Truth be told, for many dental professionals and even DSOs, inventory management continues to fly under the radar, with little to no thought given to how and when dental supplies are purchased and handled. Without a standard process, employees are left to manage a very long, complicated, technical list of supplies through disparate systems and processes, reliant on emails, faxes, phone calls, and supplier portals.
However, as practices battle a labor shortage and fight to improve profits, how you manage your inventory presents an enormous opportunity to lower your overhead, thereby increasing profits. Doing so digitally allows you to save on costs while reducing the time investment, increasing your office efficiencies, and allowing your employees to focus on the job they were trained and hired to do, service your patients.
Below we fill you in on what inventory management is comprised of, offer tips for smart dental supply order management, and take a look at what you have to gain from it all.
Interested in improving your profitability? Want to know about how Method's dental inventory management system can enable your employees to make smarter buying decisions? Keep reading to find out more.
Dental supplies can be costly, from N95 masks to nitrile gloves and implants. Although ideally, a dental practice should spend 4% to 6% of its overhead on supplies, according to an Aldrich report, in reality, the average single dental practice spends 7.2% of collections on supplies, showing there's plenty of room for improvement.
Supply costs represent a major area of expense for a practice. Therefore, having a good handle on how you purchase your supplies is critical to optimizing profits, impacting your production rates and service levels.
Inventory management involves tracking the supplies you spend money on from purchase to usage and identifying requirements, ensuring you buy the right item, in the right quantity, at the right time (and hopefully, if you're focused on procurement, at the best possible price).
Proper inventory management techniques safeguard your practice against stockouts that could impede your service levels while optimizing your cash flow, decreasing carrying costs, and reducing the likelihood of incurring damaged, lost, or expired stock.
Dealing with limited storage space? Are your supplies cluttered, unorganized, and hard to find?
Managing your supply inventory isn't an easy task. However, by implementing a standard process, you can ensure all employees perform the task in the same, optimal manner that aligns with your business goals.
Here are a few tips To help you avoid running out of critical supplies:
Although you may want to start with your highest movers, you eventually want to create a list that encompasses all the supplies you use over the entire year. This may seem overwhelming or tedious, but an accurate supply list is the foundation of good inventory management.
Next, you'll want to record your purchasing information, including the suppliers you purchased from, how much you purchased, when, and at what price.
Again, this may seem horrendously tedious—which is why digitization may be the key to success. Historical purchasing data empowers you to leverage your volumes for improved cost savings, track price increases to avoid "price creep," and identify anomalies so you can highlight improvement opportunities and ensure you buy smarter moving forward.
You'll want to perform routine inventory checks, preferably once every couple of weeks, or at minimum once a month. First, record the stock level of each item on your supply list and compare it to your last count. This will give you an idea of your usage. Pro tip: if you're using an excel spreadsheet, formulate it to calculate your usage and save your history so you can use this to more accurately forecast future demand.
You'll also want to pay attention to special circumstances that may temporarily impact your usage. For example, perhaps you're aware that you had a highly irregular amount of hygiene appointments and used more than the average amount of prophy paste. You don't want to continue to repurchase at these increased volumes if the higher usage isn't expected to last. Inversely, look ahead and consider if there is anything out of the norm you should account for when you're ready to purchase supplies.
Periodically look back to your on-hand counts and how slowly or quickly inventory is moving. If inventory sits too long, you're tying up cash flow and risk the financial hit of wasted materials if they expire. To prevent this, you'll want to lower your order quantity.
Assuming you've created a budget for your practice(s), you need to ensure you stay within it. Overbuying can lead to cash flow issues, leaving you short to pay necessary expenses. If you do find you have to buy more than you budgeted for, look into the root causes.Perhaps you underestimated your budget due to unforeseen price increases, or if you're lucky, business is busier than you expected. However, in many cases, you'll likely find you're over-purchasing.
If your purchasing processes are overly cumbersome and you're running into labor issues, your employees may be looking to save time and err on the side of caution by buying large amounts. Although you can't blame them, there are better ways to save time and mitigate risks without pinching your finances (we'll get to those later).
