Waste Management Software Helps Find The Right Price - InformationWeek
IoT
IoT
Healthcare // Analytics
News
9/7/2011
04:35 PM
Connect Directly
Google+
LinkedIn
Twitter
RSS
E-Mail
50%
50%
RELATED EVENTS
Building Security for the IoT
Nov 09, 2017
In this webcast, experts discuss the most effective approaches to securing Internet-enabled system ...Read More>>

Waste Management Software Helps Find The Right Price

It uses statistical models to help managers decide what price to bid on a contract. One in a series of profiles of InformationWeek 500 innovators.

Pricing optimization software, also called revenue management software, is commonly used in a few industries--airlines and hotels, for example--but not widely beyond those. Waste Management found a way to make it work in the business of trash collection.

The company created a system that uses custom analytic models to predict whether a customer up for contract renewal is likely to accept or reject a price increase. It considers factors such as type of services, geography, and past behavior, as well as competition and economic conditions. Pricing managers get the analysis, then exercise their own judgment in determining whether to push for an increase.

Waste Management needed the pricing app for several reasons. One is volume. The company provides more than 100,000 service quotes a month, and relying on the experience and instinct of managers is "not a scalable model," says CIO and senior VP Puneet Bhasin. Also, the company has started a multiyear effort to increase revenue and cut costs, and it's counting on "pricing excellence" to meet its goals (see Waste Management's New Model: Garbage In, Profits Out).

Implementing a pricing optimization system can be daunting. One reason is that price can be an emotional issue. If an airline passenger who paid $500 finds that the person next to him paid $250, the $500 traveler isn't happy.

Waste Management's services, however, are different because every bid is unique, says Bhasin. Location, type of waste, weight and volume, scrap value, rules on where garbage can be taken, and competing services all go into its calculations.

Another challenge is that there isn't an easy off-the-shelf pricing optimization system that companies can buy, Bhasin says. While pricing software is available, there's a lot of hard work in learning what factors really drive market prices and in customizing the software to the industry and market.

The company first had to build its predictive models, which it did using SAS's analytics software. "It takes a commitment to science and technology not everyone has," Bhasin says. Waste Management built different models for all 25 of its markets, since the drivers differ. IT custom-coded the models into decision support software, then established a portal to give its pricing managers access to the recommendations generated.

The system will never replace a manager's judgment. But by modeling the most important market drivers, Bhasin says, Waste Management is working to be "more intelligent in how we price our products."

Go to the 2011 InformationWeek 500 homepage

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of IT Report
In today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.
Video
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll