Current Issue

By Noreen Hong, Thermo Fisher Scientific

Outsourcing Your Asset Management
Organizations today are under tremendous pressure to increase productivity and efficiency, reduce total cost of ownership, and focus on core business competencies.  To meet these business objectives, many are looking to external business partners to manage non-core business competencies, especially in the area of instrument and equipment management, service and support. 

In today’s complex corporate environment, it can be very difficult for decision makers to determine an asset and service management solution that is integrated and multi-dimensional, aligns to their business goals, and meets the goals of key stakeholders.  Without fully understanding the needs of these stakeholders, the individual instruments, their environment, and their specific service requirements, an organization’s proposal process can be prolonged due to unclear expectations and requirements, and inconsistent assumptions between you and your potential partners.  The end results are serious delays in the supplier selection process and solution implementation, poor execution, and ultimately, unrealized gains. 

A Case Study
A large U.S. pharmaceutical manufacturing company recently decided to outsource the asset and service management of their laboratory instruments and equipment with a goal to reduce their overall service spend.  In their proposal process, the organization first identified the key asset and service management suppliers.  Then, they collected an asset list by requesting scientists, researchers and other asset owners to submit their assets for inclusion in an integrated services solution and to define the service requirements.   After several months, the organization gathered a collection of separate and inconsistent inventory lists that totaled more than 10,000 instruments - some with varying service level requirements and issued an RFP to suppliers. 

As the company reviewed the responses, they realized it was difficult to compare suppliers as each had varying assumptions on the service requirements and each presented their offerings differently.  In an attempt to gain uniformity, the organization allowed suppliers to visit and meet with individual end users at their sites to re-scope and re-issue a second RFP.

Again, the organization received proposals with varying assumptions. In addition, the new proposals provided solution prices that exceeded the organizations’ current service spend.  Upon review, the organization discovered that these increases were due to the added instrument and equipment service requirements, such as incremental preventive maintenance events and faster response times, requested by end-users as opposed to actual or needed service requirements. 

One year after releasing the first RFP, the organization still had not selected an integrated asset and service management supplier or solution.  They made the decision to start over, now collaborating with a supplier to properly define their asset and service management needs.  Through this collaborative assessment, the supplier assisted the organization in identifying the key business stakeholders, defining the business goals and objectives, and determining the components needed to achieve an optimal asset and service management solution based upon their environment and asset mix that would best meet their needs.  This process involved a standardized collection of instrument and equipment data such as manufacturer, model,, location, service requirements, and service methods.  This resulted in a proposal that the organization’s stakeholders could understand and a response to evaluate to make a decision. 

Lessons Learned
Several lessons can be learned from this case study.  First, without identifying key business stakeholders and aligning their needs to the overall business objectives, the proposal process encountered many delays and confusion.  In addition, this misalignment caused greater delays during the second RFP when suppliers interviewed scientists and captured their “ideal” service requirements versus needed requirements.  Second, by not providing a consistent asset list and documenting specific service requirements, they faced proposals that had many assumptions which made it difficult to compare suppliers.  As this company discovered, without consistent fields and requirements, the task to review and compare services for 10,000 instruments quickly became a difficult and frustrating one.  Lastly, without determining what they currently had, the organization struggled to document an asset and service management solution that would achieve their goals.

Determine Business Objectives
First, determine the results your organization wants to gain by implementing an integrated asset and service management solution.  Is the organization trying to streamline business processes?  Allow end-users to focus on core competencies as opposed to management and servicing of instruments?  Improve productivity?  Improve service response time?  Optimize or reduce service spend? 

Form a Team
Once these overall goals are agreed upon, form a team.  This team should be a cross-functional team of individuals who understand the overall goals and are empowered to make decisions on behalf of their respective departments.  They can consist of individuals from procurement/ strategic sourcing, operations, lab management, quality assurance/ quality control (QA/QC), information technology, and specific end-users. 

With this cross-functional team in place and overall goals identified, the next step is to understand your instrument & equipment mix, the environment in which they operate, and their required services.  This will help your team evaluate your current maintenance situation to baseline where you are today and more importantly, allow you to figure out where you want to be.  This is a critical step in the proposal process.  Often times, organizations create an RFP based upon their current instrument list without doing the due diligence of understanding and documenting how instruments are being utilized or why service requirements are needed.  The end result is an maintenance management program that does not fully achieve the organization’s overalls goals.   

Establish and Document an Instrument & Equipment List
To establish your instrument list, begin by first gathering your current instrument mix and service requirements.  What are the instruments and services you have and want included in the integrated asset and service management solution? Identify the individuals who can assist in the data collection of instrument information, location detail, and maintenance information.  The purpose of this exercise is to create an instrument and service list to baseline where you are today.  During this process, your team should also understand why these requirements are in place.  For example, are specific requirements sited in a particular lab’s Standard Operating Procedures (SOP)?  Are specific requirements followed per OEM recommendations?  Are specific requirements performed to comply to regulatory standards, such as FDA requirements?  By fully understanding the purpose of these requirements, your organization can begin scoping an integrated asset and service management solution that will satisfy your overall needs. 

Begin by collecting and documenting the instrument and equipment details:

• Manufacturer
• Model
• Description
• Serial Number
• Asset Tag – Does your organization assign company specific asset tags and numbers for tracking purposes?
• Age / Installation Date
• System Hierarchical Information – Is the instrument part of a larger system?  If so, is it the main component (the parent) or sub-component (child)?  Does it have a System ID number assigned to it?

