NOTE: This document is provided for historical purposes only.
Presentation by Richard Murphy, Murphy Warehousing Company
MR. JENKINS: Thanks, Dave. Our next speaker is Richard Murphy, Jr., President of Murphy Warehouse Company, and I would like to just pause for a moment and make sure you understand the difference between the distribution centers that Lowes and J. C. Penney would operate, which we would characterize as private warehouses or distribution centers, and public warehouses. Public warehouses or contract warehouses are companies that store product for others and may have multiple customers in their locations. So as Richard talks this morning, he will be referring to multiple customers in his presentation.
Richard is the President of Murphy Warehouse Company, a logistics support services company which provides distribution, warehousing, transportation, value added services, administration, fulfillment services for both domestic and international clients. Richard received his MBA from Carlson School of Management in the University of Minnesota. He has an MLA from the Harvard Graduate School of Design, and he has a BLA from the Institute of Technology at the University of Minnesota. He is an active member of the American Warehouse Association, Council of Logistics Management and Warehouse Education Research Council. Richard.
MR. MURPHY: What I would like to talk about, as Mike mentioned, is a little different perspective, and I refer to it as a practical approach. One of the reasons that I call it that is because I am going to take two different perspectives this morning. One is that of a small business perspective. As Mike eluded to, we are not the same size as J. C. Penney or Lowes, and, therefore, there are different issues and questions that one has to ask themselves. What is affordable to a small business? What is manageable to a small business? The other perspective that I want to take is that of the public warehouse distribution industry, which I will talk about in just a second.
What I want to do today is to talk about where we started, what motivated us to find solutions, what are some of the things that we have implemented, did they work, and what were the results that we had? The key, obviously, is if we have no results, why do it. One of the questions that I hope to answer in the next graph is: "Was our program effective?" The graph that I show here is an 11 year tracking of our workers comp. modification and experience ratio. For those of you who deal with that side of your business, you will know what a mod. rate is. Basically, we started back in 1987 at a 1.5, and we today live at a .5 credit ratio.
Now, is that a significant event that we have accomplished? If you look at our industry, which is a fairly risk prone industry, the transportation and warehousing industry has an average of roughly 1.0. We are 50 percent below that, in terms of how the insurance industry rates our company and the activities that we do, which has a direct bearing ultimately on what we pay for insurance. The next slide is a graph over the last 10 years that shows what was our cost per hour for workers' comp. insurance. As you can see, our highest point was $2.35 an hour. We are now living with roughly $1 an hour of cost, which is significant savings to a small business.
David talked about savings in the half a million dollar range. I am talking about for our size company in today's dollars a $140,000 to $160,000 savings. That is significant money to a small business.
We have also during that period seen the number of claims go down almost 50 percent and the claim losses reduced by 400 percent. The severity of the types of injuries that we would see also went down during that period. What is nice is that while we were working so hard on this program, our business took off to where our labor hours almost doubled during the process.
Now, what is this public warehouse industry that Mike talks about? You will often hear it referred to as contract warehousing, depending on the contractual relationships. You will hear it referred to as third-party logistics or out-sourced logistics in some business publications. Basically, its profile is small businesses. We act as a bank for goods/products. We do not own the goods/products in our facilities like Lowes and J. C. Penney would. We are a service industry. We are not a manufacturer or distributor in that standpoint. We have a large variety of products that we handle yet basically have no control over the product configuration that we see in the warehouse, and we deal with the global marketplace.
Now, what do I mean by those last two comments? This is a picture of a very typical inbound, international container load, fully loaded. This is actually a good one, to be honest with you. It is very difficult to deal with some of the ergonomic issues that we would all like to implement because of the nature of how things come in from the global marketplace. The U.S. industry has done a much better job of unitizing, which could include palletizing or putting onto slip sheets, etc. to reduce the amount of hard labor required to load/unload containers.
Who is Murphy? Well, we are located in the Twin Cities where we have a lot more snow than Chicago does, unfortunately. We are a family owned and operated business. I represent the fourth generation. We have 135 employees, and operate 1,300,000 in square feet. We provide a myriad of services to our clients, as you can see, everything from warehousing and distribution, transportation, administrative services, et cetera. We deal, as Mike eluded to, with a smorgasbord of customers, roughly 150, dealing in everything from food/groceries, food service, healthcare, beverage, tobacco, chemicals, retail, to you name it.
