Commodity Group Description
For the purposes of this document, we will narrow our focus within the safety commodity to just Personal Protective Equipment (PPE). PPE is designed to protect workers from serious workplace injuries or illnesses resulting from contact with chemical, radiological, physical, electrical, mechanical, or other workplace hazards. The basic hazard categories are: Impact, Penetration, Compression, Chemical, Heat/cold/wet, Harmful dust, and Light radiation. PPE products are designed to protect the individual from injury hazards to the head, the eyes, the hands, the feet, hearing loss, as well as injuries that could be caused from falling, or breathing in contaminated/toxic air.
As effective as these products may be, PPE should not be used as a substitute for engineering, work practice, and/or administrative controls to prevent exposure to workplace hazards. For example, a respirator is not meant to be worn by an assembly line worker during his/her entire work shift; other methods such as a ventilation system or replacement of hazardous substances/processes should be utilized. However, PPE can work in conjunction with such preventative measures or when such controls are not possible. Also keep in mind that PPE protects only the user - it does nothing to remove the hazard from the workplace. For example, a respirator may help protect the wearer from toxic fumes, but does nothing to protect others in the vicinity. i
The global marketplace is fragmented and characterized by several well-established players as well as small, niche companies. Market participants include 3M Company, Aearo Company, Alpha Pro Tech Ltd., Ansell Healthcare Products LLC, Bacou-Dalloz Group, BartelsRieger, Bekina, Björnkläder AB, Capital Safety Group, Defense Industries International, Draegerwerk AG, E.D. Bullard Company, Eurodress GmbH, Gateway Safety, Inc., International Safety Instruments Inc., Interspiro, Jackson Products Inc., Jallatte Group, Johnstone Safety Products, Kwintet A/S Group, Latchways Plc, Louis M. Gerson, MAPA Spontex, MCR Safety, Mine Safety Appliances, Moldex-Metric, Inc., Norcross Safety Products LLC, Oy Silenta Ltd, Pacific Helmets, Pammenter & Petrie, Pro-Guard Technologies, Respire Ltd., Safety Equipment America, Saf-T-Gard International, Sioen Industries NV, Schuberth Helme GmbH, Scott Health & Safety, Skylotec, SpanSet (UK) Ltd, The heightec Group, Tractel Group, Uvex Winter Holding, Vandeputte and Wells Lamont Industry Group.
From 1998 to 2007 the PPE industry was growing at rate of approximately 5% per year, and the U.S. market reached $6.4 billion in 2007. Europe is the largest market worldwide, worth an estimated US$9.9 billion in 2007. The United States is the second largest regional market followed by Japan at third position. Collectively, Europe, the U.S., and Japan account for close to 80 percent of the approximately $25 billion personal protective equipment market. Although PPE sales receded as a result of the financial crisis and resulting world economic recession in 2008 and 2009, the global market for personal protective equipment has started to improve and is expected to recover in the medium term, to reach $33.3 billion by the year 2015.
Most manufacturers in this market earned below their potential during the recession, as sales of these products are tied to economy and employment rates, which witnessed a drastic decline. Demand was worst hit in the most recession-beaten end-use sectors including vehicle manufacturing, steel, chemical and construction industries, while demand from the public sector recorded relatively cushioned falls. Body protection, which includes fall protection, protective clothing, protective gloves, and safety footwear was affected by the meltdown in the construction industry, while head protection, which includes eye and face protection, respiratory protection and hearing protection was relatively cushioned due to outbreak of H1N1 virus.
Despite the recent weaker market brought about by the recession, the PPE market has successfully weathered the downturn. This is largely because the underlying economics of PPE goes beyond the temporary weakness in the market’s climate. Companies cannot afford to cut corners on PPE for long, given the disproportionately higher costs associated with employee/worker injuries, loss in productivity/performance, and penalties paid for violation and non-conformance of OHS laws. These costs tend to far outweigh any gains stemming from cutting PPE expenditures as a measure to save money. Additionally, a comfortable percentage of the PPE market is built upon legally binding requirements.
Longstanding growth drivers in this market, which have and which will continue to push gains include recovery in employment rates, rising emphasis on worker health/safety issues, stricter government mandates and technology innovation. The large number of unprotected agricultural, industrial and construction workers in developing countries like China and India additionally offers ample scope for market penetration.
Personal protective equipment has long remained functionality driven. However, growing consumer desire to combine safety with style and protection with comfort is leading to greater innovation. A staggering array of products and solutions are now being offered, with an option for customization wherever required, which further contributes to the growth potential. iii
Strategic Sourcing Considerations
There are a myriad of choices within the personal protective equipment category for the various products and without a strategy, the spend can quickly get out of control leading to increased costs, inconsistent levels of protection, and waste.
The first step in controlling the buy is to understand what you are buying, who you are buying it from, how much you are buying, and how much it costs. Once you understand the buy, you need to segment your PPE into the various sub-categories: Head Protection, Eye Protection, Ear Protection, Hand Protection, Foot Protection, Breathing Protection, etc.
Work with your internal health and safety management to determine the various applications where each product is used and work to standardize on a common product per sub-category, per application, based on establishing the specifications required for those operations. Then take those common specs and the aggregated volume to market through a competitive bid process. This will enable buyers to aggregate spend on fewer common items and allow sellers to stock a narrow range of products. This standardization approach will lower the total cost of supply.
The Safety/Personal Protective Equipment category is very competitive with a number of good quality distributors, so it should be easy to find a number of providers who will want to compete for the business. Some of those major distributors are: Air Gas, Grainger, Hagemeyer, and Magid Glove & Safety, as well as many other local operations.