Analyst Insight: The growth of e-commerce, coupled with continuing evolution of the supply chain, has made moving dangerous goods in a safe and compliant manner more important than ever. Unfortunately, several key gaps exist within many organizations’ processes and infrastructure that make maintaining a reliable hazmat supply chain challenging, and put their operational efficiency, reputation and bottom line at risk.

The supply chain greatly impacts an organization’s overall performance, and managing dangerous goods safely and compliantly as part of its operations adds a greater level of complexity. Moreover, many dangerous goods pros find compliance challenging and time-consuming, and aren’t fully confident about the value of their supply chains.

A recent Labelmaster survey found that 28% of dangerous goods pros either don’t believe or are unsure about whether their supply chains add positive economic impact to the business. And 56% harbor similar ignorance or doubt about whether their supply chains are a differentiator for their companies.

The lack of confidence that many dangerous goods pros have in their organizations’ supply chains is, in part, the result of specific gaps within operations and infrastructure. These include:

• Ability to handle reverse logistics. The continued growth of e-commerce has brought with it an increase in reverse-logistics activity, both from consumers returning to stores and stores returning to manufacturers and distributors. Yet managing reverse logistics is challenging for many organizations. While 67% of dangerous goods pros feel their company’s reverse-logistics processes are adequate to meet current needs, 13% say they are “not adequate,” and only 20% feel they can support future requirements.
• Presence of complete and accurate data. Access to, and communication of, timely and accurate data is imperative in today’s supply chain. Unfortunately, data accuracy, completeness and reliability remain a problem for dangerous goods pros. In fact, 45% of companies have problems with centrally collecting, storing and communicating hazmat data, and 55% have problems getting high-quality data from upstream supply-chain partners.
• Dangerous goods functionality of existing technology. While technology is pervasive in the supply chain, more than half of dangerous goods pros still rely on manual processes. Not only does this make compliance more challenging and time-consuming, it further contributes to data collection and transparency issues. But simply using technology is not a guaranteed fix, as many lack the necessary dangerous goods functionality. Only 29% of dangerous goods pros say their ERP system possesses the  functionality needed, while 41% say their WMS possesses all of the necessary functionality.
• Compliance of carriers and partners: While some compliance issues have to do with internal process or infrastructure issues, others are tied to supply-chain partners. In fact, 71% of survey respondents wish their partners were as compliant as their own companies. While this often comes as a result of the manufacturers, retailers or distributors they do business with lacking adequate resources or training to handle and ship dangerous goods properly, 42% of respondents agree that the carelessness with which carriers handle and transport dangerous goods is a significant problem for their business.

Outlook:

The shipping and handling of dangerous goods will only become more difficult as supply chains become more complex, greater numbers of items are classified as dangerous, and regulations continue to emerge and change. In order to ensure regulatory compliance and maintain a smooth, on-time hazmat supply chain, companies must invest in adequate compliance technology, training and infrastructure. Otherwise, they put their supply chain — and, ultimately, the entire business — at risk.

Pia Jala is Vice President of Consulting with Labelmaster.