Why and How DSOs Should be Keeping Track of Inventory

September 12, 2022

Keeping track of your dental supply inventory is integral to controlling your overhead costs. For DSOs and single-office practices looking to improve profits and mitigate their risks of stockouts and financial losses, keeping track of inventory should be considered a critical part of their standard business processes.

It’s no secret that stockouts can hinder your ability to service your patients, damage the reputation you work so hard to build, decrease your revenue, and further impede your profitability, leading to costly expediting and shipping costs. But stockouts aren’t the only issue arising from poor supply inventory management.

In this article, you’ll find out what inventory tracking entails, review some basic stock control techniques, and learn how they can benefit your practice. We’ll also get into what you should look for in inventory management software.

Read on if you’re ready to leapfrog into efficiency, get control of your supply spend, and drive cost savings.

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What Is Inventory Tracking?

Inventory tracking is the process of tracking all supplies required for production. This includes all SKUs currently being held within your practice and monitoring all inventory movement and activity internally and externally throughout your supply chain.

It also includes tracking purchases through the usage of purchase orders, recording deliveries by adding received quantities into inventory, counting on-hand inventory to validate inventory levels, and accounting for usage by withdrawing quantities from inventory as they are pulled from stock.

A keypart of inventory management and procurement, inventory tracking ultimately aims to ensure you always have the right products, in the right quantities, at the right time to meet your production schedule.

It also mitigates your risks of losses through overpayment, theft, fraud, redundant orders, and the mismanagement of inventory.

The Benefits of Tracking Inventory

Keeping track of your inventory helps you work more effectively, allowing you to do more with less.

Your dental office is a busy place, and your employees are likely responsible for many tasks. And if things are going right, your schedule should be jam-packed. However, by establishing a clear process for tracking inventory, you can ensure to have the supplies you need to service your patients in the right quantity, avoid stockouts and minimize carrying costs while keeping the funds tied up in your inventory to a minimum.

Although it may seem like a cumbersome, time-consuming process, when implemented effectively, inventory tracking practices can help you reduce carrying costs (the costs of carrying excessive inventory), decrease supply costs, maximize productivity and mitigate your risks.

As a bonus, you’ll also be able to calculate your inventory turnover and supply usage.

Is any of this a big deal? Well, let’s run through it.

Carrying costs. The costs of buying, storing, and managing inventory — may seem inconsequential. However, they typically average 20 to 30% of the total cost of inventory and can take a nice bite out of your profits.

Cashflow. Too much money tied up in excess inventory hinders your cash flow and may mean you don’t have the funds you need for other critical items, such as paying your employees, buying or repairing equipment, or scaling!

The right quantity. Holding the “right” quantity of each supply means you are purchasing at the right time and at a quantity that is most economical for your practice, taking into account any available volume price breaks suppliers offer, as well as average usage and current inventory levels. This reduces supply costs and ensures supplies are used before they expire or get lost or damaged, minimizing your risk of financial write-offs.

Inventory turnover. Once you’re tracking your inventory, you’ll be able to better understand your inventory turnover (how much you use of each item over a given time period). Calculating your inventory turnover and supply usage is the first step in leveraging your volumes for price reductions.

It can even be used to organize your supply closet. This helps to increase office efficiencies by reducing the amount of time your employees waste sifting through the inventory to find the supplies they need, and again, reduces the likelihood of damage, loss, or expired product, allowing you to implement FIFO (First In, First Out).

Lastly, tracking your inventory can help you avoid fraud and theft. While you always want to trust your employees, opportunities for fraud stem from a lack of internal controls. Without tracking your inventory, implementing best practices, and performing the three-way match process, you leave opportunities for employees and suppliers to take advantage of.

The Challenges of Traditional Inventory Tracking

Tracking inventory for dental supplies doesn’t come without its challenges.

It only stands to reason that the more inventory you have, the harder it is to track. Now, add to this the complexity of your dental supplies.

Dental practices require a long list of supplies. Varying only slightly in the specification, the long SKUs used to identify each item differ only slightly from one another and can be difficult to distinguish. As a result, ensuring the correct identification of each item in your inventory can be tedious and difficult.

Unless you’ve neatly organized your supply closet and minimized the areas outside of the supply closet where you hold inventory, a lack of organization may further slow down the process.

It’s apparent that without the right system, inventory tracking can be time-consuming, hard to do accurately, and can quickly overwhelm your employees. Given that your employees likely have a myriad of tasks they’re responsible for, and you may even be short-staffed, you simply can’t afford for your employees to waste too much time tracking inventory.

Luckily, you don’t have to.

Inventory Management Techniques

Let’s be honest. There are best practices, and then there’s good enough. How you decide to track your inventory depends on where you are as a business. There is no point in establishing processes that are simply unattainable for your practice.

Instead, remember the Kaizen philosophy, and focus on establishing a gradual adoption of small yet impactful improvements.

