Elementor #7706

Case Study

Transforming Safety at Food Distribution Warehouses: Reducing Accidents and Operational Costs​

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Table of Contents

Background

Americold Logistics is the leading cold storage provider in the temperature-controlled supply chain industry. The company operates more than 200 cold storage warehouses that support producers, retailers, food service providers, and consumers around the world. Americold was experiencing an above-average recordable injury rate resulting in direct annual losses of over $1,000,000 per year at several of its distribution centers. In addition to direct losses, safety incidents created costly disruptions and inefficiencies throughout Americold’s operations. 

This case study examines safety and operational issues at an Americold distribution center in central California, the first test site for Voxel’s video intelligence platform. Like many warehouse facilities, Americold’s distribution center used security cameras to review footage after safety-related incidents occurred. This led to an endless cycle where management was constantly reacting to incidents, and lacked the tools and visibility to take a proactive approach to site safety. Voxel’s AI safety solution helped the facility slash incident rates and realize operational savings from lost time, equipment damage, energy costs, and systemic inefficiencies caused by a poor safety culture.

With Voxel’s Video Intelligence Platform, Americold Achieved…
  • A 77% reduction in overall injuries resulting in direct annual savings of $1.1 million
 
  • A 65-90% improvement in monitored safety behaviors (PIT speeding, piggybacking, perimeter detection, proper lifting, open doors, protective equipment, blocked aisles and doors)
  • Energy savings from monitoring open doors to reduce cooling costs in a refrigerated warehouse
 
  • 2,000% return on investment and 100% reduction in TRIR
 
  • A strong safety culture as management developed more effective methods for safety education and training

“Voxel is life-changing for this industry, for warehousing and distribution. I can see the big picture: it’s not just the indemnities. Think of all the indirect costs involved in one incident, let alone multiple incidents. If you have more than a couple incidents, it can bring your whole company to its knees.”

— former Americold general manager

Problem: Hidden costs of safety

Medical and indemnity claims

In 2020, Americold’s facility in central California had twelve medical and indemnity claims related to workplace injuries (typically back injuries, joint injuries, and other strains and sprains). When an injury results in time missed from work, the claim converts from ‘medical-only’ to an indemnity. Payments for a single indemnity claim on a typical injury at a large distribution center can cost between $40,000 and $70,000 per year. In one year, indemnity claims totaled more than $1 million in direct losses for Americold at the central California facility alone. 

Lost sales and production time

Case picking is the first step in the order fulfillment process, when an order is selected from a pallet or shelf. If an order selector gets hurt and misses work, the facility may lose 2,000 cases picked per day. In 2020, the facility in central California often had 4 or 5 workers missing at a time due to injury, resulting in 10,000 to 15,000 missed cases per day. Each case has a fixed cost determined by contract and settled at the end of each month, so 15,000 missed cases may add up to thousands of dollars in lost sales per day. These losses were made worse during the COVID-19 pandemic which caused additional absences. Lost productivity added up to hundreds of thousands of dollars in lost sales, plus damage to reputation and customer service.

“AT my distribution center, I was responsible for anything and everything chilled and frozen at [three major grocery chains in California]. I had to get three grocers on a call and tell them. ‘I’m trying to ship, but we’re three days behind. If we fall any more behind, you’re not going to get anything.’ You have to decide, what’s the worst of the worst? Frozen stands the test of time: if you have Hot Pockets, it’ll last for months in your freezer. If you have a pound of ham, or lettuce, it might only last a few days in the refrigerator. Every day counts with deli products, so we stopped shipping frozen. And that’s hundreds of thousands of dollars in sales to these stores lost, just because we couldn’t ship them any frozen product. I had my wife go to [the supermarket] when that happened, they had no freezer food because I couldn’t ship it to them.”

– former Americold general manager

It is difficult to quantify the amount of lost production time caused by an incident, because an injury to one employee impacts workers across the facility. After an incident, supervisors and managers must stop their work to assist the victim and clean up the worksite. When an ambulance comes to the site, truck activity is halted and drivers are paid overtime to complete the day’s work. If a manager drives the employee to the hospital, the manager loses several hours of work time. In the weeks after an incident, supervisors must spend additional administrative time on paperwork related to the incident. When an injured worker is absent for a prolonged period, other employees must work overtime to compensate for lost time. Meanwhile, morale suffers when staff feels overworked and under pressure to meet quotas. 

When multiple workers were absent due to injury, the general manager at the facility had to find new employees to fill the gap, by spending money on hiring campaigns, digital advertising billboards, and weekly job fairs. Eventually, the facility began flying workers in from other distribution centers in the region to complete the work, creating additional expenses for flights, hotels, training, and salary. This further contributed to lost productivity as management was preoccupied with accommodations, transportation, and per diem payments, instead of the regular operations of the facility.

