Risk and Liability Management Improves Efficiency and Lowers Costs

In order to accomplish anything, whether we notice it or not, we go through a step by step process that accomplishes our task.  Whether we accomplish this on our own, or delegate it to our subordinates; every step in the process introduces risk and liability.  This is true from the most nominal of tasks, to the most complex.  Taking this into consideration prior to delegating any task or setting out into a new direction is the best and most proactive way to increase efficiency and decrease cost.  To best handle operational risk and liability, keep efficiency and cost paramount.
The word efficiency as defined by dictionary.com means:
 “accomplishment of or ability to accomplish a job with a minimum expenditure of time and effort”
Naturally when people think efficiency, they think of the time it takes to do a job, the assembly line was a revolution in efficiency.  Beyond time, there is a second word in this definition, EFFORT.  Effort is key, because we pay for effort over time; this shows us that efficiency is tied to cost.  If machines and robotics do the work, we must pay to electrify them, and pay specialists to keep them within calibration.  If we will have humans do the work, we will be paying a manual labor force.  A mechanized labor force on the other hand, costs less in the long run, and is more efficient. Also, with Plant Equipment (PE) that falls into a state of disrepair; making small fixes to continue the operation as planned is never the right thing to do especially when there is no immediate deadline.  Instead of a temporary patch, replace the component.  In the event that there was a deadline and you experienced a failure with machinery, most of the time the cause would be a failure of proper inspection, and thus poor management.  Would you not check your car out prior to a road-trip?  Much like a vehicle, proper routine inspection and maintenance is key to the reliability of the machinery of your operation.  When it comes time to work, things will be more efficient; and routine maintenance and inspection is ALWAYS more cost efficient than replacing entire pieces of machinery.
Unfortunately the majority of jobs in logistics and small business operations still must be handled by humans.  Robots and the facilities with which to best use them are far too costly to small businesses and most logistics ops.  Unloading inventory, checking for damage, sorting the inventory, and then stocking that inventory and preparing it for use, are all human jobs.  Unfortunately for humanity, we come with risk and liability attached.  As humans, we get: injured, sick, distracted, and discouraged among other things.  All of these things bring increased chances of risk and liability.  Too often, operators and business owners will tell their employees to “just get it done”; without regard for risk and liability.  The problem is that one at risk or liability causing action by labor can compound into another, and then another.  Once the problem comes to light, it will cost more money and time to correct.
I often hear  “well there might be unforeseen liabilities, why should we address them if they have not come to pass so far”?  The problem is that once they do, they strain the already limited operations budgets most businesses and operations have, do not let something like that drag you down too.  Efficiency and cost are tied together, but if the client or consumers see any of these problems, you now have a quality issue, don’t let it get that far.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s