Managing tomorrow’s risks and hazards today

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The term future-proof has entered the language through IT systems but applies equally to the modern distribution centre. Poor delivery performance, inability to cope with future demand and the nightmare of a fire destroying stock all lay in wait for any business which does not think beyond today’s storage and distribution pressures.

It is essential to think in detail about the needs of the business even before work starts. The typical developer’s shell is just that, no electrical services, heating, sprinklers and other equipment and features that a modern, bespoke distribution centre needs. Any requirement which is not added to the developer’s specification from the start will inevitably mean extra cost and the risk of a potential delay to the building programme. Generally electrical services, heating and sprinklers are deemed fit-out items as they have no long-term, tangible value for developers but the interface with the developer’s shell, which will be rentalised, is critical. At worst, the new facility could face significant costs or inflexibility from the day it opens.

From our experience in designing and projects managing distribution centres we know that even the most aware managers can overlook vital equipment or facilities. They include electrical requirements such as fork truck charging, dock leveller specification, access for vehicles and fuel islands, and the right floor specification for high-bay equipment.

Making an allowance for extending or altering a warehouse to cope with increased traffic or a change in demand can place considerable strain as the business strives to maintain normal service. Additional land allocated for extending a warehouse will have to be rentalised in some form with the developer to recover the loss of rent for not building additional accommodation at day one on the land. While no-one can forecast exactly how the business may evolve, there are a number of simple steps which companies can take when planning to make the process both easier and less costly should the moment arrive.

Extensions will also require increased circulation space outside and potentially more lorry and car parking. The prudent tenant or adviser will negotiate and agree a rent for potential extensions at the time of the original agreement when the landlord is far more likely to be willing to compromise. Laying services – water, power and heating – close to the most logical area to extend will also reduce the cost and time required to build additional facilities.

It may make economic sense to fit more loading docks and access points than are currently required to save the additional cost and disruption later on. And extending the aisle for a stacker crane or VNA truck will be a more cost-effective way to extend than adding further aisles and additional equipment.

While these risks are operational and can hit the bottom line, impending legislation may cost directors and managers far more than their bonuses. Proposals are in place to reform fire legislation which may come into effect either in 2004 or 2005, and the increase in fire risk has already had a big impact on company insurance costs

The proposed Regulatory Reform (Fire Safety) Order which will be enforced by the fire authorities will replace the current Fire Precautions Acts. Distribution businesses will need to ensure that they have adequate protection against fire including sprinkler systems and to maintain fire-fighting equipment for use by fire fighters.

Fire risk and protection is already high on the agenda of most storage and distribution managers because of the impact on insurance premiums. Following the shock of 9/11, the collapse of the Independent Insurance Company added to the food industry’s woes. The company was heavily involved in insuring premises with insulated composite panels, frequently used in the industry for chilled and cold stores, and seen by many as an aggravating factor in the case of fire.

Materials, such as polystyrene, melt at relatively low temperatures which can result in collapse from the roof down. However in many other respects such panels are highly suitable for cold store construction. Panels have a high strength-to-weight ratio and a high thermal insulation value; they provide considerable structural rigidity, fast assembly times and tight jointing which helps achieve a hygienic surface. The development of polyisocyanurate foam panels, described by the Loss Prevention Board as non-combustible, could be seen as providing the standard material in future for food processing and storage facilities.

Many insurers increased their rates from levels between 25% and 100%. traditional open-plan design may find that installing firewalls may have a very positive effect on their ability to negotiate lower insurance costs. Fast access for emergency services to the building and a water supply may also play in the company’s favour.

The Disability Discrimination Act due to come into force in October 2004 is designed to ensure that all service providers – which may include warehouses where members of the public may have access – ensure that their premises are fully accessible to persons with disabilities. At first glance, the requirements of the Disability Discrimination Act (DDA) are straightforward. It requires all service providers to ensure that their premises are fully accessible to persons with disabilities.

But the DDA extends the definition of disability far beyond wheelchair users to encompass sight and hearing impairment, mental disabilities, lack of physical mobility or dexterity, inability to lift objects and other physical and mental limitations.

Access for people in wheelchairs is one of the issues tackled by most businesses, but ensuring that emergency exits are adapted to the needs of those with limited physical mobility is sometimes overlooked. Wheelchair users will find it difficult to travel over the grass which surrounds many buildings, and major retailers such as B&Q have installed hard surfaces leading from emergency exits.

