The latest statistics from Health and Safety Executive (HSE) show that, for 2013/14, 1.2 million people suffered from a work related injury or illness in the UK, costing society an estimated £14.2 billion. Needless to say, health and safety (H&S) is a major consideration for businesses all over the world. However, with supply chains now under increased scrutiny, performance in one part of the chain can significantly impact performance in another. In light of this, companies need to expand their procurement approach to include the monitoring and management of supplier H&S performance.
What is it?
H&S refers to any action, practice or regulation that aims to protect people through the prevention and management of an accident, injury and illness. Some of the key areas for businesses to be aware of include accidents from the use of machinery and transport along with other general incidents and illnesses that occur in the workplace. In terms of supply chains, any organisation that has a high number of historic cases or has not implemented the necessary prevention methods represents a risk to their buyers.
What are the issues?
By not taking all relevant actions to effectively manage H&S risks, organisations allow themselves to be hit with a number of impacts that can severely hinder performance. Some of the direct impacts include prosecution from non-compliance of laws and regulations, loss of finances due to compensation and loss of employee work time. There are also a number of indirect effects such as a detrimentally impacted reputation, a lack of employee engagement and reduced willingness to work.
Health & safety has long been a consideration for companies so why the increased focus now?
Though H&S has always been a central part of business strategy, the combination of a number of reasons has led to performance within supply chains now being a vital factor. Firstly, legal frameworks relating to H&S practices are stricter and more complex than ever before, meaning companies need to implement and prove that they have taken the necessary actions to manage H&S effectively. Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) 2013  and the Health and Safety at Work etc. Act (HSWA) 1974  are two of the key pieces of legislation in the UK. RIDDOR requires organisations to record and report work related accidents to HSE and HSWA is a more overarching framework that aims to secure the health, safety and welfare of people at work with non-compliance potentially a criminal offence. These general regulations combine with a host of industry specific ones such as CDM Regulations 2007, a law specific to construction which aims to continuously improve industry performance .
On top of this, stock exchanges and voluntary frameworks are all starting to place far more emphasis on H&S. The FTSE4GOOD stock exchange now includes H&S performance as a key part of the inclusion criteria and the Global Reporting Initiative’s latest voluntary framework, G4, includes detailed disclosure requirements around the monitoring and management of H&S incidents. With indexes such as DJSI also following this trend, H&S is a topic that is now at the forefront of businesses thinking.
Furthermore, there is a growing awareness that one part of the supply chain can have a significant impact on the H&S performance of companies further down the stream. For example, if a supplier sells its products in oversized and heavy packages, there is a greater risk of manual labour related injuries occurring in the buying organisations. Add to this the change in public expectation and the growing importance that non-financial information has in the consumer decision making process, and H&S performance across the entire supply chain has never been so important.
What information should suppliers be disclosing?
As the effective management of H&S related risk in supply chains is clearly an important task, buying organisations need to expand their supplier due diligence process to cover the necessary H&S information. Such information will vary depending on the type of buyer as well as the type of supplier, with key areas including H&S related policies, accreditations (e.g. BS OHSAS 18001), management systems, communications (e.g. email campaigns and newsletters), risk assessments, training (e.g. internal employee workshops and recognised training programmes) as well as the number and frequency of historic incidents. By engaging with this process and disclosing the right information, suppliers place themselves in a far stronger position to flourish whilst allowing their buyers to make informed decisions to effectively manage and minimise risk.
The business case for ensuring compliance
Both buyers and suppliers will experience a host of business benefits from being transparent and ensuring health and safety compliance:
o Minimised costs related to prosecution and compensation
o Reduced risk of losing work time
o Increased employee wellbeing and engagement
o Strengthened internal and external reputation
o Reduced risk of H&S related costs
o Enhanced reputation
o New business and investment opportunities
o Increased buyer and customer confidence http://www.hse.gov.uk/statistics/overall/hssh1314.pdf