SDS & Chemical Management

Getting Return on Investment

Intuitively, you know that there is real value in chemical management done right. More than merely a chore of compliance, smart organizations, led by SH&E or safety professionals who have learned to partner with C-level executives to grow business, are finding tremendous value in the tools that help them become more proactive in enterprise-wide chemical hazard management.

Accordingly, they are uncovering remarkable return on investment (ROI) in these solutions and using this to demonstrate that they can increase both top-line growth through new product development innovation and bottomline profit through cost reduction and risk mitigation. Here's where to find this ROI and how to use it as the foundation on which to present a case for better safety data sheet (SDS) and chemical management to the CEO or CFO.

The Cost of Doing Business (as Usual)

Although not always recognized, hard costs are associated with doing things manually and the way "it's always been done." While we don't get monthly bills for these status quo inefficiencies, the costs nonetheless exist and the price tag may be heftier than one realizes. If considering upgrading from a manual process to an automated SDS system, this is a sensible place to begin building an ROI case. Variables to consider in assessing these internal costs include:

*time spent on SDS binder creation and distribution;

*time spent on binder updating and archival;

*time spent performing chemical inventories and reconciling materials to SDS notebook;

*time spent acquiring, updating and organizing new SDS documents;

*time spent searching for SDS-related documents across departments;

*external auditing costs and consulting fees associated with chemical management and compliance;

*hours and cost associated with preparing and submitting compliance reports (e.g., Form R, Tier H).

Beyond this list, also consider the added responsibility and accountability that current processes place on the SH&E professional, as well as the opportunity cost that might be achieved if efficiencies were improved via conversion to a web-enabled SDS management solution. In this assessment, look down the road a bit to determine whether current processes are even sustainable in the future, and if now might be a good time to automate SDS management.

For example, GHS and OSHA's adoption of HazCom 2012 necessitates major changes to all SDS. Are you ready? In light of these and other factors, you may want to rule out some cheaper online alternatives in favor of a more comprehensive solution with built-in industry expertise, comprehensive chemical data and regulatory indexing, and managed services to help you confidently navigate the unknown seas ahead.

The ROI of Risk Avoidance

Speaking of seas, we all understand the analogy of the iceberg: there is always more that we can't see (or foresee) than that which we can. This is the basis of all insurance policies. Personally, we purchase home, life or automobile insurance hoping we'll never have to use it. We don't view these policies as necessary evils, but instead as security against the many unknowns and uncontrollable variables we all know exist.

Likewise, the professional risks surrounding chemical management are numerous and growing. These risks only increase with the complexity of governmental regulations and requirements, the violation of which bring fines and deeper vulnerabilities. Risks to factor into an ROI equation include:

*cost of workers' compensation claims;

*cost of increased insurance premiums resulting from incidents;

*liability of missing or outdated SDS;

*cost of production downtime and replacement labor;

*emergency response and remediation fees;

*health insurance and medical costs;

*fines for and liabilities for noncompliance with regulations;

*damage to overall corporate brand due to negative press.

Anyone who has had the misfortune of managing in the wake of a serious injury or incident understands that these costs are much greater than can be calculated. If found to be preventable, such costs are compounded exponentially by lawsuits and fines as well as loss of reputation, morale and overall brand value. Hindsight in these instances highlights the importance of continual foresight and vigilance in our roles as SH&E professionals. After all is said and done, we are the principal responsible party and simply must have the tools and services that allow us to most effectively protect what's been termed our triple bottom line, encompassing employees, corporate earnings and the environment.

The Value of Efficiency

For many companies, introducing new products is business critical. From research to prototyping to production to recycling, the product life cycle process requires a significant investment of capital. In calculating the ROI of efficiency, how important is it to identify potential market risks and substitute better alternatives at the beginning of the product development process rather than at the end, when all the investment has already been made?

The right chemical management system helps one make informed choices throughout the product life cycle. It ensures becoming an expert partner in the process by providing the tools to crossreference current or planned chemicals or ingredients with safety, environmental and even regulatory factors.

This introduces a fresh new level of value in the overall efficiency of the product development process and magnifies your identity as a true environmental expert. These ROI proof points may include:

*improving the ability to add value to the entire product life cycle management process;*identifying potential restricted ingredients or materials in the R&D process;

*reducing late-cycle product redevelopment and recycling costs;

*increasing reputational value by consistently introducing high-quality, low-impact products;

*increasing the organization's overall chemical and inventory management efficiency.

With every aspect of a site's chemicals and ingredients indexed, automatically updated from vendors, and accessible online 24/7, a strategic SDS and chemical management solution can actually help a company produce better products, keep workers safe and build a better business.

Do the Math

The best way to understand a company's ROI potential is to complete a quantitative assessment. Having a structured approach and format, coupled with verified industry benchmarks and statistics, lends credibility to the ROI assessment. Check available industry resources or even current SDS solution providers for a detailed ROI evaluation.

Although historically viewed as a cost of doing business rather than as a strategic imperative that can generate measurable ROI, today's SH&E leaders are leveraging tremendous value from their chemical management solutions. The right solutions are not only paying for themselves, but also helping to elevate these leaders into partner positions, as well as cutting costs, reducing risks and ensuring that they are better able to contribute to the long-term growth and profitability of their organizations. Don't be afraid to leam the language of your CEO and build an ROI case for chemical management. It might be easier than you think.

The right chemical management system helps one make informed choices throughout the product life cycle.

Kraig Haberer is the COO of SiteHawk (www.sitehawk.com), an SDS management provider that offers software and managed services to help companies with SDS management, chemical inventory and product sustainability initiatives.