Equipment and facilities damage

The facility experienced a high frequency of collisions by powered industrial truck (forklift) drivers, particularly collisions with doors and equipment such as racks, trailers, and pallet wrapping machines. Regular collisions generate regular replacement costs for damaged equipment: a damaged freezer/cooler door may cost more than $15,000 to replace, and a door seal alone can cost an additional $2,000. A wrap machine costs $12,000 to replace, and may be sold by a single vendor only–this creates an additional cost of paying a specialist technician to travel to the facility and inspect the damaged machine.

One of the most important productivity factors in a distribution center is travel time within the facility, which accounts for more than fifty percent of labor time overall. The facility sometimes experienced periods where six out of ten doors (60%) of doors were damaged and unusable: workers had to travel farther to navigate to a usable door, multiplying travel time and generating substantial ‘hidden’ labor costs.

Collisions cause vehicle downtime: if a vehicle is involved in a collision, a replacement vehicle must be rented from a third-party until the unit can be inspected or replaced. Even if a vehicle is not totally disabled, it will be taken offline pending inspection, causing equipment depreciation (decay in value over its “useful life” span). Sites do not carry spare inventory of vehicles, and the facility suffers additional lost productivity until the unit is restored or replaced. 

A single incident incurs substantial maintenance costs, because logistic equipment requires specialist mechanics to perform diagnostics and repairs. If a vehicle cannot be repaired on-site, it must be transported to a service shop, causing more downtime. A high incident rate also increases the need for routine and preventive maintenance, adding further to cyclical costs. The facility typically spent approximately $5,000 per month on vehicle repairs and maintenance.

Inventory shrinkage occurs when inventory is damaged in a collision. If a forklift drops a pallet of product, the lost inventory must be reimbursed to the customer: a dropped 4,000-pound pallet may cost thousands of dollars in additional losses paid directly to a customer.

Administrative fees and penalties

After an incident resulting in an injury, an investigation by the Occupational Safety and Health Administration (OSHA) determines whether or not the incident was preventable. OSHA warns facilities not to move any equipment involved in the incident until they send an inspector to take photos of the worksite and assess if the equipment was faulty–this causes additional equipment downtime and lost productivity. During the inspection, the general manager loses another day following the inspector around and recreating their photos to produce an identical record in case of a legal dispute. 

In the course of an investigation, OSHA may request inspection reports for a unit involved in an incident, or reports for related issues. If a facility is missing inspection reports, OSHA may issue citations and penalties for failing to maintain complete records. In one incident, OSHA cited the facility for missing vehicle inspection reports, and the company paid a fine. The facility then purchased a $250,000 telematics system to record vehicle collision events and prevent future citations.

An OSHA investigation into a single injury can trigger a cascade of additional fines and citations on unrelated issues. During a site visit to investigate a safety incident at the facility, an OSHA inspector noticed a missing sensor in a work zone, triggering a separate citation. Americold’s attorneys successfully challenged the citation in court, but the process incurred costly legal fees. Legal challenges are necessary for a large company that operates multiple distribution centers: if OSHA discovers the same offense at another facility, the penalty may be five or ten times greater for a “repeatable” offense. 

An investigation into a single incident may last longer than one year, causing waves of legal fees, penalties, and lost administrative time. Each incident also elevates OSHA scrutiny of a worksite and increases the likelihood of future inspections and citations. The general manager at the central California facility said: “Once you have a citation, OSHA will be at your door every year until they can prove you don’t have any citations.”

Recurring overhead costs

A distribution center the size of Americold’s facility in central California can incur more than $300,000 in annual overhead costs related to safety enforcement. This category of costs is mostly fixed, and does not vary with the actual safety performance of the worksite. 

In spite of these elevated recurring costs for safety enforcement and management, the facility was unable to reduce its incident rate. The distribution center’s high overall productivity ‘covered up’ the actual costs of safety incidents. When productivity gains faded, the urgency of rethinking safety protocols became more apparent.

“CORPORATE would call every month and say: ‘Your safety incidents are going through the roof.’ That ‘bucket’ is a big expense. But I’m a labor management guy, a software guy, I know how to use the tools we have to increase productivity. So even though we had all these injuries, we increased productivity 20%. If you put $1,000,000 on the bottom line and then you have $800,000 of losses, it still looks like you’re $200,000 in the green in a really bad year. But the next year, I didn’t get those productivity gains. Now [safety] is in the cross-hairs of ‘We need to fix this.’”

