by Linda Knopp
Forget the pencils, pens and paper clips. The storeroom at the Southwest Michigan Innovation Center in Kalamazoo, Mich., instead stocks chemicals, solvents and other scientific supplies needed by its early-stage life science clients.
Since June 2004, SMIC has provided an on-site storeroom with a variety of refrigerated, frozen and room-temperature research supplies to give clients a convenient, low-cost alternative to maintaining their own inventories. The storeroom contains supplies most frequently needed by incubator clients, so the stock varies as research projects change.
By reducing the amount of standard scientific supplies clients need to store, the program allows companies to fill their labs with the equipment and researchers they need to grow their firms. “Having an on-site storage room means that clients will be less likely to halt research due to unavailability of some scientific supply,” says Sandra Cochrane, SMIC’s chief operating officer. “By having critical supplies on site, client companies can weather the occasional missed delivery or avoid the cost of rush shipments of necessary products.”
Many of the incubator’s life science clients regularly purchase supplies through the storeroom, both as a matter of convenience and of cost, Cochrane says. During the 2005 calendar year, SMIC and its clients saved $266,000 by purchasing scientific supplies through the storeroom. Individual savings ranged from 11 percent to 59 percent, depending on the item.
In recognition of the cost-savings and convenience the program offers SMIC and its clients, NBIA awarded the incubator’s on-site storeroom for scientific supplies the 2006 Incubator Innovation Award.
SMIC officials kicked around the idea of offering an on-site storeroom even before the incubator opened in 2000, but early talks with a national vendor didn’t prove fruitful. “The vendor wanted us to buy the stock ourselves, but we didn’t want to make that investment,” Cochrane says.
The program came to fruition a few years later, though, when SMIC struck up a deal with Sigma-Aldrich, an international life science product supplier who worked frequently with the incubator and its clients. Under the agreement, SMIC provided a secure room; a locking, glass-front cabinet; and utilities and Internet access, while Sigma-Aldrich provided the stock, the personnel and the equipment – a refrigerator, a freezer, two chemical solvent cabinets and a $60,000 vending system. The vendor also handled all invoicing.
Unfortunately, Sigma-Aldrich discovered within a few months that the project wasn’t as profitable as the firm would have liked. “They were more than willing to give it a try,” Cochrane says, “but they just didn’t achieve the numbers they needed to continue with it.”
But SMIC was prepared. The incubator had negotiated a one-year guarantee with Sigma-Aldrich, which allowed time to work out a transition plan. In fact, it was the Sigma-Aldrich representative who managed the program who approached SMIC with a solution: turning over the storeroom’s management to Single Source Procurement – a start-up firm and SMIC client that already worked with the incubator on other procurement projects. During the transition, Sigma-Aldrich donated the storeroom equipment to the incubator.
Since taking over management of the storeroom, Single Source Procurement has expanded the program to include products from other vendors and hired a part-time storeroom manager who is on site each business day from 10 a.m. to 2 p.m. to answer questions and assist with special orders. Outside of those hours, there generally is someone in Single Source Procurement’s office to help clients attain goods not typically stocked in the storeroom, such as microscopes, sterilizers and other equipment.
Because Single Source Procurement has negotiated discounted prices with vendors, SMIC clients – and the incubator itself – can save money by shopping the storeroom. “The clients love it,” Cochrane says. “They have the convenience of being able to get the supplies they need 24 hours a day, and they’re able to save money. Single Source Procurement [which is owned by a former procurement manager at pharmaceutical giant Pfizer] has the connections and relationships to know the types of discounts vendors can give and that pays off.”
Keywords: facility management, technology incubator
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