Feature

Considerations for Outsourcing Laboratory Equipment Maintenance (continued)

On-site engineers Typically, more than 80% of a pharmaceutical R&D and manufacturing company's maintenance expense can be attributed to five or six key equipment technology groups. It is in this dynamic that the on-site engineer model delivers the greatest cost savings compared with standard OEM contracts. In this model, engineers are deployed permanently on-site to provide preventive and repair maintenance for all equipment from one or more key technology groups. For example, a site containing 5000 pieces of equipment may have 500 complete HPLC systems, so HPLC is a key technology group. To calculate the number of engineers needed to carry out maintenance, the number of hours required to deliver the specified service level is divided by the utilization efficiency of a single engineer. For example, if the system predicts the hours required as 10,000 and the utilization is 1430 hours, then the number of engineers required is seven. The service provider's knowledge system shows line item information of the labor hours and parts usage from historical data gained from other sites to assist with this calculation. Companies usually pay a provider a fixed price for the labor, with spare parts and consumables given at either a fixed price or as used, within an agreed upon margin. This approach depends on whether the company wishes to assume or transfer financial risk. The financial make up of a typical OEM service contract comprises parts, labor, travel (typically 20%), and profit. Travel is not incurred with an on-site model, therefore this expense is immediately a cost saving. The provider, however, will have ensured the on-site team is fully utilized to contain cost. In practice, a provider can help by smoothing out preventive maintenance peaks and troughs and by providing value-added labor services that would otherwise be charged for, including equipment moves, salvages, and software and firmware updates, as part of the contract. Dedicated on-site teams do not have the same cost-overhead burden as field-based teams, and this may lead to lower costs. Spare parts for supported equipment are kept on-site, which drives first-time fix rates from approximately more than 70% to greater than 90%, thereby reducing revisit costs. Overall, this model should produce a 20–25% hard-cost savings compared with full-price OEM contracts as well as soft-cost savings. On-site engineers provide maintenance and administration for all equipment of a specified technology regardless of vendor. Therefore, there are opportunities to standardize maintenance and qualification protocols across the technology, which minimizes the cost of compliance. Having engineers permanently on-site means breakdown response can decrease from more than 48 hours (typical OEM response time) to less than 1 hour, thereby reducing the amount of backup equipment required and freeing scientists to conduct analysis rather than repair equipment. To deliver effective on-site multivendor maintenance requires in-depth technical backup, recruitment, training, parts sourcing, and information technology systems. Therefore, it is likely the most capable providers will be global equipment providers who see a business opportunity in maintaining equipment manufactured by their industry peers and competitors. The information technology system used will need to record every maintenance event and cost transaction to match the capabilities of the dedicated asset management model. The provider also will need the systems and processes to manage the complete maintenance process at smaller, less well-resourced manufacturing sites of 500–1000 items of equipment and be able to dovetail into in-house resources, systems, and processes at larger sites of at least 5000 items, where in-house maintenance management or maintenance delivery groups provide support to scientists. Will scientists believe a multivendor on-site engineer model can deliver higher quality service than their OEM? Not initially. They will have many questions relating to engineer training, competence, parts availability, and software support. Therefore, it is vital to engage laboratory personnel early in the evaluation process so that their concerns can be addressed by means of the proof statements available from those companies already successfully implementing this model. Often companies implement the on-site model on a small scale at first and then use this success to win over more skeptical stakeholders. (continued)