Prioritizing Generator Sources

Material:  Wood Waste

Issue:  Many wood-waste generators could exist in a region that is considered for implementing a wood-waste reuse-recovery system. However, technical and economic needs present challenges to potential processors trying to establish cooperative business relationships with those generators that determine the volume of the wood-waste stream. Potential processors strive to focus the supply search and negotiations to the fewest yet most viable participants, while still ensuring the necessary product volume and reliability to end users. They must keep marketing costs to a minimum while optimizing incoming supply. Investing in the capital equipment needed to process value-added material into products can be very expensive. Thus, processors must know how to negotiate contracts with reliable supply sources while meeting certain material specifications.

Best Practice:  This Best Practice recommends developing a regional network of supply sources that are diversified enough, in aggregate, to enable a processor to meet overall sourcing needs regardless of any individual source problem. If possible, a processor should initiate signing long-term supply agreements. The sources within the network should have experience and interest in using the latest quality-control techniques to ensure minimal variance in the feedstock quality, while optimizing volumes delivered and feedstock reliability.

Implementation:  Potential processors must understand the total consumption capacity for wood fiber in the region to establish the appropriate strategy for equitably meeting the generators needs. The difference between the estimated consumption capacity and the supply needs met by virgin chip supply defines the potential demand for commodities such as recycled paper, recycled wood and incremental forest residuals.

Specifications and adaptability of the regional market could cause discrepancies between this potential demand and the actual regional supply and demand. Most likely, existing primary generators could supply a regional system for wood waste reuse-recovery; however, the region’s size could cause sensitivity to transportation cost. Also, the local competition for use of the raw material, its disposal fees, or both could affect the availability of wood waste.

The solid-waste hauling companies and wood-waste processors that sell to lower-value markets presently control the existing wood-waste stream. They may not have high-value markets, but they currently serve all regional customers. It is necessary to research the local wood-waste marketplace to identify competition or potential partners. To implement a wood-waste reuse-recovery a processor might need provide wood-hauling services. A new, value-added, more reliable wood market would interest existing haulers.

The actual quantity and mix of wood waste varies regionally because of demographics, the age of buildings and construction materials, and the business base. Typical sources of wood waste could include:

·         Mill Residues -- such as bark, chips, edgings, sawdust, shavings and slabs,

·         Demolition Wood -- such as lumber, panel shapes, doors, cabinets, plywood, particleboard,

·         Pallets and Crates -- from commercial businesses,

·         Commercial Scrap Wood -- such as furniture scraps, wood working plants, and

·         Renovators -- such as lumber scraps, old cabinets, etc.

To implement a wood-waste reuse-recovery system, processors need to develop very specific specifications for wood-waste material. Processors must clearly convey to supplying sources their needs for the designated wood-waste volumes, their quality level, and acceptable contamination levels, if any. Therefore, they must determine if suppliers’ type and quantity of incoming wood waste meet with the quality control requirements. If not, perhaps a better strategy would be to place a supplemental, intermediate processor in between the sources and the end-use market. Typically, potential processors should perform a feasibility review and cost-sensitivity analysis. They should analyze the many variables that control the financial success of a reuse-recovery system for wood waste--including the risks associated with the investment.

To set supply priorities, consider different criteria. Foremost, consider volume, material quality and feedstock reliability issues. Furthermore, consider competition, market demands, and the existing recovery and supply infrastructure. Once wood-waste suppliers start negotiations with the potential processors to establish a permanent business relationship, it is crucial that the contractual terms be realistic and workable for both the suppliers and the processor. Discuss and agree upon specific payment terms and how to handle disputes.

Benefits:  Overall, the time and cost of the entire process of collecting wood waste and then determining its acceptability as high-grade wood-waste feedstock for product manufacturing is not a business activity of concern to end-use manufacturers. They simply want to be supplied a constant quantity and quality of feedstock at a reasonable price. Therefore, a critical capability for potential processors is to be able to securely obtain the necessary wood waste and reliably process it into a clean, quality feedstock at the lowest marginal cost.

Processors will most highly value and solicit generators that can provide wood waste that can be readily processed to meet exact specifications and, depending upon volume and availability issues, could receive the highest market price from the end-user requiring those specifications. The highest market price may could include reduced disposal fees or actual payments. Once demand is established for wood waste, these preferred generators will be sought out by competing processors. It is important to establish strong business relationships with them that include the following:

·         competitive market prices,

·         prompt and effective service,

·         ongoing communication.

Application Site:  This Best Practice applies to development of wood-waste processing facilities.

Contact:    For more information about this Best Practice, contact CWC, (206) 443-7746, e-mail info@cwc.org.

References:

1.       Brickner, Robert, Gershman, Brickner & Bratton, Inc., Falls Church, VA.

2.       Clean Washington Center, Construction, Demolition & Landclearing Debris Research & Assessment, May 1995.

3.       Solid Waste Association of North America (SWANA), Construction Waste & Demolition Debris Recycling...A Primer, October 1993.

4.       Walsh, Daniel, NW Wood & Fiber Recovery. Albany, OR.

Issue Date / Update:  March 1997