Costco Bulks Up Compliance Program with 3E


Courtesy of Courtesy of 3E Company

Untitled Document Background
Costco Wholesale Corporation operates an international chain of membership warehouse stores, mainly under the "Costco Wholesale" name, that carry quality, brand name merchandise at substantially lower prices than typically found at conventional wholesale or retail sources. As of March 2004, Costco operates 319 warehouses in 38 U.S. states and Puerto Rico with more than 78,000 employees in the U.S. International operations include 63 locations in Canada, 23 in Mexico, 15 in the United Kingdom and 12 more in Asia, in all totaling about another 25,000 employees.

Costco's warehouses present one of the widest and most exclusive product category selections found under a single roof. Categories include: groceries; candy; appliances; television and media; automotive supplies; tires; toys; hardware; sporting goods; jewelry; watches; cameras; books; house wares; apparel; health and beauty aids; tobacco; furniture; office supplies; and office equipment. Costco is known for carrying top quality national and regional brands, with 100% satisfaction guaranteed, at prices consistently below traditional wholesale or retail outlets. A broad array of products and categories along with a very large employee base and hundreds of locations worldwide makes managing compliance an ongoing challenge at Costco.

Challenge #1 – MSDS Management for Rapid Growth and Globalization
Before coming to 3E Company, Costco implemented an internal system for maintaining current MSDSs. This basic system consisting of an automated fax program enabled each warehouse to request an MSDS as needed by dialing a dedicated fax number and entering a product item number associated with the MSDS. The result was an MSDS being faxed back directly to the requestor. This highly manual process required a dedicated administrator to ensure all MSDSs were scanned into a database making them readily available via fax and to ensure that the version faxed was the manufacturer's most recent version. Due to continued growth, an increase in Hazardous Material Business Plan requests, a desire to add Canadian MSDSs to its program, and a shift in employee responsibilities, Dale Anderson, Director Insurance & Safety, considered outsourcing MSDS management. "We looked at other MSDS programs, but most of them were either software programs managed in-house or through the use of a third party database consisting of pure chemical MSDSs. Neither of these options were appropriate for a retail environment. Only 3E offered the breadth of services we need," said Anderson.

Solution #1
Because the warehouses have limited Internet access, 3E MSDS On Demand®, 3E Poison & Exposure Hotline and 3E Spill Hotline programs were implemented throughout the organization. These programs provide 24-7-365 access to 3E hazmat specialists via the HazMat Mission Control Center for MSDS requests, as well as medical advice and access to toxicologists and physicians in the event of a poison or exposure incident or chemical cleanup advice if a hazardous material is spilled in the warehouse. Costco is currently migrating to 3E Online®-MSDS.

"Once 3E's services were implemented, and our inventory was reviewed, we felt more confident about the timely availability of MSDS's. Having 3E's expertise on tap to manage the paperwork burden also allows us to spend more time focusing on other issues," says Anderson.

Challenge #2 – Regulatory Tracking During Expansion
As Costco continued to open new locations and expand its operations, EH&S staff was finding it increasingly difficult and time consuming to keep track of the various state and federal agency requirements associated with regulatory reporting.

Solution #2
Costco implemented 3E's Compliance Calendar and Disclosure service. "3E's regulatory specialists already maintain active relationships with agencies across the United States. Why not leverage that knowledge for us as well? Using that expertise and experience to provide accurate and timely completion of required disclosures, permits and fees makes sense," said Patrick Coor, Costco Environmental Compliance Specialist. "3E created a calendar program to track all appropriate disclosures. The database tracks agencies, contact information, reporting requirements, due dates and all associated fees. All notices, renewals and invoices are sent directly to 3E and they remit payment through a trust account on our behalf. The convenience of having 3E do all the leg work saves us literally hundreds of hours," Coor added. These reports include, but are not limited to, California's Hazardous Material Business Plans and EPCRA Tier II reports.

Challenge #3 – Spill & Waste – Readiness & Response
Occasionally, whether it is a torn bag of merchandise or a delivery truck leaking fuel, there will be a spill. Although a phone call to 911 can quickly obtain a local hazmat response team to stabilize a situation, Costco still needs to properly contain, label, store and dispose of the waste product.

Solution #3
"Although we could handle it ourselves, it doesn't happen often enough for us to try to maintain relationships with the cleanup companies as well as keep up with the various state and federal spill requirements. 3E pre-qualifies hazmat response and environmental contractors, ensuring each has the proper certifications and licensing required to transport and dispose of hazardous waste at an approved site. Why not entrust this to someone who addresses these scenarios day in and day out?" said Anderson. With the MSDS and Compliance programs with 3E, utilizing 3E's spill expertise was a "no-brainer."

"3E provides an all inclusive clean-up and waste management service that enables Costco to initiate a response with a simple phone call. 3E then manages the entire incident and provides Costco with constant updates from the scene. I have found this service to be highly professional, efficient and cost effective. In one instance, using 3E instead of a contractor recommended by the local jurisdiction, saved us thousands of dollars," said Coor.

Challenge #4 – Transportation Classification & Support
With the MSDS program in place, Costco began working with 3E to improve their Department of Transportation (DOT) classification and transportation of hazardous materials program.

Solution #4
With 3E's Transportation Classification module, 3E specialists assisted in analyzing Costco's inventory, pre-classifying pertinent products for packaging and labeling requirements, and aided in preparing required shipping papers and documentation. Costco employees also have 24-7-365 toll free hotline access to 3E's transportation specialists who respond with guidance on classification information, packaging, marking and labeling as well as regulatory questions for any mode of transport.

3E and Costco are now working on a special vendor registration program, which will result in even tighter compliance and inventory management. Although vendors have always provided MSDS's to Costco they will now be required to provide MSDSs and related regulatory information directly into Costco's shipping system via 3E before any transaction can take place or shipments can be received. "We are excited to partner with 3E to implement this program, "said Ed Maron, Executive Vice President of Special Projects. "Costco has always been the industry leader in all aspects of our business, and environmental, health and safety is no exception. Combining 3E's expertise with Costco's commitment to legal and safety compliance, we will continue to strive toward a hazard-free environment for all who do business with our company."

Results – Value, Awareness, Flexibility & Access
"We value our relationship with 3E. They have helped us raise the level of EH&S awareness within our organization—from executive management all the way down to the warehouses," said Coor. "It's the "one-stop-shop" concept that appeals to Costco and makes 3E a valuable partner. This plus their willingness to be flexible in order to meet our specific needs helps set them apart from their competition. We're in the retail business, not the hazmat business, so it's pretty nice to be able to readily access an MSDS or dial a number and have a professional take care of a hazmat issue," added Anderson.

Location: Issaquah, WA
3E Services: 3E Online®-MSDS, 3E MSDS On Demand®, 3E Spill, 3E Poison & Exposure, 3E Transportation Classification, Compliance Reporting
Industry/Market: Retail
Company Web Site:

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