. So the US BCSD is developing a Platinum level of membership for companies that want to support the program and participate in several regional networks. The cost for this level of membership will also be reflective of business size and type.
One of the organizations on the national level is Procter and Gamble. They've committed that all of their plants around the country will post into the network, even if there's not any network near the plant. They're going to post on the national database their outputs. We're thinking that if enough national people do that, we're going to start to see clusters, and the clusters will help identify where the network should grow, but also to attract recyclers to see if they have a solution. By combining a certain number of manufacturers, they might have enough output to do a project.
For more information, visit wtpnetwork.org.
This story is sponsored by POWER Engineers, which has one of the most comprehensive teams of engineers and specialists serving the baking and snack industry. As an extension of its clients' engineering teams, the company provides program management, integrated solutions and full facility design for the baking and snack industry. Learn more at www.powereng.com/food.