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05

Apr

The Lasting Effects of Supply Chain Mismanagement

Author: Rene Garcia

Supply-Chain-Mismanagement

In New York City, March 25, 1911, 123 women and 23 men died from fire, smoke inhalation, or falling or jumping to their deaths when a fire broke out in the building where their factory resided on the eighth, ninth, and tenth floors. The incident was known as the Triangle Shirtwaist Factory fire and is the deadliest industrial disaster in the history of the New York City. This tragedy and loss of life eventually led to legislation requiring improved factory safety standards. While this famous incident is over 100-years-old, workplace deaths and injuries are still happening today.

In a recent case, Cusseta, Ala., Regina Elsea was working at an auto parts manufacturer on the assembly line when a mishap occurred, and Elsea was impaled by one of the robots. She died the following day. The Occupational Safety and Health Administration reviewed Elsea’s case and found the contracting company she worked for was in violation of a federal law that could have prevented her death.

Sadly, in both cases these accidents could have been prevented with better evaluation of contractors and adherence to higher standards of safety in the workplace.

Careful Vetting Minimizes Risk in the Supply Chain

Before working with a vendor, supplier, or contractor, it’s important for any organization to have a procurement process in place as part of their overall operational risk management plan. Part of the this process should be a thorough vetting before a contract is awarded, covering current and historical data. Some very important information to capture from potential partners are:

  1. Insurance – Do they have the right policies, the right limits?
  2. Evaluation of trades – What are they qualified to do?
  3. Financial History
  4. Subcontractors
  5. Sustainability Compliance and CSR
  6. Safety Statistics
    • Total recordable incidents and injury and illness rates
    • Lost workdays
    • Number of fatalities
    • Days away, restricted or transferred (DART)
    • Record of citations issued
    • Workers’ compensation insurance carrier “experience modification rating” (EMR)

These are just a sample of the types of things that should be addressed by a procurement consultant or supply chain management software, because they show that there is evidence of effective safety management. The best suppliers will ensure that there are flow-down provisions for lower-tier contractors, a signed certification from the contractor that all of its employees and those of its tiers agree to follow all applicable safety and health regulations, and that contractor safety checklists exist.

Any organization that is focused on sustainability in its supply chain knows that protecting the workforce is a key pillar of that practice. Injuries and deaths are already tragic on their own, but they can also have a lasting impact on business. Not only is the workforce demoralized by the human toll and diminished with less workers, but the company’s reputation can also be ruined. The Triangle Shirtwaist Factory fire happened over 100 years ago, but society is still talking about it today.

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