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Globalization of Distributors—Is it the Next Step?

  • November 2013
  • -
  • Frost & Sullivan
  • -
  • 56 pages

Globalization of PPE Manufacturers and End Users Drive Distributor Globalization

This Market Insight provides a qualitative analysis of the opportunities for e-commerce in the global personal protective equipment market. An overview of the PPE industry,demand and distribution structure has been provided. Topics also include distribution trends, purchasing trends, selection criteria and the status of e-commerce in the various PPE product segments. This Market Insight also offers strategic recommendations for market participants. The base year for this research service is 2012.

Executive Summary

• Distributors play a very important role in the personal protective equipment (PPE) industry. PPE manufacturers have traditionally relied on distributors to get their products to end users.
• With the evolving nature of trade and the consolidation and globalization of PPE manufacturers as well as end users, distributors find themselves impacted by decisions that force them to look beyond their traditional boundaries. Thus, distributors are faced with the decision to globalize in order to survive and sustain their business.
• Strategies to globalize include forming alliances or partnerships with suppliers overseas, setting up operations in other countries in order to enter new markets or acquiring other companies either to expand products and services offerings or to expand its geographic presence.
• To be truly customer-driven, suppliers need to adjust their businesses to meet the needs of the customer, which in today's marketplace means local service, local inventory and technical sales people.
• Global suppliers are able to source and supply PPE equipment regionally with shorter lead-times and faster delivery.
• Although globalization of distribution networks may carry unforeseen risks and its success is not always assured, the risks of not getting involved may be even greater.

PPE Industry—Overview

• The PPE industry is highly fragmented and expected to witness a compound annual growth rate (CAGR) of X to X% across different products between 2012 and 2017.
• The demand for PPE generally depends on the overall population, employment rates, global economic activity, legislation, and regulatory compliance.
• Europe and the United States continue to be the largest markets in terms of consumption. However, the market is witnessing increasing demand from emerging and transition economies.
• The protective gloves segment, followed by protective apparel and respiratory protection, holds the largest revenue share in the PPE market followed by protective apparel and respiratory protection.
• The North American and European PPE markets are very mature and fragmented, and both of these regions have significant volumes of exports and imports in the overall PPE market. The markets in China, Asia-Pacific, Latin America, Eastern Europe, and South Africa are highly fragmented and dominated by local PPE manufacturers, which in turn makes market penetration difficult for international companies.
• Most suppliers depend on distributors for the dispersion of their products and direct sales to end users make up a very small portion of their revenue. Thus, distributors play a very important role in the PPE industry.

Global PPE Industry Snapshot

• PPE consumption is dependent on the employment in the region.
• Emerging markets have become more attractive to PPE suppliers because of their increased investments in manufacturing and infrastructure activities.
• Rapid population growth, strong economic development, and improving health and safety regulation are forcing suppliers to look at emerging markets in a whole new way.
• The US and Europe account for more than half of the global market in personal protective equipment.
• Growth in the Asian region will be driven by manufacturing and infrastructure projects underway in the Middle East, India, China, and Vietnam.
• In addition to being the world’s most populous countries, India and China also have a large industrial workforce that is unprotected from occupational hazards. These countries therefore offer potential for future growth.
• Potential markets exist in Africa, low-income countries in the Americas, the Eastern Mediterranean, and Southeast Asia.

PPE Industry Supply Chain—Overview

• In todays market, the line between the manufacturer and distributor is blurred.
• As supply chains become more global, it has become increasingly simple to source PPE from regions where manufacturing cost is lower. An increasing number of distributors are therefore selling products that bear their own names as well as the names of other branded manufacturers.
• However, it is important for PPE manufacturers to have distribution partners that can ensure seamless entries into the market. Larger manufacturers lose perspective at the end-user level and the distributor plays a key role in communicating customer feedback to the manufacturer.
• All end-user companies in hazardous sectors need a wide range of different types of PPE to protect their employees. Most PPE manufacturers are not able to meet all of the PPE needs of a company.
• If end users are to source all of their equipment from a single partner, they choose to do so from a distributor. There is also a trend for manufacturers to become head to toe suppliers.
• Local distributors are able to offer end users many types of services that manufacturers cannot provide themselves. Distributors are therefore a critical link in the chain of how end users acquire PPE.
• Less than X% of PPE is directly sold to end users, the rest of PPE sales are carried out through various distribution channels, demonstrating the significance of supply chain management in building a successful PPE business.
• Distributors are sometimes the only providers in emerging regions such as Africa and South America.
• Apart from the quality of product the other key factors that majority of the PPE distributors expect from an ideal PPE manufacturing company are training, supply chain and logistics management and price consistency.
• It is important for the distributors to get the required technical knowledge about the product so that their personnel can sell it to the customers for critical needs.
• It has been highlighted by the distributors that the larger manufacturers are often poor in supply chain and logistics management. This needs to be improved to ensure timely delivery of product.
• Stability in product price is a crucial factor that enables client retention.

Table Of Contents

Globalization of Distributors—Is it the Next Step?
Table of Contents

1. Executive Summary
2. Introduction
3. Overview of PPE distribution
4. Global Trends Shaping PPE Distribution Channels
5. Globalization of the Distributor
6. Appendix
7. The Frost and Sullivan Story

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