New Online Model Challenges Conventional Purchasing Practices
Over the past decade, the rise of online marketplaces has brought shoppers benefits like these:
- Competitive prices
- Detailed product reviews
- Free shipping from centralized platforms
Yet a lab manager who shops easily with Zappos or Orbitz at home must endure a system better suited to 1983 when he arrives at the lab. Talking to sales reps, calling for quotes, guessing at quality, and filling out order forms are normal. Whether you need a box of pipettes or a $250k analytical instrument, purchasing is not easy.
Related Article: The Procurement Process
In short, the scientific procurement space is ripe for change. High-tech advancements like automated bidding systems, machine learning, and instant communication can make clumsy lab procurement processes as easy as buying online. The result is higher efficiency, lower prices, and full transparency from day to day.
In many ways, it's strange that the ease of putting something in your cart and checking out hasn't arrived in the lab purchasing world by now. In most labs, that scientist who needs a box of pipettes is likely to write it on a whiteboard or enter it in an Excel spreadsheet, or even just yell it across the lab. Then the lab manager must find the right box from an approved vendor, fill out a requisition form, and submit it to purchasing. Everyone waits for purchasing to cut a PO and order the item, and then waits some more for delivery. There's little or no transparency on when the item shipped, if it is backordered, or even what the final price is.
And all this hassle assumes you're buying from an approved vendor! It's also almost a given you are not getting the best price, regardless of what the sales reps may lead you to believe. Most large institutions negotiate a set discount with certain vendors. To lock in the institution's business, the vendor usually insists in the contract that they be one of only a few "approved" vendors. The problem with these contracts is that they make it difficult or impossible to buy from non-approved vendors. Regardless if the non-approved vendors have lower prices on better products, it often isn't possible.
Related Article: The Procurement Dilemma
This lock-in and these inflated costs usually aren't conveyed to the labs, who are footing the bill in the end. Account managers from these approved vendors will try to make you believe that you're getting a sweetheart deal. In fact, the reality is that you're paying a >50% markup on items you can get elsewhere.
Imagine a world where ALL this work gets eliminated. In this alternate world, let's say that same scientist wants to buy a box of pipettes. She logs into a simple online account with a modern user interface and enters the catalog number. The website generates an order request with all the relevant fields filled in: item name, vendor, price, unit size, etc. Behind the scenes, the order request automatically goes to the lab manager for a one-click approval. The order request is instantly forwarded to purchasing.
Simultaneously, and completely invisible to the user, a finely-tuned machine learning program is automatically taking that catalog number and putting it up for instant bidding to distributors that offer an identical product. This AI system can even identify scientifically equivalent products that are cheaper and put them up for bid as well. It then takes the lowest bid and generates an offer to be sent to purchasing for review. The offer includes product reviews from other scientists that confirm both the quality and equivalency of the product.
Related Article: Strategic Sourcing
The purchaser never sees all the work that's been saved through automation. She just has a simple choice to buy the original item or the cheaper item offered. Of course this magical system includes free shipping and tracking links, and in the case of backorders it offers instant notifications and alternate product suggestions.
Sound radical? In the consumer world, this is the standard. There's no reason it can't become the standard in lab procurement as well.
