It might seem basic or even obvious, but managing your inventory is an integral part of an efficient dental practice. However, as basic it seems, inventory management is often not addressed until it becomes a drain on your cash flow and your bottom line. To run efficiently, a practice needs functioning equipment and adequate supplies.
Practices that don't plan and organize their inventory systems can lose thousands of dollars per year on their bottom line. While running out of certain products affects the flow and productivity of your practice significantly, placing rush orders or consistently ordering throughout the week is just as disruptive to your work flow, along with being time-consuming and expensive.
Where to start
Let's start with an assessment of your inventory system. Does your office have a designated person for inventory control? Do you have a preferred vendor list? Is there a standard operating procedure in place for ordering? If not, this is where to begin.
The list of supplies used in the dental office can be overwhelming. To keep your inventory under control, it is key to have written standard operating procedures to use as a guideline. In many practices, clinical supplies are ordered by a dental assistant, and a business team member usually orders the office supplies. Dental supply representatives will be able to give you sample inventory lists or a suggested timeline of supply replacements.
It's best that the doctor and the responsible team members meet regularly to ensure that the system is working well. Improvement can be made based on procedure habits, pricing changes, and new product developments. Here are some quick and easy-to-implement tips to take back control of your inventory right now:
- Designate time each week to review what supplies you currently have in stock.
- Check the expiration date of materials and pay attention to storage directions (for example, do not store biological monitoring strips on top of the autoclave). How quickly do you use the materials? Are you critically low on some items and overstocked on others?
- Being organized means supplies are easy to identify and quantities can be determined easily. Have a designated location for the bulk of your inventory. Use these supplies to replenish your operatories. Once a supply leaves this area, it should be considered used.
- Look ahead in your schedule to anticipate patient flow for the upcoming month and consider the procedures most commonly done.
- Determine your inventory budget. Dental supplies should be 5% to 7%, and business office supplies should be 1% to 3% of your average monthly collections, not production. Remember, you can't pay bills with money you don't have. By determining a yearly budget for supplies, you can then divide the amount over the months. It's better to take a look at your historical collections per month.
- Decide if all doctors and hygienists will be using the same types or brands of materials (composites, cements, and impression materials). The most efficient method is to use consistent brands. A wide variety of products will mean higher expenses.
- Use an inventory control system, whether it is the Tag system, an electronic scanner, or a computerized system that is accessed by passcode or fingerprint scan.
- Many dental practices tend to overstock to be safe; however, this can become costly when materials have a shelf life.
- Beware of gray-market materials when ordering from companies you are not familiar with. Gray-market materials are usually advertised at 10% to 15% off in journals or on websites. These materials come from unknown distributors, are close to or past their expiration date, and are not necessarily regulated by the U.S. Food and Drug Administration. Use due diligence when ordering from new vendors.
It is understandable that dentists look for ways to cut costs and reduce overhead, but keep in mind that it is not always less expensive to "shop around," as the time you spend usually negates any savings. Developing and cultivating a relationship with your supply vendor can save you money and headaches in the long run. Try not to consider your sales representative an interruption; instead consider the rep as part of your team. Sales reps are great resources -- not only for getting materials when you run out, but they know a lot about what is going on in the industry and in your area as they visit many dental practices each day.
Solid inventory control will require communication among all the team members; it is not merely one person's responsibility.Part of your job as a practice leader is watching for unprofitable areas of operation. Avoid the slow leak of dollars by urging your team to share your inventory best practices.
Teresa Duncan is an international speaker who focuses on revenue, dental insurance, and management issues. For more information or to contact her, visit her Odyssey Management website.
The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.