– former Americold general manager

Solution: Identifying unsafe behaviors

Americold’s regional safety managers are responsible for safety training, policy, audits, and OSHA compliance across Americold’s facilities. In 2020, the facility in central California was one of Americold’s most unsafe distribution centers, so it was recommended by a regional safety manager to trial Voxel’s video intelligence platform for improving site visibility and safety.

The Voxel platform requires a simple setup of an edge computing appliance that connects to a facility’s existing security camera system. The edge server directs the cameras’ video feeds to Voxel Cloud, a secure environment where the footage can be analyzed to identify visual cues and events related to unsafe and risky behaviors. When a flagged behavior is identified in a scene, a short clip of the incident is delivered to the Voxel web app for review. There, the incident can be assigned to a supervisor to address it with the workers back at the facility. 

Americold was initially focused on tracking behaviors related to collisions, so they chose to flag ‘no stop at intersection’ and ‘piggybacking’ incidents (when one driver opens a door and a second driver follows through directly behind them before the door closes), as well as ‘speeding’, ‘blocked aisles’, and perimeter detection for trucks, people, and crosswalks.

At the facility, many doors are controlled by a string-pull mechanism: the driver pulls the string on one side to open the door, and pulls again on the other side to close it. If a driver doesn’t need to wait for the door to open, they may save a cumulative 15 to 20 minutes of standard time per day. In 20 minutes, a driver can pick many additional cases, and thus receive a higher incentive bonus: instead of a base $18/hour, a driver may make $22/hour by hitting their incentive target. Eliminating the step of waiting for a door adds seconds and minutes to a workers’ daily productivity–but that step is also the moment when an accident is most likely to occur.

Distribution center workers are industrial athletes who may lift 2 to 5 tons of product in a single day. Workers often lift heavy frozen cases above their head, and carry heavy meat cases in ergonomically unsafe postures. Americold wanted to reduce musculoskeletal injuries at their worksite by flagging improper lifting ergonomics associated with sprains and strains, especially overreaching and lifting with an arched back.

Improved site visibility can expose previously-unknown inefficiencies and cost-saving measures. The facility was experiencing elevated energy costs, so the site chose to flag ‘open door’ duration time. Thanks to Voxel’s incident tracking, the general manager realized the doors to refrigerated zones were being left open for several hours during the day, and at the end of the night when there was minimal supervision. Open doors allow cold air to escape, replaced by warm air from outside. The refrigerator’s compressor must drive the warm air out to bring the temperature back to normal, driving up energy costs. The monthly energy bill at the facility was roughly $100,000 per month–by setting an alert when a door was left open, the facility saved an average of $6,000 per month on energy costs.

Method: Improving safety culture

“Closing the loop”

Americold implements a “behavior-based safety” program in which a supervisor walks around the facility and issues verbal warnings and reminders to follow safety protocols (e.g., vehicles stopping at intersections and workers wearing personal protective equipment). The supervisor produces written reports of safety violations, and after the issue is resolved, the report is signed by a manager. But a single supervisor walking around a facility cannot capture all unsafe behaviors and “near-miss” incidents. The system was ineffective at “follow-through” and supervisors were prone to “pencil-whipping” the process (mechanically filling out paperwork because they had no way to enforce the underlying rule). There was no mechanism to turn this intermittent reporting process into a lasting change in behavior. The facility used Voxel to “close the loop” and develop a comprehensive system for safety training and enforcement.

Positive reinforcement

Technology alone cannot create a strong safety culture. A successful safety program requires vocal leadership and a genuine commitment to protecting workers. The general manager recognized that creating a strong safety culture is achieved through positive reinforcement of good behaviors–not punitive or retaliatory measures for bad behavior. Alongside Voxel, the facility rolled out a new safety initiative called “Caught You Being Safe.” Whenever Voxel captures one worker exhibiting ‘high-risk’ behavior in a scene, it may also capture several other workers exhibiting ‘safe’ behavior in the same or nearby scenes. The general manager chose to reward the workers captured ‘being safe,’ rather than punish the individual worker captured ‘being unsafe.’ 

When the manager sees a clip of a safety incident in the Voxel dashboard, he forwards the clip to the shift supervisor and the ops manager with the subject: “Caught You Being Safe.” At the beginning of the shift, the supervisor gives the ‘safe’ workers a ‘swag’ item (like an Americold-branded sweatshirt, cooler, or coffee mug) to reward safe behavior. At the end of the shift, the supervisor pulls the ‘unsafe’ worker aside for a private conversation. The purpose of the conversation is to explain why the ‘safe’ workers were being rewarded for their behavior, and to highlight the importance of the safety rule. For example, if the worker was captured lifting with an ergonomically unsafe posture, the supervisor will review clips from the Voxel dashboard and offer advice and feedback on improving their technique: “I’m worried about your lifting technique, here are a few examples. I want to save your back, you’ve only got one.” 

