Australia’s Asset-Intensive Industries Save Millions Managing the External Workforce

External workers are foundational to Australia’s asset-intensive industries, making data transparency across this workforce an operational excellence imperative. One Australian oil and gas company realized significant savings – translating to millions – after bringing in SAP Fieldglass solutions to holistically manage its contingent workers.

“Companies need an integrated, holistic system that brings information together in a unified way for greater visibility across operations,” said Chris Willcocks, vice president and head of Intelligent Spend Management at SAP ANZ. “They can monitor, measure, and manage the entire contractor engagement life cycle in real-time to ensure that procurement and health and safety policies and processes are consistently enforced. In an environment where human lives are at risk and unplanned shutdowns can cost millions per day, doing this right is absolutely critical.”

Balance External Workforce Safety with Productivity

Research from an Oxford Economics study conducted in collaboration with SAP Fieldglass showed that, across all industries, 42% of workforce spend is on external labor. What’s more, industries like mining, oil and gas, utilities, chemicals, and heavy manufacturing typically average higher percentages of contingent workers as part of their overall workforce population. The trouble is, external workers often face additional time pressures, potentially increasing safety risks.

Findings from FEFO Consulting’s Health and Safety Index confirmed this challenge. The index benchmarked feedback about safety, engagement, leadership, and systems from over 200,000 respondents in asset-intensive companies primarily based in ANZ. Compared to employees, contract workers were 24% likelier to feel pressured to compromise safety to complete a job and 10% likelier to have seen colleagues compromise safety for the sake of shortcuts.

“External workforces often consist of short-term labor that’s expected to carry out complex, specialized work at speed as they interact with numerous stakeholders,” said Mark Wright, managing director at FEFO Consulting. “In driving a high-performance culture, don’t put productivity before safety. That leads to a culture of rushing to get the job done, as opposed to looking after your workmates and coming home safely.”

Minimize Risk with Tech and Culture Change

Asset-intensive industries face growing regulatory pressure in Australia. Industrial manslaughter laws and punishments can amount to fines in the tens of millions with executive liability that could mean lengthy imprisonment. To prevent incidents, Wright recommended a combination of technology innovations plus workforce culture change.

“Take a pragmatic, risk-based approach by focusing on compliance requirements that will actually add value. Apply technology to simplify, gain efficiencies, and improve the user experience,” said Wright. “Make culture changes by setting clear expectations that balance safety before production. Recognize positive performance and create a great experience so external workers can easily follow processes and model behaviors that meet both compliance and productivity objectives.”

Digitalization for Business Results

To operate safely and efficiently, asset-intensive industries need to capture and understand mountains of data that reflect workforce activities spanning recruitment, hiring, and daily on-site performance. For many organizations, digitalization has profitable business impact.

A global mining company with major operations in Australia increased workforce visibility, process efficiencies, and cost savings by integrating SAP Fieldglass solutions with its core SAP ERP system. The company improved regulatory compliance across external workforce processes, from engagement through offboarding. Supervisors reduced their workload significantly by eliminating time-consuming administrative steps such as service entry sheets for the external workforce. They also saved costs by having one consistent system for worker types and rate cards.

Pandemic-Era Business Resilience

Although the pandemic didn’t hurt Australia as much as other harder-hit countries, remotely located industries were affected due to their heavy reliance on a more transient workforce. These people often travel across state borders within Australia or fly in from other regions of the world. Earlier lockdowns contained the pandemic’s spread but restricted the flow of contingent workers.

“The smartest organizations have learned from the pandemic’s challenges. They’re looking at risk beyond likelihood and consequence to consider the velocity and speed of how major risks can impact them,” said Willcocks. “For example, we just launched SAP Fieldglass Assignment Management, a solution designed for asset-intensive industries. Companies can quickly assign large volumes of workers by task, tracking and managing spend for complex plant maintenance scenarios and, most importantly, helping to ensure health and safety compliance.”

External Workforce Brings Innovation Opportunities

The pandemic’s speedy, devastating impact is now kindling innovation. Wright urged organizations to move beyond purely compliance-based external workforce selection and management and consider new ways suppliers can add value.

“Instead of asking your external workforce suppliers hundreds of questions about their risk and injury statistics during pre-qualification and annual reviews, ask targeted questions on how they think you can innovate,” he said. “If someone can improve your safety with innovations, that will help you quickly adapt to fast-moving threats.”


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This blog also appeared on SAP BrandVoice on Forbes.