Make or Buy: A Strategic Decision for Lab Automation Instruments

WHITE PAPER MAKE OR BUY: A STRATEGIC DECISION FOR LABORATORY AUTOMATION INSTRUMENTS. 2 INTRODUCTION. The diagnostics industry is experiencing rapid growth and transformation, and automation plays a pivotal role in enhancing laboratory efficiency, accuracy and quality, while also enabling easier scaling of diagnostic testing. In this changing landscape, it is imperative for diagnostics companies to carefully evaluate whether to develop laboratory automation instruments inhouse, or to leverage external expertise by purchasing them. Strategic decision-making requires careful consideration of all the benefits and trade-offs associated with the ‘make or buy’ decision. This whitepaper aims to guide commercial leaders in diagnostics companies in making informed choices between in-house development and outsourcing when it comes to laboratory automation instruments. The paper analyzes the advantages and disadvantages of both approaches, and provides a comprehensive framework to aid decision-making, looking at factors such as cost, expertise, time-to-market and strategic alignment. By understanding the implications of each option, businesses can make well-informed decisions that optimize their operations and drive business growth. 1 Evaluate market landscape 2 Define strategic objectives 3 Analyze time-to-market and resources 4 Assess internal capabilities 5 Consider intellectual property 6 Conduct cost-benefit analysis 7 Mitigate risks 8 Stay flexible and agile 9 Optimize collaboration 10 Monitor continously ‘Make or buy’ strategic assessment. 3 ADVANTAGES. • Control and customization: Developing laboratory automation instruments in-house offers diagnostics companies full control of the design and customization, so that they can align instrument specifications precisely with their unique needs and workflow requirements. • Flexible cost allocation: Keeping the development of an automation instrument in-house allows more flexibility in allocating costs, based on the individual requirements of each project. • Change management: Developing instruments in-house with internal stakeholders may simplify change management if project scopes alter during product development. POINTS TO CONSIDER. • Resource intensive: Developing laboratory automation instruments in-house requires a significant investment in skilled personnel, research and development and infrastructure, as well as ongoing maintenance and support. • Time-to-market: Manufacturing complex laboratory automation instruments in-house can be time-consuming, potentially delaying market entry and diminishing any competitive advantages associated with rapid production. • Opportunity costs: Allocating internal resources to in-house development may divert attention from core competencies and other strategic initiatives. ADVANTAGES. • Access to expertise: Collaborating with an original equipment manufacturer (OEM) grants diagnostics companies access to their automation expertise and experience, to produce instruments that incorporate cutting-edge technologies and are guided by industry best practices. • Time and cost efficient: Developing laboratory automation instruments with established OEM partners can expedite timeto-market and lower the cost of ownership of the solution, as an OEM will already have existing infrastructure and digital support tools in place. • Scalability and flexibility: Outsourcing provides the flexibility to adapt to evolving market demands, leveraging the OEM partner’s ability to scale the production of instruments up and down. • Highest quality and reliability: Working with an OEM partner supports the highest levels of product quality, as they will already have rigorous quality checks and well-established quality management systems (QMSs) in place. POINTS TO CONSIDER. • Dependency on suppliers: Relying on poorly selected external partners can entail potential risks, such as quality control, supplier reliability and possible limitations in customization. • Intellectual property concerns: Outsourcing may involve licensing agreements or shared intellectual property, potentially limiting the exclusivity of new instruments and the resulting competitive advantage. • Strategic alignment: Selecting a suitable OEM partner requires careful evaluation of the compatibility between the proposed solution roadmap and the outsourcing company’s long-term strategic objectives. OPTION 1: ‘MAKE’ – IN-HOUSE DEVELOPMENT. OPTION 2: ‘BUY’ – OUTSOURCING AUTOMATION DEVELOPMENT. 4 STRATEGIC FRAMEWORK FOR THE ‘MAKE OR BUY’ DECISION. The following framework highlights all the factors to consider when choosing between developing laboratory automation instruments in-house or outsourcing them. The purpose of the framework is to help business unit leaders in diagnostics companies make informed ‘make or buy’ decisions regarding the development of laboratory automation. In turn, this will enable them to optimize their company’s resources, accelerate innovation and enhance their competitive position in the market. Evaluate the market availability of both options • Research and evaluate the availability of laboratory automation systems in the market, including offthe-shelf solutions and potential partnerships with technology providers. • Assess the scalability, reliability and compatibility of existing solutions with respect to your company’s specific requirements. • Consider the time-to-market advantage and potential risks associated with buying instruments or partnering with external vendors. Define the company’s strategic objectives • Clearly define the strategic objectives and long-term goals of your company in the context of laboratory automation development. • Determine the specific benefits and competitive advantages that you aim to achieve through laboratory automation. • Align your company’s strategic objectives with its overall business strategy and vision. Analyze implementation time and resources • Consider the time required for developing automation systems internally versus the implementation time associated with