Some provisions of the DDA have been in force since the end of 1996 and in the following two and a half years more than 5,000 cases were taken to employment tribunals, a higher number than for sex or racial discrimination. Actions against service providers have been few but the signs are that both employees and the public will not be slow to use the DDA to their perceived advantage.

In October 1999, the DDA was extended to cover employers and providers of goods, facilities and For some food premises with insulated composite panels, re-insurers have told insurance companies either to decline cover or to increase rates up to 900%.

Despite these gloomy forecasts, companies can take a number of practical steps to minimise insurance costs, and at the same time reduce the risk of fire, which could destroy their business. Most insurers are not well informed about the issue and will favour companies who can demonstrate that they have identified practical and effective measures to tackle the risk of fire. A practical risk management programme should consider the following three key issues:

  • Understanding how fires start and spread, and how they can be controlled.
  • Designing a building and establishing the disciplines and procedures to minimise the odds of a fire starting – and how to prevent it taking a hold and causing too.

Recognising that insurance is merely another form of betting. If you can improve the odds in your favour by showing your insurance company that you are a good bet, you could considerably reduce your insurance costs.

Sadly arson and the activities of some extremist groups are leading causes of fire damage. Effective security should be in place for any business to prevent theft and fraud, but a well-constructed and secure perimeter fence will discourage opportunist vandalism and slow down the progress of more serious attacks. Good housekeeping will make starting a fire more difficult and slow its progress. The stack of broken pallets and discarded packing seen around many buildings is an invitation to would-be arsonists and will help spread even an accidental fire.

Systems which can detect and extinguish fires rapidly can play the most important role in minimising fire spread and damage to building, equipment and stocks. VESDA (Very Early Smoke Detection Alarm) systems linked with overhead sprinklers are fast becoming standard in storage and distribution facilities. According to a spokesman for Alpine Fire Engineers, most fires can be controlled with just one or two sprinkler heads which causes far less damage than the volume produced by a fire hose.

Installing sprinklers can help to significantly reduce insurance costs and may well be worth pursuing given the increase in insurance premiums. We have, for example, undertaken a number of projects involving retrofitting sprinklers in existing buildings, taking a turnkey approach to all the issues involved. Recent projects include a retrofit sprinkler installation programme for 200 B&Q stores, in-rack sprinklers and a specialist flammable liquid zone for Screwfix Direct and a similar project for Halfords’ Redditch distribution centre.

With correct planning and organisation the installation of roof level sprinklers can be often undertaken outside normal working hours, with minimum disruption to normal business.

services in retail and public areas. Businesses are now required to take “reasonable steps” to adopt policies for people with disabilities and provide aids or services. In the distribution and logistics environment, such steps would include widening doorways, introducing ramps and lifts, ensuring that switches, controls, entry mechanisms and such are at a suitable height, the provision of Braille signs, and improving signage and lighting.

However legal ramifications are not the best of reasons for providing facilities for people with disabilities. Many play a valuable role for businesses and in society, and up to a quarter of the population – our employees and customers – are believed to have some form of disability under the definitions offered by the DDA.

The current Code does however offer a possible solution – a professional access audit. It is believed that an audit, followed by a detailed access improvement plan – is likely to identify the changes required to meet all foreseeable and reasonable requirements of the DDA. In addition, should an issue arise, the fact that a company has taken and implemented external and professional advice may be viewed favourably as reasonable and responsible behaviour on its part.

Many major companies are anticipating the DDA, both in the letter and the spirit of its requirements, and carrying out the necessary building modifications in advance. B&Q, one of the country’s leading and most high profile Creating stacks of broken pallets and discarded packing is an invitation for would-be arsonists.retailers, currently has some 309 stores nationally, and took the decision early on to ensure that it will meet the DDA’s requirements in time. The company commissioned us to carry out a full programme covering 15 retail warehouses and 70 supercentres to ensure compliance with the DDA by October 2004.

As daunting as the potential threats may look, distribution companies have little to fear provided they take the time to plan and consider the needs of the business and have a general awareness of the issues involved. However help from companies with specialist expertise in design and project management – as well as the law and insurance – will provide the additional guidance and support most businesses need to guide them through an increasingly complex environment. n

Laurie Sice is with distribution property specialist

Tel: 0870 6060123.

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