Beth DiPaolo, Eurofins Lancaster Laboratories PSS Insourcing Solutions10.11.17
During the last 15 years, the Biopharma industry has experienced a trend in using outsourced partners to provide laboratory services either outsourced or insourced into client environments. Today many companies use different terminologies to define insourced-managed services giving legal and HR guidance to mitigate risk in properly categorizing and then effectively managing these relationships.
Proper Categorization and Management of External Providers
There are traditionally three categories clients are using to ensure the proper use and management of external workers that would be offering services at client sites. The first category includes temporary staffing, also called staff augmentation. The second is project-based external workers such as consultants and contractors. And the third is external service providers or managed service providers. The first category of temporaries are co-employed and managed by the client; the second two categories are exclusively managed by the vendor.
What differentiates those exclusively managed by the vendor would be a focus on a distinct body of work. External service providers can provide project-based work as well, but the difference in how these two are categorized is traditionally around the function of a distinct body of work and how the service agreement and relationship is governed.
Traditional examples of external service providers or managed services might include security, landscaping, or food services traditionally. There has been a strong trend to move this external service provider concept into laboratory service offerings. For the sake of this article insourcing means exclusively managed external services offered by the laboratory service provider in client environments that focus on a scope of work or projects clients are requesting.
The main advantage of using either an external service provider or outside consultancy is that most companies do not set a term limit of services if these services are exclusively managed by the provider. This brings much more effectiveness and opportunity to maximize the return of investment in securing services by avoiding a constant churn of required recruiting and training with traditional staff augmentation.
Outsourcing or Insourcing?
There are key factors that drive decision-making between whether to outsource or insource with an external service provider. Those factors may be cost, duration of projects, IP, proximity and TAT, or the need for immediate scientific collaboration.
The key factor though that is rate limiting in deciding between outsourcing and insourcing is laboratory space available at client environments. Many times clients have gone through reorganizations that have available lab space and equipment. This space is essentially sunk costs that can be fully utilized with an insourcing solution. If that space can be allocated to an external service provider, it can prove extremely cost beneficial compared to traditional outsourcing since the external outsourcing partner will have increased costs for service covering their own facilities, quality systems, and equipment.
Strategic Paradigm Shift in Maximizing Partnerships
Prior to going shopping for an insourced external service provider, it’s important for ensuring a true shift in thinking to maximize the benefit of a strategic partnership with your preferred external service provider. Traditionally clients attempt to use the same thinking they had with the use and management of staff augmentation to a managed external service provider. This simply doesn’t work. Not only will doing so violate the categories established to avoid co-employment guidelines set by your internal HR and legal policies, but it will also lose the opportunity to fully maximize both the client’s own resources and the partnership’s capabilities of serving the client.
Strategic Qualification and Selection of an External Service Provider
When defining questions for RFPs, it’s important to think strategically in assessing the capabilities to ensure the best service provider to partner with to meet project goals. Here is a list of key factors to assess:
Between the three categories, it’s important to remember that cost comparison between at least the first (staff augmentation) to external service providers is an apples to oranges comparison in price. There are additional costs external service providers have that are factored into pricing. They include in addition to compensation strategies, bonuses, benefits, tuition reimbursement, technical training, employee and leadership development, reward and recognition, and infrastructure to support the services.
If the client is assessing a cost comparison between the clients’ headcount to the cost of external service providers, it’s important to factor in the long-term liability costs associated with their own human resources. Traditionally, in the industry, the comparison of external service providers to FTEs is cost beneficial or cost neutral depending on how clients have done their calculations, including the lost opportunity costs if they are constantly using their own resources to train and manage, which isn’t needed for true managed services on the long-term, if done properly.
Most importantly, to ensure no violation of co-employment, external service providers share pricing for services just like outsourcing pricing, not salary information one may be exposed to with staff augmentation.
Effective Implementation
It is optimal to select a strategic external service partner who can guide the client on effective implementation. A great question to ask a vendor is what lessons have they learned through implementation experiences? If it’s a seasoned, innovative provider, they will share lessons learned and how they have made implementation seamless.
Implementation is a critical importance in establishing the relationship effectively. Forming an implementation committee is critical to ensure all security, IT, safety, HR, cultural and site expectations, and communication strategies are all covered.
