Lots of us at Labelmaster are excited about our hometown Chicago Bears, who are poised to make the National Football League playoffs for the first time in eight years.
As one of the league’s biggest turnaround stories, the Bears have made sharp improvements in several statistical categories. One improvement that gets very little attention? Penalty yardage, which they’ve reduced more than 16% since last season.
In football, as in Dangerous Goods transport, compliance is a competitive advantage. That’s why we introduced the “total value of compliance” framework.
What is “total value of compliance”?
Total value of compliance — or TVC — is a framework for making hazmat compliance a competitive advantage. TVC builds on three factors relevant to any business engaged in hazmat transport:
- The costs of compliance. The actual cost of maintaining compliance throughout your supply chain.
- The costs of non-compliance. The cost of errors or lapses in compliance.
- The revenue opportunities of higher-level compliance. Opportunities for market leaders to differentiate, increase revenue and speed cash flows.
TVC views DG compliance as not just a cost of doing business, but also as a value-added component that contributes to profitability. The higher your TVC, the more profitable your operation can be.
But can we really compare hazmat compliance with a football team’s ability to reduce penalties? Yes, because neither one exists in a vacuum. Improved hazmat compliance, like reduced football penalty yardage, makes possible bigger improvements within the organization.
Here’s how the three pillars of TVC make sense in football terms, and vice versa.
The costs of compliance — in DG and football
Everyone knows Dangerous Goods compliance costs money—not just labels, placards or packaging, but also training, software, management and oversight.
A football team doesn’t spend money—its “currency” is practice time. Players can only practice so much per week, but the best coaches make the most of those practices.
When players practice proper technique, their “compliance” improves because they’re less likely to commit penalties. But coaches can’t spend all their practice time on technique—they have to devote countless hours to fitness, strategy and other elements of the game.
Therefore, coaches who practice technique most efficiently “purchase” better compliance at a lower overall “cost.” Similarly, DG operations that spend more efficiently achieve compliance at a lower overall cost, which contributes to a higher TVC—and higher profits.
The costs of non-compliance—in DG and football
Non-compliance in hazmat shipping and football both have the same consequence: penalties. And the true negative effects of non-compliance aren’t limited to the dollars (or yards) the organization is penalized.
In football, a team committing an infraction doesn’t just lose yards—they may also surrender a key first down or forfeit a scoring play.
In hazmat shipping, non-compliance can trigger a domino effect of expensive consequences beyond penalties and fines:
- Carrier refusal of shipments
- Return shipping costs
- Disposal of materials from returned shipments
- Damage or contamination of trailers, tankers, containers or vehicles
- Incident reporting and cleanup costs
- Higher insurance premiums resulting from failed inspections or incidents
- Potential liability for damages or injuries
- Bad publicity from a hazmat-related incident
Reducing non-compliance is a clear way to improve TVC and elevate profitability.
The revenue opportunities of higher-level compliance—in DG and football
A football team whose improved technique results in fewer penalties will reap other, more impactful benefits as well.
For example, when an offensive line canbe trusted to protect the quarterback without committing holding penalties, thecoach can confidently call longer passing plays with greater potential outcomes.
Likewise, organizations that are confident in their hazmat compliance can undertake more ambitious projects with greater potential outcomes. Here are a few ways superior compliance can actually open the door to new revenue sources:
- New products aligned with regulatory standards from day one
- Popular products that other companies, less familiar with Dangerous Goods, may avoid
- Joint ventures and other collaborative initiatives
- New customers and supply chain partners
This facet of improved TVC is where today’s most advanced shippers turn hazmat compliance into a competitive advantage.
Read more about total value of compliance
We’ll be writing more about TVC throughout 2019, with specific guidelines to help you improve your operation in all three aspects of the TVC framework. Meanwhile, for more detail about the TVC concept and how you can apply it, download the Total Value of ComplianceTechnical Brief today.
And … go Bears!
Labelmaster is a full-service provider of goods and services for hazardous materials and Dangerous Goods professionals, shippers, transport operators and EH&S providers. See our full line of solutions at labelmaster.com.