Manufacturing and Warehouse Hidden Costs: Factoring Injury into ROI

on March 16, 2017

42294348_sIf you’ve been weighing your options to create a more efficient operation, you’ve likely run across numerous solutions. Most likely they involve facets of Lean strategies and automation or other equipment. A lot of these choices will cost you money, which can cause managers to pump the brakes. You want to be certain that the improved process will outweigh your initial investment in a time frame that is worth it.

The level of improvement to production isn’t the only factor you should consider, however. Manual material handling consistently falls into the job categories reporting the most work-related injuries. Repetitive strain and overexertion account for the majority of these musculoskeletal disorders (MSDs). In other words, just because your employees aren’t exposed to dangers that may break an arm or cause a concussion doesn’t mean they are safe.

The cost of injury is two-fold. First there is the direct cost, or worker’s compensation. In the 2015 edition of the National Safety Council Injury Facts, the average compensation claim is reported at $36, 894. Liberty Mutual Group’s most recent safety index gives us a broader, more staggering picture:

“According to the 2016 Liberty Mutual Workplace Safety Index, the most disabling, nonfatal workplace injuries amounted to nearly $62 billion in direct U.S. workers compensation costs. This translates into more than a billion dollars a week spent by businesses on these injuries.”

The second cost, however, is even higher, and often overlooked. This is your indirect cost. The American Society of Safety Engineers approximate indirect costs to be up to 20 times higher than direct costs. Consider lost work time, administrative expenses, insurance hikes, training, and other resources you need to accommodate one employee being injured.

Clearly, as a manager, you want to provide a safe environment for your employees. You must remember that bending, lifting, pushing, pulling, gripping, twisting, and lifting are all culprits of chronic injuries. Bear in mind the repetitive motions that will be eliminated with automation, transitioning to workcells, or whatever efficiency strategy could make sense for you. Employee injuries can devastate a business, so do not take safety for granted.

For some companies, packaging is an expense that can eliminate the risk of injury, too. Packnet specializes in heavy, large, and fragile product packaging. We work with you to engineer the most practical, effective, and cost-efficient solution. Additionally, we travel to your site to package large and/or heavy objects. Let us know what you need: 952-944-9124 or