The total number of lab supply vendors used by a biotech grows on average by 40% each year, with 35% of spend coming from new vendors. That’s a lot to manage, creating an environment of constant new vendor onboarding and PunchOuts maintenance. The burden falls on both the lab and procurement in many forms, resulting in experiment delays and rampant longtail spend. The solution is to optimize the lab supply ordering process in a way that allows scientists to experience all of the benefits of a large supplier list, without the drawbacks.
Why does R&D need to purchase from so many lab supply vendors?
Experimental protocols often specify precise equipment, chemicals, reagents, or consumables essential for ensuring reliable results. If a scientist attempts to reorder a specific chemical and discovers that their regular supplier is facing unexpected backorders, the exact chemical must be located elsewhere — in stock and ready to ship. In some cases, such products are niche and not readily available from the average supplier. To reduce risk to timelines and experiments, R&D needs access to a supplier base that is large enough to support scientific choice.
Read more about the scientific buying journey
What are the benefits of purchasing lab supplies from a large supplier list?
The benefits of purchasing from many suppliers include enhanced scientific choice, product quality assurance, access to innovation, reduced supply chain risk, and the ability to compare prices.
- Research flexibility. Access to a wide variety of products from a wide variety of suppliers supports scientific choice, increasing the likelihood that the lab can find what they need when they need it.
- Product quality assurance. Supply quality is critical to ensure accurate and reliable results. A large supplier list allows labs to compare products, assess quality, and choose the items best suited for their specifications.
- Access to innovation. Some vendors specialize in specific research areas and unique products. Labs often seek out these specialized vendors to access cutting-edge technologies or materials.
- Reduced supply chain risk: Reliance on a limited vendor list can amplify the impact of supply chain disruptions, delays, or product shortages. Access to an enhanced vendor pool mitigates some of these risks.
- Price comparison. Budgets can be better optimized through price comparison and negotiation across multiple vendors.
What are the downsides to adding and purchasing lab supplies from a large number of vendors?
On the surface, adding dozens or hundreds of new vendors may not seem like a huge issue, but the downstream impacts are problematic for procurement, finance, and the lab.
- Constant vendor onboarding. The vendor addition process at many biopharma and pharma companies is a source of frustration, cost, and delays. It includes routine steps such as vetting, documentation, supplier profile creation, credit checks, negotiation, supplier training, and set up of purchase orders, invoicing, and receiving. In addition to being a major source of delay, the average cost to onboard a supplier ranges from $1,000 to $10,000. Multiplying this expense by hundreds of suppliers quickly reaches labor costs in the millions.
- PunchOut catalog maintenance. Many in the life sciences industry implement procure-to-pay (P2P) platforms to automate back-end accounting systems. P2P utilizes PunchOut catalogs in order for end users to purchase supplies from a finite set of vendors. Unfortunately, navigation between catalogs to compare products and pricing is time-consuming and inefficient. PunchOuts also are prone to glitches, pricing inconsistencies, and out-of-date information, requiring maintenance and oversight from procurement.
Learn more about the challenges of juggling multiple PunchOut catalogs
- Timeline delays. A ZAGENO study found that it takes an average of 3+ weeks to add a new supplier to the purchasing system. Further, 61% percent reported experiment delays due to waiting for a new supplier to get up and running.
- Growing longtail spend. The niche product purchases required by R&D can lead to hundreds or thousands of small, one-off purchases. On average, half of all R&D expenditures fall under this type of spend, also known as longtail. A growing longtail precludes holistic spend management, impedes economies of scale, creates a messy paper trail, and poses challenges in ensuring the proper application of pre-negotiated discounts and terms.
Learn more about taming longtail spend
How can you optimize your lab supply ordering process to easily manage thousands of vendors?
The secret to an optimized lab supply ordering process is to balance the need for scientific choice with vendor consolidation. The easiest and quickest way to do this is by accessing a lab supply marketplace.
What is a lab supply marketplace?
Lab supply marketplaces, such as ZAGENO, arose from the need to address substantial, growing tail-spend as well as niche product specificity needs. ZAGENO users can build a cart from over 40 million products across 3,500 pre-vetted suppliers with ZAGENO as the sole vendor of record, meaning that there is only one consolidated invoice each month. ZAGENO’s customer service team handles new supplier addition and onboarding, reducing the process from weeks to hours. Accessing a lab supply marketplace offers:
- Automated vendor set-up and management. Removes the burden of supplier addition onboarding and PunchOut management. A single channel for vendor management enables holistic spend management, no matter the size of the vendor list, while supporting scalability.
- Order placement automation. Streamlines approval workflows, offers single log-on ordering tracking and delivery status, and sends one consolidated bill each month. Reduces errors and improves audit-readiness.
- Consolidated product liability terms and vendor due diligence. Ensures that due diligence, credit checks, and term negotiations are complete before making them available to customers.
- Reduced longtail spend. Leverages enterprise-wide buying power to negotiate better pricing with suppliers. Access to millions of SKUs allows for easier price comparison.
- Enhanced supply chain continuity. Instantly provides access to qualified product alternatives from vetted suppliers when needed. Customer service team adds and onboards new suppliers within 24 hours.
Read more about the benefits of using a lab supply marketplace
Help your lab innovate more efficiently by embracing the benefits of a lab supply marketplace. Contact ZAGENO today to transform your lab procurement into an agile, scalable, seamless process, allowing you to focus on what truly matters — acheiving scientific breakthroughs.