Assessing your culture and the receptivity of this new service model is important as well. Will client employees be excited or threatened by the presence of an external service provider. Will it free up client resources to be motivated to projects they couldn’t get to? Will it make your employees’ lives easier? This is a critical assessment to do and ensure reassurances are in place to mitigate negativity and disruption.
Paradigm shift training is also a key part of implementation to ensure all who are using these services understand how they will interact with these services to ensure compliance. Ask your external service provider for an example of their training to help guide you in these actions.
Strategic Governance
In order to fully maximize the relationship, establishing meaningful metrics is key. Your preferred partner should have excellent examples of how to best measure success not only in a QC environment, but also in an R&D environment where metrics are more challenging.
Ensure the metrics are part of the service agreement. This is not only an effective way to maximize the relationship, but it also secures the service model in its appropriate categorization.
Plan regularly scheduled governance where key leadership from both companies come together to review metrics and collaborate on process improvements and forecasting.
There may be ideas and suggestions you have thought of that the service provider has as best practice sharing. Ask your service provider for examples of best practices. What ideas have they done to improve processes, LEAN and establish efficient lab operations, and find cost savings.
Making Your Life Easier
The goal is to ensure clients have confidence and trust in a strategic partner that shares the same values and vision. Sometimes that means relinquishing some control and trusting that they can do this possibly better. Many clients have to decide what is their core competency, and where it is not, find the partner who is an expert in that area. When clients realize that and select the best in the field of managed external services providers, this will make their lives so much easier.
Most importantly, choose a partner that’s going to be proactive in communication, positive, highly collaborative, and innovative. Fostering a strategic relationship will help fuel your goals of getting products through the pipeline to help improve and save lives. Securing a partnership that is motivated to doing that together is transformative.
Beth DiPaolo is President, Eurofins Lancaster Laboratories Professional Scientific Services. With Eurofins Lancaster Laboratories since 1987, Ms. DiPaolo oversees global operations for its award-winning Professional Scientific Services (PSS) insourcing program in addition to providing leadership for the company’s recruiting and organizational development functions. Under her leadership, the PSS program has been recognized for nine strategic client partner awards in the last eight years and celebrates its 15th Anniversary this year.
Proper Categorization and Management of External Providers
There are traditionally three categories clients are using to ensure the proper use and management of external workers that would be offering services at client sites. The first category includes temporary staffing, also called staff augmentation. The second is project-based external workers such as consultants and contractors. And the third is external service providers or managed service providers. The first category of temporaries are co-employed and managed by the client; the second two categories are exclusively managed by the vendor.
What differentiates those exclusively managed by the vendor would be a focus on a distinct body of work. External service providers can provide project-based work as well, but the difference in how these two are categorized is traditionally around the function of a distinct body of work and how the service agreement and relationship is governed.
Traditional examples of external service providers or managed services might include security, landscaping, or food services traditionally. There has been a strong trend to move this external service provider concept into laboratory service offerings. For the sake of this article insourcing means exclusively managed external services offered by the laboratory service provider in client environments that focus on a scope of work or projects clients are requesting.
The main advantage of using either an external service provider or outside consultancy is that most companies do not set a term limit of services if these services are exclusively managed by the provider. This brings much more effectiveness and opportunity to maximize the return of investment in securing services by avoiding a constant churn of required recruiting and training with traditional staff augmentation.
Outsourcing or Insourcing?
There are key factors that drive decision-making between whether to outsource or insource with an external service provider. Those factors may be cost, duration of projects, IP, proximity and TAT, or the need for immediate scientific collaboration.
The key factor though that is rate limiting in deciding between outsourcing and insourcing is laboratory space available at client environments. Many times clients have gone through reorganizations that have available lab space and equipment. This space is essentially sunk costs that can be fully utilized with an insourcing solution. If that space can be allocated to an external service provider, it can prove extremely cost beneficial compared to traditional outsourcing since the external outsourcing partner will have increased costs for service covering their own facilities, quality systems, and equipment.
Strategic Paradigm Shift in Maximizing Partnerships
Prior to going shopping for an insourced external service provider, it’s important for ensuring a true shift in thinking to maximize the benefit of a strategic partnership with your preferred external service provider. Traditionally clients attempt to use the same thinking they had with the use and management of staff augmentation to a managed external service provider. This simply doesn’t work. Not only will doing so violate the categories established to avoid co-employment guidelines set by your internal HR and legal policies, but it will also lose the opportunity to fully maximize both the client’s own resources and the partnership’s capabilities of serving the client.
