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 realised significant savings – translating to millions – after bringing in SAP Fieldglass 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 lifecycle 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 Economic study conducted in collaboration with SAP Fieldglass, showed that across all industries, 42 percent of workforce spend is on external labour. 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 percent likelier to feel pressured to compromise safety to complete a job, and 10 percent 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, specialised 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.”

Minimise 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 million 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. Recognise positive performance and create a great experience so external workers can easily follow processes and model behaviors that meet both compliance and productivity objectives.”

Digitalisation 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 onsite performance. For many organisations, digitalisation 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 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 organisations 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 tool 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 important, ensuring health and safety compliance.”

External workforce brings innovation opportunities

The pandemic’s speedy, devastating impact is now kindling innovation. Wright urged organisations 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.”

This article also featured on SAPBrandVoice on Forbes