In-house labs make sense in era of mounting pressure on supply chain, NOW Foods' Secrist says

By Hank Schultz

- Last updated on GMT

Aaron Secrist, NOW Foods
Aaron Secrist, NOW Foods

Related tags Supply chain Dietary supplement

The mounting pressure on supply chain verification means it’s time for more companies in the dietary supplements industry to consider building and staffing their own labs, said NOW Foods exec Aaron Secrist.

Secrist, who is the company’s director of quality and R&D, spoke at the recent Dietary Supplement Analytical Summit put on by the United Natural Products Alliance in Salt Lake City.  The summit, which had a more narrow focus of looking at which DNA testing procedures can be fit for purpose and how they might be integrated into existing quality management paradigms, also touched on a more basic concern for the industry, Secrist said.

“Verifying the supply chain is I believe the biggest issue facing the industry,” ​Secrist said. “The biggest issue is the globalization of the supply chain that has happened over the last 10 or 15 years.”

New regulations coming down the pike, specifically the way in which the Food Safety Modernization Act will finally put some of the same obligations on ingredient suppliers that manufacturers have been under since the advent of GMP rules under Part 111, have been seen by many in the industry as a step towards getting the supply chain picture under control. Secrist said the new regs might help, but will be far from a panacea.

“A lot of people think FSMA will solve all of our supply chain problems. This will not solve our problems any more than Part 111 solved the problems with our industry. There will still be companies that will not comply,” ​he said.

Why set up your own lab?

In light of those risks, Secrist said it is time that more companies consider bringing certain testing procedures in house. NOW Foods has operated its own extensive lab at its Bloomingdale, IL main facility for a number of years.  That experience, Secrist said, taught the company the plusses and minuses of having these function in house. Chief among these is peace of mind, followed closely by an increase in operational flexibility. New products can be formulated and launched without having to wonder if the contract lab a company is working with can run the methods needed to verify a new suite of ingredients.

“If you send a new method to a lab, I can guarantee that method will not be validated within 10 or 15 days,”​ Secrist said. “The main reason to build your own lab is control. Nobody knows your products like you do. And it helps you adapt quickly to changing priorities.”

One of the things that has set NOW Foods apart has been its ability to cost effectively offer a huge list of SKUs. Much of that comes from the company’s sophisticated warehouse and shipping systems. Making sure all of the tests needed on those products, from raw material intake to finished product release testing, does not form a bottleneck is a big reason for having your own lab, Secrist said. It’s expensive to set up, but can potentially cut costs in the long run over having a raw material batch or a finished lot of goods gather dust awaiting outside lab results to come back.

“Cycle time is critical. If you are trying to shave margins one of the best ways to do that is by managing inventory. If you can turn samples around in two days that’s a huge competitive advantage,” ​he said.

Lab construction considerations

Secrist said there a host of things to consider when building a lab.  In the planning stage, adequate thought must be given to growth potential. New equipment might be eventually wanted or needed, and room needs to be provided for the people operating that equipment. Trying to cram too much into a space makes for an inefficient working environment, one in which hard-to-recruit lab personnel won’t be happy in working in for long, Secrist said. Simply walling off the back corner of the warehouse might be inexpensive to start, but might prove costly in the long run, he said.

In addition, space needs to be provided for lab consumables and for sample prep and storage. Labs also have specific needs for dedicated ventilation systems, safety equipment such as eye wash stations, a need for a high purity water source, and they generate waste that needs special handling.

Secrist said not every test needs to be brought in house.  Some procedures might require especially expensive equipment.  An ROI analysis needs to be conducted on each test considered.  That analysis needs to take into account the criticality of the ingredients being tested, looking for their potential to create a costly bottleneck, he said.

Finally, there is the most delicate portion of the equation, that being the people a company needs to recruit to staff its own laboratory. A number of companies in the dietary supplement industry are found in out of the way locations that usually have some historical context, having been the hometown of the founder, for example. Secrist said with the competition for quality control personnel within the industry, finding highly trained people willing to work in and remain in rural locations is becoming more and more difficult. If the company’s manufacturing facility must remain where it is, Secrist said a remote lab, while not ideal, could be considered, especially if it can be located near a university that could offer some partnership opportunities.

What should you spend

Secrist said in his discussions with responsible members of industry he had developed some metrics about quality control expenditures. Most responsible companies are spending as much as 8% to 10% of revenue to start as they begin to build their own lab operations. That declines to about 4% to 6% of revenue over time.  Annual capital expenditures on this function average about 0.5% to 1% of revenue, he said.

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2 comments

10 to 15 Days Validation

Posted by Kent Oostra,

Not every lab takes 10 to 15 days to validate a method. We pride ourselves on our customer service and one of those services is turn around time. We aim for a 2 to 5 day turnaround. Not all tests can be done in 2 to 5 days, but routine microbiological, heavy metals, fatty acid profiles and others can be. It may not be as cost effective as batching samples as other labs do, but it makes a difference to my clients. Also, maybe look at what a lab is charging. Large labs charge a lot more for work due to their large overhead. A USP 2021/2022 micro panel shouldn't cost over $70 a sample. If your paying more, you didn't research all your options.

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If you're having to wonder...

Posted by Peter Kendrick,

If you are "having to wonder if the contract lab a company is working..." then you're working with the wrong lab...
Customers can also be concerned that "the fox is watching the chicken coop" if you don't use outside validation. Just a thought...

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