Health, Safety and Environment (HSE) Inspection Market Procurement Intelligence Report

The market for Operation of Industrial Facilities and its sub-segments such as Health, Safety and Environment (HSE) Inspection are at an interesting intersection. Buyers of Health, Safety and Environment (HSE) Inspection are insisting on hard evidence to support cost reduction. Suppliers are responding with elaborate matrix of KPIs that provide managers actionable data on supplier performance and cost savings achieved.

Several macro level trends such as slowing economic growth, trade conflicts, rising wages and technological disruptions have put pressure on managers to reduce their spend on Health, Safety and Environment (HSE) Inspection without affecting the performance.

Suppliers have historically gained handsome margin-on-margin by sub-contracting a part of their work to another contractor. However, Buyers are now delving deep into the business models of suppliers and negotiating hard to avoid further sub-contracting. In cases where it is imperative to sub-contract, category managers are employing should-cost models to keep supplier margins on sub-contracting to the minimal.

Trends like these and many others discussed in this report are necessitating a relook at the way Health, Safety and Environment (HSE) Inspection is procured and the procurement cost saving opportunities that exist.

It has become imperative for category managers to remain as agile as possible in terms of their procurement practices. However, it is not always easy to quickly spot and implement alternative practices in a category like Health, Safety and Environment (HSE) Inspection. To help quick decision making, this report advises on several procurement best practices that have worked well for category managers.

For example, Investing in benchmarking studies that help category managers enhance their knowledge on pricing or billing rates of suppliers allows them to not only save costs, but also negotiate better with suppliers. For example, while negotiating for bundled services, they can save significantly on a single service by cross-verifying rates quoted by suppliers against industry benchmarks.

Buyers must clearly define clauses pertaining to the ownership of sub-contracting services that are not a part of their preferred suppliers' portfolios. This will ensure consistency in the services of sub-contracted firms as well as protection of confidential data.

Benefits of an integrated program are more apparent over a period of 5-7 years, and the goal in such relationships is to achieve cost savings and improve performance in the long run. Buyers should opt for suppliers that have a track record of long-term engagements as this will increase the probability of these suppliers sustaining in a mutually beneficial relationship for a longer duration.

Health, Safety and Environment (HSE) Inspection procurement managers also need to proactively identify and mitigate potential risks that can arise in the supply chain or contracts for Health, Safety and Environment (HSE) Inspection procurement. Some examples include: