he processes a procurement department follow are a critical and central part of any company. In the current economic landscape, the pressure on procurement departments to find efficiencies is immense. In parallel with these pressures, mandatory regulatory compliance is also increasing, including laws that affect the health and safety of workers.
Balancing the two can be extremely challenging and the reality is that many procurement departments do not take into sufficient account the safety and health credentials of a prospective supplier, or the working conditions under which the goods or materials are produced.
Integrating Health and Safety into Procurement
Integrating Health, Safety, and Environmental (HSE) considerations into the procurement process is essential for ensuring the sustainability, efficiency, and compliance of organizational operations. Procurement activities encompass sourcing, purchasing, and managing goods and services, making them integral to the overall HSE performance of an organization. By embedding HSE principles into procurement practices, businesses can mitigate risks, protect the well-being of employees and stakeholders, and minimize adverse environmental impacts throughout the supply chain.
Procurement decisions have far-reaching implications on HSE performance, as they influence the quality, safety, and sustainability of products and services procured. Therefore, it is imperative for organizations to incorporate HSE criteria into supplier selection, contract negotiations, and ongoing supplier management processes. This approach not only ensures regulatory compliance but also fosters a culture of responsible sourcing and sustainable procurement practices.
Considerations
Key HSE considerations in the procurement process include assessing supplier HSE performance, evaluating product safety and compliance, considering environmental impacts, and promoting HSE requirements in supplier contracts. By proactively addressing these considerations, organizations can enhance risk management, improve supply chain resilience, and demonstrate commitment to HSE excellence to stakeholders and the broader community.
In this context, effective communication and collaboration between procurement, HSE, and other relevant departments are essential for integrating HSE considerations seamlessly into the procurement process. By fostering cross-functional collaboration, organizations can leverage expertise from different disciplines to identify HSE risks, develop mitigation strategies, and drive continuous improvement in procurement practices.
Health and Safety and Procurement
Unfortunately, with health and safety often coming so low down on the list of priorities when choosing contractors it is often overlooked altogether. Despite this reality the fact remains that a company cannot export their risks onto contractors; this is a nontransferable legal duty and the responsibility will always be theirs. The company also has a duty to protect both their clients and the end service users. In addition, due diligence and incorporating health and safety into the supply chain process directly protects the company’s reputation: a failure in this area which could prove disastrous, possibly even fatal for the company.
The procurement process can be broken into three important stages, which are: specify, select and monitor. By looking at these stages independently we can glean a better understanding of what could go wrong when HSE is not considered in the procurement processes.
Under “specify,” the appropriate health and safety components of any project are crucial as they aid in describing the services to be delivered. Highlighting the HSE roles of all stakeholders can be a key to the success of this stage in addition to answering pertinent questions helping to confirm that HSE considerations are adequately reflected within the procurement processes. Such questions could include: Are HSE responsibilities clear for the contractors? What evidence is required to demonstrate effective health and safety management?
Selections
Secondly, “selections” refers to key controls to be considered when selecting contractors or delivery partners, these include: HSE statistics i.e. historical records ? Competency of the responsible person with respect to the contract ? How effective and suitable is the potential suppliers HSE management system ? Do they have a record of adherence to local HSE standards such as OSHAD ? Or, do they have international standards in place such as ISO 45001, ISO 9001, ISO 14001 ?
Finally, “monitoring” is the periodic review of the performance to evaluate the vendor. Within this should be measures in place and the contractual ability to manage/remove a contractor who demonstrates poor performance/compliance or breach of contract and/or HSE legislation.
How and Why Could Things Go Wrong with Health and Safety in Procurement ?
Potential health and safety failures during the procurement process could include:
– Not involving the companies health and safety staff in the procurement process
– Failing to describe the services required accurately during the procurement process
– Not understanding the risks involved in the product or service being procured
– Failing to effectively monitor the contractor
– Cost being the final deciding factor
The above listed failures in addition to not giving proper consideration to health and safety issues could lead to a general increase in the incidence of injury and illness. Other outcomes could include:
– Equipment failure
– Defective products or even hazardous materials entering the supply chain
– Serious health and safety failures ie. Death or serious injury of project worker
– Loss of company reputation, contracts and revenue
How and Why Could Things Go Wrong in Detail ?
Neglecting HSE aspects in procurement can lead to various risks and pitfalls, undermining workplace safety, exposing organizations to legal liabilities, and damaging their reputation. This article explores common scenarios where health and safety can go wrong in procurement processes and provides insights into mitigating these risks.
1. Lack of Supplier HSE Evaluation:
One way health and safety can go wrong in procurement is the failure to adequately assess the health, safety, and environmental performance of suppliers. Procuring goods or services from suppliers with poor HSE practices can pose significant risks to organizations. These risks include potential workplace accidents, product safety issues, environmental damage, and reputational harm.
To mitigate this risk, organizations should implement robust supplier evaluation processes that include HSE criteria. This may involve conducting HSE audits, assessing suppliers’ safety records, certifications, and compliance with relevant regulations. Additionally, organizations should prioritize partnering with suppliers who demonstrate a commitment to HSE excellence and sustainability.
2. Ignoring Product Safety and Compliance:
Another common pitfall in procurement is overlooking product safety and compliance with health and safety standards. Procuring unsafe or non-compliant products can endanger employees’ health and safety, leading to workplace injuries or illnesses. Moreover, using non-compliant products may result in regulatory violations, fines, and legal liabilities for organizations.
To address this risk, procurement teams should thoroughly research and evaluate the safety and compliance aspects of products before procurement. This includes verifying product certifications, conducting risk assessments, and ensuring alignment with applicable health and safety regulations. Collaborating with HSE professionals during the product selection process can help identify and mitigate potential risks effectively.
