Risk Management at Newton Tools Company - Case Study Example

Risk Management at Newton Tools Company Student: Instructor: Course: Institution: Date: Table of Contents Introduction 3 1Things to do next 3 2Action plans 6 2.1Organisational culture and workplace safety at Newton Tools 6 2.2Background of Newton Tools Company on issues relating to OH&S and the warehouse management 8 3Meeting agenda 11 4Recommendations 11 Conclusion 13 References 14 Appendix 17 Introduction Effective management of risks involves minimisation of a systems exposure to potential hazards and possibilities of a risk occurring. While both risks and hazards cannot be out-ruled in any system, it is possible to reduce their probability of occurring or causing harm by limiting the causative factors[CCH07]. This report consists of a risk audit at Newton Tool’s warehouse basing on the case scenario. The first section of the report is the identification and discussion the potential risks and hazards that may affect the company. The second part is the action plans that should guide the company’s response to the identified risks relating to OH&S and warehouse management. The third section identifies the next meeting staff meeting agenda in relation to risk management. Finally, the report offers recommendations on how Newton Tools can manage risks, potential hazards and its supply chain effectively to avoid costly incidences/accidents and disruptions. 1 Things to do next Newton Tools warehouse posed several workplace safety risks that should be addressed in order to reduce the possibility and intensity of the occurrence of the identified risks. According to Tang (2006), the possibility of a risk occurring can be reduced by limiting a system’s exposure level, environmental hazards and vulnerability. After conducting a risk audit on Newton tools based on observations made in the scenario, the following warehouse risk items were identified. The risk items are listed in order of their importance in relation to potential harm or loss that may be caused. 1. High stacking of heavy inventory may cause injury in case they fall It is noticeable that the warehouse did not use a racking system. All the heavy and light tools were stored using block stacking. Stacks went as high as three pellets in most cases. The stacking system can be highly unstable particularly if it goes higher than required. In most cases, 1.2 metres is the recommended height[CCH07]. In case of instability, inventory may fall leading to disorganization and potential injury to workers. This risk is likely to occur given the narrow aisles that forklifts and people have to use to access inventory. It is highly important that the management prioritizes addressing this risk as it may cause damage, injuries or fatality in the warehouse. 2. Poorly planned drainage system increase chance of chemical contamination The warehouse has previously been half flooded by a drainage pipe smashed by an accident. Workers dropped a crate of heavy tools against the pipe and smashed it. This incident exposed the warehouse to the risk of chemical contamination since the company is located in a heavy industrial area. In fact, a large drain separates the company from a large chemical plant. Additionally, a flooded warehouse may damage inventory such as steel tools, which may rust due to contact with water. This could potentially lead to huge financial losses. 3. Dusty environment and polluted pose a potential health hazard Newton Tools is located in a dusty industrial area with few trees to control wind. In addition, a large chemical plant may also be causing a lot of air pollution. The mixture of dust and chemical air pollution may pose a health hazard to workers. This may cause the company to incur losses in terms of employee treatment and loss of trained talent. It is vital, that the company considers internal and external measures that can limit the impact of surrounding area air pollution on its workforce. 4. Blind corners increase the risk of collisions between forklifts and people in the warehouse There were several blind corners at the Newton Tools warehouse. Blind corners, narrows aisles and highly stacked inventory increase the chances of collisions involving people and/or vehicles. This could potentially lead to injuries, fatalities and lawsuits based on organisational health and safety regulations. More than 50% of forklift fatalities in Australia involve a pedestrian. Several companies including Visy Paper Pty Limited have recently been fined by authorities due to forklift accidents[Ann15]. According to SafeWork NSW, 1360 workers were injured in forklift related incidents [Saf16]. Clearly it is important to reduce the probability of forklift accidents by addressing the blind corners problems at Newton Tools. 5. littered floor increased chances of employees sustaining injuries or respiratory problems It was also clearly evident that the warehouse floor was dusty and littered. This exposed workers to unhealthy working conditions that could cause respiratory conditions. Littered floors also increase chances of accidents that may cause injury particularly due to the fact that workers do not wear appropriate safety gear. The littering also encouraged disorganisation and poor inventory management practices such as tools mix-up. 2 Action plans 2.1 Organisational culture and workplace safety at Newton Tools Newton Tools is a family company that has been in existence for more than 20 years. The workers are a close-knit group that look out for each other. It takes quite a long time for the group to accept new workers into their circle and consider them pone of their own. According to Barry, Tommy Bahama, the chief financial officer who joined five years ago is still new in the company. The rest have worked for more than 10 years. The close-knit nature of the work force has made it highly impossible to criticise practices and policies at the work place. When the old logistics manager threatened to sack some employees due to