Inventory Management
Procurement
Method Pay
Analytics & Reporting
A group average can make procurement look controlled.
A 30-location DSO might have 24 practices buying from an approved formulary while six recent acquisitions order from whichever rep called that week, and the blended number still reads fine. Scoring locations one at a time tells you something the average cannot.
This article lays out a five-stage procurement maturity model built for dental groups, along with a quick diagnostic to place each location and identify the constraint keeping it there. The path runs from manual ordering to strategic spend control, with each stage requiring the DSO to solve a specific problem before it can move to the next.
Enterprise frameworks assume a trained buying team, a contract portfolio and a central system everyone already uses. A dental group starts with almost none of that, so a generic procurement maturity model misreads where a DSO actually stands. And the stakes keep rising, since the ADA Health Policy Institute reports that roughly one in six US dentists is now affiliated with a DSO.
A quick note on terms: DSO here means dental service organization, the structure describedaaaaa in the DSO business model, and has nothing to do with the finance metric days sales outstanding. Three differences shape every stage that follows.
The person placing a supply order is usually an office manager or lead assistant who fits ordering in between patients. None of them were hired to buy, and their schedules punish friction:
Controls succeed in a DSO when they are easier to follow than to skip.
Dental spend arrives as hundreds of small orders a month per location, each too small to catch anyone's attention. Contract-based procurement was built for big-ticket categories, and it misses this pattern:
Each stage of the model adds another layer of control over that small-order volume.
A group that sat at a solid stage 3 last quarter can close a deal and suddenly have a stage 1 location inside it. Every acquisition brings:
That makes a DSO's maturity a portfolio of locations at different stages, which is worth keeping in mind as you read the ladder.
Each stage of this procurement maturity model is defined by what you would see on an ordinary Tuesday at a location, what the stage costs, and the one constraint blocking the next step. The stages build on each other, so a group can buy software designed for stage 4 and still operate at stage 1 if nobody has counted the supply room.
The ladder follows the logic of Method's three-step savings framework. Getting organized covers stages 1 and 2, choosing the right products covers stage 3, and building a competitive purchasing process covers stages 4 and 5..
Every location runs its own purchasing by phone, email, supplier portal and the occasional fax. Headquarters learns what was bought when the invoices arrive. Day to day, that looks like:
Our internal data shows well-run practices hold supply spend to roughly 4 to 6 percent of collections, and a stage 1 group has no reliable way to tell which side of that range it sits on. The constraint blocking stage 2 is inventory visibility, since you can't control purchasing until you know what you already have.
This is where a group gets its supply rooms in order. Common markers include:
Rush orders and expired stock drop, and the group gets its first reliable picture of usage. What gets bought and what gets paid stay untouched, though. The constraint blocking stage 3 is a decision about standards, because until the group agrees on standard products, there is nothing to enforce.
At this point are the first enforcement points, and if anyone on your team has asked what is spend management in practical terms, this is the first answer. At this stage you will typically see:
Standardization savings start here, and so do a lot of stalls. The Hackett Group found that top-performing procurement teams lose 60 percent less savings to maverick buying and contract noncompliance than their peers. That leak between an approved order and a paid invoice is the constraint blocking stage 4, since an approval says nothing about whether the group paid the right price.
Stage 4 closes the distance between the price a group negotiated and the price it paid. The full procure to pay process runs end to end:
Ardent Partners research found the average organization manages about 69 percent of its spend, while best-in-class teams manage roughly 90 percent. The constraint blocking stage 5 is what happens to the data afterward, which often sits in monthly reports that never reach a supplier negotiation.
At stage 5, procurement becomes a management tool. The source to pay cycle feeds back on itself:
Stage 5 tends to show up in larger DSOs with 50 or more locations, where volume justifies a dedicated procurement function. The risk at the top of the procurement maturity model is sliding backward, usually through the next acquisition.
Reading the stages is the easy part. Placing your own group takes a more honest look at each location.
Answer these seven questions for a single location, working down the list in order:
Stop at the first no. A no on question 1 puts the location at stage 1 of the procurement maturity model. Two yes answers in a row puts it at stage 2, four at stage 3, six at stage 4, and all seven at stage 5.
Then run it for every location. If the scores spread across more than one stage, the group average is hiding something. Once you know each location's stage, [[LINK: the procurement KPIs you track]] should match it, since a stage 2 location measured on invoice match rates will look like a failure for the wrong reasons.
Moving up from there takes a few things no diagnostic can supply.
Advancing is rarely a software decision alone. A platform makes every stage easier to run, and it still cannot decide who owns procurement, which products are standard or whether locations will follow along. Those decisions are where procurement best practices start for a dental group, at every step of the procurement maturity model.
