Page 70 - Retail World March 2021

RISK MANAGEMENT VULNERABILITIES IN THE LOGISTICS SECTOR EXPOSED Global risk management provider SAI Global says the enormous pressure on businesses in the logistics and supply chain sectors from exponential growth in delivery volumes has exposed operational and workforce vulnerabilities. SBy SAI Global Technical Manager Daniel Havers. AI Global warns that continued trade growth, particularly with the new Regional Comprehensive Economic Partnership (RCEP) set to come into effect, will test providers in the logistics sector over the next five years. Leveraging strong management systems will be key to success. Even before the Covid-19 pandemic, the transport, postal and warehousing sector was projected to grow 6.6 per cent in the five years to May 2024 (Australian government, Labour Market Information Portal). Since March, when supply-and-demand shock followed social restrictions, leading parcel delivery companies were reporting 70-80 per cent growth in volumes. Such growth is continuing. In October, the national retail turnover rose 7.3 per cent, while sales in Victoria were up 11.9 per cent (Australian Bureau of Statistics). The unique circumstances that instantly drove consumers to buy online rather than in-store gave the logistics industry no time to assess customer demand. Instead, they were forced to simultaneously solve shortages in staffing, transportation, distribution capacity or employee PPE as they occurred, causing delivery delays. Workforce vulnerabilities were also exposed and forced the industry to tackle them on the spot. Businesses had to implement social restrictions in their workplaces, slowing production at a time when volumes were booming. Worker fatigue presented risks in the physical and mental safety of workers on the road, in depots and in warehouses. Those businesses that quickly hired new workers to service the demand may have had little time to train and onboard them thoroughly. Organisational vulnerabilities can devolve into serious issues, and risk becoming crises. High volumes of trade will not only continue beyond 2021. They are expected to increase further because of the new RCEP free-trade agreement signed by Australia and other Asia Pacific countries. Early 2021 is a good time for the logistics sector to embed long-term improvements into the fabric of their operations and workforce. An effective method is ensuring internal systems meet international best-practice benchmarks. Neither short-term operational improvements to help handle higher volumes nor introducing a new policy or process will enable organisations to adapt fast enough to situational changes. Ensuring systems meet international standards, however, is extremely effective and, over the long term, minimises the risks of serious internal issues and puts the business in position for increased success. The new trade agreement covers 30 per cent of the global economy and will put further pressure on providers in logistics and supply chains that will need to pivot the direction of their business with this new agreement. Underperforming management systems can interfere with the strategic direction of the business, and therefore system and training improvements will be needed. An ISO 9001 certification ensures organisations meet the benchmark criteria for quality products and services, consistently. An ISO 45001 certification ensures they meet the international standard for workplace safety – in addition to meeting workplace safety laws. Securing certification includes a thorough audit of existing systems to gauge areas that fall short of international standards, followed by improvements, then further reviews and amendments – a process that takes months. Additionally, I encourage organisations to develop a management plan to minimise the potential of worker fatigue during busy periods of high business activity, while still enabling organisations to handle high volumes. A key to sustained success is leveraging organisational management systems as a business tool. Too often, businesses implement a basic management system to meet minimum requirements, but the functional framework provides little or no added value to the business itself. Management systems must be tailored to the context of a business and its strategy, in the context of potential risks and opportunities, to adequately prepare the business for situational change. For instance, the management system of a logistics company must have processes in place to handle significant spikes in growth, and for expansion should it need to quickly move to a larger workplace and rapidly onboard employees within a short timeframe. About Daniel Havers Daniel Havers is the Technical Manager at SAI Global and has an extensive background, with experience working as a technical professional specialising in the development, implementation, assessment and verification of food safety and quality management systems. He has supported numerous food and beverage manufacturers and retailers across Australia and Asia Pacific during his 11 years with SAI Global driving improvement in system and site standards. About SAI Global SAI Global is a provider of integrated risk management solutions – a combination of leading certification capabilities, training services and advisory offerings across the entire risk lifecycle. It helps organisations proactively manage risk to build trust with customers and achieve business confidence, growth and sustainability. The company has global reach, with locations across Europe, the Middle East, Africa, the Americas, Asia and the Pacific. For more information, visit saiassurance.com. 68 RETAIL WORLD MAR, 2021