Back to knowing your business. Practice overhead is the money needed to meet all practice expenditures, not including the doctor, right? Every dentist should have a good understanding of what their practice overhead is. A profit and loss statement summarizes your practice revenue and expenses incurred during a specific period of time - monthly, quarterly, yearly etc. Some of these expenses are fixed like rent and practice loans - these expenses do not change (really) from month to month. Variable expenses, on the other hand, are much harder to control but not in a bad way. Ideally, variable costs increase as your production increases. However, if your variable expenses go up and your production does not, then you need to find out why.
A good example of a variable expense is supplies. Supply costs are variable because if you are producing more crowns, then you need more supplies to do crowns. It’s common sense. So, how do you know if you are hitting the mark?.....or if your ordering dental assistant is dating the supply rep? Understanding your dental practice supply cost percentage to adjusted production will help you gauge control of the expenses. This number should lie somewhere between 5-6%.
While you CANNOT improve fixed costs, you CAN improve your supply expenses with systems.
1. DELEGATE RESPONSIBILITY Just like any other task, someone needs to be accountable - just don’t make it you! Lolly Daskal writes in her blog, “The Story of Everybody, Somebody, Anybody and Nobody” “There was an important job to be done and Everybody was sure that Somebody would do it. Anybody could have done it. Somebody got angry about that, because it was Everybody’s job. Everybody thought Anybody could do it, but Nobody realized that Everybody wouldn’t do it. It ended up that Everybody blamed Somebody when Nobody did what Anybody could have.”
2. AVOID THE BULK Contrary to what your dental supply rep says, bulk is bad. If you don’t need it now, don’t buy it. Remember back in March when you ordered 3 months worth of impression material? I imagine you could have used the cash for other things. Check out my blog titled, “Top 5 Questions Dentists Ask Me” to find out why.
3. FOCUS ON VISUAL RESUPPLY Do you know how much space a box takes up? ALOT! This includes your chilled supplies. Start by taking everything out of boxes and placing each item into its own container. Just months ago I worked with a practice who had around 60 bags of 12 disposable impression trays. Guess where they were stored…….under the sink in the lab! The rest were ‘nicely’ scattered throughout the operatories and in the resupply closet. Needless to say this practice will never need to order another extra large impression tray. Talk about putting things into perspective…
Get all of your supplies in one area. A central location for all supplies is ideal for storage but for those of you who cannot move walls right now, just consolidate. Your resupply area will store no more than six weeks of inventory.
4. STOP OVERSTOCKING Fully stocked does not mean 3 boxes of lidocaine. 
I like to call it the 90% rule. Consider the procedures you perform 90% of the time and stock no more than one week’s worth of this inventory in the operatories. Again, it’s much easier to do this if the inventory is visual. If it isn’t, I can fix that!
5. LIMIT QUANTITY / FREQUENCY OF ORDERS Only order supplies once a month or at the most bi-weekly. Take control now. Find a vendor and stick with them - loyalty is priceless. Review trends once a year, make adjustments as needed, and avoid paying an employee to go searching for the deal of the day. It’s like tripping over dollars to pick up pennies. Staff salaries are variable costs, too!
Do you remember the point I made last week about how easy it is to throw money at problems? For God’s sake, you don’t need a sophisticated inventory management program to get a handle on your supply costs. Don’t always assume that your inventory is being managed properly and following your practice ordering system guidelines. Review your profit and loss statement monthly. If you feel comfortable sharing the details with the personnel assigned to supply ordering, I encourage you to do so.
If you don’t measure how much you’re spending on supplies, you can’t manage it.
You have to start somewhere. Personal protective equipment isn’t cheap anymore. Not only do we need a lot of it, we need space to accommodate it. These suggestions can be enacted with minimal disruption to your current practice. If implemented, supplies will become accessible at all times and take up less space, your ordering processes and procedures streamline, and you feel the freedom to serve your patients with a full staff!
Godspeed….
For answers on how you can implement a streamlined ordering system that is guaranteed to improve the variable costs associated with supplies, shoot me an email abachman@desergo.com.
