A comprehensive software system for environmental and safety compliance, management, planning, and reporting is what waste management organizations seek and rarely find.

By Thomas R. Cutler

Two-thirds of operations managers and information technology (IT) professionals in the waste management sector pronounced frustration in a recent survey of 230 industry firms by TR Cutler Inc. The leading causes of dissatisfaction include lack of data integration, inability to produce compliance reports, and inability to access data vital to improving business operations. Too often systems promising integration lack key reporting functions and other compliance issues, according to the survey. More than half (58%) of those reporting dissatisfaction plan to replace their systems this year.

The components in an integrated waste management system are beyond simple report generation. Some of the key components sought are included in Figure 2.

Examination of these components reveals the intricate elements that must be addressed for complete automation and integration. Without question, gathering and controlling data by an enterprise resource planning (ERP) system are among the first key steps to proper information management for compliance and reporting. ERP systems are designed to manage information across an organization in a way that optimizes resources and makes information available in a variety of places, but most do not provide specific domain information regarding chemicals, regulations, or product hazards.

It might be necessary to have an ERP system augmented or modified to include:

• inventory management that focuses on special requirements or regulated materials, rather than just identifying items with product numbers;
• hazard, chemistry, and regulatory information for products based on their chemical components;
• hazardous-waste tracking from item to drum to accumulation area to manifest, and confirmation of proper disposal;
• labeling, storage requirements, and other safety information pertaining to specific products based on components;
• compliance with Occupational Safety & Health Administration mandates, including employee training notification, chemicals on hand, and job responsibility;
• facilities management that correlates regulated inventory to fire safety information, special store needs, and permits;
• regulatory reporting for federal, state, local, and international environmental compliance.

Why Generic ERP Systems Fail Waste Management Firms

Off-the-shelf ERP systems are designed to work for all types of organizations, especially repetitive manufacturing facilities. Unless they are modified to reflect the unique and often idiosyncratic nature of waste management regulations and requirements, these software tools are of little use in the waste management industry.

An integrated waste management element of any ERP system must accomplish each of the functions in Figure 3.

It is equally critical that handling, storage, and disposal permits are tracked and that users are notified of actual or impending permit or regulation violations.

Facility-specific waste data included in integrated ERP are shown in Figure 4.

Report Generation

Waste management is report-intensive. Waste management agencies must provide reports showing local state, federal, and international compliance, including tax reports, Land Ban forms, and Superfund Amendment & Reauthorization Act reports. Ideally they are sent electronically to the regulating agencies. User-defined reports are critical to internal decision-making at the highest management levels.

Whether metal or chemical or mechanical, the unique report-writing requirements of the waste management industry are not met by generic ERP systems.

Variances in waste management can create conflict for generic ERP systems:

• Quality isn't predictable: Lots are not equal because the physical, mechanical, dimensional, and functional properties are not equal.
• The part numbers function does not perfectly define form, function, or fit: Application of raw material is a function of actual quality. Yet quality is merely the comparison of properties to specified targets. Different lots of the same part number can have different properties.
• The process alteration function is often required to produce the same final item: Property adjustments in manufacturing operations are often needed to produce the same item, yet partial orders might be required to ensure quality and consistency.
• Work orders or runs are not as functional as tracking units by containers: Location, quality, and quantity must be tracked at the container level because properties can be different for containers on the same order and same part number in inventory.
• Substitution of materials is commonplace: Material applied to an order can be a function of the characteristics of available inventory and can contradict the bill of material. Generic ERP systems cannot handle this type of deviation.

Where ERP systems often fail is the inability to account for this type of fluctuation and variance. Typical ERP manufacturing software is assigned to handle a constant, inflexible number of parts to make a finished good. Finding systems that offer the capacity to handle inventory differently has usually been the province of engineer-to-order and made-to-order ERP software providers. The larger ERP firms, SAP and Baan, say their systems can be modified to handle the nuances of the waste management sector, yet it might be found that the cost, time, and results do not prove these sales assertions to be true.

The Supply-Chain Part of the Equation

Ideally the integration of the supply chain will be a Web-enabled application software designed to replace paper-quality forms, collect and store quality data, and make it available in controlled environments throughout the supply chains of regulated, standards-compliant, and quality-driven manufacturers. Most often, these applications are used in the following sectors: pharmaceutical, chemical, aerospace, automotive, electronics, plastics, food processing, and other process manufacturers. It is critical that this adjunct application can be used on both the buy side and the sell side; it is also important that the operations side has full functionality for mission-critical manufacturing processes and supply-chain transactions. Then comes the critical question: Does this supply-chain component integrate with the ERP system? When IT waste management professionals are pitched software solutions for ERP or supply-chain management (SCM), it is absolutely essential that the integration of these features are discussed and resolved before any implementation program is initiated.

The Pros and Cons of Available Integrated Software

Budgetary concerns are real. Some of the larger firms will charge several million dollars to set up an integrated ERP/SCM system with added modules from a variety of companies. The average installation time for a comprehensive integrated system was just under one year, with more than 25% taking longer than one year.