negligence, a senior executive who worked with some employees 20 years ago at the same company intervened and “smoothed things out”. It is relatively difficult to improve the risk situation at Newton Tools when everybody seems inclined towards a casual approach to work. Additionally, a culture that is less accommodative of “outsiders” may increase the chances of change efforts failing since people are less enthusiastic about ideas coming from people outside their circle (Boehning, 2014). Employees at Newton tools have somewhat been accustomed to unprofessional practices and approach to handling matters. For example, there is no regular meeting to assess how the warehouse has been managed and what should be improved. All the employees lacked proper work wear and safety gear; they were all wearing sneakers and running shoes. The employees did not consider safety shoes and clothes as essential to their work. This means that there is lack of organisational health and safety policy in place. Alternatively, the management may be reluctant or noncommittal in implementing the health and safety policies in place. In any case, casual clothing encourages a culture of unprofessional practices. It was further evident, that there are no efforts made by management to improve the organisation and order processing systems at the warehouse. One employee noted that she spends half her time getting returns and fixing up orders since wrong tools are often picked unknowingly to service an order. This increases operational costs and risks damaging the reputation of the company among its customers. It is impossible to manage risk associated with warehousing and inventory management if the employees have a deeply entrenched culture of irresponsibility in as far as accomplishing expected duties is concerned. An action plan to improve and develop a more positive culture at Newton Tools Objectives Tasks Success Criteria Time Frame Implementer To ensure that workers are more accommodative of new members of staff Implementing teamwork and bonding activities Redefining “Who We are” at Newton Tools by introducing values that emphasize employee wellbeing How employees refer to each other and welcome new employees How employees rate their relationship with superiors and colleagues 1/June/2016-1/Sept/2016 A team including top executives (CEO and senior department managers) To ensure employees at Newton Tool warehouse approach their work professionally and more seriously Developing a dressing code policy that considers safety, brand image and functionality. Outlining a system of servicing orders and recording incidents that should be addressed. Employees to dressing professionally and in full appreciation of the safety and functional aspects of their work. Reduced incidences that result from poor planning such as wrong items sent to a customer. Renewed emphasis on industry-accepted and professional standards solutions to problems 1/June/2016-1/Dec/2016 A team of department employees led by Gerry 2.2 Background of Newton Tools Company on issues relating to OH&S and the warehouse management It will be important to develop a series of questions about the background of Newton Tools Company in order to get a better understanding of the current situation at the company. The following sets of questions will be used to improve the risk situation at Newton Tools Company in relation to OH&S and Warehouse management Employees’ Questions 1. Are you aware of the company health and safety policy? 2. Do you understand the basic features of an organisational health and safety policy that should apply to your current profession? 3. Have you received any training on organisational health and safety in this company? 4. What is your role in ensuring Newton Tools is a safe work place? 5. Do you think you are exposed to any health hazard originating from within or without the warehouse? 6. Do you consider complying with health and safety requirements as part of your daily routine at work? 7. Were you given any orientation relating to health and safety at work? 8. Do you have an understanding of your rights as pertains to your health and safety at Newton Tools? 9. Do you think the management has been consistent in reviewing and implementing health and safety at work? 10. Have you handled or witnessed the handling of any emergency case here at the workplace? How do you think the incident was handled? 11. How many injuries (minor or major) have you witnessed here at the workplace in the past one year? What do you think caused one of the injuries that you can remember? 12. Do you have any form of training on the procedures of responding to an incident/accident at the workplace? 13. Do you participate in any inspections to assess the safety of the workplace? How regularly? 14. Do you report any unsafe conditions or incidences in your work environment? 15. Do you think the Newton tools warehouse is a safe and healthy place to work 16. Have you witnessed any accidents/incidences at the warehouse that you think could have been averted with proper planning? Explain. 17. Do you think the company has provided you the right information and safety gear to work safely at the warehouse? 18. Do you think the order fulfilment system at Newton Tools is efficient? 19. Does the current system of procedures make your work easy or stressing? 20. On a range of 1-10, how would you rate the company’s track record on health and safety policy implementation in the past five years? Questions to management 1. On a range of 1-10, how would you rate the company’s track record on health and safety policy implementation in the past five years? 2. Has there been training initiatives in the company on organisational health and safety? 3. How effective do you think the current policies are in addressing health and safety at the workplace? 4. Would you consider revising the current health and safety policies at the company? 5. Does the management have am structured approach of engaging employees in developing and implementing health and safety standards? 