By Bob Richard, President Hazmat Safety Compliance
This is a first in a series of blogs that I hope to publish on our new website. I am very excited to have undertaken the next adventure in my hazmat career by starting a company dedicated to helping companies large and small that face the many challenges associated with hazmat safety compliance. In this article, I will focus on the costs on non-compliance and inappropriate investment in safety and compliance resources. It is obvious that companies need to focus on being profitable, providing their customers with exemplary products and services. Unfortunately, their focus on safety and compliance doesn’t always get the attention necessary. Many C Suite managers and decision makers don’t see the value in investing in safety and compliance. The safety and compliance staff don’t, in many cases, receive the appropriate resources and budgets needed to keep up with the constantly changing regulatory environment until there is an incident or a large penalty is assessed.
I have heard more than once, corporate decision makers state: “Why should I invest in safety and compliance it doesn’t reap returns that contribute to profit. We’ll take our chances that nothing goes wrong or that the government will not fine us.” Don’t get me wrong there are plenty of companies that have strong safety cultures supported and promoted by upper management, but this is not always the case. Based on my experience as both a regulator and a hazmat consultant, I have had the satisfaction of working on both sides of the fence. I’ve experienced many variations in company safety and compliance commitment and investment. In both situations, I have experienced satisfaction with helping folks to enhance safety, compliance, supply chain efficiency and implement cost saving best practices.
Decision makers don’t always see or understand the benefits of appropriate investment in safety and compliance. While I have not always been successful convincing them to make the appropriate investments up front before costly incidents or penalties are incurred, I have worked with many companies to help them understand why safety and compliance investment is something that can’t be overlooked. The simple fact is that the many benefits of safety and compliance initiatives are under estimated. Experience and history show that these efforts can have a positive outcome on financial performance, a company’s competitive advantage, public image and worker productivity and satisfaction. The impact of investment in safety and compliance on people’s lives and a company’s success is immeasurable. Failure to appropriately invest in safety and compliance has time and time again been demonstrated to cost many times more than appropriate investment and has in several cases resulted in bankruptcy of a company.
Although not inherently obvious there are plenty of ways to quantify a company’s safety performance and in turn influence their commitment to safety. There are direct and indirect business costs associated with injuries, fatalities, criminal and civil suits, property and environmental damage, business disruption and worker safety. In many cases companies only focus on the costs of injuries, property damage or penalties. However, there is certainly a business case for safety investments that will contribute to the bottom line. Costs that are typically overlooked include:
Payments to injured personnel including members of the public such as but not limited to worker’s compensation payments, medical expenses and civil penalties;
Civil liability damages and litigation expenses,
Property damage;
Environmental damage and clean up;
Workplace disruption, downtime and loss of productivity, administrative time, damage to equipment or the facility;
Investigation and implementation of corrective action costs;
Costs to repair public image and costs associated with public backlash (e.g. public boycott on products and services) and potential loss of business, such as a reduced ability to win contract bids;
Worker replacement and training including the costs associated with the loss of skilled workers that can’t be easily replaced and employees not wanting to work for your company because of concerns about safety;
Increased insurance premiums; and
Attorney fees.
The challenge to companies can be daunting because many have not properly invested in hazmat safety and compliance and underestimate the challenges of compliance with complex and frequently changing regulations.
Hazmat Safety Consulting can assist companies to enhance safety and achieve better regulatory compliance. These steps include:
Promote Safety. The most effective way to ensure regulatory compliance, avoid penalties and add significant financial value to a company’s bottom line is to develop a positive safety culture. Promoting such an environment can result in lower risk that minimizes the potential for accidents while maximizing efficiency.
Define Lines of Safety Accountability. This includes direct accountability on the part of senior management and each manager in the chain of command down as well as to individual employees. It is necessary to set and measure performance outcomes in order to determine whether the operation is performing in accordance with expectations, and to identify where action may be required to enhance performance levels to meet expectations. If employees are expected to behave safely and accountable for their actions, there is much less chance of an unwanted injury-causing incident.
Implement An Effective Employee Training Program. Employees that perform hazmat functions, whether a packaging professional, product classifier, customer service staff, administrative and stockroom employees that purchase or ship products, drivers handlers and storage personnel should receive job-appropriate hazmat safety training. Employees need to be able to recognize “red flags.” For instance:
Employees should become familiar with which products that are most likely to be or contain hazardous materials, such as lighting, aerosols, home electronics, cleaning supplies, pet care products, perfumes and nail polishes, and lawn and garden care products—to name just a few. All such products should be handled appropriately.
Employees need to know that products or packages that are leaking, damaged or expired may need to be treated as hazardous waste. A hazardous waste program should be in place throughout the logistics operation, including retail store locations and distribution centers. Steps that should be taken include registering as a hazardous waste generator, training employees on the various Federal, State, and local hazardous waste regulations, designating a hazardous waste storage area, and complying with a number of specific regulatory requirements.
Employees should pay close attention to packaging. Whether at the customer service desk, in the stockroom, or at the shipping dock, employees need to know they can’t randomly package an assortment of items into any available box. Returned consumer goods containing hazardous materials must be properly packaged and secured in accordance with DOT regulations before they’re sent to a warehouse or returns center.
Audit the Reverse Logistics Operations. Conducting periodic self- or third-party assessments of a company’s processes and supply chain operations is one component of establishing and maintaining a positive safety culture. Periodic evaluations can be used to identify safety hazards; ensure that remedial actions necessary to mitigate the risk are implemented; and provide for continuous monitoring to ensure an appropriate safety level is achieved. Developing a compliance checklist that identifies potential gaps and vulnerabilities in the shipping process is highly recommended. If the checklist is kept current with all applicable regulations, it is an effective compliance guide that, when used properly, will minimize a company’s exposure to violations from enforcement officials.
Correct Deficiencies. Trucking companies, airlines, vessel operators and other carriers are required by the HMR to report incidents involving the release of a hazardous material (e.g. a package is dropped and subsequently leaks). Once an incident is reported by one of these carriers, there is a strong chance that an inspector will be targeting the offending company. This is particularly true if the release occurs aboard an aircraft, or in a parcel-sorting facility prior to or following air transport. Numerous violations are issued by the Federal Aviation Administration every year (exceeding several million dollars) as a result of these types of events.
Hazmat Safety Consulting can assist companies to develop a strong safety culture and hazmat compliance program. I am looking forward to working with you and hope you will visit our web page to follow future blogs as we undertake a new journey on the road to enhancing safety, compliance and corporate commitment to appropriate investment that will certainly reap positive returns and improve the bottom line.
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