Save 15% or more on Lab Supplies

When consulting with biotech companies they’re often considering a variety of ways to save money and operate more efficiently. Here are five points to consider when trying to improve both:

Price Benchmarking

It’s important to select items for improved pricing when there’s margin to do so for the supplier or they’ll just decline. Also it’s critical to preserve supplier and vendor relationships and to make reasonable requests. You can certainly fatigue vendors by requesting quotes on the wrong items. It matters since sales reps will often prioritize quotes and customer service to reasonable clients. We help identify these items by analyzing the spend and if the price is high compared to peers. Currently, we’ve collected over 1 billion dollars of purchasing data, which allows us to provide unique insights.

Often companies mistakenly take their top ten highest spend items and request quotes on those repeatedly. It may work great the first couple of times, but long term the results stagnant. Usually companies have already done this when we talk with about pricing, which is fine, but long term it is better to be strategically selective.

Inventory Analysis

If you have an accurate inventory system in place then this analysis is made much easier. Often our clients don’t have a system that monitors their inventory. We work them to help develop solutions so that they can better track how items are moving through their companies. If you don’t have that option to examine your inventory, pick a date and from that point forward monitor what is being ordered. This will allow you to determine what items are being used and at what rate. We often find that inventories have products that are essentially taking up space and have been in the inventory for more than one year. When picking a date, start at least two years previous as it can help identify items that are never ordered again. It could be that these items have been used and are no longer needed, but often these products are sitting in inventory. At large companies this can represent millions of dollars and additional risk as products approach their expiration dates.

Shipping Costs

In addition, you can often reduce shipping costs as you begin to understand how products are being utilized. This reduction can come from ordering in large volumes and improve combinations of products. For large volumes consider both the size and number of units, for example, Fisher Scientific sells 6 x 500g of a product instead of ordering 1x. For combinations the significant savings can be found in items that require HAZMAT and overnight shipping such as enzymes. You can add a lot of value by ordering many of these items together as shipping can be $85 plus for overnight and fees (ice pack, special handing, dry ice, etc.).

Equivalent Products

Often commonly used chemicals and supplies there will be multiple vendors that can supply an equivalent product. If you’ve benchmarked your prices as mentioned above, you should have a list of targets. While it is worthwhile to approach existing vendors also consider alternatives sources. You can find these by search and asking other researchers. We spent a significant amount of time research and creating a database of more than 100,000 for scientific supplies and chemicals. It may not always be an option to change, but we’ve repeatedly found significant savings (over 65% on >25k annual spends) using this approach.

Contract Pricing Errors

A common type of error is that companies are being charged list price instead of the contract price. We’ve helped clients by cleaning their data so that they can easily identify the errors. The cleaning is the tedious but the savings falls instantly to the bottom line. After cleaning the data, simply sort by catalog number and price to find outliers. If you’re contract is for a significant percentage off of list price then the anomalies will easily stand out.

Another type of error which is more subtle is pricing increasing when you log into your account. For example, the list price for item is $175.91 and when you log into your account that price increases to $183.12.

Conclusion

If you’re able to apply these five methods mentioned you should be able to save 15% or more on your scientific supplies, equipment and chemicals. Often procurement departments have limited resources and if we had to pick one method it would to do price benchmarking.