February 15, 2007 (Vol. 27, No. 4)

Adherents Say These Services Reduce Costs, Decrease Response Times, and Increase Uptime

Are lab asset management services worth their salt? Millennium Pharmaceuticals (www.mlnm.com) thinks so. A two-year relationship with Thermo Fisher Scientific (www.thermo.com) has trimmed its annual multimillion-dollar maintenance budget by 15–20% compared to what it would have paid the original equipment manufacturer (OEM), according to Jack Parker, associate director of asset management.

Such cost savings tend only to accrue during the first three years of any lab asset management program, though. GE Healthcare (www.gehealthcare.com), with 10 years experience in healthcare asset management and multivendor service, says the greater benefit is increased service levels that result in more uptime.

Lab asset management services boast they have faster response times than OEMs, but that is based on having an engineer on site. Parker, with a time and materials contract, thus expects a two-to-three-day response time—slower than with an OEM contract but also less expensive.

Additionally, Parker adds, “data from the program allowed us to understand our costs better. We found that administrative charges, often in the $750–1,000 range, were often higher than the actual cost to repair the instrument.” Consequently, Millennium is piloting Thermo’s new integrated service delivery model that includes multivendor services and bases an engineer on site to service one particular vendor’s instrument set. That is expected to eliminate tens of thousands of dollars in costs, decrease response times, and increase uptime.

Asset Managers That Are OEMs

The leading lab asset management firms are themselves OEMs. From their perspective, “lab asset management is a value-added service to your clients,” as Luis Rodriguez, director of business development for Thermo Fisher Scientific’s Asset Management Services, puts it.

From the client’s perspective, it lets them focus on their key competencies while cutting costs, notes PerkinElmer’s (www.perkinelmer.com) Martin Long, business director for OneSource®. “This goes back to the business drivers in the industry,” he says. “Pharma is looking to cut costs in each area they can,” and exchanging 50 to 100 OEM service agreements for one contract and one invoice simplifies asset management and maintenance administration.

For example, Agilent (www.agilent.com) reports that one of its big pharma clients cut average downtime per instrument, per incident from 30 hours to nine hours when it contracted for lab asset management. Employee time devoted to trying to resolve the issue dropped from nine hours to one hour, and the number of process steps to get it fixed dropped from 20 to 10.

Likewise, Agilent’s regulatory compliance services suite decreased the time for a particular calibration test from four days to one day by simplifying the review and approval methods.

The expertise gained from exposure to so many different instruments as well as various brands and models of the same type of instrument gives asset management firms best practices insights that may not be available from in-house or even OEM sources, according to David Heiger, Ph.D., worldwide marketing manager for Agilent Services.

The specific benefits, however, will vary among management companies and among their clients. “All the service models are different,” Rodriguez notes. Sometimes, each solution within a model may be also different.

At Thermo Fisher Scientific, Rodriguez says a client’s lab size isn’t an issue. The company offers three service options. Under its managed maintenance option, the customer chooses the vendor on a time and materials contract, and Thermo provides the resources and tools to manage maintenance at a reduced cost. That allows a company to continue receiving service from its established OEMs or third-party service organizations.

Under Thermo’s multivendor direct service, a service engineer is on site providing a fast response time, familiarity with the instruments, and an established relationship with the client.

“There are, however, certain instruments you can’t put on a time and materials or multivendor contract,” Rodriguez points out. For those, Thermo will manage the entitlements for which the customer has contracted.

Options at PerkinElmer’s OneSource are slightly different. PerkinElmer stresses a client-specific approach in which an engineer may be on site full time or two to three days per week. Additionally, Long says, “We have more than 400 engineers on the field in the U.S.,” and a comparable number in Europe, providing a local field technician option for companies that can’t justify an on-site service engineer.

PerkinElmer’s other option is to work with OEMs directly on a time and materials basis, eliminating clients’ administration and negotiation burdens. Long describes PerkinElmer’s OneSource team as “an army of ants—a tightly knit internal team that responds very quickly. We don’t dither.”

At Agilent, the focus is on large analytical labs with at least 50 mass spectrometers or chromatographs.

“Labs with more than 100 such instruments start to see real savings,” Dr. Heiger says. Agilent’s on-site engineers maintain the chromatographs and mass spectrometers and work with third parties to maintain less sophisticated instruments like pH meters, mixers, and centrifuges.

