In logistics operations, the commitment to safety is all too often like the half-hearted embrace we give to an older aunt we occasionally see at family gatherings. We do it because we have to and it’s expected. But we’re not giving safety the full-on bear hug it deserves.
The devastating COVID-19 pandemic actually helped to elevate safety from an obligatory process within logistics companies to a strategic priority. Safety in logistics is about avoiding accidents for sure, as this eBook will review. But it's much more. Logistics associates − from warehouse pickers to truck drivers − are essential workers that form the backbone of everyday commerce. If they get sick and cannot work, products can’t get to market, commerce grinds to a halt, and a business's very survival is threatened.
In logistics operations, in the warehouse or on the road, the subject of safety is like motherhood and apple pie – everyone’s a fan.
And why wouldn’t they be? Who wants to see colleagues hurt? Plus, safety is simply good business. Accidents bring work to a halt and can cost you a ton of money.
But despite the clear benefits of reducing on-the-job injuries, safety is still regarded as a compliance-driven chore in many logistics environments.
We must move beyond papering the walls with pithy slogans – “safety is no accident!” – and begin the hard work of driving accountability to the associate level and empowering those who do the work.
This eBook examines safety investments from an ROI perspective, and then oﬀers up 4 strategies to improve safety performance in your logistics operation.
Accidents carry a hefty price tag, both personally and for the company, in terms of insurance costs, lost time, productivity dips and other negative consequences.
The National Safety Council reported that the cost of work injuries in the U.S. in 2018 – both fatal and non-fatal – totaled $170.8 billion.
Data collected by the National Council on Compensation Insurance (NCCI) for the years 2017-2018 show that direct medical cost per injury is about $41,000. The indirect costs can be 2.5 times higher than that.
Your workers’ compensation insurance may cover most of the direct cost, but that still leaves you with the indirect expenses. One component of those indirect costs – higher insurance premiums – bears special examination.
Consider an example offered by the insurance brokers Cavignac & Associates in San Diego. A company pays a base premium of $105,600 per year and has not had any claims. Then a worker fractures a limb on the job. The insurance company pays out $50,000 for that claim. That accident and payout changes the calculation for the company’s workers’ comp premium, driving it up to $129,600. That higher rate stays in effect for the next three years.
Companies that implement effective safety programs stand to gain a significant return on their investment. According to Optimum Safety Management, various studies have shown that just $1 invested in injury prevention returns between $2 and $6. That’s bottom-line profit from money that is not being spent on administrative costs, insurance, healthcare, and lost wages.
Despite this historically proven ROI, companies struggle to overcome the psychological barrier of investing in things that might happen.
A good metaphor is preventative medicine. According to the Centers for Disease Control, preventable chronic diseases account for 75% of the nation’s healthcare spending. Example: preventative programs that reduce hypertension by just 5% would save the economy $25 billion per year.
Shippers and 3PLs shouldn’t focus on the cost of logistics safety programs without a true understanding of the real cost of preventable safety incidents.
What are the real costs associated with poor safety performance? Check out the accompanying sidebar.
During the COVID-19 pandemic, worker protection became a new and essential core competency for corporate logistics organizations and their 3PL partners. We're not talking about things like having extra PPE equipment or setting up a few extra wash stations with hand sanitizers. We're talking about a company-wide commitment to safety involving a significant investment of resources and dollars. Elements of such a program, as it relates to virus protection, include:
To be successful, virus-related safety protocols can't be encouraged and enforced only through "management-down" communications. 3PL associates should be enlisted as active participants in a company-wide crusade to maintain a safe environment for the entire team that will, in turn, avoid a shutdown and ensure business continuity for the 3PL's customers.
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Four initiatives can make the most diﬀerence in moving your RIR down and reaping the health and economic rewards of doing so.
Establishing a culture of safety starts at the top. If C-level executives don’t make it clear that safety is a top priority, all the posters, training and speeches will come across as so much lip service.
Part of establishing a positive safety culture is to look for opportunities to celebrate accomplishments. For instance, get workers excited about hitting records for incident-free days.
One logistics company set a goal of achieving 90 days without a single incident throughout all its 26 logistics operations. As the company got close to that record, the safety group announced each milestone achieved. When the company tied its previous record, 37 days, leaders made a splash. Finally, after the company did achieve the 90-day goal, all locations were rewarded with a free catered lunch.
Look for similar opportunities to spotlight accomplishments at your company. Remind associates they are part of something important – something that’s got board-level attention.
A safety audit should not be a white-knuckle ordeal.
If you do safety audits for your company, associates may view you as being in“gotcha”mode – almost like when the health inspector visits a local restaurant. It’s critical that you turn that perception around. Make sure the local distribution center or terminal manager views the audit as a collaborative exercise aimed at achieving mutually desired goals.
To reassure your colleagues that you’re not there to throw them under the bus, spend time building personal relationships. Make sure that managers and other associates don’t see you ONLY during audit time doing audit-type stuﬀ. Talk to associates. Listen to their concerns. Attend safety meetings and celebrations. Invest time to show how personally invested you are in the facility’s success.
For local associates to embrace the role of corporate safety managers, they must get beyond the perception that auditors are just ticking boxes on an OSHA safety checklist. During a safety audit, have a team physically walk the building alongside management, proactively looking for opportunities to improve safety.
It might take a full hour to do a walk-through, depending on the size of the facility. This should be a collaborative and interactive process with associates on the floor. The team will appreciate the collaboration and begin to understand that you genuinely care about making safety a priority.
There’s a whole universe of accident causes, but certain underlying reasons are clearly identifiable. Many accidents come in the form of slips, trips and falls, as well as injuries sustained while lifting. Often, they happen when people are hurrying and skirting basic safety procedures. Associates need to be trained rigorously to be more conscious of predictable hazards.
OSHA recently released a report on common causes of accidents in warehouses. The list below is their top 10 areas for which they issue citations. In every area, you’d be wise to have a training module that addresses the dangers associated with each, and ways to minimize these accidents.
• Hazard communication
• Electrical, wiring methods
• Electrical, system design
• Guarding floor & wall openings and holes
• Mechanical power transmission
• Respiratory protection
• Portable fire extinguishers
To drive down your RIR, make safety a highly visible element of everyday operations. Clearly display your current days without incident metric, as well as other safety and compliance measures. Associates take pride in having good performance, and take ownership of these numbers.
This transparency and accountability creates healthy competition between facilities. Associates want the full team to succeed but, like most of us, they want to win. So, encourage that kind of friendly competition. At that same time, be careful to make distinctions between facilities for the sake of fairness. Some logistics operations are almost completely automated, while others are more manual and, therefore, more likely locations for safety accidents because there is more human activity. Competition is healthy; it just needs to be fair.
Keep in mind that management must also be accountable when it comes to safety. One way to demonstrate a commitment to safety is by investing in better equipment. For instance, you might invest in upgraded lighting, security access controls, and camera systems to keep your buildings updated. Associates notice these types of upgrades and recognize that management is reinvesting the company’s profits to provide the kind of work environment that keeps everyone safe.
A good logistics safety program goes way beyond a set of policies and procedures, posters, and a training schedule. The secret sauce is to develop a pervasive, operations-wide culture that understands that safety is simply smart business, and that it applies to absolutely everyone.
That kind of culture doesn’t get established in a couple of months. It takes years to get a mature culture of safety in place. A strong, proactive and safety-minded CEO can help shorten this timeline by constantly reinforcing the importance of safety and the role of each individual associate.
Ultimately, safe logistics operations don’t happen because of a few hard-working safety managers. Meaningful progress happens only when associates, across the organization, embrace safety as a personal responsibility.