January 2012

BenchmarkingofAnalyticalLaboratories

byDrN.Th.M.Klooster

Theadvantagesofbenchmarkingandthebenchmarkingprocess

Intertek Consultancy Services 1

http://www.intertek.com/outsourcing/laboratory/benchmarking/

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Contents

ExecutiveSummary . 3

Introduction . 3

WhyshouldIbenchmarkmylaboratory? . 3

HowcanIproduceintheleanestoperationwithoutcompromisetoqualityandsafety? 5

Benchmarkingbywhom? . 5

Laboratorybenchmarkingperformanceevaluation . 6

BenchmarkingandLaboratoryOutsourcing . 8

AboutIntertek .... 9

Abouttheauthor 9

Intertek Consultancy Services

http://www.intertek.com/outsourcing/laboratory/benchmarking/

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ExecutiveSummary

Manufacturingexcellencekeepsbeingofevergrowingimportanceinmanyindustriessuchas
(petro)chemicals,polymers,foodandpharmaceuticals.Inthischallengingenvironmentthecentralsite
laboratoryisoftenunderpressuretoincreaseitsefficiencyanddecreaseitscostsonayearlybasis.
Wheneveroperationalconstraintsappearforthelaboratoryinthiscontinuingprocess,Intertekcanbe
askedtoconsultonbasisofaperformancebenchmarkingstudy.InsuchstudyIntertekconsultants,having
manyyearsofexperienceasgeneralmanagersofQualityControlorResearch&Developmentlaboratories
assesstheoverallperformanceoftheCompanyLaboratoryinrelationtothatofitspeers.Theypresentthe
currentstatusandapossiblewayforwardinareportwithrecommendations.AsIntertekshows
commitmentforitsrecommendations,itcanberequestedafterwardstosupport,driveorleadthebythem
suggestedchangeinthelaboratory.

Introduction

Internationalstandardanalyticalmethodsdescribeextensivelyhowtomanageandoperatelaboratoriesin
ordertoreduceoreradicatemistakesanderrorsinresults.However,thereisnoformalisedapproachfor
whichanalyticalmethodsorprocessestouseinordertorunalaboratoryinthemostefficientway.Indeed
themeaningofthewordefficiencydependsuponthetypeoflaboratoryanditsindustrialsetting.This
paperdescribesthewaysinwhichIntertekusesbenchmarkingmechanismstoclassifyandrank
comparablelaboratoriestooptimiseoperationalandcostefficiency.

WhyshouldIbenchmarkmylaboratory?

Inmanyindustriesthelaboratoryisacriticalandintegralpartofthemanufacturing,innovationandquality
assuranceprocess.Itisthesilentexpertsystemensuringthatthecustomergetsthequalityheorsheis
expectingandthatthemanufacturingyieldsareoptimizedforsafetyandprofit;insomesensesitisan
insurancepolicyprotectinganyrisktotheCorporateBrand.However,thelaboratoryisalsooftenacapital
intensiveoperation,requiringhighlyskilledstaffinsomecasesorhighlyexperiencedstaffinothers.Such
staffisraretorecruit,costlyandverytimeconsumingtotrain.Moreover,inbothequipmentandstaffat
thelaboratorythereisoftentheneedforbuiltinredundancy,backupfordisasteroroverspillrelief.

Benchmarkingisthecontinuousprocessofmeasuringandcomparingonesownoperationswiththoseofa
valid,referencepeergroup.Suchdiscreteandconfidentialcomparisonsprovideopportunitiesfor
improvementsincetheyenableanyoperationtolearnandadoptbestpracticesofothers,toobjectively
evaluateriskandtoindependentlymeasuretheirownperformanceagainstexternalrecognisedstandards.
Eventhoseorganisationswithmultiplelaboratoriesinhouseandinternalefficiencyandqualitytesting
programmestakegreatbenefitfromengagingperiodicexternalbenchmarking.Bynotleadingthe
evaluationwithinhousestakeholdersofthelaboratory,benchmarkingfurtherpromotesexternal
orientationandthelearningcapabilitiesofthecompany.Itvisualizesthestrongandtheweakpointsofthe
operationinaconstructiveandobjectivewaywhichimprovesinternaltransparency,removingmyth.

