Trends—September 2014

HCS Updates: Asked and Answered

The Occupational Safety and Health Administration‘s (OSHA) 2012 Hazard Communication Standard (HCS) is sure to elicit a supply chain reaction from chemical manufacturers, distributors, and end users. The updates to HCS 1994, OSHA’s previous convention, feature some cosmetic changes—"material safety data sheets" are now referred to as "safety data sheets"— as well as new definitions, lexicon, and context.

But hazard classifications, instructions, and labeling are facing some extensive revisions. Come June 1, 2015, any party involved in chemical manufacturing and petroleum refining, and their ancillary support industries, will be required to meet these guidelines.

To find out more about these new measures, and how they impact the supply chain, Inbound Logistics posed some questions to Paul Burgess, staff regulatory specialist at Labelmaster, a Chicago-based hazmat compliance facilitator.

Q: What are the key provisions in OSHA’s 2012 Hazard Communication Standard?

Burgess: The key provisions include ensuring that material is classified according to the new standard (US 29 CFR 1910.1200); has a warning label applied that is constructed to the new six-element standard (provided the container qualifies as a "shipped container" under the new rule); has a 16-section safety data sheet (SDS) constructed to the new standard; and that employees are trained to understand both the labels and the SDSs.

With regards to labeling, chemical manufacturers and importers must provide the product identifier; supplier information that includes name, address, and phone number of manufacturer, importer, or distributor; and the signal word, pictogram, and hazard statement for each hazard class and category. Precautionary statements must also be provided. HCS 1994 does not require the use of pictograms, specific signal words, or precautionary statements.

The safety data sheets, formerly called material safety data sheets, provide specific details about a product’s characteristics—such as ingredients, risks, boiling point—as well as procedural instructions for safely handling that product. The revision includes a more uniform format for reporting this information.

Q: Any other changes from the previous standard?

Burgess: The requirement to provide adequate hazard communication via container labeling, a valid chemical inventory, hazard communication training to employees, and an MSDS/SDS library, has not changed. All the methods and means by which this is to be accomplished, however, have been formalized, and in most ways coordinated with the Globally Harmonized System of Classification and Labeling of Chemicals (GHS)—nearly all of which differ from the previous standard’s specifications. The GHS offers a basis for harmonization of rules and regulations governing chemicals at a national, regional, and worldwide level—an important factor for trade facilitation.

Q: What impact will this new regulation have on different supply chain actors?

Burgess: The initial impact will fall on chemical manufacturers as they embrace the requirement to formally classify, then construct, appropriate labeling and SDSs for their products. Importers and distributors will face the same onus, although they would be wise, for liability reasons, to rely on the original material source. Packaging providers will have to modify their markings to accommodate the new labeling. This may require more "real estate" on the package surface compared to the older standard.

Q: Is there an effect on transportation or other logistics functions?

Burgess: This is an area of potential confusion for many actors. The requirement to label and mark packages for transport in commerce under the USDOT 49 CFR Hazardous Materials Regulations has not changed due to this regulation. Those requirements, or others such as the International Maritime Organization or International Civil Aviation Organization, remain the same.

The new rule applies only to containers used in the workplace by employees—not packages shipped in commerce. Only packages that serve as both the shipping package and as the final-use container would require the display of both transportation labels and hazard communication labels.

Q: What recommendations would you offer shippers to help them meet these new compliance requirements?

Burgess: Shippers shouldn’t delay implementing the program, especially if they have a significant inventory of materials that require classification. After that, it is simply a matter of following the rules as far as assigning values to the labels and SDSs in accordance to that classification, then building them. It’s simple in the sense that it requires far less intellectual effort, and carries far less potential for a liability risk, than does classification. However, it is still going to be an enormous exercise in new paperwork.

For more information regarding the changes between HCS 1994 and HCS 2012, visit: www.osha.gov/dsg/hazcom/side-by-side.html

Procurement: Pull, Don’t Push

Companies are not leveraging procurement to take advantage of strategic opportunities, according to new research conducted by event organizer Worldwide Business Research in concert with the ProcureCon Indirect East conference.

Many companies are not adequately staffed to successfully execute their transformation goals, and do not operate on a strategic level within their respective organizations, indicates the survey of more than 300 procurement professionals. To point, 36 percent of those surveyed report that efforts to transition from tactical to strategic processes lag behind schedule.

Staffing appears to be an issue as well—in terms of quality, not quantity—according to 56 percent of respondents.

"Properly staffed does not necessarily just mean having the appropriate quantity of people," explains Barbara Smith, enterprise labor services purchasing manager at Xerox. "It also means having the right people in the right positions with the right skill set."

The survey results suggest that companies are not leveraging procurement to drive strategic business process change, and that collaboration with other functions is wanting.

"Procurement professionals have earned a seat at the table in the corporate world, but they must adopt a business-driven focus, and balance long-term vision with short-term agility, in order to keep it," the research concludes.

