Safety strategies: How best-in-class companies improve safety and boost productivity
November 12, 2010 by Nuris Ismail and Matthew Littlefield
As safety regulations continue to change and the need to reduce the risk of an adverse event becomes increasingly more important, the challenge for many organizations is how to effectively do this in a productive way. Aberdeen Group surveyed more than 230 executives to understand the performance, strategies and execution capabilities of some of the most mature and successful manufacturers when it comes to machine and plant safety.
Market pressures driving change
With the current economic condition, manufacturers today have become very focused on cutting costs and improving production efficiency. These are obviously critical areas to focus on, but cannot be at the sacrifice of employee safety. Aberdeen Group finds that the top pressure driving manufacturers to focus on safety is the need to comply with safety regulations and the need to reduce the risk of an adverse event, as selected by more than half of all respondents.
Safety issues are becoming an increasingly important business concern. As safety standards continually evolve, manufacturers are directing their focus to staying ahead of regulations. The consequences of not being in compliance with safety regulations are drastic, resulting in penalties, fines, damage to brand image, plant shutdowns and even fatalities. Indeed, the risk of a safety event not only threatens machine operators, but also the organization’s bottom line.
To better understand how companies are overcoming these pressures, Aberdeen used four key performance indicators (KPI) to distinguish the performance between the best-in-class (top 20 percent performers) from industry average and laggard organizations.
We find that best-in-class companies are able to effectively manage safety incidents by realizing only 0.2 percent repeat accident rate and 0.1 injury frequency rate, while at the same time increasing productivity with a two percent unscheduled asset downtime rate, and performing at 90 percent overall equipment effectiveness. This means that these industry leaders are not only able to create a safe working environment for their employees, but they are also able to gain a competitive edge in the marketplace by gaining higher operational efficiencies.
Best-in-class companies are differentiating themselves in two major ways from an organizational and process capabilities perspective. First, best-in-class companies understand that an effective organizational structure is key for improving plant and machine safety. To enable real change in the culture, an organization needs to have a long-term vision for machine and plant safety, environment and social stewardship, and therefore needs to appoint an executive to execute this vision. Our research uncovered that 82 percent of best-in-class companies have an executive sponsor driving safety initiatives. In addition, having the support of executives is key when it comes to making investments in what are often expensive upgrades to assets, safety systems and plant automation systems.
This strategy aligns well with a certain director of a multibillion-dollar industrial equipment manufacturer. Commenting about their safety strategy, he states, "Engaging upper management to be part of our safety initiatives has been the greatest benefit. The level of awareness about our safety initiatives has increased, more people are taking it seriously and our repeat incident rate has dropped while reporting has gone up."
In addition, best-in-class companies are implementing a proactive risk management strategy to understand the risk profile of both their assets and operating procedures. At the highest level, a risk management approach focuses on four major aspects of managing risk: identification, quantification, prioritization and mitigation. By taking such an approach, best-in-class companies can provide their employees with a clearer picture of all the risks throughout their industrial plants – whether the risks are associated with their aging machines or unsafe operating procedures – and are better equipped in having a response and recovery plan to reduce and mitigate these risks. Indeed, performing a risk management assessment can lead to opportunities to design out hazards in the machine wherever possible.
Finally, best-in-class organizations are taking advantage of recent changes to safety standards and technology advances. Safety technology has significantly improved where employees no longer need to remove all sources of energy (lock-out/tag-out) from a machine in order to gain access to the machine. Instead, manufacturers can keep the machine running, while safely allowing the machine operator to gain access for repair or maintenance. As a result of designing their machines to have this capability, best-in-class manufacturers are able to create a safer work environment for employees and optimize machine availability and productivity.
While compliance and the need to reduce the risk of an adverse event has been a primary driver behind many companies’ focus on safety, this research shows that best-in-class manufacturers are better able to improve plant and machine safety, and realize superior operational performance through a blend of business capabilities and adopting the latest safety technology.
In order to close the performance gap, Aberdeen recommends that manufacturers who are performing below best-in-class performance do the following:
• Establish a safety culture endorsed by senior management. The vision of plant and machine safety needs to start at the top. It is difficult to implement changes in strategy and processes without the buy-in and support of true budget and authority holders. Safety needs to be ingrained from the top floor to the plant floor.
• Establish a formalized risk management strategy. Implement a risk analysis to identify quantity, prioritize and mitigate all risks in both manufacturing assets and operating procedures. Having a clearer picture of the risks can provide opportunities for machine designers to design out hazards wherever possible.
• Invest in the latest safety technology. With changes to safety standards and advances in more sophisticated safety controls, manufacturers have the design flexibility to allow the machine to run while simultaneously allowing safe access to the machine for repair and maintenance; thereby improving machine safety and the machine’s overall productivity.
Nuris Ismail is a research associate with the Aberdeen Group. She can be reached at email@example.com. Matthew Littlefield is a senior research analyst with Aberdeen Group. He can be reached at firstname.lastname@example.org.