A hundred inventory locations, and no way to cost a service.

The challenge

Hybrid revenue models break cost systems in ways single-model businesses never encounter. Capital equipment, consumable kits on a recurring cycle, and internal lab services each behave differently. Different cost structures, different margin logic, different questions from investors. A public company has to report on all three credibly.

The ERP made that close to impossible. Inventory had been configured so that each location within a warehouse or lab was set up as its own inventory location, more than a hundred of them. Every item carried a cost by location, so a cost change meant touching the item across every location it existed in. BOM integrity was fragile, cost reporting was slow, and no one could reliably say what a lab service actually cost to deliver.

The services line was the fastest-growing part of the business and the least understood part of the cost structure. Those two facts were related.

The work

Inventory architecture rebuilt

The full NetSuite inventory module implementation consolidated 5,000+ SKUs across more than 100 locations into a two-location bin architecture. Bins carry the physical granularity; locations carry the costing. Directed start to finish, validated in a sandbox environment before migration so the transaction behavior was proven rather than assumed.

That single structural change is what made everything downstream possible. Cost by location stops being a hundred-way maintenance problem and becomes a two-way one.

Bottom-up costing for lab services

The service and delivery cost structure was modeled from the ground up rather than inferred from a margin assumption, defining which cost elements belong to a service, how consumables and labor attach to it, and what data has to exist for the number to be trusted quarter after quarter.

The services segment grew to roughly a quarter of total revenue with a managed margin profile. Costing it properly is not the only reason that happened, but you cannot deliberately scale a line whose unit economics you cannot see.

A variance process that runs without you

Purchase price variance and standard cost roll were left as a documented standard operating procedure rather than institutional knowledge. It runs on a defined cadence in the close window, flags any variance at or beyond a $1,000 materiality threshold, and requires per-item evidence before a cost is touched: the governing purchase order, the item record before update, the cost by location after.

The cost roll itself is specified end to end: standard cost version, planned rollup, revaluation against a named adjustment account with assemblies revalued from components. It closes by tying the delta through subledger, balance sheet, and income statement. Written so the next person can run it correctly on their first attempt.

BOM integrity and reporting

BOM costing and labor modeling across a technically complex product line, with cost reporting workflows that supported SEC reporting obligations and improved inventory valuation.

The result

What transfers

Two patterns generalize well beyond biotech.

The first is architectural. If your ERP treats physical granularity and costing granularity as the same thing, you will get one of them wrong, usually costing, because the warehouse wins arguments about where things physically are. Bins and costing locations are different concepts and should be configured as such.

The second is about mixed business models. Any manufacturer adding a service line, a recurring consumable, or an aftermarket revenue stream inherits this problem. The instinct is to let the new line ride on the existing cost structure until it is big enough to warrant its own. By then it is big enough that getting it wrong is expensive, and the historical data needed to fix it properly was never captured.