In the past, workers at the distribution center were only approached about safety issues after an incident, to warn them about bad behavior. By using Voxel to create a consistent mechanism for delivering positive feedback, workers began to understand that safe behavior is rewarded. This simple change transformed the safety culture from a reactive system in which safety is only discussed in a negative and punitive context, to a proactive system in which safety is regularly celebrated and encouraged. When speaking to workers about unsafe behaviors captured on camera, supervisors do not mention the word ‘Voxel,’ and instead focus the conversation on the worker’s behavior and its health and safety risks. The goal is to strengthen relationships between supervisors and workers, rather than create a ‘Big Brother’-type figure who is “always watching.”

The general manager instructed each shift supervisor to give one “Caught You Being Safe” reward per day. To ensure there is no “pencil-whipping” the process, the supervisors take a selfie with the ‘safe’ worker and their reward, and send the photo to the manager. While using the Voxel dashboard, the manager made an effort to send more “Caught You Being Safe” alerts to his supervisors than messages alerting unsafe behavior. He found that Voxel was most effective as a training tool to routinely coach and educate workers about safety using real-world examples, while the events are still fresh in their memory. Disciplinary and punitive methods were only used as a last resort, and became less frequent as the culture improved. 

“ONE of my top order selectors–he is the best, but he takes shortcuts because he wants to make the most orders that he can. He was the key offender of blasting through the door, pulling the string, going right through without stopping, slowing speed, or changing direction. You know how some people can shave and drive? He can do it on a pallet jack and in his sleep. I said to him: ‘One time, that door’s going to be broken and you’re going to slap right into it.’ He says: ‘I haven’t yet.’ But all it takes is one time you do the ‘California stop,’ and then you’ll get hurt, and I won’t have someone to replace you.

Eventually, I tell the supervisor to talk to him, but it didn’t change much–or maybe changed for a week or two. Then I bring him in with the ops manager and say: ‘If this keeps going on, we might have to pull your incentives.’ Now when I see him do a piggyback, I call him up to my office right away and show him the scene. And I tell him: ‘It’s not this scene, it’s the other twenty I’m not seeing. You’re going to get yourself or somebody else hurt.’ And he knew it came from a good place because every day we’re doing ‘Caught You Being Safe.”’

– former Americold general manager

In the past, OSHA has discouraged the use of incentive-based safety programs, due to concerns that workers will under-report incidents in order to hit their incentive targets. Voxel eliminates human error from incident reporting: your security camera system will capture the incident and make a record, regardless of whether or not a human reports it. OSHA has since clarified their rule to permit any incentive program that does not deter or discourage an employee from reporting an injury or illness. By using cameras and computer vision to report safety incidents, Voxel creates the possibility of more effective incentive structures to reward safe behavior. 

As Americold’s facility incorporated positive reinforcement methods into the worksite’s daily routine, new hires picked up on safety norms faster than usual. The general manager said: “It’s about how you deliver the message. If you’re one of my working leads, you bring that new hire under your wing and show him: ‘Look at the cool swag you get if you do it right.’ That’s better than saying: ‘If you do it wrong, it’s caught on film.’”

Responding to worker pushback

Workers sometimes take shortcuts and ignore safety procedures because they are trying to meet quotas and hit incentive targets. From the perspective of a distribution center worker, it can feel like taking a ‘paycut’ to practice safe behaviors. After Voxel was implemented at the  facility, some workers complained to the general manager that they were earning a lower effective hourly wage. The general manager’s job was to work one-on-one with employees to help them improve productivity in other areas, instead of compromising safety for marginal efficiency. The manager’s message to his workers was to avoid shortcuts: “As much as you think this is going to break your day, it’s not going to make your day either.”

Outcomes

Summary

After one year of implementing Voxel’s AI safety solution, Americold’s distribution center in central California achieved a 65% to 90% reduction in all flagged behaviors. In 2021, the facility’s recorded injuries resulting in missed work fell 100% (from 4 to 0) year over year.  The number of days missed from work due to injury dropped 100% (from 288 to 0). The number of days in which workers were transferred or restricted from work due to injury fell 86% (from 433 to 60). In 2022, the central California facility experienced a record-low one injury year-to-date, with zero days missed. Americold has since begun a trial of Voxel’s video intelligence platform to its southern California facility, with planned expansions to several more distribution centers on the West Coast.

The following charts reflect cumulative year-end data recorded in OSHA’s Injury Tracking Application. Data is unavailable before 2018. “Missed work” data is unavailable for 2019. Voxel trial began February 2021.

Lost Time at Americold Distribution Center in Central California, 2018 to 2022 (YTD)
Injuries at Americold Distribution Center in Central California, 2018 to 2022 (YTD)