Intertek Consultancy Services

http://www.intertek.com/outsourcing/laboratory/benchmarking/

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Againstthisbackdropanystepsanorganisationcantaketoenhancetheefficiencyofitslaboratory
operationscan,notonlymateriallyimprovetheefficiencyandreduceoperationalcostofthelaboratory
itself,butitcanpositivelyimpactalloftheproductquality,manufacturingyieldandsafetyissuestouched
bythelaboratory.Thegainisveryoftenmuchgreaterthanthefootprintofthelaboratoryasaproper
benchmarkingexercisecanleadtoadjustmentstoverymanyprocesseswhichfeedintooraredrivenoutof
thelaboratory.

Laboratorybenchmarkingalwaysdrivesefficiencyandqualityandoftensuggestsimprovementsindata
managementandmanagementinformation.Intodaystougheconomicenvironment,clearlyitisan
instrumentwhichhelpsorganizationsenhancetheircompetitiveedge!

Thefocusofabenchmarkingstudywilldifferperlaboratorybutisusuallydependingonsizeofthestaff
andcomplexityofthelaboratorytechnologiesand/orinstrumentation.Thiscanbeclarifiedbymeansof
thebelowgraph:

Benchmark Benchmark
size
efficiciency efficiciency +
technology

Subcontract? Benchmark
strategy

complexity

Incaseofasmallandrelativelysimplelaboratorythebenchmarkmayfocusontheneedofthe
organizationtohaveresultsproducedintheshortesttimeframe.Dependingontheurgencyof
deliveryofresultsitmightbeassessedwhetherthelaboratoryshouldstayonthesiteorwhether
itsactivitiesshouldbesubcontractedtoanoutsideorganization.
Incaseofalargelaboratorywithrelativelyroutinetoolsthebenchmarkmayfocuson
opportunitiesforchangingtolesslabourintensivemethodologies.
Incaseofasmalllaboratorywithcomplextechniquesthebenchmarkexercisemightfocuson
organizationalprocedurestokeepallinstrumentationintheairandonmanpowerconstraints
versusstrategicneedsofthecompany.
Finally,incaseofalargeandcomplexlaboratorytheoperationalefficiencyofusingalltechnology
maybebenchmarked.

Intertek Consultancy Services

http://www.intertek.com/outsourcing/laboratory/benchmarking/

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HowcanIproduceinthemostefficientoperationwithoutcompromisetoqualityandsafety?

Aroundtheglobeindustriesarefindingthemselvesoperatinginaneverfasterchangingenvironment,inan
increasinglytougheconomyandalongwithfiercercompetition.Marginserodebecauseofincreasingprices
forfeedstockwhilepricesofproductsremainstableorevendecline.Insuchsituationsitbecomes
imperativetobebestinclassforallpartsoftheproductionprocess.Herebenchmarkingofthestake
holdingdepartmentsintheproductionprocesshelpstorevealefficiencylevelsandareasforimprovement.
Forlaboratories,abenchmarkingprocessisoftenrequestedbecauseofquestionslike:

Howefficientisourlabcomparedwithourpeergroup?
Areweactuallyovertesting?
Howcanweconducttheminimumleveloftestingformaximumbusinessvalue?
Howdoesourlaboratorymanagepeaksandtroughsintheworkloadandworkpressurebestin
ordertominimiseovertimeandstilldeliverresultsintime?
Howcanwestayleanestincostsbutbestinquality?
Howcanweexploitat/in/onlineanalysisbest?
Istherelationshipandcooperationofourcentrallabwithallplantlabsonthesiteefficaciousand
productivewithlowestTotalCostofOwnership?

Hereitshouldberemarkedthatthefirstanswertothesequestionswillcomefromthemanagerofthe
laboratoryhimself!Aseverymanagerbelieveshislaboperatesveryefficientlywiththeavailableresources
andassets,theanswerwillmostlikelybethatnotmuchcanbeoptimisedandthatfurtherchangescome
withacost.Herethelabmanagerwillbehelpedbytheprovisionofexternaldatainabenchmarking
process.

Benchmarkingbywhom?

Benchmarkingiscommonlyperformedbyconsultantswithspecialexperienceandexpertiseinthearea
underinvestigation.Intertekisoneofthefewcompanieswhoofferlaboratorybenchmarkexercisesbased
onitsexperiencewithoperatingQualityControl(QC)andResearch&Development(R&D)laboratoriesand
withmanagingthelaboratoriesofmanufacturingcompaniesoncethesehavebeenoutsourced.Intertekis
theworld'sleadinglaboratoryoutsourcingandanalyticalservicescompany,operatingcommercial
laboratoriesworldwideinthechemical,petroleum,pharmaceutical,food,consumerandrelatedindustries.
Thussignificantlaboratoryoperationexpertiseresidesinthecompany.Theseexpertsaudit,measureand
evaluatelaboratoryoperationswithakeeneyeonquality,efficiencyandproductivity.Allbackgrounddata
provideamplematerialforcomparisonsandshowclearinsightintobestpracticesforspecificgroupsof
laboratories.