GE Healthcare offers one service model based on its asset management experience in the energy, aerospace, rail, and healthcare industries. “We’ve found that an on-site manager and on-site service team adapts to specific customer needs and is optimal for cost savings and customer satisfaction,” states Juan Ibarra, strategic marketing director, GE Healthcare Life Sciences Services.

Since it stocks many parts on site, downtime for maintenance and repairs is minimal. GE typically handles about half the equipment, subcontracting the rest to OEMs or third-party service organizations to ensure the right level of technical expertise.

Whatever service model or lab asset management company is used, the first item on the agenda is to get an accurate inventory list. Lab asset managers agree that the lists provided by the client are invariably incorrect and, therefore, inadequate as the basis for a contract.

At PerkinElmer, “we usually find about 30 percent more equipment than they say they have. For example, one company had 2,500 instruments on its inventory. We found 3,500, and there were 1,400 instruments on the list that we couldn’t find.” So, Long says, “we conduct an inventory audit to understand the actual amount of equipment, its condition, the environment in which it’s used, and the critical service issues.”

Asset Control

One of the issues, Rodriguez explains, is that asset control is inconsistent from site to site and even from lab to lab. One major biotech client, for example, found three of its sites managed assets differently, and the same type of instrument often had different service levels. Asset management services work to resolve such discrepancies based not only on OEMs’ recommendations but on actual experience with particular instrument models.

After the inventory, firms typically conduct a needs assessment to help clients maximize their return on invested capital. At Thermo, that involves understanding the corporate goals and objectives and then aligning asset management to those goals.

At Agilent, Dr. Heiger says, the needs assessment includes learning who uses the instrument, when it runs, why it isn’t running, and how it fits into overall workflow. “You need a baseline,” he notes.

As part of GE’s AssetPlus™ asset management system, the company barcodes all equipment managed under the contract and links that to its service and maintenance records, condition, and operating history as well as documentation and specifications. This means that maintenance technicians and end-users have computer access to all the relevant information. GE also offers RFID tags to track mobile equipment and hazardous materials.

Such information also can help simplify business practices by, for example, redeploying instruments or putting the maintenance of all equipment or all critical equipment on one contract, Dr. Heiger says.

For any lab asset management system to work well, you need total buy-in, Rodriguez says, and that necessitates addressing lab personnel’s concerns and teaching them how the program works. A critical point, Long stresses, is to “win the hearts and minds of the scientists so they see you have the technical capabilities you say you do.” Thermo does that with monthly “Lunch and Learn” meetings that are geared to attract lab personnel to discuss, document, and resolve their issues and to conduct surveys that help Thermo learn from their experiences.

A big concern of all new relationships is response time. When working directly with an OEM contract, response time may be 48 hours, Long says, “so scientists try to diagnose and fix the problems themselves or use backup equipment.” Having a multivendor engineer on site slashes response time and eliminates the cost of travel—typically 16–18% of a service charge, he adds. A fast response time also frees lab personnel to concentrate on their jobs rather than on equipment maintenance. PerkinElmer keeps replacement parts on site, specific to the customer, which results in a greater than 90% first-time fix rate and an average total downtime of less than four hours, according to Long.

Technical Know-How

A distinguishing feature of lab asset management companies is their technical assessment capabilities. GE, Thermo, and Agilent each offer this service, helping companies determine which of the competing equipment is best for them, analyzing not only instrument capabilities, but also lifecycle issues and costs. “These really are financial decisions,” Dr. Heiger notes, “and include the up-front costs and the soft costs, like the cost and service life of consumables, for equipment,” which often are overlooked in the initial assessments.

Remote diagnostics capabilities, one of the hallmarks of Agilent and GE, are available for much of the equipment they cover. As Dr. Heiger explains, “A large portion of downtime isn’t because of breaks. Instead, it’s application- or setup-oriented.” Remote diagnostics capabilities let the client continue working while technicians diagnose the problem.

Disposition of Surplus Equipment

It’s not unusual for surplus instruments to remain in labs unidentified, and once they are identified, to be warehoused, donated, or at worst, tossed into dumpsters.

Thermo addresses part of that issue this spring with its Virtual Depot, a software-based application that tracks the inventory of surplus instruments enterprise-wide, allowing a company to save substantial money by leveraging existing resources.

The future of lab asset management is likely to parallel what happened with the clinical and hospital segment of the healthcare industry about eight years ago, according to GE’s Ibarra. “The first main driver was cost savings. We’d win the first deal because of costs and productivity. Customers would then renew that contract because they saw a much higher level of service than ever before.”

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