In smaller groups the owner might be a director of operations, and in larger ones a dedicated procurement lead. Either way, the owner:
Without an owner, a few good office managers can carry a group to stage 2, and it will stall there.
A formulary is a clinical decision as much as a purchasing one, and a formulary that ignores dentists' preferences will be ignored in return. A workable standardization decision:
This decision is the hinge between stage 2 and stage 3, and no approval routing can substitute for it.
Buy-in comes from making the controlled path the easy path. In practice, that means:
This is also where "get organized first" belongs. Enforcing pricing at locations that have never counted inventory asks staff to follow rules built on numbers nobody trusts, so getting organized is a precondition for everything after it.
If your group has the owner, the standards and the buy-in, and the process is still held together by spreadsheets and email, a platform will earn its place. To see how Method runs formulary enforcement, approvals and invoice matching across every location.
Even with all three requirements in place, one pattern keeps some groups from climbing at all.
Picture a DSO whose original practices are at stage 3, while its six newest acquisitions still order from their old reps, at old prices, without inventory counts or purchase orders. On paper, the group is integrated. In practice, it still buys like a collection of independent offices.
When locations sit at different stages of procurement maturity, a few problems show up:
Fast-growing DSOs are especially vulnerable because new locations often enter faster than procurement processes can be standardized.
The solution is to assess each location separately and move the least mature locations through the basics first. Every acquired practice should reach stage 2 before being expected to follow stage 3 controls. From there, locations can move up the maturity model together, turning the framework into a practical integration plan.
Procurement maturity in a DSO is hard to see from headquarters. Month-end reports blend strong locations with new ones, and every acquisition quietly adds another location that buys the way it always has. Placing each location on the ladder is the only honest way to know where the group stands and what needs to be fixed next.
Method gives DSOs one system for moving locations up the ladder, from barcode-based inventory counts at stage 2 to formulary enforcement, threshold approvals and three-way invoice matching at stages 3 and 4. Method's procurement platform brings every supplier into one place with real-time price comparison, so the data you need for stage 5 negotiations builds up as a byproduct of everyday ordering. Schedule a demo to see where your locations sit today.
A procurement maturity model is a staged framework that describes how an organization's purchasing function develops, from uncoordinated buying to strategic spend control. Each stage is defined by observable characteristics, which lets a team place itself accurately and see what the next step requires. For DSOs, the model has to account for clinical staff doing the ordering and for locations arriving through acquisition. The five-stage version above runs from Manual to Strategic.
Published frameworks commonly use somewhere between three and six stages. Four stages are easier to remember, while five give a DSO a distinct stage for organizing inventory before enforcement begins. That separate stage matters, because enforcing rules on uncounted supply rooms rarely holds. Whatever the count, each stage needs observable criteria and a clear constraint blocking the next one.
When people ask what is spend management, they usually mean the combined practice of seeing, controlling and improving everything an organization buys. In a DSO, spend management begins at stage 3, when a formulary and purchase orders start governing what gets bought, and it becomes complete at stage 4, when pricing and invoices are enforced too. A useful measure of progress is spend under management, the share of total spend flowing through controlled channels. Ardent Partners research puts best-in-class organizations at roughly 90 percent.
The procure to pay process covers everything from the purchase request through ordering, receiving, invoice matching and payment. Source to pay adds the upstream work of choosing suppliers, requesting quotes and negotiating pricing. A DSO needs a working procure-to-pay flow to reach stage 4, and it needs the full source to pay cycle to reach stage 5. Groups that try to negotiate before their invoices are matched usually find they can't prove what they were paying in the first place.
Start by counting. A procurement transformation that begins with enforcement tends to fail at locations where nobody knows what is on the shelves, so the first step is getting every location to stage 2, with scheduled inventory counts and a named ordering owner. From there, the group can make its standardization decision and build a formulary. Our internal data shows well-run practices keep supply spend around 4 to 6 percent of collections, which gives you a benchmark to track progress against.
It depends on which constraint is blocking the move. The jump from stage 1 to stage 2 is mostly counting and assigning ownership, so a single location can make it quickly. The jump from stage 2 to stage 3 waits on a standardization decision that involves clinical leadership, and that often takes longer than any software rollout. Groups integrating acquisitions should plan by location, since each new practice starts its own climb.
Three carry the most weight: a named owner for procurement, a formulary built with clinical input, and a purchase order process every location follows. Line-item invoice matching and budget tracking against projection then protect the savings those first three create. The Hackett Group's research ties disciplined processes to 60 percent less savings lost to maverick buying and contract noncompliance. Start with ownership, since the other practices need someone to maintain them.
Yes. A group with three locations moves through the same stages as one with 80, and smaller groups often climb faster because there are fewer habits to change. The main difference is who owns the work, which is usually an operations lead in place of a dedicated procurement team. Method supports groups at every size, from independent practices to large DSOs, on the same platform.
