How Safe is your Supply Chain?

How Safe is your Supply Chain?

Over the years, the utility industry has developed an ingrained safety culture. When we think about these safety programs, we often think of the hard hat, the steel-toe boots, flame resistant clothing, keeping three points of contact as we climb the stairs, and dozens of other little things that can make big differences when it comes to safety.

While a company might be diligent about the safety of their own people and facilities, what about the safety of suppliers and partners?

Recent headlines provide several examples of how lapses in safety by suppliers has a significant downstream effect on the business.

In May, the Meridian Magnesium factory in Eaton Rapids, MI, experienced a fire in a tunnel containing a conveyor belt. A fire detector failed to provide a timely alert of the fire to workers and, when it was discovered, a fire suppression system discharged water onto molten magnesium. This only made the situation worse and by the time firefighters arrived, the tunnel was glowing white. The building was evacuated and firefighters could do little beyond letting the fire burn out.

The plant suffered $8 million in damage and hundreds were left unemployed. But that was only the beginning of the impact. A week later, Ford announced that production of its popular F150 pickup would be temporarily halted because of a parts shortage caused by a fire at a supplier’s facility. That supplier? Meridian Magnesium.

Suddenly 3,600 workers at Ford’s Kansas City plant were being furloughed. In the next few days, the impact would also extend to Ford’s Super Duty production lines in Kentucky and Ohio as well as Chrysler’s Pacifica production line in Ontario. Lack of adequate fire suppression at the facility of a major supplier seems like the kind of thing Ford would want to know about, but news reports and comments by Ford do not hold any indication that they had ever visited the plant or reviewed (at any level) the plant’s safety record and procedures.

It turns out that the plant’s safety record was less than stellar. Since being acquired by another company in late 2013, the Meridian Magnesium factory had been cited for several safety violations that resulted in fines of $6,700. These incidents included violations of standards related to worker safety around electrical equipment, die-casting machines, and industrial trucks. Beyond the fines, these violations had resulted in employees suffering injuries and burns on the job.

Your safety culture does not automatically extend to your supplier network.

While most Request for Proposals and contracts ask for information about supplier safety programs, the reality is that it tends to be little more than a “tick in the box” when it comes to the final vendor evaluation. A supplier with a safety manual and a safety program is a start. But what utilities really need are suppliers and contractors that have a safety culture that aligns with theirs.

How much do you know about the safety programs of your key suppliers? How are the safety requirements in proposals actually evaluated? Do you know if they have been cited for any safety violations or have statistics about accidents and near misses? Have your safety professionals ever visited supplier facilities? Are communications channels in place so that you are aware of and can proactively deal with an incident at the supplier’s facility?

Depending on your answers, it may be time to jump start a safety partnership with those key suppliers for the sake of both improving safety of personnel and mitigating supply chain impacts. In your next RFP, request copies of physical security policies and information security programs. Once you have a shortlist of vendors, perform site visits to examine and assess safety. This information can then be used to create a gap-to-goal plan that you can partner with the selected vendor to achieve, sharing best practices and creating an urgency and path for action.

As they say, better to be safe than sorry.

Phone: 312-602-4000
222 W. Adams
Chicago, IL 60606
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