3. Failure to Consider Environmental Impacts:
Procurement decisions can have significant environmental impacts, particularly concerning the sourcing and disposal of goods and materials. Ignoring environmental considerations in procurement can lead to unsustainable practices, resource depletion, pollution, and ecosystem degradation.
To avoid this, organizations should integrate environmental criteria into their procurement processes. This may involve assessing suppliers’ environmental management practices, evaluating the life cycle impacts of products, and prioritizing environmentally friendly alternatives. Implementing green procurement policies and engaging suppliers in sustainability initiatives can help minimize environmental risks associated with procurement activities.
4. Inadequate HSE Requirements in Supplier Contracts:
A critical mistake in procurement is failing to include robust health and safety requirements in supplier contracts. Without clear HSE expectations and obligations outlined in contracts, organizations may struggle to hold suppliers accountable for maintaining HSE standards throughout the procurement process.
To address this, organizations should incorporate specific HSE clauses and performance indicators into supplier contracts. These clauses should outline HSE responsibilities, reporting requirements, compliance standards, and consequences for non-compliance. Regular monitoring and auditing of supplier performance against HSE contract requirements are essential to ensure adherence and continuous improvement.
Insufficient Training of Procurement Professionals in Health and Safety Matters
Procurement professionals may lack the necessary training and awareness regarding health and safety considerations in procurement processes. Without adequate knowledge and understanding of HSE risks and best practices, procurement staff may overlook critical safety aspects or make uninformed decisions that compromise workplace safety.
To mitigate this risk, organizations should invest in HSE training and awareness programs for procurement staff. Training should cover topics such as identifying HSE risks in procurement, evaluating supplier HSE performance, selecting safe and compliant products, and integrating environmental considerations into procurement decisions. By equipping procurement professionals with the necessary skills and knowledge, organizations can enhance HSE compliance and risk management in procurement processes.
Case Study – Health and Safety Failures in Procurement
In a manufacturing company, the procurement department was tasked with sourcing a new supplier for chemical cleaning agents used in the production process. The procurement team focused primarily on cost considerations, opting for the supplier offering the lowest price without thoroughly evaluating health and safety aspects.
The selected supplier, while offering competitive prices, had a history of safety violations and poor HSE performance. However, this crucial information was overlooked during the supplier evaluation process. Additionally, the procurement team did not adequately assess the safety data sheets provided by the supplier, which highlighted potential hazards associated with the cleaning agents, including toxicity and skin irritation.
As a result of the oversight, the company introduced the chemical cleaning agents into the production process without implementing proper safety measures or providing adequate training to employees. Consequently, several workers experienced adverse health effects, including skin rashes, respiratory issues, and headaches, after exposure to the cleaning agents.
Furthermore, a workplace accident occurred due to improper handling of the chemical cleaning agents, resulting in a spillage incident that posed a significant risk to employee safety and environmental contamination. The company faced regulatory scrutiny and potential fines for violating health and safety regulations.
The incident led to disruptions in production, increased absenteeism due to health concerns among workers, and reputational damage for the company. Moreover, the company incurred additional costs for remediation efforts, medical treatment for affected employees, and legal expenses associated with regulatory compliance and potential litigation.
In hindsight, the failure to prioritize health and safety considerations in the procurement process proved detrimental to the organization. This case underscores the importance of robust supplier evaluation, thorough assessment of product safety and compliance, and integration of health and safety requirements into procurement practices to prevent similar incidents and safeguard employee well-being.
Conclusion
In conclusion, health and safety can go wrong in procurement processes due to various factors. These include inadequate supplier evaluation. Ignoring product safety and compliance, overlooking environmental impacts. Insufficient HSE requirements in supplier contracts, and lack of training and awareness among procurement professionals. To mitigate these risks, organizations must prioritize HSE considerations in procurement practices. From supplier evaluation to contract management. By integrating HSE criteria into procurement processes and fostering a culture of safety and sustainability. Organizations can enhance workplace safety, mitigate risks, and demonstrate commitment to responsible procurement practices.
A responsible procurement process should take a holistic approach and centre on other factors outside of cost. To risk map suppliers and potential suppliers. This will surely go a long way towards achieving improvements. Which aid in the prevention and/or elimination of workplace injuries and fatalities.
Factoring in health and safety into the procurement process can be summed up to companies in one word – Protection. Protection for your employees, protection for your visitors, protection for your contracts. Protection for your revenue and protection for both the company’s present and future.
Corporate OHS – Health and Safety
If you are looking for support with occupational health and safety in the UAE and help from expert Safety Consultants. Corporate OHS is a Health and Safety Consultancy services provider. Our HSE Consultants offer expert resources and superior performance to give you greater results.
We specialize in creating workable, user friendly solutions aligned to your business activities, operations and budget.
Our range of health and safety consultancy services includes;
– Health and Safety Risk Assessments
– Hazard identification and control measure implementation
– Gap Analysis
– Audits and compliance audits
– HSE management system development, implementation and review. Including locally compliant systems such as OSHAD or OSHJ and/or accredited systems such as ISO 45001, ISO 14001,
ISO 9001 and ISO 50001
– HSE legal compliance reviews and assistance
– Accident investigations
– Business continuity and crisis management
– Long term or project based HSE outsourcing
– Flexible monthly support retainers. Giving access to HSE service without the burden of a permanent cost
To find out more about our services. Please visit our website www.corporateohs.com Or send an email to enquiries@corporateohs.com, or call 00 971 4 550 7862.
