The costs of managing chemicals are far more than just the product price, but the life-cycle management of chemicals can be optimized to cut these peripheral costs. By adopting best practices, the chemical management process is more integrated into the business process, becoming a strategic advantage to the organization, raising efficiency on a number of fronts, decreasing legal liability and risk and improving plant/laboratory safety, as well as offering bottom line cost savings. Improved information management systems are becoming more functional and less costly, making these process improvements possible. Such systems are still an investment, and costs of re-engineering operations and changing current processes must be considered, but the savings of a concerted, focused effort to improve chemical management are significant, and the ROI quickly justifies the costs.
Challenges of Chemical Management
If you ask industrial and laboratory operations managers about their biggest challenges, the answers you'll hear most often relate to environmental regulations and the management of chemicals. And the concern permeates the whole organization as well -- according to Accenture and the Conference Board, over one third of 500 top US CEO's named chemical-related Environmental Health and Safety issues among the biggest concerns in their businesses and industries, placing it in the top five on the list of responses. Cost, process, regulatory and safety issues converge around chemical management, making it a critical, complex and cumbersome activity.
The true cost of a chemical as it completes its lifecycle is much more than the purchase price alone. Additional costs include compliance, inventory management, safety, facilities, and disposal. Management costs can range from $1.00 to $10.00 for every dollar of chemicals purchased. Best practices that address the various aspects of chemical management can significantly reduce the extra costs in a chemical's lifecycle.
Environmental health and safety is often viewed as 'outside' the business process, and given less attention than other practices. For example, companies often treat procurement of chemicals or hazardous materials the same as they handle any other purchases, without planning for the unique storage, reporting, and eventual disposal requirements. Although financial data is specifically and meticulously analyzed, the impact of chemical management choices is often neglected. These choices have far reaching effects and can sometimes be catastrophic for an organization. Viewing EH&S as a critical part of the business process and integrating it with other activities can raise efficiency of chemical management and provide a significant advantage in terms of cost savings, safety, risk management and competition.
Implementing Best Practices helps this integration of EH&S with the organization's processes, and supports the strategic or business goals of saving money and growing the business. On the day-to-day level, these operations affect the tactical or management goals of increased safety and decreased legal and regulatory risk. Reviewing the impact, cost savings and benefits become clear. (See sidebar.)
Capture data available at critical junctures of the supply chain.
Companies must integrate Environmental Health and Safety into their process. Data is collected, generated, and modified in purchasing/ERP systems or vendor systems. This data can and should be automatically captured and transferred to an EMIS (environmental management information system). There may be some effort needed to collect and manage the appropriate data, but the payoff by far outweighs this effort.
When EH&S information is managed by integrated systems, underlying other departments' data and programs, it supports best practices in other processes - purchasing, delivery, receipt, inventory management. Improved data will increase compliance efficiency for audits, inspections, permits and reporting.
Best Practices for Chemical Management
- Purchase only the chemicals and amounts required
- Reduce inventories and store only what is almost immediately needed
- Improve inter-facility and intra-facility delivery of chemicals
- Reduce infrastructure costs
- Increase environmental regulatory compliance and decrease legal liability
- Facilitate data interchange to and from EHS systems and ERP/MRP systems
- Increase operational safety for workers and the community
- Streamline environmental compliance and reporting
- Enhance a corporate image of responsibility and safety
- Minimize hazardous waste disposal
- Automate repetitive and low-value tasks
- Conserve human resources for more value-added tasks