Are you in a toxic relationship?

The warning signs are all there. They only come to you when they want something. They guilt you when you don’t give them what they want. You’re not allowed to talk to other people, but they are. I’m talking, of course, about your main dental supplier.

Now don’t get me wrong. Distributors like Henry Schein or Patterson absolutely create value in the early days of a pediatric practice. Their ability to coordinate equipment installation, help with design work, and provide valuable market intelligence makes them indispensable to a startup. Supplier sales teams are incredibly knowledgeable and can be a huge help to a newly minted practice owner.

The pitfall lies in the fact that once a dentist gets in bed with a supplier, they get comfortable. The dentist ignores the fact that they are paying way too much money for their supplies. The dentist ignores the reality that the supplier is now controlling contact with all of the manufacturers and gets to decide which practices get more time with them. And let’s be honest, the dentist admits to themselves that they really just don’t want to deal with the headache of supplies in general.

Before you go breaking up with your favorite rep, consider a few things.

1. A doctor/owner of a single location has an incredibly limited number of hours to spend on business activities outside of clinical practice. 99 times out of 100, a doctor’s time is better spent on driving new patient volume vs driving down their supply cost.
2. Lower cost doesn’t always equal higher value. Sure, you may be paying more for your supplies, but it’s also something you never have to think about. The suppliers understand this, and make the supply ordering process almost invisible, which is a massive help to doctors. The added value that suppliers bring to small practices is compensated for in the form of higher costs, and in many cases the added value they provide justifies the additional expense.
3. Supply chain management is hard. Just researching the best procurement system can take dozens of hours. Then you have to factor in the fact that you’ll choose the wrong system the first time (not that that’s ever happened to us, cough cough). So now you’ll have been through two staff trainings, two systems implementations, and countless headaches just to get a supply ordering system in place.
4. There are dozens of relationships to manage. At Alcan, we spend literally hundreds of hours a year working on our vendor relationships. Price is just one component of these relationships. WAY higher up the list are things like continuing education, local and national support, training opportunities for doctors, access to new products, and personal relationships. When we partner with our vendors, we commit to them, and expect the same in return. That’s the level of dedication and effort it takes to set up a mutually beneficial supplier relationship.  

So, let’s say in an alternate universe you somehow find the time as an owner doctor to set up a procurement system for your office that allows you to purchase from multiple vendors at your negotiated pricing. Wait, what negotiated pricing? You only get that if you do big volume. Like 5 practice minimum volume. So you just did all that work to set up the perfect procurement system, you suffered the shame of being laughed out of the building by 3M and GC America, and your team is actually spending more time on procurement than they were before, and you end up saving maybe 1% on your supply costs? All of a sudden that Patterson rep is looking pretty hot and tempting again.

It's not like I’m trying to write the Dental Supplier’s Manifesto here. The truth is that most doctor owners will never be able to dedicate the time it truly takes to set up and manage an effective supply chain. If your supply costs are bottom dollar but you have no established relationship with the manufacturer, that’s not a supply chain, that’s a disaster waiting to happen. If you have no effective system of managing and storing your inventory, that’s not a supply chain. If you have no link between purchasing and payables, that’s not a supply chain. All of these things have to be in place and work cohesively together to truly create value while reducing supply cost in a pediatric dental practice.

So what’s the moral of the story?  You can’t win, so don’t even try? For some of you, yes (kidding).  Here are a few easy tips to help with your supply management at your office.  

Quick tips:

1. Know what your supply cost actually is. 5% is pretty good for a pediatric practice. 8% is more common. 10% means you have a problem. Look at it on a trailing twelve month basis, as monthly fluctuations can skew the actual number.
2. Designate a single point of contact on the clinical side for ordering AND receiving. Typically it will be your Lead Assistant.
3. Talk to your supplier. Tell them you read this article and know they are charging you too much. Ask for a discount. I’m serious.
4. Look at alternatives. Like most pediatric dentists, my wife Dr. Alex has some pretty strict requirements for what she will put in a kid’s mouth. However, there are a lot of products such as bibs, sterile wrap, 2x2s, etc that brand doesn’t matter, and in a lot of cases you can save some significant costs just by switching to what the suppliers refer to as their “house brand” for those types of expendables.

Conclusion

Everyone talks about driving down supply costs, and in a group like Alcan, that’s a major selling point for us. But if you’re a single location, I would say the best thing you can do to manage your supply spend is to attack the low hanging fruit with the understanding that every minute of time you spend on managing supplies is a minute that could have been spent elsewhere – getting new patients, building your practice culture, or spending time with your family.