In part one of this series, we discussed the top pressures driving companies to focus on Environmental, Health and Safety: managing risk and compliance in operations. We also highlighted that Best-in-Class companies are able to effectively manage safety incidents by realizing only 1% repeat accidents and 0.1 Injury Frequency rate, while at the same time reducing energy consumption by 10%, and performing at 87% OEE. From a strategic perspective, there are two major themes that emerge from executing a successful EH&S program: improving visibility into operations and optimizing processes, both being the top two strategies selected. In this article we will be focusing on how Best-in-Class companies are effectively executing the above strategies.
Executing the Top Strategies: Process and Organization
Best-in-Class companies are able to effectively execute on these strategies by having a formal EH&S system that adheres to standards such as ISO 14001 and OSHA 18000, among others. These standards provide a framework for organizations to identify and control EH&S incidents and implement a systematic approach to setting EH&S objectives and targets, achieve those targets and highlight the success that has been achieved.
From an organizational perspective, it is critical to ask questions such as: “Is there an executive within the organization that believes EH&S issues are important to the long term success of the organization?” and, “Are they vocal in promoting the need for an EH&S program both internally and externally?” To enable real change in the culture, an organization needs to have a long-term vision of environmental stewardship, plant safety and social responsibility, and therefore needs to appoint an executive to effectively champion this vision.
Having sponsorship from corporate executives is important, but manufacturers need to ensure that the strategies established in the boardrooms are implemented efficiently across the plant floor. Best-in-Class companies are establishing roles and responsibilities across functional teams to ensure that corporate goals are communicated with their employees and there are roles established to ensure the success of these goals.
Knowledge Management and Performance Management
To effectively manage energy, emissions, and safety issues in manufacturing operations, organizations need to equip their employees with the right data, at the right time, in the right form. Best-in-Class companies are 2.6 times as likely as Laggards to automatically collect EH&S data and store it in a central location. While some companies track incidents, most companies do it in an error prone fashion through a manual process of spreadsheets. This becomes a roadblock for root cause analysis and establishing preventive actions. The Best-in-Class are not only more likely to collect this information automatically, they are also almost two times as likely as Laggards to make both real-time and historical data available to decision makers. These leaders are not just collecting data and publishing it for a yearly sustainability report. Instead, these leaders are using this data (water usage, energy usage, waste, GHG emission, safety issues, equipment downtime, etc.) in order to make actionable decisions to optimize and improve processes.
Investing in technology to gain access to critical information on the plant floor is one the major differentiators for Best-in-Class performance. Best-in-Class companies are more likely to invest in enterprise-wide solutions to ensure that information is collected in a central location and decisions are made from a single version of the truth.
There has been a confusion in the marketplace in understanding the most critical functionalities of an EH&S solution. The figure below highlights some of the key modules that differentiate Best-in-Class performance.
The overall adoption rate of all the technologies mentioned is not high even for Best-in-Class companies. However, a big percentage of companies have plans to invest in these solutions in the near future to enable visibility into their EH&S initiatives. Companies should invest in these solutions to efficiently manage the massive amounts of complex data related to energy, environment, safety, and compliance and provide employees and executives the ability to make connections between the day-to-day tactical operations and the strategic business goals.
The concept of EH&S is not new to organizations. Sixty-eight percent of companies responding to the survey has had a formalized EH&S group for more than 5 years. But the tenure of EH&S programs is not directly correlated to Best-in-Class performance.
Best-in-Class organizations have differentiated themselves by establishing a formalized EH&S program with the help of global standard, providing long term vision through executive leadership, and investing in technology to manage knowledge and performance in real-time.
Matthew Littlefield is Senior Research Analyst, Aberdeen Group, email@example.com. Mehul Shah, Aberdeen Group Senior Research Analyst, contributed to this report.