Instead, we suggest you take an honest look at your available resources (human, financial, and technological), the benefits of tracking inventory, and your business objectives before deciding what makes sense for your practice.

Instead of making a quick jump, DSOs may want to lean their way into lean inventory management.

Here are a few approaches that may get you there.

Pen and Paper

If you’re new to tracking inventory, keeping it simple and putting pen to paper for a quick inventory count may be a great first step.

Given the complications we mentioned above, unless you’re highly organized and your stock taker is meticulous in paying attention to detail, you may be opening the door to errors and wasting valuable employee time.

If your count is inaccurate or incomplete, you may still experience stockouts. And keep in mind that you’ll need to transpose this information into a spreadsheet if you want to estimate your supply usage for demand forecasting, improve cash flow, avoid stockouts and negotiate better deals.


A step above pen and paper, an inventory tracking spreadsheet will allow you to save your history so you can accumulate essential data to be used to establish reorder points and order quantities and negotiate cost savings based on volumes.

Is it possible? Yes, dependant on your resources. Is it efficient? No. Is it effective? Mildly so.

Although a spreadsheet offers no help in terms of the challenges of counting and tracking inventory, as the process is electronic, it offers DSOs a first step in aggregating and sharing information across locations.

This information can then be used to move on to the next process, finding and implementing the right inventory management software.


By introducing inventory management software into your practice, you can increase your efficiencies with streamlined workflows, leverage automation to eliminate human error, track inventory in real-time and make life easier for your employees.

A good inventory management platform should help you:

  • Keep track of inventory in real-time
  • Help you monitor against reorder points (pre-established stock levels that trigger a replenishment order) and let you know when it’s time to order
  • Offer barcode scanning to minimize errors and speed up processes such as inventory counts or reordering
  • Offer multilocation management, allowing you to track and manage inventory across several locations
  • Track your open orders
  • Track orders against your budget by location, allowing you to stop unnecessary ordering before it impacts your cashflow and profitability
  • Know what was delivered when and ensure you pay for no more than what you received
  • Offer analytics that help you forecast demand and identify areas of improvement
  • Maintain reorder quantities to prevent excess stock and ensure you purchase in the most economical quantities
  • Allow access on any device (mobile phones or Ipads, which can be used for counting inventory)

The Advantages of Using Inventory Management Software

From counting stock to relying on intuition to estimate supply needs, manual inventory takes your team’s attention away from servicing your patients and their various other tasks while simply being ineffective.

Luckily, the birth of SaaS software has now made Inventory Management Software accessible to dental practices of all sizes, providing you a quick-to-implement, scaleable process with little barrier to entry.

By leveraging software, you can eliminate your inventory tracking challenges, control and optimize your supply spend, and scale your business, profitably.

Inventory Tracking and Management Software for the Dental Industry

Our dental supply management software provides a standard, scaleable process for tracking inventory and staying on top of your supply needs while ensuring you use funds wisely and spend no more than you need to.

Best yet, Method’s inventory management tool is flexible enough for you to implement today and yet robust enough to grow with you over time.

We provide you with the controls and methods you need to align your internal processes and purchasing decisions with your business objectives. We help you meet your business targets by enabling you to drive cost savings, monitor against budget by location and category, and implement and enforce buying rules and formularies with purchasing controls set across a single or multiple locations.

By connecting your team through a single platform, your employees can work more effectively, communicating and collaborating on orders and sharing documents both internally and externally with supply partners.

With Method, managing inventory, shopping, and buying supplies all becomes easier and faster, avoiding all the emails, phone calls, faxes, and numerous supplier portals and spreadsheets your employees would otherwise have to rely on.

Quickly Track and Manage Your Dental Inventory With Method Procurement

We help you track and manage your supply inventory and purchases effectively so you can optimize profits and continue to scale.

Method’s marketplace makes it easy for your employees to shop and quickly make the best purchasing decision for your practice, bringing the dental supply market to your fingertips.

Like Amazon, our marketplace allows you to search for the right supplies with 750,000+ dental-specific items in our catalog and quickly compare pricing and availability across 2,000 + suppliers.

Plus, we’ll help you:

  • Implement purchase requests and approvals for ultimate budget control
  • Track your open orders and avoid redundant orders
  • Issue, receive, and analyze Requests for Quotes (RFQs)
  • Create and enforce formularies across locations
  • Minimize the time your employees spend managing inventory
  • Eliminate costly human errors with barcode technology
  • Leverage our spend analytics so you can better utilize your purchasing volumes, identify areas of improvement and optimize your spend
  • Identify synergies between locations and other areas of opportunity.

Don’t just negotiate- realize cost savings with the purchasing data and control you need to leverage your volumes effectively.

For more information on what we offer or to find a package that suits your needs, click here.

Ready to get started on your journey to cost savings? Request a personalized demo or contact us for more information.

Ready to build a better dental practice?

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.