6. What is the frequency of health and safety audit and inspections at Newton Tools? 7. Does the company provide safety gear and protective equipment to employees? 8. What are some of the health and safety issues do you think should be addressed immediately at Newton Tools? 9. Would you consider the warehouse a healthy and safe workplace for employees? 10. Do you think the employees are aware of their rights pertaining their health and safety at work? 11. Do you think the company is at any risk of a legal action due to negligence or non-conformance with OH&S requirements? 12. How effective have been the company’s policies in handing health and safety incidents/accidents in the past five years? 13. Does the company align its safety and health standards with industry or national code of practice? 14. Do you think the company has an efficient order fulfilment system in place 15. Do you think the company can save significantly and improve its reputation with improved order and delivery procedures? These questions will be effective in understanding the background of Newton Tools in relation to OH&S issues and warehouse management. The following action plan will guide discussion with Tommy Bahama and warehouse staff to address potential issues relating to the responds given to the questions above. Objectives (goals) Issues Targeted person(s) Time Frame Potential Challenges Results To understand and improve the management’s commitment to OH&S OH&S Training OH&S Inspections and audits OH&S policy development process and implementation The state of OH&S at Newton Tools Risks at the warehouse Tommy Bahama 1/June/2016-15/June/2016 Inconclusive results due to management’s bias on positive progress and dismissal of dismal performance on aspects of OH&S at the company To understand and improve how employees perceive OH&S at Newton Tools and their commitment to adhering with health and safety at work OH&S training and awareness Commitment to OH&S Potential risks and hazards at the warehouse Cooperation with management on OH&S Warehouse staff 15/June/2016-30/June/2016 Inconclusive results due to employees’ tendency to withhold information on fear of victimisation Employee indifference to the aim of the process due to an exclusivist culture 3 Meeting agenda The agenda for the next warehouse meeting will be: Understanding and improving OH&S and Related risks at Newton Tools. This agenda will address issues such as management’s and employee’s responsibility in implementing OH&S policy at Newton Tools. The agenda will also highlight various risks at the warehouse, their potential implications and how they can be addressed successfully. The agenda will also identify measures that could be implemented to improve the supply chain and the company’s operations. 4 Recommendations Eliminating hazards, reducing risks and improving the supply chain at Newton Tools Management of risks and potential hazards is critically important to the success of any organisation. Businesses that implement appropriate OH&S policies are less exposed to hazardous incidents that may lead to losses, injuries and fatalities (Cronstedt, 2002; Lingard, 2013). Workplace fatalities in Australia have been rising sharply over the past decade due to business managers overlooking or paying no attention to OH&S policies at work[CCH07]. It is important to note that an organisation such as Newton Tools stands a better chance of benefiting from reduced risks in its supply chain. Newton Tools warehouse facility is exposed to a potential chemical contamination hazard posed by the fact the company is close to a large chemical plant and lacks a properly designed drainage system. The current drainage system has inadequate capacity to handle excess storm water thus exposing the warehouse to the risk of a flood. Additionally, the drainage system is vulnerable to mechanical damage caused by accidents within the facility as it was the case when workers smashed one pipe causing the warehouse to be half flooded. In order to prevent potential health hazard and damage to inventory, the management should consider overhauling the drainage system and factoring in risks such as mechanical damage and exposure to chemical contaminants. Newton Tools warehouse also poses several risks to employees. The pellets are stacked very high along narrow aisles. This increases the chances of causing objects to fall thus causing injury and potential fatalities. The warehouse has several blind corners that can cause collisions between forklifts and people and other forklifts. The floor is dusty and littered is thus a health and safety problem for employees. The management should implement changes to lower the height of stacked pellets, ensure the warehouse is clean and has wide aisles without blind corners. Safety mirrors can also be installed at blind spots to reduce the risk of an accident occurring (Vries, Koster and Stam, 2016). The management should consider reviewing its OH&S policy and align it with the current government and industry requirements to ensure the workplace is safe and poses no health risks to employees. The management should implement an Enterprise Resource Planning Software (ERP) to streamline the order fulfilment system. Such a system should consider all the risks involved in the entire supply chain including possibilities of delayed production of tools due to labour unpredictability, unavailability of raw materials and machine breakdown (Heckmann, Comes and Nickel, 2015). Delayed delivery due to issues such as tools mix-up is an avoidable risk that may damage the reputation of the company[Kap12]. It is important that inventory management is highly automated and organised to avoid sending wrong tools to customers. Evidently, it is possible to reduce the level of risks and exposure to potential hazards at Newton Tools Company. However, it is important that the management involves the employees in training, sensitization and planning in order to entrench a culture of OH&S