In a recent episode of the Life Science Rundown podcast, Nick Capman spoke with Eric Busenburg, president of Euro-American Worldwide Logistics, about a critical challenge facing life science manufacturers: running out of storage space for raw materials and finished goods.
Euro-American is a family-owned business that’s been providing premier storage and shipping solutions for the life sciences industry for over 55 years. Headquartered strategically in Worcester, Massachusetts, the company offers cGMP temperature-controlled storage environments, GDP-compliant global shipping, and customs brokerage services to life science manufacturers across the state and beyond.
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Summary, Key Points, and Practical Takeaways
This interview has been edited for clarity and length.
Nick Capman: What's the main storage challenge facing life science manufacturers today?
Eric Busenburg: It's a common problem and typically a good one to have. Manufacturers and CDMOs often don't know exactly when their next big PO will come across or when they'll have additional batch runs to manufacture. Based on estimates, they build their infrastructure size, but we all know that can fluctuate. It's a typical problem that manufacturers face when they start to succeed. As growth occurs, one of the hurdles they'll face during that growth phase is the logistics people saying we're out of space. This can happen suddenly, catching companies off guard. It's particularly challenging when manufacturers face unexpected large purchase orders or need to run additional batches, which can quickly push them beyond their estimated storage capacity.
What options do manufacturers have when they're running out of storage space?
They're faced with two primary options. First, they can build additional infrastructure. This gives them complete control but comes with significant time and cost commitments. The second option is to outsource to a third-party provider like ourselves. This offers flexibility and immediate capacity but requires finding a provider that meets quality standards. We've also seen a third option, especially during the pandemic. Some clients decide to do a build-out, but in the interim, they need to use a facility like ours. We've partnered with manufacturers so they can use our facility as a satellite, third-party materials management facility while they are building additional infrastructure.
What are the quality considerations when choosing between building and outsourcing?
Quality departments typically prefer keeping everything in-house under their own roof. And we agree, that's the best option. It always is. The unfortunate part is it's not realistic all the time. There are hurdles you'll face if that's the option you choose. Our challenge is how to get as close to in-house as possible without it actually being in-house. We work closely with the quality and supply chain teams to find what hurdles or friction points exist. That's what we take as our next resolution that we have to meet. Throughout the 55 years we've been in business, we've been addressing these non-stop. We've gotten pretty good at keeping things as closely aligned as possible to make ourselves a true extension of their manufacturing facility.
How long does it typically take to build new storage infrastructure?
In general, the time commitment would be one to three years minimum, depending on the size of the facility. There are still lead time issues on sourcing materials needed to build additional infrastructure. Just to give you one example, backup generators typically would take one to three months, and they're still out a year. This extended timeline can be particularly problematic for companies needing to accommodate immediate growth or new clients. If a CDMO needs to take on new clients and their clients need immediate batch runs, they don't have the luxury of waiting one to three years for you to build additional infrastructure.
What are the advantages of outsourcing storage?
Outsourcing offers immediacy. You can move in immediately and support growth after going through the necessary quality checks. It also provides flexibility. Your time commitment could be three to five years with a satellite facility instead of a much longer commitment if you're putting capital into additional facilities. Plus, you get immediate access to expertise without having to hire and train new personnel. The move-in ready availability we provide includes not only the infrastructure but also all the people working here providing expert care and service. This addresses another hurdle the industry is facing: the difficulty in finding and training the right people. If you're outsourcing, you're outsourcing to somebody already with that expertise. This reduces your costs, reduces your risk, and eliminates the need to train new personnel to support growth.
How important is the location of a third-party storage provider?
Proximity is certainly one of the key factors. What we find is that quality's appetite is one hour. They want to be able to see, touch, and feel their products and materials. We're intentionally centrally located, which puts us within one hour of every manufacturer in Massachusetts. This proximity is crucial for quick access to materials and products, minimizing disruptions to manufacturing processes. We have our own fleet of temperature-controlled vehicles, they're validated, and we get them approved through each client. We guarantee that 24 hours a day, seven days a week, we will get those materials to the client same-day. This removes one of the risks. We've had clients call us at two in the morning, and we have processes in place to respond immediately.
What should manufacturers look for when selecting a third-party storage provider?
Proximity is huge, as I mentioned. Beyond that, size matters. If you're dealing with a big box store, you might be a small fish in a big pond. That introduces some risk because you're dealing with junior-level people typically. You want a provider that can offer more attentive care to each client. Look for direct access to high-level experts. For example, when dealing with imports, you should be able to talk directly with the Vice President of international logistics or the Quality Manager for quality issues. Also, look for validated temperature-controlled vehicles and same-day delivery guarantees. Make sure they can create customized quality agreements and align with your processes. We have a unique quality agreement with every client written by both ourselves and the manufacturer. This ensures that every process of theirs is being followed exactly at our facility.
