In industrial operations, senior managers and company executives generally wish, and are required, to oversee a safe operation. That’s why almost nobody thinks failing to invest in safety is a good idea.
However, most managers lack the familiarity and expertise to justify the costs of these investments within the business model level. For example, complying with regulations is usually considered safety managers’ primary responsibility. Their job is both to enforce laws and regulations on the industrial process and to reduce costs and worker insurance premiums by cutting workplace injuries and accidents. Therefore, in the eyes of many executives, safety is a necessary expense and a cost of doing business.
What they don’t see is that safety can also be a real revenue generator.
A safe operation is one where production isn’t forced to stop due to downtime, repair, or – even worse – an injury caused by incident. Less-than-compliant conditions that cause production stoppages will have a direct effect on revenue. Such occurrences, along with potential worker compensations costs or regulatory penalties, can add up to far more than the cost of prevention, i.e., the expense of installing safety systems and equipment.
So sometimes, when sales are down, market conditions change and times are tough, safety can be the first business investment cut. That’s why it’s important for managers to convince executive leadership that unsafe production costs money and affects the bottom line.
The business case for safety
Managers can make the business, i.e., financial, case for a safe operation in several ways. The first step is to increase awareness in safety standards. Not only can standards prevent loss of revenue, they can also add to the bottom line by emphasizing the company’s competitive advantages. This can be done through:
- Innovation and R&D
- Shorter cycles
- Customer confidence and loyalty
- Public health
- Market access and trade
- Supply chain optimization
Unsafe production costs money while safe production makes money. For detailed advice on how to change safety from a cost center to a profit center, visit our website or check out our comprehensive guide to investing in safety for industrial operations.
Click here for a free whitepaper: Slaying the Dragons: Investing in Safety in Slow Times