SUPPLY CHAINSAND SUSTAINABILITYIs Your EHS Team Managing Contractor and Subcontractor Risk?

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ABOUT THE SUPPLY CHAIN AND SUSTAINABILITY REPORT

Our latest Supply Chain and Sustainability Survey sponsored by Avetta® was launched in January 2019, and by the time the survey closed approximately one month later, 308 environmental, health, and safety (EHS) professionals had shared their insights into how their companies are managing the safety risks that naturally occur in supply chains consisting of multiple contractors and vendors.

We at Avetta and the EHS Daily Advisor Research Team would like to extend our thanks to all of the professionals who chose to participate in the survey, and also to our readers for their interest in making their workplaces safer for all employees, contractors, and subcontractors.

All percentages in the following report have been rounded to the nearest whole percent. If you have any questions or comments about the survey, its data, or the report, please let us know via e-mail at media@simplifycompliance.com.

ABOUT AVETTAAvetta connects global organizations with more than 85,000 qualified suppliers, contractors, and vendors across 100+ coun-tries. We support the continued growth of supply chains through trusted contractor prequalification, safety audits, monitoring, and more. With real results in reducing TRIR, our highly configurable solutions elevate safety and sustainability in every workplace.

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CONTENTS

About the Supply Chain and Sustainability Survey .......... 2

Supply Chain and Sustainability Survey Results ............... 4Number of Contractors Employed ............................................................ 4Citations and Fines .......................................................................................5Skipping the Contractor Audit ...................................................................6Vetting Your Contractors ............................................................................. 7How Are Contractors Audited? ..................................................................8Contractors’ Performance Under Audit ...................................................9Audit Consequences .................................................................................. 10

Who Responded? ...................................................................11

A Message from Our Sponsor .............................................12

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NUMBER OF CONTRACTORS EMPLOYED

For our first question, we wanted to know just how many contractors (including subcontractors) our respondents work with. Their answers ranged from a mere handful to more than 25.

of participants work with fewer than 5 contractors

work with 5–10

employ 10–15

work with between 15 and 20 contractors

employ 20–25 contractors

of respondents employ more than 25 contractors at their organizations

14%

20%

9%

10%

5%

38%

5% of those polled work at an organization that doesn’t employ any contractors— these respondents did not answer any of the subsequent questions in the survey.

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Only 5% of survey takers work at a company that has been cited by a safety regulatory or other agency in the past year because of the actions of a contractor or subcontractor.

However, a larger share of 15% said that their company has been cited or fined at some point in the past because of actions taken by a con-tractor.

CITATIONS AND FINES

When asked how thoroughly their organizations vet new contractors or audit current contractors regarding matters of safety compliance, records, and best practices, survey participants had a variety of responses.

38% 29% 25% 8%

of those polled vet or audit

their contractors

“very thoroughly.”

do a “somewhat” thorough job

in vetting contractors.

perform only minimal vetting and reviewing.

do not vet or audit their

contractors for safety

compliance at all.

In all, 62% of respondents do not feel that they vet their contractors very thoroughly, demonstrating the current atmosphere of uncertainty when it comes to managing contractors within a supply chain.

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SKIPPING THE CONTRACTOR AUDIT

Despite a large portion of the respondents feeling that their vetting process is less than thorough, they are doing little to change it. This brought us to our next question: Why do some participants chose to skip the process of auditing con-tractors? While respondents could choose between multiple reasons (and they were allowed to select more than one reason), the most common answer was that it had simply never crossed their minds to perform these audits.

Here are detailed results for each reason given for skipping the contractor audit:

• “We simply have never considered it before”: 47%• “Time constraints”: 26%• “Administrative difficulty/high complexity in completing the assessments”

or “It isn’t required of us by law”: both 21%• “We feel that the burden of responsibility will not fall on our

company”: 15%• “Budget constraints”: 11%• “We trust our contractors implicitly” or “Lack of information available about

the contractor”: both 5%Several respondents who specified other reasons for a lack of contractor vetting or auditing indicated that it was due to a lack of management support for the process. Specifically, one participant noted “There is resistance from the man-agement team to implement contractor management [from a] safety and health perspective,” while another said “Leadership [is] not engaged in current contrac-tor safety policy.”

