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Business Management

Key Techniques For Making The Best Equipment Deals

Sometimes the acquisition of new laboratory equipment can be quite simple. Most of the time it is because what we currently have is broken, says Mala Burton, laboratory supervisor with the Hopewell Regional Wastewater Treatment Facility in Hopewell, Va.

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Sometimes the acquisition of new laboratory equipment can be quite simple. “Most of the time it is because what we currently have is broken,” says Mala Burton, laboratory supervisor with the Hopewell Regional Wastewater Treatment Facility in Hopewell, Va.

She is quick to acknowledge that it is not always that uncomplicated. “Sometimes upgrades are done based on new technology becoming available, and at other times it is necessary to upgrade because of the need for automation.”

Janet Cushing, laboratory administrator in the orthopedic department at Rochester University (Rochester, NY), says that most of her laboratory’s new acquisitions are based on “changes in technology, new regulations and new standards.”

Explaining how new acquisitions are approached at her facility, Melissa Porter, laboratory manager at the National Institute of Arthritis and Musculoskeletal and Skin Diseases (Bethesda, Md.) says that the need is generally identified by principal investigators. “Then, I look at the available options. If it is a sole-source offering, there is no choice but to buy from the vendor that offers the equipment. If there are multiple systems that do the same function, I tend to bring them in for demonstrations. These sessions are attended by the end users in our laboratories who get some hands-on time on the systems. In the end, they help to decide which systems to buy.”

Sooner or later all lab managers face the acquisition decision. They have to take into consideration factors such as cost, reliability, supplier’s reputation and user requirements, according to Eric Buckstein, manager of validation at Sanofi Pasteur (Swiftwater, Pa.). Other important criteria identified by participants in the Lab Manager Magazine 2009 best practices survey include training, footprint, cost of repair/replacement parts, labor savings, ease of use and willingness of vendors to provide training and compliance with regulatory and consensus organization requirements, among others.

Layered on top of these considerations is the requirement to select from among hundreds of vendors offering products. Buckstein says that the sifting out process can be challenging. “Sometimes the equipment you need is sole-source and you have to buy from a particular vendor. For others, we either invite them in or visit their facilities to evaluate their offerings, usually by viewing demonstrations of the systems we are interested in acquiring.”

In selecting a vendor, Porter does not always start out with a preferred list. “For the most part, we use the main, largest vendors, and we always make careful comparisons of what they are offering.”

For vendors seeking to do business with her lab, timing is very important, especially for the smaller, less-established vendors, she says. “We work with government rules and we have to get a minimum of three quotes for any particular instrument.

“We do not always go with the lowest price in our acquisitions. Price is only one factor, and there are other very important considerations. Does the instrument meet our needs? We have often paid premiums to satisfy this requirement."

“Equally important is our experience with the supplier and its reliability with maintenance contracts."

“We want to ensure that we are getting our money’s worth and that the equipment will hold up—especially with the bigger ticket items, which are shared and heavily used. As a result, we have to take much more than price into consideration.”

Still, price is a major factor. Judy Yen, a laboratory manager at the Whitehead Institute for Biomedical Research at MIT, says, “Pricing is very important for us, for large equipment as well as for smaller items and consumables.”

Cushing concurs and adds, “We generally do not pay list price. We always obtain quotes and get the best pricing, and we generally use price variations among vendors as a negotiating tool.”

The Lab Manager Magazine 2009 survey revealed that this approach was popular with some participants not only to obtain better pricing but also as a way to secure from vendors extended warranties and better customer service, among other benefits. A number of participants outlined their approach for accomplishing this. In general, this approach seems to be: Let the vendor know that the same product can be obtained at a lower price from another vendor—this usually leads to concessions on price, warranty period and service contract.

This approach was, however, eschewed by others. “I don’t do this. I ask for the best price and expect to get it the first time,” one participant commented. Another said, “I don’t do this. I simply do what is right for the lab.” In the same vein, another participant stated, “I will look at several companies and let each know. We will then choose the best. I do not like to play one against the other.” Still another offered the following advice: “Ask what they can offer based on your needs. Emphasize that service is everything. Mention previous purchase history and the value placed on the relationship.”

Still, such bargaining has been identified repeatedly as being effective in dealing with vendors. Some participants indicated that they were able to obtain concessions by pointing out that the equipment or other product was cheaper elsewhere,that it was inferior when compared to those of competitors and that customer service was inadequate.

Some participants recommend using the purchasing power of entire organizations rather than individual labs when negotiating. One way to accomplish this is to use corporate purchasing departments to do the negotiating. And, of course, use the old standby whenever possible—three competitive bids.

Zeroing in on the equipment itself, some participants recommended comprehensive knowledge of the systems. This will ensure that the equipment and services that are being acquired are precisely those that are needed. In essence, one participant recommended: “Do your homework and know the critical features required—do not pay for unnecessary features.”

A number of participants shared steps that could be implemented to hold vendors more accountable for performance. Tighter contracts and monetary penalties if the equipment does not perform as expected top the list. One participant pointed to the need for immediate follow-up with vendors by end users: “This allows the vendors enough time to correct errors and is crucial in making vendors more accountable for performance.”

A large number of valuable solutions were provided by the participants, including the standard requirement to have everything that was agreed to put in writing, requiring vendors to provide references from other users and getting them to agree to assign the most-qualified service technicians to your project.

Entire solutions were also proffered. One such solution was to implement a supplier report card that rates each vendor on timeliness of delivery, cost-effectiveness, customer service and quality. One participant stated that these reports were generated from data gathered by his company’s receiving, purchasing and quality departments. “Vendors falling below 75 percent are placed on a warning list and, if they do not improve their performance, they are removed from the approved vendor list and we do not purchase from them.”