Now, where were we 10 years ago? Well, we found ourselves, especially at the change of seasons - when you stop and think about when people, especially in a warehouse environment, get back injuries, if we hone on that for a minute - they generally occur in the spring and the fall when the temperature changes. So we found ourselves with back strains and injuries. At that point we also saw a growing number of carpal tunnel cases. We were starting to get concerned about some of the severity and long term effects of what we were seeing. So we started to ask ourselves: "What can we do to address those issues?"
The first thing we did was look at the process itself. We have a person who is hurt. Why do we have to make him or her feel any worse than they already feel? Why do we have to continue to deal with somebody who is in a depressed state, often angry - not necessarily at you; it could be at themselves - why continue this negative trend? So we started to ask questions of ourselves. Could we change this whole experience of going through an injury situation and make it a more positive experience? Now that may sound like an oxymoron, but it is more than an attitude. Obviously, the person is hurt, and you can't necessarily make them feel better when they are hurting, but you can at least change the process to a positive nature versus a negative one.
So we started asking questions: How can we help our injured associates feel better? How can we make them feel safer and more comfortable in understanding this whole process that they are going to go through and the financial protection that they are afforded, especially in the State of Minnesota, which may be different in some other states? We wanted to convey that we cared about them, and I truly mean it. We care about our employees, and we wanted them to understand that even when they weren't here on a daily basis. We wanted them to know that we wanted them back. We didn't want them sitting home alone, watching TV or whatever, going stir crazy or getting further depressed.
Again, I can't stress enough how important this first process issue is to this whole procedure to turn it into a positive experience. We then turned to the issue of bringing them back to work. We work very hard here because this is not an easy thing to do, especially in a smaller company. Our goal here was to ultimately return the associate back to their original job when they could do it.
Now the key to this whole process is that it is a very timely process. You have to be proactive. You can't let the process just grind along. You have to push it on behalf of your associate. Otherwise, the wheels will slowly come crashing. The doctors need to know that you have light duty or alternate types of activities. We coordinate very closely with the workers comp. carriers, the doctors and therapists that develop the proper restrictions for job creation and for work hardening processes.
Some of the things we have done include light duty. We may have somebody literally answering phones in an operational office while they are recovering. They may only drive a forklift and not do hand picking. They may be a janitor versus a warehouseman. They may do relabeling types of work. We have had some success stories where we have brought people into the office from the warehouse environment. We have had two people who are doing significant things for our company who have gone from the warehouse through the office and into management.
Now, these efforts were great. We were very successful, but it still didn't find solutions to the cause of the injuries we were seeing. So we started to look at the next plateau. As much as I would like to use the proper wording here, and I am sure the sponsoring agencies would like to hear that the regulations that they have implemented motivated us to go to the next level - and I do say this with all due respect - but that isn't what motivated us, quite frankly. What motivated us was the more practical side of it, which is that I have a skilled work force that I cannot replace. They are not necessarily walking around with suits and ties on like you and I are today, but they still do a very important job, and it is much more technical than it ever was. I can't physically replace them easily.
It takes us, we figure, at least 12 months to make somebody off the street who is green into an effective warehouse person. Why do I say that? Because you can only do so much in a classroom. In fact, very little of it can be done in a classroom. They have to experience it, and it takes time to experience it.
Another issue that we find that my previous speakers probably don't have is that we have little or no turnover in our company. Therefore, I am also dealing with an aging skilled work force that I have to find a way to protect. And lastly, our employees, quite frankly, are our friends and neighbors. Remember, we are a small company. I know everybody. My management knows everybody, and the employees know everybody. In many ways it is a family, and we run it as a family. If you think about your family, you would treat them differently than you would a stranger. That is how we like to look at it.
So we went about developing a series of solutions to prevent and reduce the number of situations which could expose any of our associates to injury. What drove this effort philosophically was that if a product can be handled mechanically, we would attempt to do it.
What I want to show over the next five categories is a series of slides of some of the areas that we looked at. The first is, quite frankly, the seating. Our people sit on these seats from six to nine hours a day, going over dock plates, which are usually not level because of the nature of trailers. They are constantly shifting gears because of the nature of their work, and it is a hard job to sit on a bench seat like this. So we went through and replaced most of these old seats with more ergonomically designed seats to provide better cushion, to give better contour to their backs, to provide lumbar support, to give them better horizontal slide support, the arm rests, as well as the seat belts.