Thisarticlefocusesonbenchmarkingoflaboratoriesofmanufacturingcompanies.Theselaboratories
mostlyoperateinQualityControlareasbutbenchmarkingofResearchandDevelopmentlaboratoriesis
alsofeasiblealthoughthemetricsaredifferent.Thebenchmarkingfurtherfocusesonefficiencyof
operationandnotonanintercompanycomparisonofresultsofanalyses;suchcomparisonsarenormally
organizedbythelaboratoryitselfaspartofits(ISO)qualitycertificateoraccreditation.

Intertek Consultancy Services

http://www.intertek.com/outsourcing/laboratory/benchmarking/

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Tangible Benefits Intangible Benefits

Lower cost of operation Less focus on lab administration

Manpower optimization Reduced risk of non compliance

Space utilization Simplification of management structure

Lowest cost of ownership Reduction in IT complexity

Business focus Other intangible benefits

Inadditiontothetangiblebenefitsasindicatedintheabovescheme,Intertekaddsnontangibles
becauseofitsexperienceinthearea.

Howistheperformanceofthelaboratorybenchmarkedandevaluated?

Alaboratoryisratherdissimilarfrommostoftheotherdepartmentsinthecompany.Differencesappearin
qualitysystemsandqualitybehaviour,culturalbehaviour,instrumentation,maintenance,safetyaspects,
useoflaboratoryinformationmanagementsystemsandsoon.Alltheseaspectsneedtobetakeninto
accountandbecomparedwithsituationsinotherlabsinrelationtotheoperationsatthatparticularplant
site.Thereforealaboratoryperformanceevaluationbeginswithastudyofallanalyticalmeasurement
activitiesonthesite.Intertekapplieslaboratoryevaluationmetricstoanalyzeandbenchmarktheinternal
laboratoryperformance,fromproductivitytoquality.

LabbenchmarkingmeasuresbyIntertekexpertsinclude:

LaboratoryROI
Laboratoryunitcosts
Laboratoryproductivity
Laboratoryefficiency
Laboratoryquality
Laboratorycustomerservice
Laboratoryreliability
Laboratorytechnology
Residentexpertise
Potentialfor3rdpartywork

Abenchmarkstudyusuallyconsistsofseveralstages.Inthefirststageupfrontinformationmaterialfrom
thelaboratoryisstudiedoffsite.Thismaterialisabsorbedandfurtherdiscussedwithlaboratory
managementduringasitevisit.Thisvisitisalsousedfordiscussionswithallstakeholdersofthelaboratory
attheplantsite(staffofthelaboratory,Operation,Maintenance,Technology,Finance,HRetc).Finallyall
dataiscompiledinareportwithgraphs,conclusionsandrecommendationsandpresentedto
management.Theactivitiesinthisconsultationphaseduring/afterthesitevisitaresummarized

Intertek Consultancy Services

http://www.intertek.com/outsourcing/laboratory/benchmarking/

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below:
Intertek
Review of provided data
Onsite Visit for data review
Interview with key Stakeholders
Attend on site meetings with client
Discuss and remove perceived roadblocks
Preparation of study report
Presentation to client

Seethebelowgraphasanexampleofvariousperformancelevelsofthelaboratoryinrelationtothemean
performanceofbenchmarkedpeerlaboratories.Axesshownarefortestingefficiency(numberof
tests/technician/year),QHSE(performanceasforsafety,health,environmentandquality),footprint
(staffnumbersinlaboratoryversusallstaffonsite;thisisafairlyconstantparameterwhendetermined
oversites,industriesandgeographies)andresponsetime(timeforreportingbackmeasuringresultstothe
plantinrelationtotheservicelevelagreements).Themeanperformanceisindicatedbythegreencircle;a
resultthatoutranksthecircleisaboveparandaresultinsidethecircleisbelowpar.

footprint

QESH Testing
efficiency

Response Time

Interestingdiscussionsarealwaysheldaroundthetopicofchangingtheroleofthelaboratoryfroma
providerofqualitydataonfeedstock,intermediates,processesandendproductstoaguardianof
consistency,accuracyandprecisionoftheanalyticalat/in/onlineequipmentonthesite.

