Diagnostic Consulting Network (Carlsbad, CA)
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IVD manufacturers hire consultants for various reasons. The challenge lies in selecting and making the most effective use of the right consultant. (Photo by Digital Vision)
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As the IVD industry continues to evolve and product complexity to increase, the range of disciplines in which a company must have competence in order to market a product efficiently and effectively today is becoming broader. Many of these are unfamiliar to IVD companies, particularly the smaller companies common in such segments as point-of-care testing. Additionally, mergers and acquisitions are streamlining company workforces and reducing in-house resources. These factors have generated opportunities for providers of consulting services because they increase IVD companies’ reliance on their external expertise.
Outsourcing has become the solution for many companies seeking to overcome their lack of internal resources in central disciplines such as product design and development, manufacturing process development, equipment specification, and reagent and reader development and integration, as well as in other areas, including regulatory affairs, market analysis, project management, and product branding. The outsourcing of critical tasks can bring numerous practical benefits to a company attempting to develop, produce, and sell an IVD product. However, this practice also brings potential risk in terms of control, cost, and management burden.
So, despite the general trend in the direction of outsourcing noncore competencies, the first question a manager must answer who is faced with the choice of developing resources internally in order to address a particular task or using an outside consultant is whether outsourcing is the right way for the company to go.
Reasons for Outsourcing
The reliance on external resources to achieve specific goals is evident in companies of all sizes within the IVD industry, and the reasons for bringing consultants on board or outsourcing specific tasks are numerous.
Small companies generally can easily identify a need to bring in outside resources. They may be ill equipped for technical problem solving, product development, marketing, branding, manufacturing, education, or any of a number of other areas. Such companies know they do not have the internal expertise or the resources to address a particular function that they may not desire to bring in-house permanently.
For larger companies, the decision whether to use external resources or internalize new resources can be more difficult. Often, this decision is budgetary or based on organizational arrangements. However, it can also be driven by such factors as the confidence or experience of the company as a whole within the IVD market or its segment of that market, and the availability of skilled personnel who might be hired onto the staff. The issue of confidence or experience applies to companies just entering the industry or a new IVD market segment, while the latter issue is problematic in certain technical segments of the industry, such as point-of-care, where the potential-employee pool of experienced personnel is relatively small.
There are numerous situations in which hiring a consultant makes sense for an IVD company of any size. For example, the organization may lack the expertise to solve a problem. In this case, a consultant can bring new skills, perspectives, strategies, or creative thinking to the big picture. Some consultants and service organizations can deliver access to technology, research, program models, or mission-critical practices and skill sets from other industries or market segments that are not otherwise available.
Outsourcing may enable an IVD company to exploit such resources as platforms for rapid tests with clear license for use; new labels; sample-handling or conjugation strategies; and refined manufacturing technologies. Additionally, when people possessing the experience necessary to solve highly technical problems efficiently are difficult to find and hire in a timely manner, calling on a consultant or service organization may be the only suitable option.
The company may need an objective point of view. This is particularly important when the organization is moving in new directions, either through acquisition or through internal evolution. Companies entering the IVD industry from other industries often need this kind of assistance. Gaining a full understanding of the intricacies of the IVD industry with respect to its technologies, regulatory requirements, and market dynamics can be a daunting task for newcomers involved with product development, materials supply, or the manufacture of finished products.
The company may be lost because of a lack of expertise in several related project areas. Consultants or consulting organizations typically can be employed to address multiple issues the sponsoring company may have, however, adding significant value in each area. They often include other consultants. Working with the right person or group—which, of course, is the objective of a careful consultant search—the hiring company has a ready conduit through which other required expertise may flow. That is, because of their experience in the industry and their networking abilities, consultants operating in one area can find other good consultants to handle other project functions.
Managing the Interaction
Once the decision is made to go the consulting route to address a particular need, the IVD company should apply certain well-defined principles in managing the interaction. Consulting or outsourcing arrangements in this industry can vary from simple hourly-pay agreements between a corporation and an individual to highly complex, multiyear, project-based contracts between companies. No matter what the scale of the arrangement, the sponsoring company should carefully manage the interaction with the consultant from the very early stages of the project all the way through its completion in order to ensure that goals are met on time and within budget.
A simple principle to apply from the outset is this: For both sides in a consulting interaction, fully understanding the needs of the partner is key to establishing a productive relationship. With respect to the service provider, familiarity with the sponsoring organization and what it expects from the arrangement will be essential if the consultant is to supply effective, high-quality service. The sponsor, for its part, should accurately comprehend the capabilities of the consultant. Also key is developing and maintaining realistic expectations of the outcome of the interaction, and communicating those clearly both to the consultant and to the company personnel with whom the consultant will be involved.
