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Chain of responsibility: Risk management of contractors, sub-contractors, and spot hire transport in the supply chain PowerPoint Presentation
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Chain of responsibility: Risk management of contractors, sub-contractors, and spot hire transport in the supply chain . Dr Will Murray Interactive Driving Systems. Debate. Transport (sub-)contractors are a road fatality waiting to happen?. Aims & Background. Aims. Background

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slide1

Chain of responsibility: Risk management of contractors, sub-contractors, and spot hire transport in the supply chain

Dr Will Murray

Interactive Driving Systems

debate

Debate

Transport (sub-)contractors are a road fatality waiting to happen?

slide4
Aims
  • Background
  • Why is (sub-)contracting important?
  • Poor practice in managing (sub-) contracting
  • Good practice research
  • Shell India case
  • Sample tools:
    • (Sub-)contractor audit
    • SHEM committee Terms of Reference
background
Background
  • Contracting, sub-contracting and use of de-, un- or poorly-regulated ‘flexible labour’ common in transport sector around globe
    • includes (Sub-)contractors, owner drivers, spot-hire & agency
  • Has many business benefits:
    • off balance sheet, custom & practice, flexible & low cost
  • But can also bring ‘safety issues’
  • Presentation based on:
    • University of Huddersfield research
    • On-going business to business projects
    • NIOSH ‘White Paper’ research
why important1
Why important?

Transport contractor’s yard

Client head office

why sub contracting important
Why (sub-)contracting important?

Global FMCG company

Global oil company

why important2
Why important?

Agency (Contract) = 10% of shifts

why sub contractor example
Oil company appoints transport contractor and manages really tightly through strict contractor management procedures:

Rejects 3 other contractors partly on grounds of poor safety record

Main contractor later sub-contracts majority of work to 2 of the rejected contractors who have many near misses in dust on dirt roads – trying to meet tough schedules – before major rollover costs oil company $9.3 million

Oil company had NO policies in place to manage sub-contractor safety performance

Could this be one of your sub-contractors?

Why: Sub-contractor example
poor practice

Poor practice

By users and suppliers

poor practice users
Not developing/applying any contractor management policy

Focus on cost

Poor communication - senior and local managers

Limited management systems in place - open to ‘gifts’

No advanced planning of contractor needs - ‘last minuteism’

Playing off contractors against each other to cut costs

Not properly assessing vehicles, drivers & journeys

Giving minimal work instructions or debrief to temporary drivers

Poor practice - ‘users’
poor practice suppliers
Taking work on at very low rates

Little focus on customer service

‘Small print’ terms and conditions and ‘get out’ clauses

Poor safety, fuel use and vehicle care

No clear written policies

Very limited risk assessment

Supplying unsuitable, inexperienced drivers

Keeping no records or performance data

Evidence of using inducements and gifts

Poor practice - ‘suppliers’
research on good practice

Research on good practice

Including Shell India case

summary of good practice
Users and suppliers work closely to:

Plan ahead

Understand each other’s requirements and give regular feedback on fulfilment

Ensure all (sub-) contracted operations are appropriately risk assessed, implemented, managed, audited and reviewed

Summary of good practice
good practice operations
Build safety into contract tender process

Buy on quality and value – rather than lowest price

Treat contract drivers equally

Provide contractors with clear requirements for safety management

Assign realistic workloads

Ensure systematic recruitment/training procedures

Keep and use detailed operational statistics

Undertake regular audits and reviews

Good practice operations
shell india case
Shell India case
  • Shell India, GRSP & local agencies implemented contractor initiative in 2006 to raise the safety standards of truck operations including:
    • Business case
    • Pilot phase to develop contractor systems audit and process
    • Stakeholder workshop involving Shell, GRSP, police, doctors, administrators, trainers, traffic engineers, highway experts, politicians, licensing authorities, regulators & enforcement agencies, government officers, politicians, AIMTC & 6 contractors running approximately 1,500 trucks
    • Voluntary, but auditable, 20-element Code of Conduct signed for safe fleet management to be piloted in Bangalore and Chennai
    • Code covered organisational, driver, vehicle & journey management
shell india case1
Shell India case
  • Other outcomes included:
    • Production, delivery and evaluation of training for owners, managers, drivers & helpers
    • Engagement with stakeholders & authorities to influence:
      • road design, planning and construction
      • licensing system to prevent unlicenced driving
      • wage rates & working conditions
      • drug and alcohol abuse
      • Overloading
    • Ongoing performance monitoring of outcomes KPIs including fuel use, maintenance costs, downtime and safety
shell india case2
Shell India case
  • Phase 2 began in late 2006, managed by consortium including Shell, GRSP & AIMTC
    • aimed to expand program to 100 transporters in southern India
    • 5 training modules had been developed
  • No more recent evaluation data available
  • Shows:
    • Benefits of partnership approach
    • Focus on better management of informal transport contracting sector
  • Worthy of further development and evaluation
  • Methodology has potential as good practice model
good practice tools

Good practice tools

Self audit for users & suppliers *

Shem committee *

contractor management audit source www fleetsafetybenchmarking net
Contractor Management Audit Source: www.fleetsafetybenchmarking.net
contractor and sub contractor shem committee terms of reference
Contractor and Sub-contractor SHEM Committee Terms of Reference
  • Promote safe & environmentally acceptable practices & procedures
  • Review (sub-)contracting safety & environmental statistics & incidents
  • Develop and implement recommendations to improve (sub-) contractor safety and environmental performance
  • Provide a forum for learning and sharing of safety and environmental information, initiatives, problems and issues
  • Represent all stakeholders, including union and front line worker representatives in developing policies, processes and procedures
  • Meet quarterly, with formal action minutes & follow-up items allocated
  • Committee will include senior representatives from company, contractors and sub-contractors
conclusion
Transportation (Sub-) contracting has many benefits & risks

Improvements in standards required from users and suppliers

Proactive, committed MANAGEMENT is most important issue

Partnerships and ‘managing process’

Auditing and data analysis

Code of practice

Regular formal and informal dialogue between users and suppliers

In UK agency sector collision rate decreased from 4X to 1.5X employed drivers when such good practice applied

Contact for guidance documents and assistance:

will.murray@virtualriskmanager.net

Conclusion