Next, determine location details:

• Department – What department would this instrument be found?
• Cost Center – What cost center?  Is there a cost center number?
• Building
• Floor
• Room
• Owner/ Custodian – Who owns this instrument?
• User (Department Manager) – Are there specific users for these instruments?

Once the instruments’ information and location have been gathered, document the instruments’ service levels by: 

• Service Requirements
• Service Method
• Service Providers

Service Requirements
Service requirements are those services required by individual instruments.  These services can be:

• Corrective Maintenance - Any maintenance activity that is required to correct a failure that has occurred or is in the process of occurring. This activity may consist of repair, restoration or replacement of components.
• Preventive Maintenance - Routine, scheduled maintenance which can include the replacement of wear use items (when applicable) to maintain optimum performance of the instrument. 
• Calibration - The set of operations that are tested against a known value.  Adjustments can/are made to correspond with the known value.
• Installation Qualification (IQ) – This is documented verification that an instrument/ system is installed according to written and pre-approved specifications, typically per the OEM.  It provides assurance that the instrument specified for a particular function was received, pre-installation procedures were followed and the instrument was installed per customer and/or manufacturer specifications.
• Operation Qualification (OQ) - This is documented verification that an instrument/ system operates according to written and pre-approved specification throughout the specified operating range.  It provides assurance that the instrument/ system operates according to customer and/or manufacturer’s specifications.
• Performance Qualification (PQ) -This is documented verification that an instrument/ system is capable of performing according to written and pre-approved specifications for its intended use in its specified operating environment.  PQ is performed after IQ/OQ.  It is a holistic test using nationally recognized standards (when applicable) of the instrument/ system to confirm system performance across the anticipated working range.  This can include customer specific performance qualification, if requested.

For each instrument, the team should determine the frequency of each service requirement and understand why they are needed.   

Service Methods
Once specific service requirements have been identified, service methods can be determined per instrument.  Service methods are ways in which an organization obtains the specific service requirements.  Examples of these and can be defined as follows:
 

• Service Contracts are agreements/ contractual obligations between an Original Equipment Manufacturer (OEM) and a customer for services provided on a specific instrument under specific terms and conditions at a fixed fee. 
• Onsite Engineers are services requirements delivered by engineers located at a customers’ site.  These engineers can be staffed by the organization or by a service provider.
• Demand services are individual service requirements that can be provided on a per-event basis, which means when they are needed by the end-user.  

In addition to documenting the service requirements and methods, determine your organization’s current service spend. 

Service Providers
With service requirements and methods gathered, it is beneficial to understand and document the service providers who deliver the services.  These can be:

• Original Equipment Manufacturer
• Independent Service Organizations
• In-House Engineers
• Multi-Vendor Direct Service Engineers

Identify Suppliers and Determine Criteria       
Once this information has been gathered, the team should analyze the data to identify service requirements that would best align to the organization’s objectives.  Including this list with the RFP will help streamline the proposal process and reduce assumptions between you and the potential suppliers.  With RFP documents completed, the team should identify potential suppliers who would provide an integrated asset and service management solution that would best meet the organization’s requirements and determine the criteria for those suppliers. 

When selecting asset and service management suppliers, several criteria should be considered.  First, the supplier should be an experienced change agent with a significant number of successful implementations.   How many years have they been providing integrated asset and service management solutions?  What is the size of their installed base?  Who are some of their key customers?  Second, they should be able to demonstrate their ability to achieve financial and operational results.  These can be evaluated through case studies, references, or customer site visits.  The team can learn more by requesting to speak to a suppliers’ existing customer who had a similar situation.  The team should also evaluate the suppliers’ capabilities.  For example, how do suppliers manage assets and services?  What tools do they use?  Do they provide you access to view and track your assets and services?  Are key performance metrics/ reports provided, such as PM completion rates, Mean Time Between Failure (MTBF), and Mean Time To Repair (MTTR)?  If direct on-site service support is required (multi-vendor services) an understanding of their support staff is critical.  How experienced are their engineers?  What training/ certification programs are utilized?  The supplier should also have a strong supplier management strategy with OEMs and ISOs.  How do they manage service providers?  Do they have strategic alliances with any key service providers?  What processes have been implemented to ensure cooperation and collaboration?  An experienced asset and service management supplier should have a comprehensive database of instrument and equipment service information and trends which customers can leverage to develop business strategies, such as asset base rationalization, process improvements, and service improvements.    Lastly, the team should evaluate and agree upon the areas of the RFP that are non-negotiable requirements versus negotiable.  For example, are there instruments where service requirements can be modified, i.e. frequency of PMs?  Are there alternative service providers the organization would consider?  Agreement upon these requirements and supplier criteria will allow the team to compare potential partners and to determine a program that would meet the business objectives. 

Conclusion
This data gathering exercise can be a tedious and lengthy process and it requires involvement and commitment from the entire organization.  Some suppliers provide consulting services or needs assessments to assist clients in this data gathering process.  Completion of the task will ensure a streamlined proposal process with clear expectations, requirements, and minimal delay.  As a result, your organization will have identified a qualified partner who can implement the optimal asset and service management solution.  Typically, the solution will consist of an integration of various service requirements, service methods, and services providers supported by a vast amount of value-added services, such as dispatch services, site staff, a web-based asset and service management tool, entitlement management, supplier management and business review meetings to drive continuous process improvements for increased productivity and efficiency, and reduced total cost of ownership   In the end, your organization can achieve your overall goals and objectives faster