Your supply chain is only as strong as its weakest link
A fire or another calamity is already bad enough for a company. But what if this affects a supplier of vital parts or components? What is the impact of such a fire on a large buyer? Increasing numbers of businesses realise that their supply chain is not only their lifeline – it also makes them dependent and vulnerable.
Ron de Bruijn, Managing Director of Riskonet: “I like to raise the concept of chain responsibility with our clients. A large high-tech company recently did more than sufficient work on this by having open discussions with several hundred of its suppliers about their mutual dependencies. The company made the suppliers aware that it is in their shared interest to focus more on work safety in the companies concerned.
They did not need to do much to get that point across. Everyone can imagine that it is the consequential damage of a fire that has the greatest impact. Production comes to a standstill, often for months or even longer. Just think about it, how much turnover and profit would you lose in that period? If it happened to your supplier, how damaging would it be for your business operations if they are unable to supply you for an extended period?
Have you thought of everything? Riskonet has created various checklists that you can go through yourself. Download the checklists here and get an insight into the weak points of your supply chain.
When reasoned this way, the supply chain is actually only as strong as its weakest link. Calamities in just one link have a huge influence on the entire chain. We see examples of this every year. For instance, take the consequences for the business world within the country and (far) beyond of the 2011 tsunami in Japan. Or take the unavailability of a piston ring costing $1.50 that caused almost 70 per cent of the Japanese car industry to come to a standstill several years ago. Another example is the fire at a supplier in Michigan in 2018 that caused significant problems to Ford, Fiat Chrysler, BMW and General Motors factories.
The smallest measures (or the failure to take these measures) sometimes have colossal consequences. Recently, during an inspection at a production facility in another company, I personally witnessed an employee producing sparks outdoors with a grinding disc. These sparks were flying inside to an area where flammable substances were being handled.
What can a company do to get its technical safety and procedures in order? In a word, it can focus. Take a look at the Riskonet checklist that we have specially developed and see whether you have thought of everything. There are plenty of things you can do to identify the risks and to take measures to limit the consequences of an incident. What is the investment? Often, it is zero. It is usually a matter of focus and attention, and of making a few adjustments within your organisation!
It all starts with the organisation’s housekeeping and by making sure that dust, litter and waste cannot cause a fire hazard and that there is a clear smoking policy in place. It involves the safe handling of flammable substances by employees, safely organisation of storage and installing battery charging stations in accordance with safety standards.
But it is also about procedures for activities that could incur a fire hazard and for the way in which third parties work at your industrial sites. It is about alarm response procedures, staff training, using existing checklists correctly and self-inspection, and about how electrical installations are installed and maintained.
We are also talking about taking damage-limiting measures with detection and sprinkler system installations, extinguishers and burglar alarm systems. Does your organisation have a continuity plan? Does it have an emergency plan? How about a recovery plan, should the unthinkable happen, and a flood emergency plan? Which temporary protection measures do you have in place to contain the problems?
The point I would like to make here is that you should not put too much faith in the knowledge that your buildings and installations comply with the Building Decree. Furthermore, you can anticipate being able to get your employees out safely in the event of a fire, but you cannot usually prevent the incident itself and the total loss of your building.
Natural hazards, namely the risks associated with the rising temperatures of nature and the climate, are special points for attention. Think about floods caused by a heavy rainfall or by overflowing rivers and canals. The checklist provides plenty of tools to reduce the risks. It is interesting to see how simple and practical the solutions can be. For instance, is your production in a region where floods occur from time to time? Make a deal with a pump supplier right away. If flooding occurs in your region, your company will be at the front of the queue if you need to hire emergency pumps.
Here is another example: Riskonet advises a company in the Czech Republic, where they have become accustomed to the possibility of flooding during certain periods of the year. They have responded to this in such a way that they can quickly dismantle their machines if necessary, and rapidly bring their industrial units back into use after a flood. As soon as the water arrives, the company takes emergency measures which lead to minimal downtime.
In other words, the company is thinking in line with chain responsibility. You should keep your eyes and ears open, take a critical look at your premises, installations and procedures and the attitude to safety within your organisation. If you are going to invest in new premises, a well-designed and suitable fire alarm system is money well spent. Focus during the design phase does not cost any extra. Furthermore, once you have a system in place, you should make sure that it is well maintained.
You should also be alert to new risks. A fire alarm and sprinkler system can be designed for an industrial unit where metal components are stored. However, if the nature of those products changes over the years, for instance, if you also store flammable substances there now, then that will affect the fire safety of the unit. This is how a company may create new risks without realising or wanting to.
However, you should start with this checklist and ask yourself whether you give sufficient attention to certain housekeeping matters, and whether you have let the upkeep of your safety procedures slide a little. The checklist also often provides further food for thought for organisations that have a strict risk policy in place. For instance, by highlighting new risks that seemed less relevant several years ago.
You should also keep in mind that you will not succeed with measures and procedures alone. It is people who determine the actual level of safety. You will need to constantly work on the human factor.”