The Science Behind Smart Outsourcing: Four Steps to Success

Transcription

1 Analytical Services The Science Behind Smart Outsourcing: Four Steps to Success A Celsis Analytical Services White Paper Table of Contents Introduction 1 The Role and Benefits of Outsourcing 1 Top Considerations When Making the Decision to Outsource 2 Workload Assessment Model 3 A Four Step Workload Assessment Model Process 3 Overview of Celsis Analytical Services 4 Conclusion 5 Smart science for smart business celsis.com/lab

2 Introduction During uncertain times, knowing when and if outsourcing laboratory services makes sense is critical especially to your bottom line. This white paper focuses on the steps companies should follow for deciding whether or not outsourcing is the best option, how to properly evaluate funding an in-house laboratory, and how to use the Celsis Workload Assessment Model to proactively manage labor cost decisions. More and more companies are looking at outsourcing laboratory services as a business strategy to drive cost savings. An array of services can be outsourced in the pharmaceutical and biopharmaceutical industries. These include research and laboratory testing as well as manufacturing. In this white paper, we ll focus on how to evaluate the costs and benefits of outsourcing lab services -- a key competitive differentiator and a way for companies to deliver greater value to their customers. The Role and Benefits of Outsourcing As the role of outsourcing lab services has evolved into a competitive and strategic decision, today s top manufacturers can take advantage of this approach to focus on uncovering what they do best and reap the following benefits: First, outsourcing allows companies to shift focus from non-core competencies to adopting best practices around the quality of their products and services. At the same time, they can leverage internal resources more effectively for maximum return. By turning more toward its core strengths, an organization can further enhance its competitive position. Second, outsourcing laboratory services can improve testing turnaround times. The expanded technical expertise from an outsourcing partner allows businesses to tap the deepest industry knowledge and experience. This is especially important for industries with stringent regulatory requirements that need to meet government approvals or compliance standards, as well as for bringing products to market more quickly. Another benefit associated with outsourcing laboratory services is cost savings and the ability for better cash management. Not only can a company increase its flexibility to convert fixed costs to variable costs, but it can also reduce overhead. In addition, outsourcing minimizes the need to invest in specialized capital equipment, such as mass spectrometers or special chambers for photo-degradation or light sensitivity studies. These savings are compounded by not having to pay for maintenance and/or calibration servicing, or to sacrifice the floor space necessary to house the equipment and supplies. Last, and equally important, is the ability for the customer to experience superior service. Performance of internal resources can be re-energized and centered celsis.com/lab 1

3 on core competencies while non-core activities can be delegated to an expert outsourced laboratory supplier. Collectively, all parties can bring together the highest value and the best quality products and services to their customers. Top Considerations When Making the Decision to Outsource The level of internal technical expertise, amount of capital to spend on laboratory personnel and equipment, and available floor space are just a few criteria to consider when making the decision whether to outsource. An accurate analysis of a company s business is needed, which involves reviewing several additional key factors: Identify core competencies Recognize company strengths and weaknesses Examine internal resources Find out which activities make the most sense to outsource, and reallocate internal resources to core programs Evaluate the external market Assess current market conditions and competitive developments that could impact your business efficiencies Conduct a thorough cost and opportunity analysis Uncover the potential savings of outsourcing, which can include: o Estimating the cost of processing in-house o Requesting bids from potential suppliers, including transaction and maintenance costs As stated above, it s a smart practice to evaluate current market conditions when deciding whether to contract with a third-party laboratory services. The current economy can have a significant impact on your decision to outsource. For example, with the high cost of capital equipment, companies may need to borrow money to purchase systems or prepare additional floor/lab space. This approach then becomes an uphill battle, as investors are often hesitant to loan capital unless solid returns can be promised. An economic downturn forces companies to shift their views to the short-term, where cutting costs wherever and whenever possible is top of mind. Today, viewing outsourcing as a competitive strategy can actually help improve a company s performance and value to customers all at a lower cost. celsis.com/lab 2

4 Workload Assessment Model A part of the process for properly evaluating outsourced laboratory services is to conduct a thorough evaluation of laboratory personnel. This will help identify where to focus core competency efforts and also how to effectively manage labor costs. The Celsis Analytical Services Workload Assessment Model (WAM) is a proprietary tool designed to help companies proactively manage labor cost decisions. Using this tool, customers can calculate the financial implications of investing in incremental labor vs. the costs of outsourcing to an independent contract laboratory organization. In the following scenario, the cost of testing is calculated by the model. There are many uses for the WAM. These include leveraging it as a: Budgeting tool for right-sizing labor requirements Labor planning tool to manage new project workload activity Analysis tool to perform volume-based what-if scenarios in an effort to proactively manage the company s environment Financial model to indentify cost savings through outsourcing Benchmarking tool for use by your laboratory management to justify headcount requirements A Four Step Workload Assessment Model Process Celsis Analytical Services can help guide companies through the four steps of the WAM. These range from an initial customer review to final analysis of model findings, and are outlined below: Step 1: Celsis Analytical Services experts start by conducting a customer interview to develop necessary model inputs. Requirements include current in-house test capacity, anticipated test volumes, costs associated with incremental headcount and variable in-house test costs. Step 2: The WAM graphs an in-house base line laboratory testing capacity. It also projects anticipated testing volumes. Excess test quantities and frequency above the base line are identified as well. celsis.com/lab 3

5 Step 3: The model calculates several costs, including: Fully loaded cost of employee(s) Fully loaded cost per test of those tests in excess of the base line volume, based on the incremental cost of the new hire(s). The new hire cost per test compared to the outsourced cost per test. Annualized savings (cost) Step 4: In the final phase, Celsis Analytical Services specialists assist customers with the interpretation and presentation of the model findings. Copies of the model data are provided to all parties involved. The Celsis Analytical Services Workload Assessment provides customers with a consistent, independent analysis to evaluate labor costs and alternatives. The WAM is just one of the many tools Celsis Analytical Services offers to assist its pharmaceutical, biopharmaceutical and consumer products customers deliver on-time, accurate results in a cost-efficient manner. Overview of Celsis Analytical Services Celsis Analytical Services offers cost effective outsourced CGMP laboratory services to pharmaceutical, biopharmaceutical and consumer products companies. Our comprehensive service offerings include a full spectrum of laboratory testing including up to 90% of the USP s compendial methods for: Analytical Chemistry Microbiology Stability Testing & Storage Our Analytical Services labs have the fastest routine turnaround time in the industry. Keeping processes clear and straightforward for customers is very important, and Celsis encourages interested parties to audit our facilities. In addition, Celsis Analytical Services has an online sample submission form that makes it quick and easy to submit the required paperwork for routine testing. celsis.com/lab 4

6 Conclusion Done the right way, outsourcing laboratory services enables companies to focus on value-added core competencies and build a successful business. For this to be realized, two things must occur. First, companies must determine which operations make economic sense to outsource. The process of examining internal resources, evaluating external market conditions and conducting a thorough cost and opportunity analysis will take a company down the right path for thoroughly assessing outsourcing laboratory services. Second, and equally important, is discovering the best supplier to partner with for achieving unparalleled service and success in today s market. Working with a company that provides a tool to effectively plan for and manage labor cost decisions can be extremely beneficial. With careful consideration, an organization can develop an outsourcing partnership that proves to be a competitive and strategic differentiator. For more information please visit Analytical Services For Inquiries: 165 Fieldcrest Avenue, Edison, NJ 08837, USA T F E labinfo@celsis.com 6200 S. Lindbergh Blvd, St. Louis, MO 63123, USA T F E labinfo@celsis.com 2009 Celsis All rights reserved AS WP SO E 5