By implementing an approval process, you can catch problems before they occur and ensure you stay within budget.
Creating a written standardized ordering process that aligns with your procurement and inventory strategy will ensure its successful execution, keep you on track to meet your goals, and alleviate stress for employees.
By creating a step-by-step guide on ordering supplies, you eliminate the guessing games for your employees who otherwise are left to piece together the semblance of a process that is likely to leave things falling through the cracks. Importantly, a written process also helps during times of high turnover. It gives new employees a reference guide as they "learn the ropes" and ensures your inventory continues to flow as needed.
Make sure to include as much specific information as possible, including any approved private label options, preferred suppliers, budget allowances, contact information, and any necessary delivery requirements such as delivery times or contacts.
Managing inventory is a balancing act. To control administrative costs and limit the hassles put on employees, you'll want to minimize the number of orders you place. Remember, every order requires entry, approval, sending to the supplier, tracking, receiving, and finally, paying the invoice. The costs of all these steps add up fast.Ordering in smaller amounts also means you're likely missing out on the cost savings that come with economies of scale. However, over-ordering increases your carrying costs (Inventory carrying costs are the total costs related to buying, storing, and managing inventory), impedes your cash flow, and puts you at risk of financial write-offs.Hence, why it's important to find your sweet spot and order not too much and not too little.
Method's scalable inventory management solution was tailor-made for the industry by people in the industry to be flexible enough to start where you are and robust enough to grow with you as your practice matures and scales.
Leveraging technology such as barcode scanning Method makes accurate inventory management easy for you and your team.
People who understand well the realities of a dental office manage a stock list, reorder supplies, and update on-hand quantities from a single dashboard, so you can ensure to order the right materials at the right time, safeguarding your productivity and patient care while saving you money.
Here's how Method can help enable easy but effective inventory management:
Barcode scanning: Minimize errors and increase inventory accuracy by shopping, receiving, and re-calibrating stock levels using barcode scanning.
Create and manage stock lists: Digitally maintain supply lists for the items you are looking to track and control. Whether it be an official formulary or simply a list of trusted products, you can create individual lists for different locations and/ or by category.
An up-to-date stock list is key for running a productive dental practice. Forgo endless supplier research and search our industry catalog with full product details and images on more than 800,000 unique dental and medical products to quickly set upp your stock list.With access to the industry's best products and resources, you can ensure you choose the right products for your practice.
Low stock alerts: A stock out on a critical item could lead to a loss of patient revenue. While as we've explained, holding too much inventory causes waste, takes up space, and ties up cash unnecessarily. Knowing what you have and when it's time to reorder is key to striking the perfect balance.Luckily, Method has your back. Once you've established and entered your reorder points (the level of stock that triggers an order to be placed), hover text warns you with a yellow symbol once you're halfway to your reorder point, and red once you hit your reorder point.Once you see an alert, you can handle your ordering process right from the platform by simply clicking "add to cart."
Complete visibility: To help you avoid redundant orders and stay on top of expected deliveries, Method offers real-time information on open order requests and pending receipts for each item in "the dental practice's" inventory list.
Of course, that's not all. Method's electronic approval process with auto alerts ensure's orders don't get hung up waiting for approvals and lets you quickly track orders against budget. Buying rules allow you to control spending and ensure adherence to buying policies. And our analytics deliver the data you need for strategic decision-making and negotiating the prices you deserve.
And that's just the beginning. Click here to learn more about how Method can help you compare, purchase, track and manage all your dental supplies.
Ready to optimize your stock levels and keep the right amount of bibs, floss, and gauze on hand while minimizing waste and saving on the cost of supplies?
Method Procurement Technologies gives independent dental practices and DSOs the inventory management and procurement capabilities they need to succeed. With our full, end-to-end solution, ordering dental supplies is straightforward and hassle-free.
Learn how Method Procurement's spend management solutions can improve your bottom line. Get in touch with our team today or request a demo to see it for yourself.