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Finding Joint Venture Partners/Buyers

Case Study Project Description

American Recycling had several business projects in development. They owned an industrial land site where they produced wood chips from secondary source lumber recovered from riverways and landing debris after logging. The need for wood chips at affordable prices was growing.

Project Problem

Several generators were moving into the market with urban wood waste chips. American needed to quickly secure their source of supply and acquire long term sales contracts to ensure the future growth of the business.

Solution

We showed them how to do a competitive analysis and build a new market niche for the company using our knowledge of the pulp and paper industry. We developed a marketing strategy on how to develop a network source of supply and get the pulp and paper mills to move quickly to sign purchase agreements for their chips.

American Recycling had an opportunity to capture a unique market niche as a flexible generator supplying a new source of original wood chips in a very high quality form. This niche is very different than those recyclers using urban wood waste. Their chips are more shredded and stringy where the original species origin is unknown. On the other side of the playing field are traditional sawmills who can supply a high quality chip but sell it in the same form from the same dwindling sources of supply.

American Recycling’s opportunity to carve out a niche was dependent on their ability to remain flexible by creating a number of different products. We developed a new strategy to promote the sale of these chips to pulp and paper mills by taking control of designing a new sales and contractual process. In order to bring this market niche into existence they needed to develop some distinct ways of doing business and differentiate themselves in all ways to the pulp and paper mill used to doing business one way with pre-set contracts.

The market opportunity for American Recycling was dependent on having a regular consistent and courteous pickup system for “unprocessed” wood that identified source organizations could rely on to come pickup their wood waste. The goal was to get both opportunities under contract.

The wood waste generator was American Recycling’s lifeline to cashflow. We performed research to understand how to secure their source of supply. These suppliers had several options for disposing of their wood. American Recycling had to learn how to cater to them so they would keep supplying their waste wood. American Recycling’s staff needed training in managing and maintaining this customer service system in order to ensure continuity and success. Each generator (supplier) had different requirements for the pickup of their wood waste. Some, such as contractors, wanted direct drop-off or a container placed right at their site. Others wanted to put it out on a certain day and be sure it was picked up regularly. Larger suppliers needed more efficient systems in order to guarantee that American Recycling could have regular access to the wood.

The company also needed good relationships with independent haulers who would be willing to cater to this customer service plan. We created a reward system for getting new sources of supply and recognition for duty beyond on the call of service. In return they received guaranteed contract work, and other perks that will maintained their loyalty. We also did a cost/benefit analysis to determine whether they should eventually have their own fleet.

Result

We re-branded the service with a name not associated with recycling, since the primary products are not recycled sources. The name had to be more memorable than “wood waste pickup” which was vital to differentiate it from Teamster controlled waste disposal services. The name also had to set them apart from urban wood waste recyclers and traditional sawmills in order to create this new market niche. All contract drivers carried the new name and logo on their trucks and uniforms. They gave out logoed hats and jackets to new suppliers.

We set up an information program that aimed to educate as well as provide a service to wood waste suppliers and developed a database of potential sources. A letter went out to all potential suppliers describing how the service worked asking for their participation with putting out materials for pickup. 40% responded. We then used a monthly reminder postcard and calendar of pick up dates. Every month, the company distributed a case study on where the wood was going.

Concurrently we also designed and implemented a chip contract marketing program to acquire demonstration sites and pilot tests. We set up industry roundtables informally at pulp and paper mills to discuss the pending problems in finding quality chips for paper making. We invited the press operators, paper makers, buyers, environmental managers and the marketing people to discuss working with this new source.

The goal was to close the session with a schedule confirmed and agreed to by all parties as to how the testing will begin and move through to identifying the definitions of a successful test and the first purchase. This strategy did yield two supply contracts after about six months of effort.