Report: Why Companies Should Align EHS Processes With QM Software
23 percent of companies have integrated EHS and quality management software into one business unit.
Update: On July 9, 2019, an ISHN webinar featuring ETQ CTO Morgan Palmer and Verdantix analyst Isabel Velasco will discuss the results of this survey. Webinar attendees will learn the key takeaways from the survey and the tools or objectives that companies need to prepare for EHSQ integration. To register for this webinar, click here.
Companies that combine their existing environmental, health and safety (EHS) systems with quality management (QM) processes are already taking a more proactive attitude to risk. And while some industries are more likely to silo these processes than others, there is evidence that integrating the two functions into one business unit can be a positive step forward.
A recent report by independent research firm Verdantix said that there is now a defined upward trend by companies to integrate mandated or existing EHS software functions with quality management.
According to Verdantix’s “Aligning EHS and Quality as a Strategic Focus for Firms” report, 23 percent of organizations now have a single business unit that deals with EHS and Quality (EHSQ). The vast majority of firms – 62 percent – still silo EHS and QM, but there is a consensus that a shared EHS and quality database will become increasingly important in the not-so-distant future.
In fact, decision makers are looking to increase QM investment in technology that enables an organizational strategy for ongoing EHSQ management, the report said.
Out of the 411 EHS decision makers that were interviewed by Verdantix, 32 percent said that they planned to spend more money on QM in 2019, with the authors of the report citing diversified regulatory requirements in both the United States and abroad as a prime reason for increased investment.
Companies are already. aware of the alignment between the two business functions and are leveraging its potential for both efficiency and incident prevention, the report said. As a result, there is value in harmonizing EHS and quality data, especially if this integration can reduce the pain points that come with compliance requirements.
“The mindset of many corporate EHS managers is shifting to employ a more overarching risk-based approach,” said Verdantix industry analyst and lead author Isabel Velasco. “What does this mean for combining EHS and quality (EHSQ) management? Firms are increasingly perceiving the alignment between EHS and quality processes — to a varied extent across different industries — and are leveraging both efficiencies and incident prevention using: 1) an organizational strategy for EHSQ management; and 2) technology that enables this strategy."
Integration requires a strategic approach
The caveat is that streamlining the EHS and quality processes is not as straightforward as it could be, especially if the organization concerned faces high EHS risks as part of its work practices. In addition, any company that is a global entity will need to adhere to a plethora of regulations and business-centric requirements in multiple geographies.
For example, the report cited the example of a fictitious chemical company that must manage thousands of task- and location-specific EHS legal requirements.
These requirements include the REACH regulation - Registration, Evaluation, Authorization and Restriction of Chemicals – the CLP regulation – Classification, Labelling and Packaging – and the European Union’s Seveso Directive (regulations that relate to the safety requirements of sites with large qualities of dangerous substances, named after the industrial accident that affected the Italian community of Seveso in 1976). In addition, the company also must comply with numerous national and local product-specific legal requirements.
Taking the above into account, a path to integrated EHSQ governance normally starts with five strategic questions, the report notes. These include how best to establish cross-functional EHSQ collaboration, the value of harmonization, the relationship of ISO 31000:2018 – risk management guidelines – to existing operations, competitor spend on QM, and investment plans for quality management software itself.
The extent to which a company integrates its EHS processes and its quality management can then be split into three scenarios – low, medium and high. All three levels rely on people, processes and technology for successful integration, with the levels themselves detailing the extent to which EHSQ exists and the technology required to move the process forward.
Companies at the low end of integration, for example, still have siloed EHS and quality business functions. By contrast, a proactive company will have governance under a single business unit and is likely to have not only incorporated evolving technology into its working practices but is also looking to pilot tech solutions such as blockchain.
EHS + Quality = EHSQ
According to the authors of the report, companies should develop a clear picture of what processes that they would want to put under an EHSQ umbrella. With that in mind, organizations that have already integrated EHS with quality are able to:
- Manage workplace compliance with a consolidated view of EHSQ obligations
- Conduct an audit, investigate an event and trigger corrective actions related to EHSQ
- Implement interconnected sensor technology and industrial wearables to link EHSQ data
- Deliver worker training with content on shared EHSQ activities
- Monitor EHSQ data across supply chains
All of these processes are, according to the report, already being used by several leading brands, even though EHSQ is still in a nascent phase of adoption.
“From a technology standpoint, firms wanting to integrate EHSQ management across their operations should consider adopting EHSQ software, mobile apps, IIoT sensors and, further down the line, blockchain for EHSQ data tracking,” the report concluded. “Although firms can prepare their strategies and resources, the integration of EHS and quality into a common EHSQ program will not happen overnight.”
Risk is part and parcel of an effective EHS strategy, but there is no reason why quality cannot be brought into the mix. Quality creates value, a crucial tool in a competitive marketplace. Adding a culture of quality to existing working practices can increase both the chances of a company achieving its EHS objectives and, importantly, identify potential pain points before they become a problem.
To find out more, download the full Verdantix report here.
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