Shopping Around

The acquisition of equipment is a strategic business and operational decision that balances technology, durability, reliability, active running time, purchase price, maintenance, service, and running costs with the value the acquisition could potentially deliver for a laboratory enterprise.

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Best Practices for Sourcing, Evaluating & Purchasing Laboratory Equipment

The acquisition of equipment is a strategic business and operational decision that balances technology, durability, reliability, active running time, purchase price, maintenance, service, and running costs with the value the acquisition could potentially deliver for a laboratory enterprise.

Adding or upgrading equipment is challenging, says Jason Todd, liquid and gas chromatography laboratory manager at Polymer Solutions (PSI) in Blacksburg, VA. Todd says, “Acquisition of new equipment is based on perceived demand and is customer driven. We don’t want to spend money on equipment for which we will rarely or never get requests for tests.”

“If a capability we don’t have comes up frequently, that could help us to make the decision to acquire new equipment.” Still, it is difficult to quantify, he says. “If we do not already have the equipment, it is challenging to estimate how much work we will bring in, and whether the investment will pay off.”

Benny McKee, executive VP, business development at Analytical Food Laboratories (Grand Prairie, TX), describes a formalized process to acquire analytical instrumentation for their laboratory, which offers a full range of specialized food, pharmaceuticals, dietary supplements, cosmetics, beverages, and water analyses.

He says that the executive team gets together on an annual basis to examine capital equipment needs for the upcoming year. “Some of the items we discuss are the ages of existing equipment and their remaining shelf life. Then we decide whether we need to purchase a backup or something new to take its place. We also make decisions on what equipment is needed to increase our capacity and productivity, and what will allow us to offer additional services to customers.”

“We evaluate our equipment and look at current usage and try to project what we might need for the future,” says William L. Fornoff, laboratory manager, Clean Harbors Environmental Services (Baltimore, MD), who also has some responsibility for monitoring all inventory for the 30 Clean Harbor labs in North America. In Baltimore, he manages an analytical laboratory that serves the needs of their wastewater treatment facility. The lab’s capabilities parallel those of environmental contract laboratories and use the same Environmental Protection Agency methods for industrial waste.

“I know what instrumentation is located at all the laboratories, and so when I am looking for something here, one of our other labs may have it and can often make it available to us, or vice versa,” says Fornoff. In acquiring equipment, he says, the first priority is to see if needs can be met in-house, with an eye on savings. This approach has sometimes resulted in extending the life of current equipment by as much as a year or two, he says. Fornoff says when equipment cannot be found in-house, or when there are regulatory changes that require lower detection limits or different tests, then it becomes necessary to purchase from outside sources. “For metals analysis, the primary vendor for Clean Harbors is PerkinElmer (PE). It has always been that way, and when we look for metals analysis instrumentation, we always start with them. Most of our facilities have PE’s metals analysis instrumentation, and because of this, we get preferred pricing. We also get favorable service agreements from them.”

He says that maintaining long-term relationships with vendors has solid cost benefits; although that does not necessarily mean that they will never consider sourcing equipment from other vendors. “I am always open to new ideas and product offerings. I use recommendations from other laboratories to take a look at other vendors, I field sales calls and talk with other vendors, and I review current trade magazines and periodicals to keep abreast of new methods and the vendors developing them,” says Fornoff.

“We are always interested in tools and technology that will make our jobs easier by increasing productivity and sensitivity at a good cost,” he adds.

Decisions on the purchase of new equipment vary depending on the situation, he says. “For instance, this year we are getting close to the end of the life for a group of ICPs at Clean Harbors. So maybe five to 10 ICPs will have to be bought within the next few years. For decisions on this, we will get a group together to decide how to go forward. For individual plants and for equipment that do not require that level of expense, the purchasing decisions are usually made in-house,” says Fornoff.

He says that decisions are based on a variety of key factors. “One of the keys is, of course, price. But at Clean Harbors, we have learned that price is not everything—it has to be the quality of the products. They have to be rugged, and capable of handling the tests we run in the waste, because we are analyzing difficult and dirty materials that are challenging to test.”

“The ability to have the equipment serviced is very important to us. We also ensure that the equipment supplier has a strong reputation and a wide geographic area of service, because our operations span from Western Canada to Puerto Rico—with the size of our company now, we need suppliers that can operate in all of North America,” says Fornoff.

Todd lists trade shows and similar venues as key information sources. “We do a lot of homework, researching offerings from different vendors, and we assess the technologies incorporated into different instruments, their reliability, performance and durability, the backup and support services offered by vendors, and our experience with that vendor in the past.”

