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MBA-51 Business Statistics
Chapter 1 Case Study
Amazon.comRisk Mismanagement
By Brian Dickens 10//00
At the Amazon.com regional fulfillment center (FC), in Fernley, Nevada, safety is a primary concern, primarily because the safety record of this particular FC is disastrous to say the most.The Fernley FC is a 1 million square foot warehouse and distribution center, employing between 800 and 1500 workers.Fernley is considered a flagship FC for Amazon in every respect except safety.Despite the efforts of several general managers and safety managers, and countless stopgap safety programs cooked up by various members of the Fernley staff, hundreds of recordable accidents, both minor and severe, are reported each year.Accidents in Fernley cost Amazon.com millions of dollars in reduced production and workman's compensation insurance claims.
Amazon.com and the employees and managers of the Fernley FC are eager to use statistical tools and data to evaluate the current trends and behaviors in the FC in order to protect the workers and to reduce the costs associated with accidents.Like all successful companies, Amazon.com recognizes the importance of "keeping score".Mounds of statistical safety data have been recorded at their facilities worldwide.Dozens of man-hours are spent each week observing samples of FC employees at their assigned jobs, analyzing the hazards of each task and developing best practices for performing them. Unfortunately, too often at the Fernley FC, the sample of employees chosen has been a non-statistical sample, based on convenience.Worse, the experimenters may actually choose subjects based primarily on their ability to perform the job productively rather than keeping safety as their primary concern.Best practices therefore, are sometimes implemented which an average or below average employee may not be able to perform safely.
A Safety Team member by the name of Kim approached Ron, a packing department manager, and asked him to let her observe one of his employees packing books on a new conveyor system that had just been installed.Ron said, "Go and watch Andy.He's our best packer.Indeed, Andy (an athletic, and highly competitive young man), consistently performed his job efficiently and safely, well above the company's reasonable expectation (RE) of productivity.Hence, Kim developed best practices for the new task based on Andy's performance, although other employees in Ron's department could not possibly attempt to match the company's RE without compromising their own safety.A short time later, Rose was injured when she reached too quickly for a container full of books and, twisting around, strained her back.
Additionally, studies are conducted after an accident occurs to determine what, if anything could have been done, (or done differently), to prevent the accident.These parameter data (because all accident data are recorded) are tabulated in order to identify trends and prevent repetition of similar accidents.New best practices are adopted accordingly.Unfortunately, in their zeal to prevent accidents and demonstrate their concern for safety, the Fernley Safety Team rushes to adopt revisions to best practices that hamper production, frustrating both managers and employees.Worst of all, some of the revised best practices actually present conditions that are less safe than those in force before the accident!
Lastly, Safety Team members walk the warehouse during production to monitor the behaviors of employees, presumably to observe and reward proper, safe behavior, and to coach people who may be working unsafely.This is undoubtedly where the biggest breakdown occurs in the Fernley FC safety program.An absolute lack of consistency in how samples of employees are selected, observed, coached and rewarded has created an environment where employees feel singled out, spied upon, hamstrung in their efforts to produce efficiently, or just plain ignored.
Employees are chosen for rewards and recognition based on friendship and popularity, and others are chosen for coaching and reprimand based on unpopularity or poor productivity.
Proper use of statistical tools and data, along with the conscientious analysis of that data to determine best practices could effectively improve working conditions in Fernley.Unbiased experiments could easily be conducted that would produce a cohesive blend of safety and productivity.Truly random, statistical sampling of employees to observe, coach, and reward would remove the political stigma from the Fernley FC safety program, and create an atmosphere where workers are eager to participate and help with safety.
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