Managing Your Lab Budget for Improved Efficiency

How to strategically manage your equipment, supplies, and personnel budget

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All too often, quality labs that are ripe with potential hit a productivity wall built by a constrictive budget. While the forecast for funding might look less than optimistic, there are strategic budgeting decisions that will help create extra room for discretionary spending or unexpected budgetary downfalls. Personnel, equipment, and lab supplies remain the three black holes that encompass the vast majority of a lab’s budget. None of these can be eliminated in any lab, but they can be strategically managed to improve efficiency and productivity.

Personnel

Like every successful business, the teams that run these activities are instrumental to its success. From selection to promoting effective teamwork, the personnel administration aspect of lab management can be incredibly consuming, but it is the greatest asset of any lab. With drastically increasing costs of employee benefits and wage inflation, the selection process has never been more critical. While every lab has its own criteria for application that are often heavily credential based, there is a great benefit of an added personal touch to the selection process. Inquiring as to each applicant’s level of voluntary continuing education can be a beneficial determining factor in selection. For example, most researchers are excited to keep up with the latest research pertaining to their fields of study and often attend annual conferences for continuing education. Researchers who are also interested, however, in actively walking the exhibit hall to learn about all of the newest beneficial technologies for their labs, while also engaging expert representatives from exhibiting businesses to apply to their research, are the types of team members who will be an extraordinary asset to any lab. This scenario allows the lab manager to consult better with his or her knowledgeable team during the procurement phase to ensure funds are being effectively utilized, thereby leading to a closer, more mutually respected working relationship within the lab.

Related Article: Stretching Your Maintenance Budget

Highly experienced researchers who are well versed in all aspects of the industry and familiar with running high-end, complicated equipment are becoming quite costly and difficult to acquire. Luckily, there is a new wave of researchers eager to make their mark on the industry. Some come from a decidedly versatile background and are ambitious to draw experience from every avenue to eliminate some expenses previously thought to be fixed. Many labs have maintenance/ repair contracts and subscriptions with various companies and contractors to ensure that their equipment operates smoothly. However, hiring or training personnel to know how to perform basic maintenance and repairs on their equipment can save bundles on such expenses. Quality manufacturers of lab equipment are usually open to teaching maintenance at no cost to anyone who is interested in learning, thereby eliminating the need for an outside contractor.

In some instances, outside contractors may be able to help cut costs. Lab technicians, postdoctoral candidates, graduates, and undergraduates will always be the backbone of every lab, but another trend that has been growing with the increased employee costs is the use of contract researchers. They can often provide an extremely results-driven benefit to a lab and could bring fresh energy to the bench without the long-term overhead of employee costs and benefits.

Equipment

It seems as though there is an army of salespeople wanting to outfit every lab with new equipment monthly. While some technologies do require either repurchasing or frequent updates, a great deal of unnecessary purchases, such as trending equipment items or single experiment items, soon find their way to a junk box. Evaluating the laboratory equipment available and comparing that with the goals and daily uses of the lab can go a long way toward ensuring the purchase of equipment that is durable, which is an important factor in budget allocation. Spending wisely for a slightly more expensive, quality product pays off time and time again, as opposed to choosing low-quality or knockoff products that are not intelligently designed by a knowledgeable manufacturer. Such products often are inherently flawed and have been produced or copied for the sole purpose of profiting from labs that are trying to stretch their budget in the short run.

For a little additional up-front investment, durable products designed for multiple uses without being high-maintenance can drastically decrease maintenance costs and eliminate the need to repurchase equipment for future experiments. Reputable manufacturers will stand behind their products and always be available to answer questions, because they want to see their customers succeed and excel. These manufacturers are the largest advocates for the success of such labs. Identifying a reputable manufacturer involves confirming a checklist of features: ease of access to a live service representative; understanding and willingness to share valuable, nonproprietary technical knowledge; a respected reputation in the industry; and full-service manufacturing functions available to customers. Acquiring equipment manufactured by reputable manufacturers can alleviate a huge burden, not only by avoiding the frustration of being stuck with one of the many subpar products on the market and the unnecessary repurchase of equipment, but also by offering freeand easy troubleshooting of rare technical questions and the significant savings of a one-time investment.

Related Webinar: Lab Budgeting 101

When acquiring specialized equipment, purchasing from a one-stop shop with little interaction might seem to be the easier path, but often it is the more costly one. Always be sure that the rep selling the equipment has the necessary technical knowledge and/or easily gives a direct connection to someone who understands what is being sold. All too often, labs are dissatisfied with their purchases because the sales rep was actually a former real estate salesperson who is utilizing his or her sales skills to push a product, as opposed to a knowledgeable system integrator who can help set up a functional system free of charge. Choosing the latter helps labs avoid purchasing equipment that will have little to no realizable benefit and that may not integrate well with the existing equipment. Developing a good working relationship with qualified reps often leads to greater financial benefit through discounts, free training, setup and service, and so forth.

Another important factor in equipment purchasing is versatility in a multiuser facility. Whether a lab is designed to be heavily trafficked by several different research groups or is uniquely furnished for one objective, different experimental configurations are a factor in the category of equipment versatility. Diminishing the need for several trend products for each application within the lab is a great way to streamline the use and expense of lab equipment.

Lab supplies

There is not always a lot of wiggle room in this department, because a constant flow of supplies is needed to sustain the lab on a perpetual basis. Consumables, media, chemicals, tools, office supplies, safety gear, glassware, plastic ware, gases, and even break room supplies are part of the day-to-day operation of a lab. There are some ways, however, to trim the costs of lab supplies. Many institutions and businesses have contracts with vendors for stocked lab supplies that have been negotiated for discounts on bulk purchases. This model is very effective if a considerable discount has been negotiated and buying in bulk is the goal.

Buying in bulk will always remain the greatest negotiating factor in purchase discounts, but this is not the only option. A possible alternative to this model is the ever-growing trend of subscription orders. More and more vendors are willing to establish a regular subscription that will be less costly than a bulk purchase, with the added bonus of less on-hand inventory management, in return for consistent, reliable orders.

Related Article: Lab Inventory Management Guide

Unfortunately, the costs of production have increased in the recent economy along with the employee costs, and, in turn, there is less of a discount margin for resellers to offer. In some cases, going to the source manufacturer is the best way to beat the bottom line on lab supplies. In the instances where budget is a larger factor than convenience is, eliminating the markups on layers of resellers and negotiating with the manufacturer directly can provide greater benefits, especially when the purchaser is astute about unique purchasing styles. Streamlining the variety of regularly stocked items can also help in negotiations for a more specific and less wasteful contract with vendors.

The concept of easy-to-budget, linear spending is truly the ideal, but this is not the reality in a lab. Establishing the bare necessities and burn rates of lab supplies and personnel expenses will help determine the major fixed expenses; but a different financial model must be used for the purchase of equipment. Purchasing equipment that is durable, versatile, well designed, and heavily supported by a knowledgeable seller and/or manufacturer saves significant time, money, and frustration for all members of the lab. Budgeting will always remain a headache when managing a lab, but developing a creative strategy through collaborative management and calculated procurement can position a lab for growth and success.

Categories: Business Management

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Today's Cannabis Research Market Magazine Issue Cover
Today's Cannabis Research Market

Published: October 13, 2016

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