70% of Industrial Waste Operators Have Fewer Than 30 Employees ── Structural Challenges in the Industrial Waste Treatment Industry Dominated by Paper Manifests, Excel, Phone, and FAX, and the Challenge of AI Business OS "WasteOS"

Leach Inc. (Headquarters: Tokyo, Representative Director & CEO: Takuya Tominaga) today announced the concept of "WasteOS," an AI business system for industrial waste treatment operators. Concurrently, we are seeking cooperation from industrial waste operators and industry stakeholders who resonate with this concept for interviews.

This article will discuss the market structure of the industrial waste treatment industry, the history of the manifest system, the actual operational burden faced by small and medium-sized enterprises (SMEs), the limitations of existing systems, and the direction WasteOS aims to take for solutions.

📣 Request for Interview Cooperation We are seeking industrial waste operators and industry stakeholders who are interested in this concept. Please share your on-site challenges, workflow, and dissatisfaction with existing tools. Your candid feedback will be directly reflected in the product's direction.

▶ Cooperate with interviews / Resonate with the concept

SMEs Supporting a 5 Trillion Yen Market

According to the Ministry of the Environment's "Survey on the Actual Conditions of Industrial Waste Treatment Business," the annual discharge of industrial waste is approximately 380 million tons. The market size is estimated to be about 5.3 trillion yen, forming a huge industrial base alongside construction and manufacturing. Although waste treatment plays an indispensable role as the final process in the supply chain supporting the Japanese economy, opportunities to discuss its actual state are not frequent.

The number of businesses in this market is approximately 190,000 based on collection and transportation business permits and about 20,000 for disposal businesses. However, there is a difference between the number of permits and the number of actually operating businesses, with an estimated 50,000 collection and transportation businesses and about 10,000 disposal businesses actually operating.

What is noteworthy is their breakdown. Approximately 70% of industrial waste treatment operators are SMEs with 30 or fewer employees, and many are micro-businesses with 10 or fewer employees. It is common in this industry for the president to drive the collection vehicle themselves, and for one or two administrative staff to handle everything from manifest management to invoice creation and administrative notifications—this is the daily reality of the industry.

While large treatment operators are introducing IT systems to improve operational efficiency, paper slips, Excel, phone, and FAX remain central to operations at SME sites. Despite the Waste Management Act (Haisohō) requiring increasingly sophisticated management standards year by year, on-site resources remain unchanged. This creates a structural gap in the industrial waste industry.

Furthermore, the industrial waste treatment industry is simultaneously facing labor shortages and an aging workforce. With limited personnel required to perform statutory management tasks, reduced time for administrative work increases the risk of transcription errors and oversight. This vicious cycle is putting pressure on the management of small and medium-sized industrial waste operators.

History of the Manifest System ── From 1998 to 2027

The manifest system became legally mandatory in December 1998. The issuance of a 7-part carbon copy manifest (A to E forms) became obligatory for all industrial waste, establishing a mechanism for waste generators to track and manage the flow of waste until final disposal.

In 2005, the electronic manifest system (JWNET) began full-scale operation. With its mandatory implementation in April 2020, the digitalization rate rapidly increased, reaching approximately 86.9% in fiscal year 2024.

The next milestone is April 2027. Due to system revisions, disposal operators will be required to add items such as "disposal method," "disposal volume," and "type and volume of waste after disposal" to their final disposal reports for electronic manifests. The government aims to achieve a manifest capture rate of 75% by 2030, and the scope of digitalization is expected to expand further.

📌 The trend of regulation is irreversible. For industrial waste operators, electronic compliance is a matter of "when" not "whether."

The "Mixed Problem" of Paper and Electronic ── The Paradox of Early Adopters Suffering More

Looking solely at the 86.9% digitalization rate, paper manifests might seem to be a minority. However, the reality on the ground is different.

Industrial waste treatment operators are on the receiving end of waste from generators. Even if they themselves support electronic manifests, it does not mean all waste generators have digitized. It is not uncommon for general contractors at construction sites to continue using paper manifests, or for small-scale waste generators not to be members of JWNET.

As a result, dual management of paper and electronic manifests becomes the norm in treatment operators' offices. The contents of paper A forms are transcribed into Excel, electronic manifests received via JWNET are managed in separate files, and both are reconciled and aggregated at the end of the month. Since paper manifests must be stored for five years, physical filing and securing storage space must also continue. Many administrative staff spend several days each month on this task.

During the gradual expansion of mandatory digitalization, this mixed period will continue for several years. This creates a paradox where companies that adopted digitalization earlier bear the cost of handling both paper and electronic systems more heavily.