They also review trade magazines, peruse emails from equipment vendors, and participate in vendor-sponsored webinars. Todd notes that the most important information source is personal contacts with sales representatives who visit periodically and provide updates about new equipment and processes. “The companies that pay attention to us on a more personal basis are more likely to get our business than those we never hear from.”

“For analytical instrumentation, we always purchase directly from the manufacturer. We also buy some consumables, especially parts, directly from manufacturers. We are a GMP-regulated, FDA-registered laboratory, and our quality systems require that our equipment be maintained in a validated, qualified state. All parts have to be suitable for the equipment, and that is best ensured by purchasing from the OEM,” he says. For most other consumables, they use the Fisher Scientific one-stop convenience.

McKee says that last year, for example, when his company decided to acquire a new GC-MS, “We looked at offerings from three different vendors and invited their representatives to come in and discuss key characteristics such as capacity, throughput, accuracy, and price point.”

He notes further, “Price is always important. Sometimes we get sticker shock when we get the first proposal. My experience, however, is that the first proposal is always the highest, and that there is always room to negotiate discounts.

“So while price is important, there are others elements that are just as important. These include backup service, responsiveness to technical issues, the availability of technical staff in the area in the event the equipment goes down, and the vendor’s ability to ship in a piece of backup equipment to keep our operations running,” he adds.

In selecting among different vendors, Todd says, “The decision is based more on the relationships with their sales representative, how much time they spend with us, our impression of how well they will support and service the equipment, the resources they devote to service, how far away the nearest field service engineer is, how long will it take to get service when we need it, their position in the marketplace, their experience, and what other end users think about the company’s equipment.” For highly complex instruments, PSI always selects the manufacturer with the best technology. “If the item is not the first HPLC or GC-MS, and if we are not really unhappy with the instruments and vendors we acquired them from, there is a strong chance we will order any new equipment from the same suppliers. Using the same vendor makes training, service, and keeping parts on hand much easier.”

While price certainly factors into the decision, it is always a case of price versus perceived value, according to Todd. “If we have researched the offerings of two vendors thoroughly from a technology standpoint, conclude that both instruments will do what we require, and if they both have the same reputation based on our past experience with them or their references, and all other factors are equal, and one has a lower price than the other, we will go with the lower price—but price will certainly not be the primary factor,” he says.

Todd says that his lab has acquired and used pre-owned equipment. The most recent, an electron microscope, was acquired last year. “The manufacturer helped with the installation and some preventive maintenance. That was a pretty big investment and the price differential versus new made sense in this case.”

In making the decision to buy used equipment, he says, “It depends on the complexity of the equipment, how familiar we are with the technology, how much we think we will be self-sufficient with the piece of equipment versus requiring extensive help from the OEM, and what resources will be available to support the equipment.”

“A good example will be buying a used auto-sampler for an HPLC versus buying an LC-MS. Many people are familiar with auto-samplers and lots of parts are available. I will be more comfortable with that than with complex equipment like an LC-MS or GC-MS, especially if they are older. These instruments have a finite life cycle of roughly 10 years. If you buy equipment that is already a few years old, then there will be questions about how long the necessary support and parts will be available and how long you will be able to keep it running.”

Todd notes that with used equipment there is a difference if you are buying from a private seller versus a reseller who purchases in bulk, warehouses, and resells. “You will pay a premium if you buy from a reseller.”

McKee says that his facility has purchased and used pre-owned equipment in the past. “We like that the initial price point is usually a lot lower than for new equipment. It is important to understand that there is an inherent risk involved, so we ensure that we find out the history of the used equipment, including the circumstances of its last operational setting and any performance metrics.”

Todd says that it will serve lab managers well not to focus exclusively on the initial purchase price. “That is important, but it is not necessarily the largest part of the total cost over the entire life cycle. You have to look at the service and support the vendor offers, the cost of service contracts, and what your uptime and downtime is going to be on the equipment. It is important to make sure that your equipment suppliers are willing to partner with you and support you well.”

McKee concurs, “First and foremost there is a need to ensure that the equipment being purchased is a good fit for the intended job. It does no good to purchase something that does not work with your analytical matrix.”

He offers additional advice to lab managers facing the challenges of equipment acquisition. “If you are going with an OEM, it helps to ask for demo equipment, which tends to cost a lot less than brand-new equipment. Also, ask for second-generation equipment that the manufacturer is about to phase out. These cost less also and may quite adequately satisfy the needs at hand. One advantage of going through manufacturers is that they typically have their own financing departments, eliminating the need to source funds from external organizations.”

He adds, “It is important to examine service contracts in detail and look at the warranties manufacturers offer, examine all quality documents, and try to negotiate those in addition to the price of the equipment.”

Categories: Business Management

Published In

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Going Greener

Published: April 1, 2013

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