Ask the Expert: What to Consider Before Consolidating Your Lab Services

David F. Beyerlein, vice president of Global Operations at MicroConstants, Inc., talks to contributing editor Tanuja Koppal, Ph.D., about the options he had available and the decisions he made regarding consolidating the servicing and maintenance for the equipment used in MicroConstants’ contract research facility. He discusses the pros and cons of each option and urges lab managers to look closely at their priorities to figure out what would work best for them, rather than focusing primarily on cost savings.

Q: Can you give us some idea of the types of equipment you use for your work?

A: As a bioanalytical contract lab, we mainly analyze plasma samples from either human clinical studies or toxicology studies to measure different drug or metabolite concentrations. We have a lot of different types of instrumentation, including HPLCs and mass spectrometers, and they require a pretty high level of expertise to maintain, calibrate, and qualify in order to keep them GLP-compliant. We have about 22 different mass spectrometers, some here in San Diego and some over in our Beijing site in China. We currently have 16 LC-MS-MS systems, seven HPLC systems, and seven UPLC systems that are active at any given time here in San Diego. In terms of other equipment, we have hundreds of pipettes that need calibration every three months and dozens of temperature-monitoring probes, located in all our different freezers, that require annual recalibration.

Q: Do you consolidate the servicing of your lab equipment with one vendor?

A: We actually did try that at one point to save money and help us with our scheduling. We used a single vendor for over a year, but it didn’t really work for our operation. Part of the reason was that the only full-service vendor we could find was located on the East Coast. There was no one here locally who could provide all the different services we needed. To do all the calibration for the equipment that we had, the vendor projected it would take about three weeks each year, and then the quarterly maintenance for the other equipment would require much less time. However, the calibrations didn’t get done in three weeks. They sent multiple employees to try to have it done within that time frame, but not all of them were as well trained on the various tasks. It was a significant cost savings, but it disrupted our entire lab operation. Our lab is all about analyzing samples—thousands of samples—so it didn’t work out that well for us. For our type of operation, that kind of downtime just kills us. If we’re not generating revenue, we’re losing any cost savings we would have obtained from outsourcing.

Q: Wouldn’t you have run into the same problem with disruption if you had gone with a local company?

A: Sort of, but to minimize the interruption to our lab operations, we decided to stagger the calibrations throughout the year rather than doing them all at once. And of course, we requested that they only send the best employees to get the jobs done. But their best employees were pretty booked up all the time, so their schedule didn’t always work well with ours. And since they had to travel out here throughout the year, all the cost savings they had originally offered by doing all the work within a shorter time period was gone. So that’s really why it was a problem that they weren’t local. If they were local, they could have just come in when it was convenient for everyone to schedule that maintenance. I still probably, in the long run, wouldn’t have gone with the consolidation for various reasons, but the cost savings was basically completely wiped out because of the travel expense.

Q: How did you handle the servicing before the consolidation and what are you doing now?

A: Before we tried consolidating, we were doing some maintenance in-house. We were also sending things to the manufacturers or having the manufacturers come out here. At the time, we thought that was much more expensive, which is why we presumed the cost savings with consolidation would make sense.

After consolidating didn’t work out, we decided which of the things most critical to our operation were causing any downtime disruptive to our schedule, and we internalized as many of those as possible. We have three people in our Metrology/Quality Control Group who do all the internal maintenance, calibrations, and qualifications. We outsource all the other services that we require. For anything that needs to be done here on-site, we try to find local vendors with the best expertise. When we purchase new equipment and before we start using any new instrumentation, we require our vendors to come in and train our people. And then, of course, we write SOPs so all our procedures are clearly documented and someone new can follow the protocol for how it should be done.

There aren’t huge margins in the contract laboratory business, so we can’t afford to have things not working. We have to optimize our efficiency and produce the most amount of work in the shortest amount of time. Price is important, but we place an even greater focus on quality, which is also why we chose this approach with our vendors. We wanted to identify the highest-quality vendors that would do the work in the shortest amount of time, even if they were a bit more expensive. Now that’s not to say that we don’t negotiate. Our schedule is probably less flexible so we have less room to negotiate on the price than some companies, but we definitely try to be aggressive with what we’re willing to pay.

Q: So what are your current challenges? Is everything working out as planned?

A: Our biggest challenge is maintaining a schedule with so many different vendors involved. We work with approximately 15 different vendors right now for the various things that we need to have done, and that’s a lot to keep track of. To overcome that, we had our quality control department, which is our Metrology/Quality Control Group, work with our IT department to design, validate, and implement a custom database to track all our equipment and instrumentation and when they’re due for maintenance. They can pull up a schedule of everything that’s coming due and start scheduling things out with the various vendors to get them in here. The database also maintains an audit trail with a history for every item that is currently in our inventory, or anything we’ve ever had here in our facility at any given time. That way, our Quality Assurance Unit can actually look back at that audit trail and see that everything we’ve ever utilized to run any sample was qualified, calibrated, and properly maintained at the time it was used.

Q: Well, it looks like you have the process fairly streamlined, but if you could make further improvements, what would those be?

A: Over the years, you learn what works and what doesn’t work for your lab. There are things that are just not cost-effective for us to do in-house, so those we outsource. Anything that we consider safety-related, such as fume hoods, we outsource to reduce our liability. But for anything that would be disruptive to our workflow, we’ve tried to internalize. I think if I could internalize more, I actually would, but there’s a limit and that’s where we’re at right now.

Q: So what would your advice be to somebody who is new to this whole process?

A: I think, really, what they need to do is evaluate what their priorities are for their lab operations. For ours, the decisions are based upon protecting our revenue stream, which requires highquality services and the least amount of downtime, as opposed to just saving money. But if we were running an R&D lab, it would probably make a lot more sense to try to consolidate things and outsource more because it wouldn’t be as disruptive.

Also, when you’re looking at what to outsource and what not to outsource, if you don’t have the internal expertise to bring it in-house, it really doesn’t make sense to even try to do it yourself because it would cause more problems than do good. That’s why we have spent a lot of time working with our vendors and equipment manufacturers to make sure that our people are trained to be able to do the types of support functions we need done. Initially, if labs don’t have that expertise, using the vendor that sold you that instrumentation is the safest choice, but they’re not always going to be your most cost-effective option. After the instrument has been in place at your facility for some time, you can decide whether to outsource it to a different vendor or whether you can internalize some of the functions to save costs. However, certain manufacturers won’t sell their parts to third-party vendors, making it extremely difficult to outsource, even if you want to.