Contractor-Safety Programs Are Crucial to Supplier Management

By Denis Sanchez, MS, MA, MCIPS

Anyone who follows the news will have noticed that disruption and resilience have been staples in most commentaries over the past 17 months. “Disruption” yields 234 million search results on Google, whereas “resilience” lists 1.47 billion.

Somewhere in-between lies another word that has been frequently used: “sustainability.” It shows 866 million Google search results, and it is listed as the 10th-most used word of 2020 by Global Language Monitor, the data research company that analyzes language usage worldwide.

Sustainability is about delivering on the triple bottom line of people, planet and profit. When it comes to supply chain management, sustainability is a strategic goal that leads to competitive advantage and improved operational and financial performance. A key component of sustainability is safety.

A company cannot achieve its sustainability goals without ensuring a safe work environment for its workers and, extensively, for anyone who shares the work site. While organizations like the Occupational Safety and Health Administration (OSHA) and Mine Safety and Health Administration (MSHA) regulate and provide guidance and leadership on safety, when it comes to third-party service providers, procurement plays an important role in ensuring that the supply chain supports these goals.

Contractor-safety programs are not just another safety initiative. They are a key part of the overall supplier management strategy of an organization. The selection and performance evaluation of suppliers of goods and services are key strategic procurement tasks. Dependance on contractors and suppliers link selection and monitoring to a company’s sustainability outcomes. In the area of safety, having a contractor-safety program is of significant value to organizations.

Building a Contractor-Safety Program

Two of the first steps in building a program are identifying its target and content or scope. The target is the part of your contractor base. Does it focus only on high-risk contractors or extend to low risks? Do you include low spend, infrequent contractors — or only target high-spend regulars on-site?

While the answers may vary, the overriding principle is that a one-size-fits-all approach does not work. As with any-risk management initiative, the approach must align with the risk profile. The higher the risk profile, the more encompassing the scope of the program and vice versa, which leads to the second element: the scope.

Typically, scope covers the three Ps of contractor safety: process, people and performance. Process covers all the policies, processes and procedures that the contractor has in place to ensure that the work is performed in a safe and reasonably practicable manner. People covers the worker-qualification component. No matter how many processes are in place, it comes down to their execution and ensuring workers are fully trained, qualified and competent. Performance is about ongoing adoption of safe-work practices and their outcome in terms of recordables using a balance of leading and lagging indicators.

Leading and Lagging Indicators

Every year, employers need to report number of injuries and other recordables to OSHA. These, as well as other statistics, are important indicators of safety outcomes and should be included in the scope of every safety program as part of the performance element. However, in doing so, it is important to follow a balanced approach and not overemphasize them as an indicator of safety performance.

Injury and illness recordables are lagging indicators. They point to something that has already happened. However, to use the analogy of safe driving, not every road infraction results in an accident or even a ticket. But over time, repeatable infractions develop into a habit of unsafe driving that can lead to tragic accidents.

Leading indicators, on the other hand, are proactive, predictive and often observable measures that are taken to prevent accidents from happening. To follow the analogy of a driver, having the right certification (a driver’s license), wearing a seat belt, avoiding distractions and observing the rules of the road prevent accidents and contribute to safe driving. This results in a good driving record, the lagging indicator.

When applied to the three Ps, key process elements to include as leading safety indicators of contractor safety are (1) observing safe-work practices that follow regulations, job-safety analyses, hazard controls and regular safety inspections, and (2) continuously monitoring performance to detect any unsafe behaviors. System-based indicators include leadership commitment to safety from the contractor organization, as well as safety by design.

Worker qualifications are critical for the people component. Buyers can lean on existing technology that maps the scope of work to be performed, its risk profile and the corresponding qualifications required from the contractor employee. Worker management systems and tools allow businesses to easily set the right expectation and ensure that the right company is contracted and the right workers execute the contract. Building this into the contractor-selection process is critical not only to achieve safety outcomes but also to avoid disruption, work delays and operational waste.

Other Important Elements

As important as the safety-related components are, it’s important to remember that contractor-safety programs work better when integrated into the procurement process. As a result, other areas of prequalification must also be addressed: financial stability, insurance, legal and business-continuity plans, and other commercial and broader criteria.

Strategic selection of contractors enables buying organizations to improve their own performance, as well as create and sustain their competitive advantage through their supply chain. Through continuous evaluation and fostering of contractor performance towards shared goals, including workplace safety, organizations strengthen strategic partnerships with their supply chain.

A structured contractor-safety program helps companies rely on a consistent approach to contractor selection and assessment. It is a strategic initiative that aligns procurement with broader company objectives and supports sustainability by relying on safe and socially responsible contractors.

About the Author

Denis Sanchez, MS, MA, MCIPS

About the Author

Denis Sanchez, MS, MA, MCIPS is vice president, operational excellence at Cognibox, a compliance, training and risk-management solutions company. He is based in Toronto.