Strategic Qualification and Selection of an External Service Provider
When defining questions for RFPs, it’s important to think strategically in assessing the capabilities to ensure the best service provider to partner with to meet project goals. Here is a list of key factors to assess:
- What is their breadth of experience: years, size, scope and technical capabilities?
- How far reaching is the service offered uniformly globally?
- Have they ever lost a project due to client dissatisfaction?
- Have they ever been recognized as a strategic partner by clients?
- What operational infrastructure is in place to ensure proper management?
- How do they effectively recruit, qualify, and onboard talent?
- What are their metrics for recruiting and retention?
- What employee engagement and development strategies are in place?
- What examples do they have with LEAN and process improvements?
- Do they have proven metrics to demonstrate doing it faster, better, and cheaper?
- What recommendations are in place for effective implementation and governance?
Between the three categories, it’s important to remember that cost comparison between at least the first (staff augmentation) to external service providers is an apples to oranges comparison in price. There are additional costs external service providers have that are factored into pricing. They include in addition to compensation strategies, bonuses, benefits, tuition reimbursement, technical training, employee and leadership development, reward and recognition, and infrastructure to support the services.
If the client is assessing a cost comparison between the clients’ headcount to the cost of external service providers, it’s important to factor in the long-term liability costs associated with their own human resources. Traditionally, in the industry, the comparison of external service providers to FTEs is cost beneficial or cost neutral depending on how clients have done their calculations, including the lost opportunity costs if they are constantly using their own resources to train and manage, which isn’t needed for true managed services on the long-term, if done properly.
Most importantly, to ensure no violation of co-employment, external service providers share pricing for services just like outsourcing pricing, not salary information one may be exposed to with staff augmentation.
Effective Implementation
It is optimal to select a strategic external service partner who can guide the client on effective implementation. A great question to ask a vendor is what lessons have they learned through implementation experiences? If it’s a seasoned, innovative provider, they will share lessons learned and how they have made implementation seamless.
Implementation is a critical importance in establishing the relationship effectively. Forming an implementation committee is critical to ensure all security, IT, safety, HR, cultural and site expectations, and communication strategies are all covered.
Assessing your culture and the receptivity of this new service model is important as well. Will client employees be excited or threatened by the presence of an external service provider. Will it free up client resources to be motivated to projects they couldn’t get to? Will it make your employees’ lives easier? This is a critical assessment to do and ensure reassurances are in place to mitigate negativity and disruption.
Paradigm shift training is also a key part of implementation to ensure all who are using these services understand how they will interact with these services to ensure compliance. Ask your external service provider for an example of their training to help guide you in these actions.
Strategic Governance
In order to fully maximize the relationship, establishing meaningful metrics is key. Your preferred partner should have excellent examples of how to best measure success not only in a QC environment, but also in an R&D environment where metrics are more challenging.
Ensure the metrics are part of the service agreement. This is not only an effective way to maximize the relationship, but it also secures the service model in its appropriate categorization.
Plan regularly scheduled governance where key leadership from both companies come together to review metrics and collaborate on process improvements and forecasting.
There may be ideas and suggestions you have thought of that the service provider has as best practice sharing. Ask your service provider for examples of best practices. What ideas have they done to improve processes, LEAN and establish efficient lab operations, and find cost savings.
Making Your Life Easier
The goal is to ensure clients have confidence and trust in a strategic partner that shares the same values and vision. Sometimes that means relinquishing some control and trusting that they can do this possibly better. Many clients have to decide what is their core competency, and where it is not, find the partner who is an expert in that area. When clients realize that and select the best in the field of managed external services providers, this will make their lives so much easier.
Most importantly, choose a partner that’s going to be proactive in communication, positive, highly collaborative, and innovative. Fostering a strategic relationship will help fuel your goals of getting products through the pipeline to help improve and save lives. Securing a partnership that is motivated to doing that together is transformative.
Beth DiPaolo is President, Eurofins Lancaster Laboratories Professional Scientific Services. With Eurofins Lancaster Laboratories since 1987, Ms. DiPaolo oversees global operations for its award-winning Professional Scientific Services (PSS) insourcing program in addition to providing leadership for the company’s recruiting and organizational development functions. Under her leadership, the PSS program has been recognized for nine strategic client partner awards in the last eight years and celebrates its 15th Anniversary this year.