Shipping and handling hazardous materials (hazmat) can have serious operational, financial and environmental ramifications for shippers.
With thousands of items classified as “hazardous” and regulations continuing to expand, moving hazmat safely and in compliance is more critical than ever. Unfortunately, many organizations put their company’s operational efficiency, competitive agility, reputation and bottom line at risk by not having the necessary infrastructure and training to ensure compliance across the supply chain.
Maintaining a smooth supply chain is critical in today’s highly competitive market. Yet, despite the importance (and overall impact) of compliance on the supply chain, there is a general lack of confidence among dangerous goods (DG) professionals in the ability of their organizations to meet changing compliance mandates. In fact, a recent Labelmaster survey found that 51 percent of DG professionals find it challenging to keep up with the latest regulations, and 15 percent were NOT confident that they can ensure DG regulatory compliance across their organization (13 percent were unsure).
For many, these challenges are tied to inadequate infrastructure and training. Despite technology advancements in the supply chain, many companies rely heavily (or completely) on manual processes when it comes to hazmat compliance — an overwhelmingly inefficient approach that is highly susceptible to human error. Instances of insufficient processes also carry over to compliance training, as 25 percent of survey respondents feel that training at their company does NOT adequately prepare employees to comply with DG shipping regulations.
To overcome these barriers, shippers must consider the bigger picture and realize the true impact that compliance (or noncompliance) can have — beyond simply the fear of being fined:
- Finance and compliance are linked. Revenue and growth are critical to every organization, and DG compliance can have a direct impact on profitability. Costs resulting from noncompliance can add up — from fees related to stopped shipments, to increased insurance liability following an accident, to the hidden costs of inefficient operations. And while penalties on individual shipments may not be overly concerning to some, the total costs can add up, with federal and civil penalties reaching as high as $186,610. For example, one large distributor had more than 12 instances of penalties across its sites for a total of over $1m in fines. Conversely, compliance can boost revenue by allowing organizations to offer popular products that other companies may avoid, or making a company more attractive to business partners by reducing risk and streamlining supply chain processes.
- Brand reputation impacts brand value. An incident involving shipping hazmat can put the public at risk and create a firestorm of negative press. Following such an incident, customers, business partners and the public may decide to find another company that is more trusted and reliable, leading to a tarnished reputation and devalued brand equity (the true cost of which can greatly outweigh the financial impact of initial fines).
- Customer satisfaction is critical. Organizations cannot afford to let incorrect shipping labels, incomplete documentation or other compliance-related errors impact customer service. Stalled shipments result in late deliveries and customer dissatisfaction — and can ultimately lead to additional penalties levied by the customers themselves. Or, even worse, the damage done to the customer relationship may be irreversible.
The Outlook
Whether your company sends a few DG shipments per month or oversees a complex, global supply chain, there’s a lot at stake by not taking the necessary steps to ensure the safe, compliant movement of goods. By investing in hazmat infrastructure and training, shippers can improve operational efficiency and reduce the risk of stopped shipments — leading to a nimble supply chain, improved customer satisfaction, an enhanced competitive advantage, and the ability to drive more revenue.
Alicia Saenz is senior consultant with Labelmaster.
