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OSHA's PSM Update: What’s Not There — Supply Chain Management
A Happy New Year to all.
Last year we reviewed each of the 24 elements of the proposed update to OSHA’s process safety management (PSM) standard. (An index of the posts is provided here.)
Most of OSHA’s suggested updates address difficulties and issues that have arisen over the course of the last 30 years. However, the process and energy industries have changed profoundly in that same time period. Also, the discipline of process safety management has made many advances. Some of these changes have improved process safety performance; others are rather more disquieting.
It appears as if OSHA has missed opportunities to consider the impact of new technology and management strategies. Therefore, it is interesting and useful to consider what OSHA did not include in their proposed updates. As time permits, we will publish a series of posts that consider some of the items that could have been considered. In this post we consider the impact of changes in supply chain management that have occurred since the year 1992.
Advances in computer and software technology have created profound changes in the manner in which industries are organized and managed. The process and energy industries are no exception. Supply chains are much more tightly managed than they were 30 years ago, inventories have been reduced, as have spare parts and equipment items, and the number of employees. These changes have led to increased profitability, but they may have eaten into safety margins. Just-in-Time management systems have made facilities more vulnerable to interruptions in supply chains — there is less resilience in the system.
This increased vulnerability was made evident once commerce started to open up following the COVID pandemic peak. Indeed, the supply chains are still not operating as well as they were three years ago. To the best of my knowledge, we cannot attribute a serious process-related incident to COVID-related supply chain difficulties (although that would indeed be an intriguing root cause). Nevertheless, there has to be a concern that stresses in the supply chains may lead to a serious incident.
Difficulties with the reliability of supplies are likely to be exacerbated in coming years as material shortages become more severe due to resource depletion. These difficulties will be made worse by the general degradation of the global economic system that has provided a raison d’être for the Just-in-Time (JIT) philosophy. This concern was dramatized when the huge container ship Evergiven blocked the Suez Canal, resulting in world-wide commercial disruptions. Was that ship carrying critical spare parts for a chemical plant or refinery?
Transfer of Risk
One subtle example of how process safety could be made worse occurs when risk is transferred from the facility to one of its suppliers. For example, instead of storing large quantities of a hazardous chemical on site, the company management may ask their supplier to do so, and then to ship the chemical as needed using a Just-in-Time management system. If it turns out that the supplier’s risk management procedures are worse than those of the operating facility, then overall risks have increased.
JIT as a Root Cause
The best companies realize that safety does not have to be an expense. Indeed, these companies understand that Process Safety Management programs are not fundamentally to do with safety — an effective management program will improve both safety and profitability. Nevertheless, the coming years are likely to see increased tension between the process safety management professionals and those who want to increase profitability by tightening the supply chains even further. Eventually, something is going to snap.
In our post Update to OSHA’s Process Safety Management Regulation. Part 23: Root Cause Analysis we suggest that there is no such thing as a true “root cause”. Nevertheless, it seems increasingly likely that a serious incident will occur, and that its cause will be attributed to over-zealous supply chain management.
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