Net savings Featured

9:38am EDT July 22, 2002

Nick Nicholson was hired to grow The Ecology Group Inc. rapidly, and he has.

The North Columbus business provides waste and recycling expense management to 75 clients throughout the United States and Canada with a network of 1,400 haulers across the country. When Nicholson began working with The Ecology Group four years ago, the company had one-third as many clients. Since he came aboard as president and CEO, sales have more than doubled, exceeding $50 million.

All the volume moved Nicholson to find a way to use technology to whittle down the mass of details that went along with the increased business.

"We needed to make the back room scalable," he says.

To accomplish the goal, The Ecology Group has implemented an Internet initiative, dubbed eTEG, to help manage the load of haulers, clients and services coordinated by the company.

He dedicated a company vice president to the effort and hired two technical experts to program and administer the e-commerce end. The initiative required a $50,000 investment for upgrading the company's systems to supply fast Internet access from anywhere in the world and a high-end computer server with phone systems -- including a T-1 line -- to support it.

By dealing with invoices, service requests and payments electronically, Nicholson hopes not only to benefit haulers and clients by improving record keeping and cutting the billing and payment cycle, but to impact his bottom line.

Already he's reaping time and cost savings that should increase once a majority of the haulers and clients take advantage of his e-commerce services. The results are likely to be even more significant in the months to come because he expects sales to continue to grow as well as the net income's ratio to sales.

"It will about quadruple our bottom line because of the savings," Nicholson says of the e-commerce initiative.

He expects to meet the goal by the middle of next year.

An easier way

The Ecology Group's e-commerce initiative is divided into three sections: eHauler, eClient and eService.

"We receive, for example, around 25,000 invoices every month from haulers all over the United States, including Alaska and Hawaii, and Canada and Puerto Rico," Nicholson says. "We needed a way to process the invoices rapidly, and we have really been working on electronic ways to do that for the past three years."

The company started by scanning standardized invoices from major haulers and having employees enter into computers any handwritten invoices from haulers in some rural areas.

The eHauler initiative, on the other hand, involves what Nicholson calls reverse invoicing.

"For example, in Columbus we work with Waste Management that way. There's around 50 services they provide for our clients here in town," Nicholson explains. "So at the beginning of the month, we send them an electronic invoice. We say, 'Check this over and turn it around as quickly as possible, hopefully within seven days, send it back to us, and we'll get you paid.'"

He also expects eHauler to help his company deal with complications caused by mergers in the industry, which result in changes in invoicing procedures, and missing or incorrect bills from haulers. The mess leaves The Ecology Group with a tremendous amount of follow-up phone calls and faxes, which could be reduced by electronically compiling and sending the information back and forth.

For example, in February, 52 percent of the invoices The Ecology Group received did not match the contract rate in its computer.

"This causes us a lot of hassle and delays," he says. "So, let's streamline: Take something that now takes 45 or as much as 70 days to get it down to 20 to 30 days or even better."

Nicholson hopes haulers will take advantage of another ability he has: depositing client payments electronically directly into the haulers' accounts. That would be helpful because, as a management company, The Ecology Group acts as the middleman through which payments are distributed. Take, for example, a large client like Consolidated Stores, which uses a variety of waste haulers because its stores are located across the country.

"Once a month, we send them a consolidated invoice, they send us one check, and we take care of distributing and paying the invoices for them to all the haulers throughout the United States," he says.

With eClient, The Ecology Group sends an e-mail to clients outlining individual stores and the monthly charge. The client can review that and send back a check -- hopefully electronically.

"We receive about $1 million a month electronically," Nicholson says, noting approximately 20 percent of his clients receive bills and reports electronically.

The company's eService is a similar concept The Ecology Group is implementing to help clients submit service requests.

Typically, he says, it takes 3.4 calls for a client to get an extra service or get something done through a hauler. Through eService, the client sends an e-mail for a service request to The Ecology Group, which pledges to let the client know the status of his or her request within an hour or the requested service is free.

As more haulers go online, The Ecology Group will pass the e-mail service request right through to the hauler.

"So we don't play telephone tag or pass things back and forth, and it's easier on both of us," Nicholson says. "We will be able to do a much better job of serving and tracking what's going on."

The game of persuasion

The entire process of using e-commerce has been an evolution for The Ecology Group, with the challenge of convincing clients and haulers to come on board.

"We started off in a rather humble way of just using scanning in house, but now we've expanded it to the Internet. We have about 20 percent of our clients and about 5 percent of our haulers using it," Nicholson says. "Hopefully, we can get it to 80 percent of both."

The company is making significant efforts to encourage participation. Among them: offering to provide computer hardware and software, as well as Internet access, at a minimal cost to clients and haulers not yet connected to the Internet. So far, Nicholson has had no takers.

In other cases, he is making inroads.

For example, The Ecology Group is linking into one client's accounting system to complete the electronic process there; another client has loaded its own software onto a computer for The Ecology Group to use.

Nicholson has yet to wring a lot of transaction costs out of the entire process, but he's seen the relationships between his company and the haulers and clients improve because of the increased communication that comes with implementing the technology.

He is realizing savings, however, in his cost to process each invoice.

"It used to cost us probably around $7.41 to process the old manual way, and now the cost is down to something like $2.29 -- and dropping -- for the electronic way," he says. "Once we get it into a grooved swing, it will be down to the pennies." How to reach: The Ecology Group, www.eteg.com, 459-3265

Joan Slattery Wall (jwall@sbnnet.com) is associate editor of SBN Columbus.