that will help the company embed risk management in its system. This will ensure the company is constantly updating its systems to handle the occurrence of identified risks and hazards. Indeed, Newton tools will benefit from reduced operating costs associated with supply chain inefficiencies and exposure to risks. Conclusion Newton Tools Is faced with several risks that may disrupt its operations, cause losses, injuries and possible fatalities. Some of the risks identified through a risk audit include: high stacks of heavy inventory that could cause injury by falling objects, poorly planned drainage system increases exposure to potential flooding hazard; Dusty environment and polluted air pose a health hazard; existence of blind corners in the warehouse pose a risk of collisions resulting in injuries, losses and possible fatalities. The culture at Newton Tools is less accommodative of new ideas to improve OH&S situation and reduce risks. Several actions such as embedment of OH&S policies and practices, employee sensitization and reduction of risk factors at Newton Tools could be implemented to lower the level of risks at the company. It is critically important to ensure that both employees and management participate fully in reviewing and implementing risk management and OH&S measures to ensure the company is less exposed to risks and capable of responding appropriately to incidents and accidents. References Boehning, M., 2014, September. Improving safety and efficiency of agvs at warehouse black spots. In Intelligent Computer Communication and Processing (ICCP), 2014 IEEE International Conference on (pp. 245-249). IEEE. CCH07: , (CCH Australia, 2007), Ann15: , (Patty, 2015), Saf16: , (SafeWork NSW, 2016), Kap12: , (Kaplan & Mikes, 2012), * Appendix Risks register (Newton Tools) Reference ID Risk Description Rate the likelihood - Very Likely - Likely - Unlikely - Very unlikely Rate the consequence - Major - Serious - Minor - Insignificant = Resulting level of risk - Low - Medium - High - Major Describe how adequate current controls are - Over adequate - Adequate - Inadequate - Non-existent Give it a risk priority A - Must B - Should C - Could #1: High-stacking of heavy inventory may cause injury in case they fall Inventory in Newton Tools’ warehouse is stacked three pellets high in most cases. This increases the chances of the tools falling thus causing physical injury to employees. Likely Serious High Inadequate: The warehouse lacks a proper Organisational Health and Safety policy in place. Employees do not wear safety gear to minimise the risk of personal injury B #2: Poorly planned drainage system increase chance of chemical contamination Poorly planned drainage system has led to the warehouse flooding before when a drainage pipe was damaged. Since the company is very close to a chemical plant, it increases the chance of contamination and potential health hazard. It may also lead to damage of inventory in the warehouse. Likely Major Medium Inadequate: The company has not put in place measures to ensure that the drainage system keeps away flood waters effectively. The company has also not limit the drainage pipes exposure to damage from normal factory operations B #3: Dusty environment and unclean warehouse pose a potential health hazard The dusty environment and a lot of track movement mean a lot of dust finds its way into the factory. Dust increases the chance of humans developing respiratory diseases. Likely Serious Medium Non-existent: There are no trees to control wind around the warehouse. The warehouse is poorly ventilated and cleaned to reduce dust. B #4: Blind corners increase the risk of collisions between forklifts and people in the warehouse Blind corners may lead to collisions between employees and forklifts and result in injury and damaged equipment Likely Minor Low Non-existent: The company does not consider adequate spacing of inventory to reduce the risk of collisions. B #5: littered floor increased chances of employees sustaining injuries or respiratory problems Dusty and littered floor may cause one to trip over and sustain injuries. Dust may also causes respiratory diseases, eye infections and other health problems. Likely Minor Medium Non-existent: The warehouse is dirty and employees do not wear any safety gear. Cartons are left open on the stacked pellets to service orders B Risk treatment register (Newton Tools) Risk in priority order from the risk register Possible treatment options Preferred options Choose what to do: A = accept option/s R = reject option/s Who will implement option/s By when? Who will monitor this risk and its treatment? Further action Risk #1 Priority B High-stacking of heavy inventory may cause injury in case they fall 1. Start a Racking system 2. Reduce the height of stacked inventory 1 2 1. A 2. A Gerry 20/Dec/2016 Barry Contact Racking systems companies Consult with industry associations Risk #2: Priority B Poorly planned drainage system increase chance of chemical contamination 1. Redesign drainage system 2. Clearly Demarcate the drainage system and provide information to workers on the potential hazard 1 2 1. B Gerry 20/July/2016 Barry Contact a OH&S consultant Contact industrial drainage systems engineers Risk #3: Priority B Dusty environment and polluted air pose a potential health hazard 1. Plant trees as windbreakers to reduce dust 2. Equip employees with protective gear 1 2 1. A 2. B Gerry 20/August/2016 Barry Contact local authorities on tree planting plans Contact OH&S consultant of appropriate safety gear Risk #4: Priority B Blind corners increase the risk of collisions between forklifts and people in the warehouse 1. Replan warehouse storage 1 1. A Gerry 20/July/2016 Barry Discuss plans with the entire warehouse team and management Risk #5: Priority B littered floor increased chances of employees sustaining injuries or respiratory problems 1. Clean warehouse 2. Develop a workplace safety policy 1 2 1. A 2. A Gerry 20/June/2016 Barry Discuss with warehouse team Read More