Data Quality: A Numbers Game

There’s comfort in numbers—even for a global information technology giant with revenue north of $100 billion. Palo Alto, Calif.-based Hewlett-Packard (HP) relies on product differentiation to capture market share. But when it comes to supply chain innovation and improvement, there’s no substitute for true collaboration.

HP is among a who’s who of leading global companies from diverse industries that are members of the GT Nexus Shipper Council—a user community comprising more than $1.2 trillion in annual revenue and five million TEUs of ocean freight. The companies share a common bond as customers of GT Nexus’ global supply chain platform. They also encounter similar challenges—especially when it comes to managing and vetting data.

"The Shipper Council is about working together, sharing best practices, and trying to understand, as a community, how to help logistics partners improve data quality from a visibility standpoint," explains Dave Thomas, program manager, global supply chain systems at HP, and current Shipper Council chairperson.

Council membership is the essence of crowdsourcing. A collective commitment to data quality, metrics, and benchmarking squashes any threat of competitive angst. In effect, members stick to the facts—finding better ways to collect, cleanse, and communicate data, and turn it into executable information, which is the key to driving supply chain visibility and responsiveness in today’s global marketplace.

In a recent interview with Inbound Logistics, Thomas hit on the issues shippers face when dealing with "infoglut," as well as the advantages of crowdsourcing data quality best practices:

• Quality at a premium. "Data quality is the foundation for driving visibility," he notes. "HP uses data in many ways: for performance metrics, proactive notifications, and business continuity situations where a political or natural event disrupts the supply chain. It’s important to have accurate information to understand where product is, and how exceptions impact customers. It’s also important to consider network analysis—using data to take inventory out of the system, improve predictability, and achieve cost savings."

• The problem with bad data. "If you make a case to senior executives for improving the customer experience or cost situations, and you work with bad data, you wind up debating the quality of the analysis, rather than its validity," Thomas warns.
• Lessons learned. By working with the Shipper Council, HP gained insight into using the data available within the GT Nexus platform. "We use a number of reporting tools, and now we can create metrics," Thomas says. "That work involves a lot of trial and error. It helps to speak with companies and people that have already created metrics to find out how they approached it, and what issues they encountered."
• You can’t outsource accountability. HP outsources many processes, but still owns the accountability from a business standpoint. "Our logistics operations team is accountable to its stakeholders for that execution," he notes. "Having information, and being able to use it to measure partners and capture proactive notifications when issues arise, is critical."
• Continuous process. Ensuring data quality is a continuing process. "You may achieve 99-percent data accuracy this month, but it doesn’t mean you’ll have that next month," Thomas says. "You have to continually monitor information to make sure that if something happens, you can take corrective actions to get the supply chain back in alignment."

Labor and Delivery

Rumors of labor disruptions took a toll on Los Angeles and Long Beach container volumes in July 2014. Imports through both ports were negligible, an anomaly in the lead-up to peak season.

Sluggish growth is partly attributed to the fact that many retailers jumped the gun on potential labor shutdowns by shipping product earlier in the year, reports the Long Beach Press Telegram. Ongoing contract negotiations between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) have cast doubts over port reliability during the busiest time of the year. That shippers are pre-emptively moving product and/or re-routing freight suggests industry is adapting to a new normal dictated by contingencies.

Competition from East Coast ports—through the Suez and expanding Panama Canal trades—as well as increasing connectivity among Canada and Mexico’s west coast ports and the U.S. hinterland give shippers more flexibility. Ports in both countries have experienced double-digit container volume growth since the ILWU/PMA contract expired in July 2014. The problem is, these ports don’t have the capacity or flowthrough to handle a sustained surge in traffic.

Contract negotiations are ongoing. While speculation about the Panama Canal expansion’s impact on East Coast-West Coast cargo balance continues, the threat of contentious labor relations over the long term might be a greater deterrent for U.S. importers and exporters. More companies will likely gravitate toward bi-coastal sourcing strategies, which might siphon volumes from the West Coast, regardless of the Panama Canal.

For God, Country…and Capacity

Shippers and truckers are wearing out treads looking for new ways to recruit drivers. One solution is mustering out of the military as the United States completes its drawdown in Afghanistan.

While questions remain about how military skillsets and training translate to the commercial sector, 10 members of the Ohio Army National Guard’s 1483rd Transportation Company provided some answers at the Ohio Trucking Association’s Truck Driving Championship in June 2014. The state-level competition is a feeder to the American Trucking Associations’ National Truck Driving Championships, a skill-based showcase that evaluates participants on safety, knowledge, and performance.

Service members from the 1483rd Transportation Company competed in the first-ever military exhibition class, sponsored by FedEx. They demonstrated their expertise through pre-trip inspections, a written test, and a driving skills challenge course.

The military exhibition class serves a few purposes: to expose private sector companies and truck drivers to military equipment; dispel concerns that military equipment is different than commercial assets and requires different training; and play matchmaker between corporate recruiters and veterans.

Of the 18 soldiers present (10 competing, eight supporting), four set up interviews, and one was offered a job on the spot. The hope is other state trucking associations and driver recruiters will get on board with what Ohio is doing, and help tap a ready and willing talent pool.