Now, as much as I would like to say that this is the ultimate solution, interestingly enough, there are still a number of our highly skilled and middle aged older work force who don't like these seats. They don't like them for a couple of reasons. One, they can't literally shift from one bun to the other just to change position from time to time. I mean, it sounds silly, but we all do it in our chairs. I can see some of you moving from time to time. You can't do that in an ergonomic seat. The other thing is these seats make it very hard to slip in and out when you are trying to pick orders, if you are picking off of a forklift. And finally, if you have any weight to you, it gets harder to turn around because you don't have the room to slide, to literally turn and look backwards. So these seats have pros and cons.
The other thing we did was to look at where the levers are. Can you imagine sitting for nine hours a day holding your hand up like this, moving these levers? You have four levers there that are constantly being used for different manipulations of the product. It is very tiring on your arm. So we have worked with the vendors to begin to bring into the fleet something much better where he can rest his arm on the armrest, if necessary, where the levers are down lower.
As I mentioned, we try to find equipment to handle products mechanically. I am showing you one of the most obvious examples. Ninety percent of the time when you have damage to a bag product it is on the bottom, which makes sense because it happens generally down where the weight is. It doesn't happen on the top where it is easy to remove. The traditional way to solve the damage problem is for you to totally repile the entire pallet to get at the bottom.
So what we have done in working with the vendors is to buy a piece of equipment where we can flip the entire pallet 180 degrees so that we can take the damages - like I said 90 percent of the time they are on the bottom layers - off so that the warehouse person doesn't have to handle the other 90 percent.
Another piece of equipment that we utilize is a squeeze clamp. Basically, it applies pressure against the product to lift, and this picture shows it lifting a unitized load. We also use it extensively to pick entire tiers or just one layer of product so that a man or woman does not have to get down and throw those nine cases on that layer.
As to Drum product, it is very hard to deal with 55 gallon drums or any type of drum product. They are generally very heavy. You literally man handle them. We had one serious injury years ago from it, and so we have developed barrel clamps to pick up things like this.
Now, where we can't find equipment to solve some of our problems, we implement what we call an activity rotation program where a person may only work for two to three hours on a particular task. Let's say it is floor loaded bags of milk that came in from overseas, and these bags weigh 50 to 80 pounds. It is a tough job to do eight hours a day of this type of work. So we generally put somebody on there for two to three hours, pull them off for the rest of the day and shift somebody else in there.
The other thing we do, and I just want to talk about one of them, is what can we do to the facilities to help improve the process. We do a lot of work with the railroads, and we have started to bring the cars indoors because of the nature of our climate. What I want to talk about is the issue of the distance between the rail car and the dock and the issue that a man or woman can walk up to the rail car and open the door at an ergonomic height and distance. Many of you, probably in high school, worked in a warehouse at one point in your life, and when you went to unload a rail car, the first thing all you had to do was climb or jump down to the rail level, which is dangerous in its own right. Then what did you have to do? The next step is you have to reach up, because if you think of a rail car, the dock is already four to five feet high. You are standing down there, and the locks are up here. The second thing you realize is that the lock and door won't move. Because of the environments that these rail cars go through, any form of lubrication they put on the doors doesn't stay there, so they tend to rust and they tend to get sticky. So you are standing there in the worst ergonomics position trying to pull this door, and you are standing on an unstable surface because you have gravel to stand on or you have got rain or ice. So what we have done is we have literally brought the dock, in our case, indoors. It works even in a warmer climate to where a warehouse person can walk up to the car at the height that would make ergonomic sense, and either use their natural leverage or use a forklift to push the door open. We have been very successful in helping reduce injuries with this close clearance rail dock set-up.
Lastly, even though we are a warehouse company, we have not forgotten the office. We have installed ergonomically designed work stations to reduce the workplace injuries here. We work very closely with a physical therapist, and some of the things that we have done is buy all new chairs for the lumbar support, the leg support, and the arm rests. The desk tops can be changed in half inch increments to fit on a custom basis the particular worker, and the keyboard height, and the types of keyboards are custom fit. Now, I know that there is an article in USA Today Newspaper that we all received in the hotel today that says that these keyboard devices don't work. Well, that may be true, but any of the people we have who use these will never go back to the other ones. They would quit before they did because of the help it gives to the arms and the shoulders. Maybe it doesn't help the wrist, but it does help other parts.
