For years, food companies have reached outside their organizations to contract testing laboratories for help with both safety and quality testing. Contract food testing organizations have their own facilities, personnel, and resources to perform testing on ingredients and finished products for food and beverage companies. The reasons to use these third-party testing organizations are many, but the main drivers have been to help the food companies address increasingly stringent testing requirements and to reduce cost.
Since the 1960s, the use of contract laboratories for food testing has dramatically increased, to the point that now the industry in projected to reach USD 24.6 billion by 2023, from a CAGR of 7.7% from 2018. The key test types that fall to these contract testing laboratories include microbiology (which accounted for approximately 28% of the testing market in 2018), residues and contamination, chemical and nutritional testing, allergens and GMOs.
The increase in outsourcing to these contract labs has been driven in part by increasing stringency in regulations but also by the increased complexity in requirements for many different food tests, making it challenging for food companies to manage alone.
One way you can attain the benefits of using third-party services without the drawbacks of moving operations offsite is insourcing, where services are performed by a service partner embedded within your facility. Many companies find this model offsets some of those concerns associated with outsourcing, specifically communication management and confidentiality.
Because work is not sent offsite, it’s easier for you to monitor insourced work. The communication is face to face, rather than via conferencing and site visits. There are no challenges with different time zones, as the service partner is embedded in your facility and able to communicate in real time. Not only is communication easier, but it also faster and enables more efficient decision making. All work is also performed within your IT infrastructure and firewalls, improving your control over IP. Your own quality systems and protocols can be followed by the insourcing partner, rather than recreated by the contract testing laboratory.
Insourcing also contributes to better utilization of your equipment and resources. Mergers and acquisitions within the food and agriculture industries means that there may be excess capacity in some locations. Insourcing can absorb that excess, making better use of capital. While outsourcing relieves you of capital expenditures – you use the contract testing organization’s instrumentation and equipment – the same can be said of some insourcing arrangements. Even if you use your own instruments, those costs can be moved from capex to opex when an insourcing service provider is involved. These attributes of insourcing can save time, money, and risk.
How to Choose
Even before choosing between outsourcing or insourcing, it’s important to determine what activities will be contracted out. Very often, the decision is made to initiate contract services for less frequent, more technically complicated or higher operator risk activities. The thinking is that the more complicated and risky analyses - which are often not the everyday, routine analyses - can be more efficiently performed by a third-party that’s skilled in handling toxic or pathogenic materials, managing complex analytical capital equipment, training staff in highly-skilled techniques and lowering costs.
Once the specific work to be contracted out is identified, it’s important to understand the timelines you need for results and to determine what level of control you’d like to maintain.
The answers to these questions can offer direction towards outsourcing or insourcing:
- Lower frequency testing, higher analyst health risk, high testing complexity, and the need for accreditation to meet regulatory requirements are more suitable for outsourcing e.g pathogen testing, pesticide residue testing, confirmatory testing of presumptive positives from screening tests.
- Point controls in manufacturing, tests with very tight timelines and ingredient performance verification are better suited for in-house testing.
Outsourcing with a contract testing organization can be an excellent solution if you’re seeking help with:
- Complex sample preparation or instrumentation requirements
- Testing programs to verify your food control system is working
- Low level detection of contaminants or residues
- Authenticity studies
- Specific label claims requirements for fortified vitamins and minerals
- Method development for new tests
These types of lab environments benefit from the flexibility and certainty in terms of expertise and technology that comes with outsourcing approaches.
Insourcing with a services partner who can perform services within your facility offers benefits when you need:
- Greater degree of control, using internal quality systems and protocols
- Intellectual property protection through internal oversight
- Immediate access to results
- Reduced time managing third parties
- Improved and timely communication of project deliverables
Another factor to consider is the hidden costs involved in the management oversight for outsourcing. It’s less costly to manage a partner embedded in the organization than one that might be on another continent. In effect, the insourced partner becomes an extension of your laboratory environment.
Staffing agencies offer a most basic form of insourcing in that they can provide qualified personnel for short-term needs to augment your staff for a specific project or find talent with a specific skill or area of expertise. Typically, companies set limits on the tenure of contract workers; therefore, this solution often lasts no longer than 24 months. This results in constant turnover of employees and significant training requirements each time a new employee is onboarded.
A managed services delivery model can last indefinitely, as you’re not receiving “bodies doing experiments,” but instead work with a partner who’s accountable for results. In this model, the service partner brings its own people to provide services to achieve a guaranteed outcome — number of samples or experiments per day, for example. This is established through a comprehensive statement of work that includes a service-level agreement.
An emerging model is the lab as a service (LaaS) approach. This goes beyond managed services, in that LaaS brings everything required to deliver on the service-level agreement – from people and processes to consumables and instruments. Onsite LaaS is a turnkey solution, somewhat of an internal contract testing lab.
Whether outsourcing or insourcing, there are benefits to aggregating as many services as possible with a single vendor. Managed services and LaaS insourcing models afford you a greater range of services that can be brought in-house. When one partner is responsible for and owns services – from the management of assets to the oversight of IT to the harmonization of standards – it achieves a holistic view of your organization.
The partner can use that insight to recommend ways to improve productivity or maintain compliance, for example. It also creates much greater flexibility in the deployment of resources to execute the agreed-upon services. The synergies of a single partner, with its teams working across an organization, reduces finger pointing and encourages problem-solving. If multiple vendors are involved, the accountability for any problem can often be time consuming and difficult to discern.
A single-vendor solution greatly simplifies the engagement for the food company – from creating a single point of contact to simpler processes and easier management oversight and communication.
OneSource Laboratory Services from PerkinElmer is a portfolio of integrated services that enable and accelerate scientific and manufacturing outcomes. As the services arm of PerkinElmer, OneSource brings the full force of PerkinElmer’s leadership in scientific instrumentation and laboratory equipment to bear in the servicing of food customers.
- Food Safety Testing Market, Markets and Markets Report, 2019: https://www.marketsandmarkets.com/PressReleases/food-safety-testing-market.asp
- Food Safety Testing Market Size, Share & Trends Analysis Report By Test (Allergen Testing, Chemical & Nutritional Testing), By Application (Meat, Poultry, & Seafood Products), By Region, And Segment Forecasts, 2019 – 2025, Grand View Research, 2019: https://www.grandviewresearch.com/industry-analysis/food-safety-testing-industry
- The Food Contract Lab Business Approaches 50, Tom Weschler, Food Safety Magazine, 2014: https://www.foodsafetymagazine.com/blog/the-food-contract-lab-business-approaches-50/