Best Practices for Success
A decision to invest in consulting assistance is most likely to result in eventual project success if certain practices are followed in selecting and working with a consultant.
Plan Ahead. It may take time for a company to locate a consultant to fit its needs. Also, consultants’ schedules often are booked far in advance. Consultant selection should not wait until the practical need arrives.
Write a Request for Proposal. The request for proposal (RFP) outlines what the company wants the consultant to do, the qualifications and experience it desires in the contractor, the project budget, and the procedure and deadline for submitting a proposal. Even if the project is small, companies will find that exercising the discipline of writing even a one-page RFP is worth the effort.
Assemble a Pool of Candidates. The hiring company should inquire among other groups or companies that have employed consultants in a similar role. The most promising candidates for a contract are those that have worked successfully with other companies in a similar area of activity.
Check References, if Possible. In the IVD industry, many consulting relationships are governed by strict nondisclosure agreements. Thus, it is not always possible to check consultants’ references. The sponsor should be considerate of this fact. However, there are other ways to check a candidate’s credentials. Some of these are literature searches in industry or trade journals, employment history checks to establish experience, and patent searches.
Set Clear Expectations. Both sides in the relationship should know what each is responsible for achieving. Time spent in negotiating and planning the project is time well spent. Ensuring that both parties are speaking the same language and have the same definitions of terms employed in the contract is a basic, but often overlooked, element of the process of establishing a consulting arrangement.
Listen to Recommendations. Often, as a result of internal company demands, consultants are forced down paths they do not wish to travel and which they will recommend against following. The sponsoring company is the customer in the relationship, so the consultant will be obliged to listen to its representatives rather than the other way around. That may be good or bad, but IVD company managers should judge carefully when the consultant recommends against a course of action. The consultant was hired, after all, because he or she is an expert. “I told you so” is not a phrase anyone ever wants to hear or a consultant ever wants to feel tempted to say.
Obtain Company Buy-In. Full-time staff and company managers must regard the hiring of the consultant and the goals of the arrangement with approval. Acceptance of the argument that the skills of the consultant are needed should extend across the entire development and management group, because resistance to the presence of a consultant can doom a project to failure. The expectations of the sponsoring manager have to be communicated clearly within his or her own organization, as do the goals and reports of progress of the project. The cooperation of the interacting personnel and of senior management within the IVD company needs to be secured and maintained throughout the project. This can require significant effort from the person initiating and managing the project, effort that has to be exerted both up and down the management chain.
Prevent Mission Creep. Midproject changes in goals—what is ominously called mission creep—need to be controlled carefully. In longer-term projects, regular reviews of initial project inputs, goals, and work plans, along with comparisons of them with current project directions and outputs, are useful in preventing the project from creeping outside of its originally defined boundaries.
IVD companies that are clear about their needs, that take the necessary time to find the right consultant, that carefully negotiate roles and expectations, and then monitor the results generated by the consultant have a good chance of enjoying success with their outsourcing arrangement. They are likely to see a positive return on their investment in consulting services.
Conclusion
Outsourcing of key design and development functions, and of certain managerial elements of product or process development, is more and more becoming a necessary element of IVD manufacturing programs. If managed carefully, interactions between IVD companies and outside consultants can be very positive for both partners, as well as for the product and, ultimately, its consumer. A formal arrangement with a consultant is among the most critical relationships that developers and manufacturers of IVD devices can learn to manage, as it provides great opportunities for the broadening of a company’s abilities and horizons without requiring an expansion of internal resources and the increase in operating expenditures that goes with it.
With the outsourcing of various specialist disciplines comes both risk and opportunity. However, the bang for the buck can be significant if everything is handled correctly. There is no magic formula for ensuring that a company finds the perfect consultant and that the consultant performs to the highest expectations. But attention to a few key elements of the interaction will help a company achieve its goals.
Hire the right consultant at the right time for the right reason. Get the full agreement in writing. Manage both the consultant’s work on the project and the relationship between the company and the hired expert carefully. The end goal is the generation, approval, and profitable sale of safe and effective products for the IVD market. Consultants and outsourcing organizations can help to get companies there. If service providers with experience, proven track records, and appropriate skill sets are chosen, and if everyone keeps their eye on the ball, a company’s outsourcing and consulting arrangements can be a critical element of its success.