We have also provided anti-glare screens. One last item in the office, we are trying to utilize more and more is a technology called EDI (i.e. electronic data interchange). Much of what we as an industry receive in orders from our customers requires key punching to put into our systems. We are trying to do more and more of this activity electronically. It is a struggle sometimes due to the demands placed on our customers' MIS departments from other segments of their business.
The other area that we get into involves the employee, and one of the most exciting ones is what I call our exercise program. As I mentioned earlier, we used to see seasonal problems with backs, stiffness, strains, you name it, and we began to look at what our people do in the warehouse. We started to realize that in reality, they have the exact same needs that a trained athlete has. So we brought in a physical therapist who worked on a three part program. The first part was to talk about spine mechanics. How are we built? What did evolution and nature give us back here in our spine and in our legs that allow us to do anything? How do we know when we have exceeded the design limits that nature provided us?
Once our people understood the basic mechanics of their construction, the therapist then went into talking about what are proper lifting techniques, and pulling/pushing/ bending techniques. Lastly, we went into a series of exercises of two types. Remember, it is no different than a professional athlete. Our people are professionals, and we look upon them as an athlete in the sense that you never see an athlete at any sport that attend not warm up before they start. So our people do warm-up exercises that they have been trained to do, and they do stretch exercises. If you ever think about it, after half time what do you see all the athletes do? They stretch. They are still warm, so they don't need to warm up, but they still need to stretch. So our people also have been trained in stretching exercises to do after they come back from lunch break or an extended break of not doing active type activities.
Now, to make it easier for people - and quite frankly this helps a lot - it is mandatory, and we pay them to do it. It is on our time. It is not on their time. They don't have to come five or ten minutes early to do it. We don't do it in groups like you think of the Japanese doing it. They do it standing by their forklift or whatever. There is nothing fancy about it.
Somebody mentioned belts, back belts. We provide those when a man or a woman wants them. However, they have been trained to understand that a belt is not necessarily there to give them support. It is in many cases a better tool as a reminder that if they turn one way, they get a certain sensation that reminds them that they are not doing it correctly. We don't rely on the belt to give the support.
Management was included in all this training. The office also went through a similar process for they have certain types of exercises that they do, et cetera.
Now, in order to make sure we were all on the same wave length, and particularly the middle managers because they are in the trenches on a daily basis, we had a special formal training program where they became sensitive to unsafe situations and practices. They are the ones, in addition to the work people, who are actually there, who are walking, looking and seeing things and we needed them to be able to walk by a situation and say oops, wait a minute, maybe you should do it this way, gee, this doesn't look like a safe practice, etc.
The other thing we have done, which most people are doing, is forklift training. All of our drivers are certified, and one of the things that we do is we don't throw a new person out on the floor and say go to work for eight hours driving a forklift. It is no different than any of you. I have a daughter who is 15 who has a driver's permit. I would never allow her to run out there all by herself for eight hours. Why would we do that with somebody on a forklift who is driving in a closed environment which can be very dangerous? So we start them out maybe a couple of hours at most here and there so they slowly get used to it, as part of their training. Then we also team couple them with a senior person on a buddy system so that over a period of months they can begin to ask the questions that they need to get answered with a senior person. We also utilize refresher sessions during our safety meetings.
Monthly safety meetings are run by the chairman of our company. That is how important we consider them. They are in small groups. Everybody has to attend them, but what is interesting is we try to, whenever it is possible or whenever it happens include recent accidents or injuries as case studies, and we do it as soon as we can after the incident while it is still fresh in everybody's mind. We bring the person in where it is appropriate, not to embarrass them - and they understand that - but to talk about why it happened or how did it happen so that they can, from their perspective, convey what they have learned through that process.
Lastly, we have an employee safety committee which is employee run. It meets on a quarterly basis. All areas of the company are represented. They deal with studying various injury situations because they can give us the floor perspective that often those of us involved in management just can't give.
In closing, as I have mentioned earlier, we have measurable results that are positive. Our costs are down. I think this approach that I have tried to quickly give you is a successful approach. I think it is affordable and manageable for small business, and I think, quite frankly, it is the right thing to do. Whether it is the right thing to do because I need to protect a skilled work force or because these are my friends and my neighbors or because we care, we all work together as a team. The key that I want to leave you with is that it is the right thing to do. Thank you.