These participants, although they do not audit contractors, did show that they think that safety is important—53% of them still regularly perform internal safe-ty audits despite choosing to forgo contractor audits. It is unfortunate that their safety protocols do not extend to their suppliers or vendors.

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VETTING YOUR CONTRACTORS

After establishing that the majority of our respondents audit or otherwise check on the safety performance of their contractors, we next wanted to know exactly how they did so. Par-ticipants perform a variety of steps in their auditing processes, and here are most common ones taken (par-ticipants were allowed to select more than one answer option):

verify the contractor has adequate insurance coverage

review the contractor’s safety training programs

review the contractor’s written safety policies and procedures

look into the contractor’s rep-utation in the industry (i.e., word-of-mouth)

track a contractor’s Total Re-cordable Injury Rate (TRIR)

regularly perform full safety audits of all contractors

review and verify OSHA logs

80%

62%

60%

59%

48%

46%

45%

15% of those polled specified other steps that they take, and several of these respondents indicated that they audit their contractors via a third party.

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HOW ARE CONTRACTORS AUDITED

We next asked by what method(s) survey participants perform contrac-tor safety audits.

• 68% perform on-site inspections, making this the most popular way to audit contractors.

• 60% conduct formal, in-person meetings

• 57% request applicable infor-mation and records from the contractor (either mail or e-mail communication)

• 25% hold a phone call or tele-conference meeting

• 14% use software, an app, or some other form of computer auditing system

When it comes to how frequently respondents perform full audits of contractors that work for their organi-zations:

• 33% perform them at the compa-ny’s discretion as host employer

• 17% perform audits annually• 16% audit contractors upon the

start or renewal of a contract• 14% never perform full audits

at all

Smaller portions of the response pool (8% and 5%, respectfully) conduct full audits either every 6 months or every 3 years.

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CONTRACTORS’ PERFORMANCE UNDER AUDIT

• 70% of respondents found the materials to be adequate.

• 12% determined their contractors’ materials were exceptional.

• 13% found the materials to be substandard.

• 4% revealed the materials to be incomplete or nonexistent.

• 93% of participants determined coverage was adequate.• 4% determined coverage was below their required standards.• 2% discovered that coverage was nonexistent.

• 69% of respondents found contractors’ training programs to be adequate.

• 10% determined the training programs were exceptional.• 14% found training programs to be substandard.• 7% could find no proof that training had even been conducted.

When it came to insurance coverage among audited contractors:

And, finally, when it came to audited safety training materials and procedures:

During their most recent audit of

contractors, when it came to written safety manuals, policies, and/or

procedures:

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AUDIT CONSEQUENCES

of survey respondents have

terminated a contract because of

the contractor’s failure to pass a safety audit or

inspection.

of participants admitted that at their

organization, contractors have failed

audits … but the contract was not

terminated.

of those polled have escaped a citation or

fine by providing proof that an offending

contractor had been sufficiently audited and

passed—a good example of due

diligence paying off.

41% 6% 11%

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WHO RESPONDED?

The 308 participants in the Supply Chain and Sus-tainability Survey work in a variety of job positions, the large majority of whom (62%) are Safety or EHS managers. A further 17% of respondents are directors of Safety, EHS, or human resources (HR), and 8% are frontline supervisors. The remaining 13% of the response pool was made up of execu-tives, managers of departments outside of the EHS function, staff-level employees, and consultants/contractors.

37% of respondents work at organizations that employ 500 or more employees, while 25% re-ported from smaller companies of 99 or fewer employees. The remaining 38% work at business-es that employ between 100 and 499 workers.

The top industry represented in the survey was manufacturing, which made up 45% of the re-sponse pool. Other industries with a strong pres-ence in the Supply Chain and Sustainability Survey included construction (10%), transportation and warehousing (7%), and the following three indus-tries each made up 4% of the response pool:

1. Utilities;2. Mining, quarrying, and oil and gas extraction;

and3. Professional, scientific, or technical services.

A large portion of the respondents (12%) specified other industries of which they are a part, including:

• Wastewater• Security• Data centers• Federal government