HOW DO I CREATE A GREAT SUPPLY SYSTEM?
I just got off the phone talking to a doctor’s staff member in charge of supplies. The question revolved around what an efficient and effective supply system might look like. She described some of the challenges she faced and I have added a few more for clarity. Here are the problems, and while you may not have all of these, you certainly have one or two.
1. Having more than one person ordering and being responsible for ordering supplies: This is public enemy number one. Multiple people being able to order supplies means no one is really in charge. Your budget should be 6% of collections or less. Remember that for a million dollar a year practice ($83,333/month), every percentage point is worth $10,000. 1% means a lot of money by the end of the year. You need a single person to shoulder the responsibility of working within a budget, ordering, finding the best prices, and organizing the storage space. Creating goals, systems, and consequences will guarantee that you bring your supply costs and well as protocols into focus.
2. Running out of supplies: Running out of supplies indicates several things.
There are no systems to know precisely when to reorder supplies. We fix this by taking a 3×5 red card and printing the item name, where to order from, the pricing and stock designation and placing this in the bin with the material at a point of getting down to a 5-10 day supply (whatever time would insure that you could easily restock it and not have to worry about paying too much for over-night delivery or having to order it from Schein, Patterson, or BENCO and paying too much for it).
3. Paying too much for supplies: Don’t get me started here. Unless you live under a rock, you should understand that people like Schein and Patterson charge you, the independent dental practices, full fare or a slight discount while they wholesale the same product out the back door to corporate practices at a 40%+ discount. These people are not your friends, and while they deserve to make a profit too, they also need to understand that they are subject to the same economic pressures you are. Up until now, they operate as though they are above the law of economics, and continue to take advantage of either your laziness to shop elsewhere or your naiveté of ordering from businesses that are contributing to the end of the private dental practice. That is the very reason we organized BEST (Building Everyone’s Success Together) for Dentistry: www.bestfordentistry.com. We have countless doctors putting thousands of dollars a month back in their pockets by using the BEST alliance partners. With corporations, insurance companies, and overall increases in overhead squeezing our profits, we have to search for the best products at the best prices. This can be huge.
4. Ordering too much of one material: There has to be a little science to ordering supplies. You have to be organized enough to have all of one product in the same place, while knowing at what point and how much you will need to order. Ordering too soon increases your overhead, while ordering too late means you can’t produce. Many products have an expiration date so ordering more than you consume in an average length of time, can lead to “spoilage”. For example, impression materials like PVS are difficult to manufacture and do not store well. Composites have the same problem. It’s like going in and cleaning out your pantry only to find that most of the stuff on the shelf is a couple of years old. I have seen supply closets with materials that were so out of date that no one makes or uses them anymore.
5. Not having the right materials: This goes back to not having just one person to be responsible for ordering and creating consequences for that person not developing a transferrable and easily understood system that insures you have the right materials in the right volume to insure nothing ever runs out.
6. Not having a budget: You remember the benchmark of 6%. That should be a firm number that your office should live by. Every staff member lives on a budget; this is not a foreign concept for anyone. It takes planning, organization, and systems to stay on budget. Whenever we were faced with increasing costs in supplies, I made sure to go to the office supply and get a small tablet for “purchase orders”. The staff member in charge of supplies had to list the products, quantity, pricing and vendor, then turn it over to me to OK the final purchase. It’s not something I liked to do, but until I could trust the staff member to own the problem, it was an opportunity for them to learn, and for me to model the actions I expected from them. Lead by example.
7. Not having an organized, systematized supply space: This ranks up there with having only one person ordering supplies. There should be a bin for everything. Hygiene supplies and products should be together, and doctor’s supplies should be in another area with alphabetized, organized bins, labeled for OSHA/HIPPA compliance. Color coding is paramount because people are visual learners. Everything has its place, so that if anything is missing, it will scream out to be ordered.
That’s it! That’s how you Summit when it comes to maintaining a 6% overhead for supplies.
Michael Abernathy, DDS