Where does lab supply long tail come from?
Ideally, scientists can procure the exact products they need, when they need them, at the right price. Unfortunately, it’s not always that quick and easy. On average, scientists and lab managers spend one day a week searching for, comparing, and purchasing lab supplies. When up against the clock, the lab will order from whichever supplier has stock readily available. Maybe they’ll order from this vendor again, maybe they won’t. The result is a mountain of small orders from low-frequency suppliers, aka the long tail.
Many factors contribute to growing tail spend, including specificity of lab experiment supplies, the lab’s limited time to source items, and the need to quickly secure product alternatives in the face of backorders or delays.
Why is long tail spend so problematic?
Long tail spend not only costs money in the form of redundant, manual purchasing processes and experiment delays, but also leaves money on the bargaining table.
- Three-way matching is a sourcing best practice, but is difficult across thousands of vendors, SKUs and disparate specs. The price spread for products across multiple suppliers can reach as high as 19% on average. List prices, markups, and discounts can vary from order to order and supplier to supplier.
- Much of long tail spend comes from vendors not already set up in the purchasing system, which can take up to three weeks on average. As such, 61% of scientists and lab managers have experienced experiment delays due to waiting for new supplier additions.
- Order tracking is time-consuming and inefficient, usually happening via email and phone calls to the tune of an average of 6 hours per week.
- A long tail causes a scattered, lengthy paper trail, adding to the manual process of getting audit-ready.
- The longer the tail, the more fragmented the spend, obscuring any kind of holistic view, making enforcement of contracted discounts and price negotiation difficult.
Three steps to tame long tail spend
Luckily, there is a way to tackle tail spend and free up money and labor that can be reinvested into what matters, the science.
- Define and collect spend. You can’t tame spend without knowing as much about it as possible. Make sure all indirect and direct spend categories are included in the project scope. Gather data from across departments, sites, and purchasers. Include purchase level data, such as goods/services type, supplier, unit price, past and current usage, site location and cost center.
- Categorize spend. Words matter. It’s all about how you collect and classify the data. Classify all expenditures using standardized naming conventions that are utilized and known by all staff. From there, ensure that all future purchases are consistently collected and categorized.
- Consolidate spend with a lab supply marketplace. Once you know what you’re spending and with whom, you can consolidate spend with key strategic suppliers in order to leverage buying power and reduce process inefficiencies. A lab supply marketplace helps you simplify purchasing decisions, offering a one-stop place to shop, track, and control costs. Some marketplaces, such as ZAGENO, even offer a detailed, real-time spend analysis dashboard broken down according to category and sub-category, time frame, supplier, user, cost center and project codes, so spend is easy to define, collect, and categorize.
Benefits of taming a long tail with a lab supply marketplace
- Recoup time and reduce delays. Instead of taking weeks, adding a new supplier to the system only takes hours or days. You can streamline and customize approval workflows, track orders and delivery status with a single log-on, and handle just one consolidated bill each month. If an item goes out of stock, you can instantly access qualified alternatives from vetted suppliers.
- Reduce costs. Life sciences pricing has long been closely guarded information controlled by the seller, with varying list prices, markups, and discounts. A ZAGENO study showed that 73% of savings can be achieved simply from using the marketplace to compare product list prices across suppliers before purchasing. ZAGENO does this for you automatically with three-way price matching and also monitoring that contracted discounts are being applied.
- Enhance supplier relationships. Being able to confidently capture spend means that you can have meaningful supplier reviews and discussions about service, delivery, and quality.
- Stronger supply chain resilience. Protocols grind to a halt in uncertain times. With ZAGENO, you can build a cart from over 40 million products across 3,500 suppliers, rated according to ZAGENO’s comprehensive, unbiased Scientific Score rating. In the event of supply chain disruption, product alternatives can be seamlessly swapped in, right on schedule.
- Minimize maverick spend. There is no point to having a preferred supplier list that purchasers can’t or won’t use. A lab supply marketplace makes it easy to stay the course and not go rogue.
- Meet compliance and sustainability goals. A lab supply marketplace readily offers information about its vendors, such as sustainability and diversity classifications, making it easy to know from whom you’re ordering and track spend according to goals.
No matter how wild your long tail spend may be, a lab supply marketplace can help you tame it. Just imagine what you and your team will be able to accomplish once you free up all of the time and resources wasted ordering lab supplies to focus on what matters, those eureka moments. Learn how with ZAGENO.