Evaluating the Difficult-to-Quantify Benefits of a Chemical Inventory Management System
Accountants can be an odd group. They talk about things like debits and credits, and worry about return on investment (ROI) and net present value (NPV). In general, I truly appreciate the work of accountants and the discussion of hard financial facts that they bring to the table. However, sometimes I think they may too quickly dismiss or discount an idea because it is difficult to quantify.
This happened recently at a laboratory that was determining whether or not to implement a chemical inventory management system. The accountants applauded the inclusion of quantifiable benefits, like employee headcount and reductions while discounting the non-quantifiable benefits of the system, like chemical liability reduction.
Although I recognize the need to focus on the quantifiable, the decision to implement a chemical inventory management system should be made based on an understanding of the non-quantifiable benefits as well as the financial facts. Let’s examine five difficult-to-quantify benefits that can be achieved with a chemical inventory management system:
Liability Reduction – Whenever chemicals are stored in a laboratory, there is a risk of potential harm to employees or the surrounding community. In accountant-speak, this risk should be recorded as a liability because there are real costs if something goes wrong. However, a chemical inventory management system can reduce this liability by providing safety managers with insight regarding chemical location, related hazards and effects and expiration information, details that can reduce the associated liability. Though non-quantifiable, this should count for something.
Freeing Up Space – The benefits of a chemical management system includes the ability to run a lean inventory. Less material purchased means that there is less space required for storage. By freeing up more space for something else, a chemical inventory management system allows laboratories to tackle additional projects without significantly increasing rent.
Environment Reporting Thresholds – According to OSHA regulators, if a chemical exceeds a certain threshold, it has to be reported. This has the potential to lead to audits or more time spent generating follow-up reports. However, if a threshold is not met, no reports and no audits are required. A chemical inventory management system can help a laboratory track reporting thresholds and provide capabilities to keep any on-hand amounts under regulatory limits.
Improving Staff Productivity – Without a chemical inventory management system, employees spend a lot of time tracking chemical information by hand. This also includes month-end or quarterly counts that probably take longer than they should because employees have to physically seek out the chemicals. However, a chemical inventory management system can help increase staff productivity by tracking key information like location and on-hand quantity, ensuring that employees do not spend unnecessary time looking for chemicals.
Increasing Employee Safety – When it comes to chemical management and employee safety, the first line of defense are safety data sheet (SDS). However, these sheets are only effective if they are readily available to employees and updated regularly. The benefit of a chemical inventory management system is that the SDS are stored digitally and can be accessed digitally. This provides employees with direct access to the most up-to-date information regarding the proper handling of a given chemical which, in turn, should reduce the number of accidents that occur in a laboratory.
Although it is more likely that the decision to implement a chemical inventory management system will come down to the hard financial facts associated with ROI, it does not mean that the difficult-to-quantify factors should be ignored. Aspects such as reduced liability, freed up space, and increased safety might not have a direct impact on the financial statements, but they will make a significant difference in the laboratory.
For more information regarding a chemical inventory management system, like Accelrys CISPro, that delivers all of the hard to quantify savings listed above, please visit our website today.