"Business as Usual" is Simply Not an Option

This article is based on a transcript of the speech Shanya Kane delivered at the 30th Annual ALMA Conference in Atlanta, Georgia, this past October.

Predicting the future is always risky, but we can make pretty good guesses by simply extrapolating the major trends that we see today. For example, multinational companies have been shifting R&D and manufacturing facilities to Asia for more than two decades, so we can guess that this trend will continue as these companies exploit opportunities in these high-growth emerging markets. Environmental concerns, especially around global warming, are already beginning to produce legislation that will place limits on the future operations of chemical and petroleum industries. Competitive pressures and industry consolidations have forced significant budget and staff cuts for more than a decade, so it is likely that executive management will continue to ask for even more reductions in the coming years.

Another amazing trend is the broad application of biotechnology within the chemical and pharmaceutical industry. In addition to creating new products and whole new industries—as in the case of biopharmaceuticals and biofuels—decades-old technologies for the production of basic chemicals are now being re-examined for production by cheaper biological-based processes. Public safety and security are now getting increased attention with the recent food safety issues and the continued threat of terrorism. We can guess that the public will demand improved vigilance in these areas and that these industries will continue to grow at an exceptional rate.

And lastly, population demographics foretell the greatest mass exodus from the workforce in history, with the impending retirement of the baby boomer generation beginning in 2011. Just consider how many people will reach retirement age within the next 10 years, and think about the loss of technical and organizational knowledge from the workplace. So, what will all these trends mean for laboratory managers?

At one time, laboratories were relatively insulated from business influences and were largely left to concentrate on science. Everyone knows that this is no longer the case—laboratories are now considered just another business function to be measured in hard business terms. Social and business trends have already impacted the way that labs operate and have affected their status within the business. The past decade has been a difficult one with declining resources and, unfortunately, there is no reason to expect that the situation will change in the coming years. Laboratories face an uncertain future of more work, fewer resources, more bureaucracy, less discretionary time, more data reporting requirements, and fewer experienced people with the knowledge to handle these issues. What this means for the lab manager is that “business as usual” will simply not be an option.

Since these trends are not unknown to most lab managers, one might expect that labs are already gearing up to meet these challenges. However, that does not seem to be the case. We find that most managers struggle just to meet their daily operational obligations and that they lack the time and resources to invest in improving their processes. They worry about providing adequate coverage for all required testing each day, about meeting customer needs, about solving problems for the business, about keeping a safe workplace, about improving the skills of analysts, about data bottlenecks, and about the countless other details necessary to meet their customers’ expectations. Lab managers seem to operate by simply dealing with the next new issue. How did we get to this point?

Across the laboratory industries, we find that staff reductions of 50 percent or more over the past decade are not uncommon. Where labs were previously able to offer high-level, even expert problem-solving services and had discretionary time to devote to improving their internal “Most managers struggle just to meet their daily operational obligations and… lack the time and resources to invest in improving their processes.” processes, most are now challenged just to keep up with the daily workload. Budgets are sparse, bench work is often done by analysts with limited skills and no science training, and the trained chemists who do remain on staff spend their time triaging the daily barrage of customer problems or managing a growing list of projects. With the resource constraints, it is only natural that lab managers are slow to devote time and manpower to projects that will improve their internal operations, until they are forced to do so—the needs of today’s customer come first. The irony of the situation is that this “manage for today” approach leaves many labs using outdated, inefficient methods and processes that rob them of the productivity that would lessen their burden.

So, what is the solution? Well, it is fairly obvious that labs will eventually have no choice but to take action to increase productivity as resources are further reduced and workloads continue to increase. Labs have done an outstanding job in redeploying resources and streamlining processes over the past years just to maintain operations, but now the easiest gains are gone; to deliver on the increased expectations from the business, managers will face tough choices. If we look at the options, there are three levers that managers can use to gain productivity—improve processes, improve labor effectiveness, or employ technology.

The lab’s most important processes are its test methods, so we can gain productivity by making them faster—doubling the speed of a test doubles the number completed in a day or halves the time required to perform the same number of tests. This is fertile ground for improvement for most labs since it is not uncommon for methods to go unchanged for years without incorporating the latest time-saving technologies. To improve labor effectiveness, the manager can demand more effort from the staff or help them to work smarter. Obviously, the preferred option is to help them to work smarter by providing more training, including cross-training, to increase flexibility in deploying resources to where they are most needed. And the third lever, technology, simply means making judicious choices where automation can effectively replace human effort. Each of these options will be somewhat disruptive to normal operations, but fortunately the marketplace can help.

