Situation:

A new CEO and COO of a major supplier of processed biological materials, controls and reference materials to the life sciences industry were driving corporate streamlining efforts. An important part of the company, laboratory testing services, had not been evaluated for cost efficiencies in a long time. Kineticos was asked to review the lab testing processes and optimize for cost-effectiveness while maintaining or improving overall quality. Data gathering on lab testing costs was very difficult – IT systems tracking costs per test did not exist. The history of why certain tests were done in-house versus others out-sourced was not obtainable, as well as why certain vendors were used. The lab management did not have the tools to determine testing costs, or decide on in-house testing or out-sourcing.

Process:

Given the lack of IT enabled oversight, the testing costs were determined manually. Then for the entire test menu, potential out-sourcing labs were sent an RFP. These labs responded with proposed pricing for out-sourced tests. Kineticos and a client team went through the menu test by test to optimize the overall menu.

Three strategies were employed to maximize cost-effectiveness:

  • For each test: perform in house or outsource
  • For out-sourcing, optimize vendor
  • Change test platform to lower cost if test result quality is the same/improved

Outcome:

Client reduced overall costs by 25% without any loss of capacity or quality. Kineticos has been asked to analyze other processes within the client.