Getting a handle on the cost of your supplies
The average dentist should be spending between 5.5% to 7% of revenue on supplies. But sometimes we get a little over-excited, buy a few new products and end up blowing the supplies budget out of the water. Good news, we have a few tips to help you keep that budget under control!
Assess how much you actually spend
The first step to solving a problem is finding out if you have one, ask your bookkeeper or accountant to provide your dental supplies costs for the last 4-to-6 months. Then take that number and compare it to the revenue from the same time period. Your cost is your percentage of your dental supplies compared to your revenue – ideally this will be in the 5.5% to 7% range.
Curious why we take a selection of months and not just the last month? If you compare a single month you won’t have the full picture. Maybe last month you bought a year’s worth of gloves because there was a bulk discount sale, or maybe you bought none because the month before there was extra. Perhaps you ran out of masks and had to make a rushed order which cost a little extra – regardless one-off factors as such can impact your past month’s supplies budget and throw your calculation off kilter.
Are you spending a bit too much?
If it turns out that your supplies budget is a little over the acceptable range, it’s time to re-evaluate and adjust. Luckily there are a few ways we can get that budget under control.
Step 1 | Take inventory
Do you have a variety of gloves you can choose from? A colour selection of bibs? An array of cotton ball sizes? A great place to start is to take inventory then limit your selection to the basics. Along with this, poke around in your cabinets and at the back of drawers to see what kind of expired products you come across. Supplies such as bond, filling materials and cement can often be found hiding out in your product graveyards and are a good indicator of what you may be over-ordering. Stick with your tried and true products. Not only will this be more cost effective in the long run, but it’ll make ordering a lot easier and more predictable.
And when you do order, get a copy of your invoice and do a line-by-line comparison to ensure your physical inventory matches what you ordered.
Step 2 | Set up a budget
Set your clinic a supplies budget that is aligned with your production levels (5.5% to 7% of your yearly revenue). Once you have that budget separate it monthly to get your monthly supplies budget.
Step 3 | Assign someone to do your ordering
Now that you have your monthly supplies budget and the basic products you need to ensure your clinic functions optimally, assign one staff member to do the monthly ordering. Having a single person do the ordering on behalf of entire your clinic is the most efficient way to get ordering done, it will also be the most cost effective. You can go one step further and create a list common supplies used and acceptable price for these supplies, this should make the re-ordering process easier
As a doctor and CEO of your clinic, you need to make a lot of big decisions, so it’s important you delegate where you can. Make sure you provide the dedicated staff member with the proper training and support to be successful, and then make them accountable to the task. Try tying it to their performance evaluation to help incentivise them to do the job efficiently and well.
Step 4 | Review your contracts with your suppliers
Once you know what you need to order and how much you can spend, approach your suppliers. Tell them what you need to order and ask them to help you find the most cost-effective solution to do so. Then compare their solutions with quotes from other vendors to ensure you’re getting the best bang for your buck!
Consolidating your supply to one or two providers and taking advantage of bulk buying opportunities such as trade shows can also help maintain cost control. Manufacturers often have great deals to allow you to more efficiently manager your supplies, pending you have the storage space. Combine all of the above for the most optimal and efficient cost and ordering practices by ordering 3 or 4 times a year by taking advantage of discounts and bulk buying. When you get your order, it is also good practice to compare it line-by-line with the physical inventory to ensure you received everything you ordered.
Supplying your office with good quality products shouldn’t blow the bank, but it does require some strategizing to accomplish. If you budget, work with your resources and try not to buy every new product that hits the market you should be well on your way to running an efficient practice!