Penalties. Sanctions. Jail time. Why Chain of Responsibility should make supply management professionals very nervous.

PASA interviewed Larry Phillips, Services Director at Chain of Responsibility Australia to learn more about Chain of Responsibility and what it means for procurement and supply management professionals.

What is Chain of Responsibility?

Drivers and operators have traditionally been the focus of road laws. However, breaches are often caused by the actions of others. Under Chain of Responsibility (COR), complying with transport law is a shared responsibility and all parties in the road transport supply chain are responsible for preventing breaches. This approach recognises the effects of the actions, inactions and demands of off-the-road parties in the transport chain.

Anybody who has control over the transport task can be held responsible for breaches of road laws and may be legally liable. COR is similar to the legal concept of ‘duty of care’ that underpins Occupational Health & Safety (OH&S) law. This approach has long been used by the courts to impose liability in negligence and damages claims.

All parties in the supply chain – consignor/dispatcher, packer, loader, scheduler, consignee/receiver, manager, as well as the driver and operator – must take all reasonable steps to prevent breaches of the road transport mass, dimension, loading, speed compliance and work hours laws.

Penalties and sanctions range from formal warnings to court-imposed fines and penalties relating to the commercial benefit derived from offences. Supervisory intervention orders and prohibition orders banning individuals from the industry can be applied to ‘persistent or systematic’ offenders.

The Heavy Vehicle National Law is a National Law, however, the states and territories have adopted some modifications to meet their local requirements.

Chain of Responsibility is an acronym developed to extend the coverage of the effects of the law to all parties in a Supply Chain (not just companies directly involved in road transport).

See About CoR for more information.

What does CoR apply to?

The Heavy Vehicle National Law applies to all parties in a supply chain that have influence and or control over the CoR hazards that could affect road transport.

These hazards are:

• Mass and Dimensions
• Load Restraint
• Speed
• Fatigue
• Motor Vehicle Maintenance

For example, where a contractor operates a vehicle that is over 4.5t gross (loaded) they are a part of the Chain of Responsibility. Care has to be taken as well in regards to details contained in Vehicles as a Work Place published by Safe Work Australia.

Why CoR make supply management professionals nervous?

The Heavy Vehicle National Law to which CoR applies is a criminal law that has shared responsibility between all parties in the supply chain. The financial penalties for breaching or inducing a party to breach these laws are severe and can have multiplier effects as the fines are per incident and can include jail time.

Organisations should consider that there is no requirement for an incident or near miss to occur before a regulator can determine an inspection is required. The level of inspection can include all parties in the organisations supply chain and can go back in history as far as they deem fit.

How will this change the way supply management professionals treat their contractors?

Parties in the supply chain will need to review how contractors (and other parties in their supply chain) are managing chain of responsibility.

This will include documenting (in contracts, standard operating procedures, checklists, training) how parties in a supply chain will work together to ensure there is no breach or inducement to breach the chain of responsibility.

While an initial desktop review is required to determine the way contractors (and other parties) are handling CoR, it is also important to do random sampling based on a risk analysis of the supply chain to ensure that what people say they are doing, they do and it can be checked/proven.

Where incidents do occur, these should be mapped back to organisational risk registers, incident registers and training to ensure all parties involved understand the root causes of the incident and work together to resolve these and develop safe transport management systems.

How can we understand our exposure to CoR?

An organisation can understand its exposure to CoR by:

1. Reviewing its risk register and the risks associated with doing business and minimising these risks.
2. Understand its actual supply chain and where it has influence and control.
3. Understand its team members’ activities.
4. Understand its policies and procedures around the CoR hazards and how they have implemented these into their operations.
5. Understand how parties in their supply chain deal with CoR.
6. Have regular reviews of the CoR hazards in business review meetings internally and externally.

How does CoR affect supplier contracts?

Contracts between parties in a supply chain should clearly state the roles of parties in the chain, obligations under the supply chain relationship, how these interactions will be managed, how they will be checked and where there is a breach or a near miss how this will be resolved – and if a resolution is not possible what action will then occur including the potential to terminate a contract.

Why are contract performance reviews more important than ever?

These are important to determine what is happening in a supply chain, to how any breaches or near misses occurred, to discuss changes to the supply line (could be potential new products, changes in budgets, changes to logistics requirements), to discuss improvements in the supply chain, to discuss changes to the safety laws or heavy vehicle national law and impacts.

These meetings need to be documented with any corrective actions noted and who/when these will be done.

It is important to have an open conversation about the supply chain so all parties are aware of current and future requirements.

What are the policies, work systems and training that organisations should have in place to ensure they are CoR compliant?

To understand this requirement, an organisation needs to understand:

1. What is their supply chain and where do they have influence and control?
2. What are the risks involved in their total supply chain and how can these be mitigated/removed?
3. What do their team members do in the supply chain and how have they been trained for this? (Under Safe Work Australia’s requirements there is an onus on an organisation to provide a sufficient level of training – this should be more than a simple awareness program).

Once the above is understood, an organisation can set up its policies and procedures and link these to the requirements of the Heavy Vehicle National Law, Safe Work Australia’s requirements and other government agencies.

As an example, policies should cover:

• Chain of Responsibility (top-level)
• Handling Mass/Dimensions
• Handling Load Restraint (mapped to the NTC Load Restraint Guide)
• Handling Speed
• Handling Fatigue
• Handling Motor Vehicle Maintenance
• Site Transport Safety Systems
• Personnel Requirements

What is your number one piece of advice for getting started with CoR compliance? 

Look at your supply chain draw it out, discuss it with all parts of your organisation, look at where you have control and influence and review this on a regular basis to ensure you are managing all aspects of your business.

Where can we learn more about CoR? (feel free to link to your site)

To learn more about CoR, download our white paper at CoR Australia.