How do the long-term costs of building compare to outsourcing?
The crossover point would be far enough out where it doesn't come into play for any short-term success the manufacturer is seeing. It would be beyond the 10-year point, much beyond that. We don't see the crossing of it being a decision factor. Another reason for this is the expertise you get. You have that expertise at your fingertips; they're already working with you. That's the same as what we're doing here. Not only is it the infrastructure, but it's also all of the people working here providing expert care and service. So where do those costs intersect? It's 10-plus years at least. And the typical success we're seeing in manufacturing, whatever is driving that growth, is around the 10-year mark.
How does outsourcing storage impact a company's ability to adapt to market changes?
Outsourcing gives you more flexibility to handle the ebbs and flows of the economy. When you have a shorter time commitment of three to five years, as opposed to a much longer commitment with your own facilities, you can adapt more easily to market changes. It comes down to the risk level. If you're committing to building infrastructure, that's a long-term commitment. You're banking on having a steady flow of growth to support that new facility you just built. With outsourcing, you can mitigate that risk. When you have those ebbs and flows of the economy that we're seeing right now, a three to five-year commitment is much more manageable than a longer-term commitment to your own facilities.
What's the future outlook for storage needs in the life science industry?
Massachusetts has done a great job of enticing these companies to come here. It goes back to the Patrick-Murray administration in 2008 with the $1 billion bill that put money towards R&D and infrastructure here in Massachusetts, along with tax incentives. The Baker-Polito administration continued it, and now Governor Healey has proposed a $2 billion continuance of the same. Massachusetts is here to stay; we are the hub. The biggest challenge now is we need the right support services to ensure we hit critical mass. And the only way to do that is we have to have supporting systems. Euro American is one of those supporting systems. As these manufacturers see growth and success, when they're faced with the two options of building themselves or outsourcing to a satellite facility, they give us consideration. We think it's a good option. The life sciences industry in Massachusetts is poised for continued growth, and companies like ours are part of the critical support structure needed to facilitate this growth.
Eric’s key takeaways:
Storage Planning: Anticipate storage needs beyond initial estimates. Be prepared for sudden increases in demand or unexpected large orders. Consider both short-term and long-term storage solutions.
Evaluating Storage Options: Consider building additional infrastructure for complete control. Explore outsourcing to third-party providers for flexibility. Evaluate a hybrid approach: outsourcing while building infrastructure.
Quality Considerations: Work closely with quality and supply chain teams. Develop robust quality agreements with third-party providers. Ensure third-party processes align closely with in-house standards. Look for providers who can act as an extension of your facility.
Time and Cost Analysis: Factor in 1-3 years minimum for building new infrastructure. Consider immediate needs vs. long-term projections. Analyze the 10+ year cost comparison between building and outsourcing.
Choosing a Third-Party Provider: Prioritize proximity (ideally within a one-hour radius). Consider provider size — smaller providers may offer more personalized service. Ensure direct access to high-level experts and decision-makers. Verify the availability of temperature-controlled, validated vehicles. Confirm same-day delivery guarantees, including 24/7 service. Evaluate their ability to create customized quality agreements. Assess their capacity for growth and scalability.
Leveraging Outsourced Expertise: Instead of hiring and training new staff, utilize the provider's existing expertise. Take advantage of the provider's industry experience and best practices.
Flexibility and Risk Management: Opt for shorter commitments (3-5 years) with outsourcing to adapt to market changes. Use outsourcing to mitigate risks associated with long-term infrastructure investments.
Integration and Communication: Establish clear communication channels with the provider. Integrate the provider into your supply chain processes. Treat the provider as an extension of your team.
Long-term Strategic Planning: Consider your company's future growth trajectory. Factor in potential market changes and industry trends. Align storage solutions with your overall business strategy.
Location Strategy: For Massachusetts-based companies, leverage the state's life science industry support. Consider the benefits of being near biotech hubs and support services.
Continuous Evaluation: Regularly reassess storage needs and solutions. Stay informed about new storage technologies and industry best practices.
Regulatory Compliance: Ensure all storage solutions meet necessary regulatory requirements. Keep abreast of any changes in regulations that might affect storage needs.
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Navigating Challenges in Raw Material and Finished Product Storage with Eric Busenburg