external development. • Assess the availability of resources – including skilled personnel, infrastructure and project management capabilities – required for successful implementation. Assess the available internal capabilities and resources • Evaluate your company’s existing internal capabilities, expertise and resources in laboratory automation development. • Identify your core competencies, and determine if they align with the requirements of developing laboratory automation systems. • Assess your company’s technological infrastructure, research and development capabilities, and talent pool in relevant areas such as robotics, software development and engineering. Consider intellectual property • Evaluate the potential impact of both options on your company’s intellectual property (IP) rights and trade secrets. • Assess whether developing automation internally allows better protection of proprietary technologies, or if partnering poses minimal risk to IP. Conduct a cost-benefit analysis • Analyze the financial implications of developing laboratory automation systems internally versus outsourcing to an OEM partner. • Consider factors such as total cost of ownership and potential return on investment. Mitigate risks • Identify potential risks and challenges associated with both the ‘make’ and ‘buy’ options. • Evaluate the risks associated with developing automation systems internally, such as delays, resource constraints and technological uncertainties. • Assess the risks associated with external sourcing, including vendor reliability and long-term support Flexibility and agility • Maintain flexibility and adaptability in the decisionmaking process. • Monitor industry trends and emerging technologies to identify opportunities for innovation or potential disruptions. • Adjust your strategic approach as needed, to ensure that your company remains competitive and is always Optimize collaboration • If you decide to partner with external vendors, identify key criteria for selecting the right partner(s). • Establish clear communication channels, collaborative frameworks and performance metrics to ensure an effective collaboration. • Define expectations, milestones and accountability measures to ensure the successful delivery of laboratory automation systems. Continuous monitoring and evaluation • Regularly monitor the progress and performance of laboratory automation systems. • Establish metrics to assess the effectiveness and efficiency of the chosen approach (‘make’ or ‘buy’). • Continuously evaluate the strategic fit, and revisit the ‘make or buy’ decision periodically based on changing market dynamics, internal capabilities and technological advancements. aligned with market demands. 5 CONCLUSIONS. When considering whether to ‘make’ or ‘buy’ laboratory automation instruments, business leaders must carefully weigh the advantages and disadvantages of in-house development versus outsourcing. While both options have their merits, outsourcing can provide significant benefits in terms of time-to-market, cost efficiency and access to expertise. If outsourcing is your preferred approach, selecting the right OEM partner becomes critical, as the success of the venture relies heavily on their capabilities and alignment with your company’s goals. Choosing an OEM partner requires a systematic evaluation process to ensure a successful and mutually beneficial collaboration. This checklist has been developed to aid commercial leaders in evaluating potential OEM partners. Careful consideration of all aspects of this decision can help your business to mitigate risks and maximize the potential benefits of outsourcing instrument development. It is crucial to approach the OEM selection process with due diligence and transparency. In conclusion, the ‘make or buy’ decision requires a thorough analysis of your company’s resources, goals and market dynamics. Well-informed decisions help you to navigate the complex landscape of laboratory automation instruments, positioning your company for success in the dynamic diagnostics industry. Realize the potential of sustainable growth Are you considering outsourcing the development of your next laboratory automation system? Tecan Synergence™ automation development services offer cutting-edge automation solutions and expertise to meet the evolving needs of the diagnostics industry. By leveraging Tecan’s extensive industry know-how, commitment to innovation, collaborative approach and forward-thinking mindset, our Synergence services enable customers to accelerate development today, and continuously adapt to drive more sustainable growth and business success into the future. LEARN MORE about our Synergence OEM services: partnering.tecan.com/synergence-oem-system-development • Control and customization • Flexible cost allocation • Change management • Resource intensivity • Time-to-market • Opportunity cost • Access to expertise • Time and cost efficiency • Scalability and flexibility • Dependency on supplier • Intellectual property concerns • Strategic alignment MAKE: In-house development. BUY: Outsourcing to a partner. www.tecan.com 402642 V1.1, 2023-10 Tecan Group Ltd. makes every effort to include accurate and up-to-date information within this publication; however, it is possible that omissions or errors might have occurred. Tecan Group Ltd. cannot, therefore, make any representations or warranties, expressed or implied, as to the accuracy or completeness of the information provided in this publication. Changes in this publication can be made at any time without notice. For technical details and detailed procedures of the specifications provided in this document please contact your Tecan representative. This brochure may contain reference to applications and products which are not available in all markets. Please check with your local sales representative. All mentioned trademarks are protected by law. In general, the trademarks and designs referenced herein are trademarks, or registered trademarks, of Tecan Group Ltd., Mannedorf, Switzerland. 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