An introduction: Return on investment calculator case study 1- Rexel Electrical Supplies

An introduction: Return on investment calculator case study 1- Rexel Electrical Supplies


This presentation will be looking at how the Office of Industrial Relations, or OIR, their return on investment calculator, was used to estimate an ROI for Rexel Electrical Supplies. So this is a case study which is found on our Worksafe website and the case study is looking at their health and safety investment. This presentation will be most helpful to those who have either had a look at the ROI calculator and don’t know how to complete it, or are curious about how we arrived at the ROI estimate for Rexel Electrical Supplies. And so if you have any questions regarding this presentation, please email us at [email protected] And so the two main points to get out of this today is to understand how we arrived at the ROI results for the Rexel case study as found on our Worksafe website. And also for you to get an understanding of the information we gathered and what factors were considered so that you can tailor an ROI that’s actually suitable for your own business. This is just a screenshot of the website where the ROI calculator lives. And as you can see, it’s a part of the five eTools suite of tools which was developed to assist businesses to better manage work health
and safety risks and hazards. There are tools to help you manage risks including heat, noise, and hazardous manual tasks. Please note that there is a combination of business supplied and estimated figures in this presentation. So a little bit about Rexel. Rexel supplies electricals products for retail and commercial purposes. They have a distribution warehouse all across Australia and the five years prior to performing this evaluation they had consistent musculoskeletal disorder claims. One of the tasks which they identified as contributing to these injuries were the manual handling of the shrink wrapper to wrap and secure pallets of goods. Upon research and consultation with workers, Rexel decided to purchase two automatic shrink wrapping machines to replace the handheld wrappers. So when we click into the ROI calculator website, and accept the disclaimer stating that any information entered into the calculator will be kept private and confidential and also will also be de-identified unless otherwise specified, we arrive at the preliminaries stage. So you can use this tool to either one, calculate your ROI for a control you have already implemented, or two, predict an ROI estimate for a control you wish to implement and want to justify the costs for. And so here we enter a description of the intervention Rexel has implemented, an automatic shrink wrapping machine. The next question asks whether we’ve experienced any injury reductions due to implementing the control. And in this case, we
performed this evaluation retrospectively and found
that the automatic machine had reduced the number of claims. And if you were to do this as a prediction or estimation exercise, you would select no or unsure. And so next we select the industry that Rexel operates in, and enter 20 as the number of
employees their business has. And so it’s only 20 because this is a small to medium size warehouse. And this is a relevant number of workers the workplace that’s actually impacted by implementing this control. After the preliminaries page, we come to step one of eight, which looks like costs associated with a typical incident in your workplace. This could be strains and sprains, falls from work at heights or lacerations. It’s really completely dependent on the type of injuries you have prevented as a result of the control, of the type of injuries or illnesses you are hoping to prevent for the intervention you are evaluating. The typical injury in this case was a back strain, and the time to provide first aid was only 15 minutes. However, since both the worker and the health and safety manager were involved, we double the time required, so 0.5 hours, or 30 minutes and average their wages of $40. Alternatively, we could enter 15 minutes in the time spent and add the wages together for labor costs. The mathematics is the same. It takes about an hour to get to their local GP and for the initial assessment where both injured worker and the health and safety manager attend. So, as you can see here, when you enter information, the total sub-costs for each sub-category is automatically calculated and displayed as you enter your information. So, productivity is also effected as workers stop work when the incident occurred. And so, the workers were worried for their colleague, which is completely understandable. So the time stoppage is about 15 minutes, or about a quarter of an hour, as only one other worker was around during this incident. So, the time to make the area safe would be more applicable for an injury such as lacerations or slips and so forth where the work environment would be compromised, or may have been less safe due to the injury. In this case, no first aid supplies were used and the worker was transported by a company vehicle and so no information for Rexel was entered in this case. So moving onto step two, we look at costs associated with investigating an incident. In this case, the health and safety manager only needed half an hour to perform the initial investigation of the cause of back strain, so we enter 0.5 hours into the time spent and an average wage for the health and safety manager. You also use 1.5 hours to write up the incident report and wasn’t really required to do much else paperwork in relation to this particular incident outside. So, step three of eight guides you through the costs associated with any damages incurred as a result of the incident. However, in this case, the back strain didn’t cause any damage to the equipment goods, so some of the key factors to note include time required to assess damage, replace equipment, including research or consultation and any stoppage if repairs halt work and salvage costs as well, if this is actually applicable to your own case. This step also isn’t that relevant to Rexel, as they didn’t have a need to bring someone over from another work site, or call for labor hire to take over lost work by the injured worker. And so the things to note here, if you include any of these factors, is ensuring you include all
recruitment and training time and staff involved in this process. So, the final step of figuring out the avoided cost of injuries, or rather the hidden costs, is determining the lost productivity attributed to the incident occurring in your workplace. And so, when the worker pulled their shoulder, one other person was around and took half an hour to help them out. The health and safety manager spent about an hour communicating with the worker to manage their claim. And so you can include this in step two of the injury investigation cost if you like. It’s quite flexible and really up to you, but we’ve included it here in this case. And so there were no other costs, as the worker was put on suitable
duties upon return to work and the return to work process was quite efficient. So here we come to the upfront cost of the health and safety intervention. So, Rexel spent $15,000 on two automatic shrink wrapping machines and it took them a couple of hours to install it. So we can put in two hours in time spent and $15,000 for the two
machines and the other costs. They spent about 10 hours consulting with workers and researching options for how to manage the hazardous manual tasks risks in their workplace regarding the manual shrink wrapper. And it didn’t take very long to train workers how to use this machine and the machine will easily last 10 years if not more, so. So, here we kept the intervention lifecycle as 10 years. And so maintenance for Rexel is actually quite easy. They estimated themselves that once a year they would spend approximately $100 over the 10 years of the lifecycle for their automatic shrink wrapper machine. So, in regards to the benefits for the health and safety intervention, Rexel timed how long the task took before the automatic wrappers and after installing the automatic shrink wrapper machines they found that there was a four minute saving each time it performed the task. And so we multiply that by 2,300 pallets that they process in the year and it gives us a total of
approximately 9,200 minutes, which equates to about 153 hours in the year. So Rexel expects that the complete elimination of hazardous manual task risks by purchasing the automatic shrink wrapping machine will prevent approximately two injuries per year from happening and so we include that here in this question here. And so for them, there was
no real workers compensation savings at that particular time. They do still, obvious, they still do experience
hazardous manual task injuries and so this savings here will steadily decrease, but however, they didn’t see any worker’s comp savings in quite at this particular time. And this brings us to the final outcomes page, or the results page. And so with the total cost of just over $16,000, estimated benefits of over $59,000, giving us an ROI indication of $3.61 of benefits per $1 of cost over 10 years. And please note that this figure is different to the case study online as the benefits were calculated over five year basis. And so Rexel would expect that they would recover their costs of implementing the automatic shrink wrapper machines in approximately three years as you see
here in the payback period. So this comes to the end of the presentation. As I mentioned, if you do have any questions regarding how we came to some of these figures, some of the processes that we went through to collect this information, or just want to ask a few questions about the ROI calculator, please e-mail us at [email protected] Thank you.

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