Of the "add-on" modules available for hazardous and nonhazardous waste manifesting, tracking, and reporting, most contain features to generate manifests, define wastestream characteristics, send alert reminders about expiration dates, track waste disposal costs, track shipping costs, track shipments and manifests of waste, maintain a list of transporters, track histories of actions with companies, store databases of waste codes and chemicals, maintain profiles of generated wastes, send alerts about expiring approvals and aging manifests, create and print container labels, schedule activities and reminders for pickups and inspectors, and prepare federal and state reports.

Several software programs offer myriad other product benefits and features and most provide some flexibility for customized report generation based on the internal requirements.

Last Step: Make Sure All Systems Speak the Same Language to Achieve True Integration

Adapters and connectors available off-the-shelf for enterprise application integration sound like plug-and-play solutions, but the reality is usually a less-than-perfect fit. It is the last step of integration that is often the most difficult, riskiest, and most expensive. The last step is what runs through the back office and that integration is firmly entrenched in mission-critical applications that run the enterprise.

Whether packaged or built from scratch, waste management applications are often the most critical business systems to integrate and most difficult because they were not designed with standards-based integration in mind. Even adapters that might solve the problem often require significant and complex custom coding. Applications built in-house - customized implementations of packaged applications - might result in an unraveling of the entire implementation.

The dangers are real. Adapters often are pieces of code from previous assignments, requiring significant work to turn into a useable component because it is undocumented and was built for a different application or functionality.

Adapters with waste management functionality must capture and reuse data from the ERP application without extensive customer modification or duplicate code writing. These adapters must not bypass the logic that is paramount to the quality and stability of the information systems.

Given the critical and strategic decision of enterprise application integration, there are key steps in the decision-making process that should be considered.

Understand the ERP Implementation

According to Rob Young, director of professional services at Encompix ERP software based in Cincinnati, OH, "ERP is a business undertaking, not a technology project. The ERP system is a tool that will affect every part of a waste management business. It will affect business processes and might lead to cultural changes within the organization." Clearly defined business objectives for the new system are essential during the selection process and must be defined at the beginning of the implementation.

Present the Project to Your Entire Organization Early in the Process

Remove any mystery or potential fear associated with the implementation of a new ERP system. Over and over again during implementation, emphasize the benefits the system will yield.

Choose the Right People to Lead the Implementation

The implementation team must include a wide range of disciplines and should have representation from every level of the organization. The team leader must have a broad understanding of the business and of the business objectives for implementing the system. Generally speaking, an IT person is not the best leader. Similarly, although the team should have the full backing of top management, top management should not lead the implementation.

Define the Roles and Responsibilities of the Implementation Team

Determine whether team members will be responsible for their normal day-to-day duties during the implementation or whether those duties can be handed off to someone else during that time. Implementation team members should be ambassadors for the ERP system; they must work to build acceptance of the new system throughout the organization.

Understand the Role of Top Management

"Top management must articulate the business case for implementing the new ERP system," Young urges. "This information should be shared with everyone in the organization. Top management must also make sure that the implementation team is focusing on these goals as part of the implementation process. Finally, top management must stand behind the implementation team and publicly support its efforts."

Manage the Elements of the Implementation

The implementation is about improving a waste management business; it is not just a technology initiative. Because it will affect all parts of aspects of a business, the agency must evaluate how the business processes will be affected. It might be necessary to change some processes, even if they have been practiced for a long time. Attention also must be given to the human element of implementation. People will naturally resist some of the changes required by the new system and some might fear that the new system will adversely affect them. Address these concerns.

Follow the Implementation Plan

The ERP vendor's implementation plan is just as important as its ERP system. If the system cannot be successfully implemented, it will do you no good, no matter how well it fits a customized waste management business. The ERP vendor must have a tried-and-true implementation methodology. Let the ERP vendor determine the implementation process and follow the vendor's plan.

Communicate

The implementation team should communicate to the rest of the organization regularly, updating everyone about the implementation's status. The implementation will require personnel outside the implementation team to participate in data modeling, training, and meetings involving the ERP vendor's professional services personnel. Make sure that participants fully understand the objectives of each activity.

Utilize Your ERP Vendor's Professional Services

Professional services are not cheap, but they are essential. Use the expertise of your vendor's professional services personnel. There is often a temptation to reduce implementation expenses by limiting the use of professional services. Companies that do so put their waste management business at great risk and set themselves up to fail. Even if an outside consultant is hired with hundreds of ERP implementations, the vendor's expertise cannot be overestimated.

Map Internal Processes and Document Procedures

This requires a lot of time and effort, but the companies that achieve the greatest results map their business processes to the system in a graphical format. There are three benefits: First, it provides a sanity check for those processes. Seeing processes graphically enables companies to identify and improve bad processes. Second, having a graphical representation of business processes helps all people understand the integrated nature of the business. Finally, documenting procedures (step-by-step usage of the system at the departmental level) tend to instill a sense of comfort to end users, providing them all the information they need to do their jobs with the new system.

When nearly seven out of 10 waste management professionals are dissatisfied with their current systems, change is critical. Two years and $2 million later, business functionality and integration goals will not be met without great care from the beginning.

Thomas R. Cutler is president and CEO of TR Cutler Inc., based in Ft. Lauderdale, FL.

MSW - March/April 2003