January 2012

BenchmarkingofAnalyticalLaboratories

byDrN.Th.M.Klooster

Theadvantagesofbenchmarkingandthebenchmarkingprocess

Intertek Consultancy Services

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

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Contents

ExecutiveSummary

Introduction

WhyshouldIbenchmarkmylaboratory?

HowcanIproduceintheleanestoperationwithoutcompromisetoqualityandsafety?

Benchmarkingbywhom?

Laboratorybenchmarkingperformanceevaluation

AboutIntertek

....

Abouttheauthor

BenchmarkingandLaboratoryOutsourcing

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:

size

Benchmark
efficiciency

Benchmark

efficiciency +
technology

Benchmark
strategy

Subcontract?

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
Space utilization

Lowest cost of ownership

Reduced risk of non compliance

Business focus

Other intangible benefits

Simplification of management structure

Reduction in IT complexity

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

Samples meeting agreed SLA Turnaround times

Samples analysed to work schedule

Pass/Fail KP Measure

Justified customer complaints per month

Support for unscheduled work requests
Response time for process critical support requested
Process critical instrument down time

>95%
>99%
< or = 1
>90%
>50% within 30 min
<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
Decrease contractual activity prices by increasing efficiency

>5%
>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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