It stinks, it contaminates and pollutes and it’s increasingly expensive to get rid of. Garbage stands as a glaring, fetid symbol of unsustainability in our modern supply chain.

Repurposing end-of-life materials is simultaneously the most important and most overlooked aspect of sustainability in manufacturing, according to Daniel Guide, a professor of supply chain management at Penn State’s Smeal College of Business. Important because of the environmental and financial benefits of converting would-be landfill fodder to manufacturing materials; overlooked because reducing materials at the front end of the supply chain is simpler, many materials obtained from recycling don’t work for high-end application and some consumers find products made of recycled materials less appealing.

But some nationwide chains, including 7-11 and Wegman’s grocery stores, have found a way to reduce their waste and cut costs at the same time. They’re all customers of Rubicon Global, a four-year-old company in Atlanta that has created a virtual marketplace for waste and recycling jobs. The marketplace links companies that have waste to be hauled and recycled with companies that haul and recycle.

Unlike eBay, in which buyers bid ever higher prices and the top bid wins, Rubicon’s platform, dubbed Caesar, enables waste and recycling vendors to offer progressively lower bids on a job until Rubicon selects a vendor based on price and quality. This innovation has empowered small businesses to compete in an industry historically dominated by two major players, Waste Management and Republic Services. While a small hauler previously wouldn’t have been able to work with a big chain like The Home Depot because it couldn’t provide services nationally, Caesar enables small businesses to compete for local jobs from national chains.

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Meanwhile, large clients are able to more easily find and hire small vendors, opening up the market to more competition and lower costs. As Bob Wickham, a principal equity investor in Rubicon Global through Rotunda Capital, a mid-market private equity firm, puts it: “Waste hauling is a local business. When you can identify and manage haulers on a market-by-market basis and stitch together a network, you create efficiency and competition. And competition drives costs out of the system.” The platform also helps clients find small, veteran-owned or minority-owned vendors, if they’re looking for those specific types of service providers.

Rubicon Global also provides waste stream consulting to improve efficiency and reduce waste at the back end of clients’ supply chains. Those opportunities often go otherwise unnoticed because managers tend to obsess over energy and water savings at the front end of the supply chain, Guide says. For example, Rubicon Global has been able to make waste hauling more efficient for many of its clients by tweaking the haulers’ routes and schedules.

With landfill diversion rates of up to 65 percent, Rubicon Global often saves its clients 20-30 percent on waste and recycling fees, CEO and co-founder Nate Morris claims. “The value proposition we offer is simple,” he says. “We save our customers money and we do something more sustainable than putting garbage in a landfill.” Rubicon Global takes a percentage cut of the savings.

Making Cash from Trash
Unlike traditional waste-management companies, which own trucks and landfills and make money by increasing the tonnage dumped into those landfills, Rubicon Global owns few assets and makes money via savings by reducing the waste that ends up in landfills.

Essentially, Rubicon is doing for garbage and recycling what eBay did for the yard sale: It’s using technology to make more information available to more parties and connecting clients with a greater variety of vendors. It creates a transparent market in a space where there wasn’t one.

By doing this, the company hopes to spark a high-tech revolution in one of our most obvious sustainability challenges: garbage. While it’s tackling a niche industry and, Morris admits, “a small piece of a big problem,” Rubicon — and, no doubt, its primary investor, QuarterMoore Capital — see trash as a large and fast-growing opportunity as garbage costs rise alongside the value of recycled and repurposed materials. Rubicon is poised to benefit from some of that growth. The company has already turned a profit, according to Morris, who adds that Rubicon’s first multinational contract is in the works.

It faces its share of risks and challenges, however, including competition from large companies such as Environmental Waste Solutions and Republic Services’ Waste Stream Advisors. It also could see increased price competition as waste-processing facilities switch to lower-cost email and digital processing, which give Rubicon an advantage today. And because it has no landfills of its own, there’s always the risk that companies that own landfills could decide to increase tipping fees for firms working with consultants such as Rubicon Global.

In any case, nobody can accuse the company — which Morris describes as “a group of young people committed to a cause” — of lacking ambition. It aims to divert 100 percent of its customers waste to “truly sustainable alternatives” by 2022, according to Morris. “It seems like a revolutionary idea: Can we do away with garbage?” he muses. But unless we do something to break the link between consumption and waste, he said, “we know the future doesn’t look great.”

Mike McCullough studies sustainable development, environmental management and politics at the University of Pennsylvania. He has a special interest in natural resource economics and resource management. Michael also is a staff writer for Oikos International’s StudentReporter.org. He helped lead a team of student reporters from around the world at the Rio+20 conference in Brazil.

Meg Schneider, an environmental science student at the University of Pennsylvania, contributed to this article.

This article first appeared at GreenBiz.com and is republished here with its permission.


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