In the past, instrument companies such as our forebear Hewlett-Packard could simply design new, technologically advanced instruments and the laboratories would buy them, do all the work to set them up, and develop the methods for their own uses. That business model is becoming a rarity. More and more labs are dealing with their resource shortages by pushing development activities back onto the instrument manufacturer.

We are now being asked to supply “analyzers,” which includes the instrument, hardware modifications, standards, validated methods, software, expendables, and training needed to perform specific tests that have been factory checked and are ready for use upon installation. For example, rather than simply sell a GC-QQQ , we might now sell a pesticides residue analyzer to a food or environmental lab, or perhaps rather than a GC, the refinery customer might purchase a fast, simulated distillation solution with automated sample preparation. We find that instrument vendors are now doing more of the analytical development to jump-start the introduction of a new application in order to compensate for expertise lost during downsizing. And we see this trend continuing as we are asked to provide more complete workflows to streamline sample preparation and data handling as well as perform the actual analysis. In the coming years, we expect that more and more of a lab’s development tasks will be delegated to laboratory suppliers and that labs will increasingly look for complete workflow solutions. These vendor-supplied workflows provide a convenient solution to the productivity conundrum—rather than devoting valuable lab resources to the development of new, super-fast methods employing the latest technology, the lab will simply purchase these solutions.

Fortunately, the market anticipated these needs several years ago and is well prepared to deliver a broad portfolio of solutions. Many of the productivity solutions needed to free additional staff time by automating and increasing the speed of tests are already developed and waiting to be BUSINESS MANAGEMENT implemented. Now, to finish the job, lab managers must adopt a new focus on productivity. The key for managers is to evaluate the benefit of each proposed solution, using rational business tools to make the best business decisions for their own unique situation. This requires lab managers to make the transition from scientist to businessperson in order to use business tools to make informed decisions regarding which solutions are costeffective and which are not.

Nearly all lab managers are trained in the sciences, and most still maintain the perspective of a scientist. Adopting a business perspective simply requires applying analytical skills in a different manner. Business activities will never follow the predictable paths of a chemical reaction, but standard business tools provide reasonable estimates of the outcomes to guide decisions. There are rational quantitative methods to evaluate the cost versus the benefits of each workflow solution offered in the marketplace for each lab’s own unique situation to decide which are worth the cost in time, effort, and money. If the solution is not a cost-effective replacement for the current method, then it should not be purchased— but the manager is obligated to do the math to make an informed decision. Managers can no longer afford to rely on attributes of the instrument or specifications to make purchase decisions, but are expected to select products based on maximizing value to the business.

What else is involved in the transition from scientist to businessperson? The successful transition from scientist to manager requires a change in mind-set to adopt a broader view of the lab’s mission beyond just the discovery and application of the science or generation of analytical results. Managers are expected to adopt a market perspective to appreciate how their efforts are used to fulfill each stakeholder’s needs, whether internal or external. They, above everyone else, must be cognizant of the expectations of their ultimate customer, and must provide the leadership and vision to explicitly define those expected contributions and to apply human relations skills to influence the staff to deliver them. And, most important, managers must look beyond the boundaries of the laboratory to optimize total business value rather than just internal operations. Reducing lab costs might be a desirable goal, but not if it detracts from the business. For example, lowering the lab’s cost by reducing testing might lead to lost sales, more off-specification products, slower time to market for new products, additional warranty claims, or other consequences that hurt the organization. That is why investments in new, faster workflows usually make good business sense—they lower lab costs by reducing test labor requirements without sacrificing the benefits to customers.

Those of us who serve the laboratory industry realize that our success depends on the success of our customers, and we will continue to invest in new technologies, products, and workflows to allow our customers to remain competitive. There are opportunities to provide solutions to alleviate the sample preparation and data processing/handling bottlenecks that occur in most labs. LIMS has become a necessity in most labs, but we are finding that it can also be quite difficult to integrate into seamless workflows. So, there is a need to improve the connectivity and ease of use of our applications with these systems. Lab managers need improved tools to build the business cases for their investments and more metrics to instantly convey the operational status of their labs. And of course, no instrument is productive if it is not working properly, so labs need an array of service options that can be justified businesswise for their particular situation—even if they are self-maintained. In summary, we will continue to improve our understanding of your needs for what we believe is the most demanding job in the laboratory and to look for ways that we can make your job a bit easier.

Lab managers must lead the way to greater productivity in order to continue to meet their organization’s expectations and remain competitive. Start preparing today by building a multiyear productivity improvement plan around faster methods, practical automation, and staff training. Avoid obsolescence by budgeting replacement of old technology, using business justifications built around both lab and customer benefits. Consider the effects of retirements during the next decade, and find ways to capture essential organizational knowledge. And last, involve your key suppliers to help you implement your plan.