BecauseIntertekfocusesonsearchingforareasofimprovementinaconstructiveway,buyinfromthe
organizationisalwaysguaranteed.Thishelpsasforreceivingtherightandmeaningfuldata,asfor
acceptanceoftherecommendationsandforfacilitatingimplementation.Oneoftheuniquethingsof
Intertekisthatitisalwayspreparedtofurthersupportitscustomerswithimplementationofits
recommendationsfromthebenchmarkingstudy.Intheareaofchangesinoperationofthelaboratory
theserecommendationsareimplementedwiththehelpoftechniqueslikeSixSigmaand/orKaizenchange
management.

Intertek Consultancy Services

http://www.intertek.com/outsourcing/laboratory/benchmarking/

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Becausethistypeofbenchmarkingcoversallaspectsoflaboratoryoperationandnotonlyfocusesonthe
testingitselfbutalsoonsampling,logistics,robotization,automation,measurementsnearorintheplants,
LIMS,quality,instrumentation,sampleretain,consumablesetcitwillbeobviousthataparticularstudywill
notberepeatedthenextyear;itisabenchmarkwithpeersandnotsomuchaimedastomeasureprogress
inefficiencyofasinglelaboratoryoverconsecutiveyears.Suchprogresscanbeverywellmeasuredand
trackedbymeansofasetofmeaningfulKeyPerformanceIndicators.Itisnotverycommonforacompany
centralcontrollaboratorytoreportitsperformancetoitsmajorstakeholdersinadetailedwaybutbelowa
schemeisattachedinwhichasetofKPIsandtypicalcorrespondingvaluesareprovided.

Service Pass/Fail KP Measure

Samples meeting agreed SLA Turnaround times >95%

Samples analysed to work schedule >99%
Justified customer complaints per month < or = 1
Support for unscheduled work requests >90%
Response time for process critical support requested >50% within 30 min
Process critical instrument down time <2 days/instrument/year
Quality
Maintain key quality/environmental certificates/accreditations fully compliant
Safety
Injury frequency rate and LT frequency rate <site average
Financial
Decrease of annual spent by reducing activity >5%
Decrease contractual activity prices by increasing efficiency >2.5%

BenchmarkingandLaboratoryOutsourcing

Afterthebenchmarkstudy,dependinguponcircumstances,corporateandindividualownersof
laboratoriesmayevenconsidertransferringvariousanalyticaltestingandlaboratoryfunctionstoIntertek
oroutsourcethecompleteoperation.Alsointhiscase,thebenchmarkstudyistobeconsideredasan
importantfirststepinsuchanevaluation.

Benchmarkingexercisescanalsobeconductedtotesttheoppositegoal:whenmanagementconsiders
outsourcingthelaboratoryonecandecidetoconductabenchmarkstudytoassesstheperformanceofthe
labtounderlinethattherearereallynogainstowinbyoutsourcing.

Inanotherwhitepaperwefocusontheinsandoutsofoutsourcing.

Intertek Consultancy Services

http://www.intertek.com/outsourcing/laboratory/benchmarking/

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AboutIntertek:

Intertekisaleadingproviderofqualityandsafetysolutionsservingawiderangeofindustriesaroundthe
world.Fromauditingandinspection,totesting,qualityassuranceandcertification,Intertekpeopleare
dedicatedtoaddingvaluetocustomersproductsandprocesses,supportingtheirsuccessintheglobal
marketplace.Intertekhastheexpertise,resourcesandglobalreachtosupportitsnetworkofmorethan
1,000laboratoriesandofficesandover30,000peopleinmorethan100countriesaroundtheworld.
IntertekGroupplc(ITRK)islistedontheLondonStockExchangeintheFTSE100index.www.intertek.com

Abouttheauthor:

DrNiekKloosterisaseniorglobalbenchmarkingconsultantwithIntertekplc.Hehasbeenlaboratory
directorinQCandR&Dlaboratoriesofseveralmultinationalsinwhichpositionhedrovebenchmarking
exercisesofhisownlaboratorieswiththoseofothers.HewaschairmanoftheDutchAnalyticalLaboratory
ManagersAssociation.

Seealso:

www.intertek.com/outsourcing/laboratory/benchmarking/magazinearticle/

www.labmanager.com/?articles.view/articleNo/3970/article/TheDevilintheDetails

Intertek Consultancy Services

http://www.intertek.com/outsourcing/laboratory/benchmarking/

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