Manufacturers of all sizes need to analyze their supply chain management from a holistic perspectiveNot many manufacturers give much thought to the safety policies or practices adopted by their vendors. As long as they receive quality products on time, it’s really none of their concern.
Or is it?
There is a real lack of understanding among the manufacturing community about the importance of safety practices in their supply chain and the serious consequences that can result from vendors that don’t implement best practices involving safety.
Consider fire. Tornadoes. Floods. Accidents. These all should be cause for concern for your company, whether large or small, since they can interrupt business continuity or your ability to provide customers with quality products on time.
Manufacturers of all sizes need to analyze their supply chain management from a holistic perspective. Start the process by developing a list of all your products. Which ones rely on critical components from just one vendor?
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Next identify all suppliers, determining which vendors make those critical parts. While your plant may be operating smoothly, would that still be the case if those vendors could no longer produce those parts due to a natural disaster? Would you be able to find another vendor in time to meet your customers’ demands? Maybe the part is made overseas. Are there other US suppliers available?
If not, any of these vendors has the power to jeopardize your business by putting you out of business. Now is the time – not after a natural disaster or workplace accident occurs – to begin the communication and evaluation process.
That process also involves working with your procurement department. Their key goal is to find the best quality merchandise for the best price. But how much does your company actually save if selected vendors fail to observe appropriate safety practices? It may force them to shut down for six weeks. Suddenly, their problem becomes yours. Now you’ve got at least a six-week delay. Was it worth doing business with them to save a nickel per item? It is your responsibility to advise procurement about the importance of safety procedures throughout your supply chain. While pricing is certainly important, other factors like safety must also be weighed.
Take Charge
Some manufacturers actually conduct periodic audits or review safety practices when visiting vendors. Here are some questions to consider:
- Who are their suppliers? Do they know if their own vendors have appropriate safety practices in place or a strong safety track record?
- What are their back-up plans for natural disasters?
- Do they conduct routine safety drills?
- Do employees receive safety training? Is it mandated? How often is it required?
- How are their safety policies enforced?
- What is the condition of their equipment? Keep in mind that if the supplier doesn’t maintain or routinely service their equipment, not only could workplace accidents and/or equipment failures occur, but the vendor could also be producing inferior parts.
- Ask about their sprinkler system. Do they conduct periodic inspections? If the sprinkler system isn’t checked or maintained, how do they know if it’s operable? Something as simple as accidentally shutting off the water valve to the system, which has happened at several plants, could lead to the entire facility burning down in case of fire or explosion.
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X Factors
There are still other factors that could negatively impact your business operations. Take inventory, for example. How much inventory does the supplier store onsite? Or, maybe it houses all of its inventory or perhaps large quantities of it in a warehouse. Either way, how high the material is stacked and how much is stacked is critical from a fire standpoint. Merchandise that’s stacked less than 12 feet poses less of a fire hazard. Flammable or combustible liquids should also be stored in appropriate containers and storage facilities.
Likewise, transportation is another key area manufacturers need to address. How many transportation vendors does your company rely on? How do they route products to your customers? What is the overall safety record of their drivers? Remember, one traffic accident can wipe you out. Make sure that they’re not only shipping products on time to customers but also that the products are not damaged when they arrive. But if they are broken, dented or scratched, how does the shipper handle it? Customer satisfaction will definitely be negatively impacted.
All manufacturers nationwide need to consider these safety issues for the sake of their business health and future. Your company’s president, owner, senior management or board of directors need to be aware of such risks, how they can minimize them, and the proactive steps they can take to ensure business continuity. When it comes to safety, there really is no room for compromise.
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Brian Roberts is director of workers’ compensation and ergonomics at CNA. CNA is the 7th largest U.S. commercial insurer and specializes in business insurance programs for the metal fabrication industry, offering a wide range of services focusing on management accountability, cost drivers, and business solutions to improve your bottom-line. The program is endorsed by the Fabricators & Manufacturers Association, Intl® (FMA), underwritten by CNA, and supported by Norman-Spencer Agency, Inc.
To learn how your company can benefit from an FMA-endorsed program call FMA at 800-394-4362, CNA at 800-262-6241 or Byron Spencer at 800-543-3248.
To learn more about safety practices on supply chain management, contact Roberts at brian.roberts@cna.com, or your local independent agent.
The information, examples and suggestions presented in this material have been developed from sources believed to be reliable, but they should not be construed as legal or other professional advice. CNA accepts no responsibility for the accuracy or completeness of this material and recommends the consultation with competent legal counsel and/or other professional advisors before applying this material in any particular factual situations. This material is for illustrative purposes and is not intended to constitute a contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice. CNA is a registered trademark of CNA Financial Corporation. Copyright © 2012 CNA. All rights reserved.
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