Learn the ins and outs of dental procurement, and how dental practices of all sizes can benefit from a proactive approach to spend management.

The state of dental procurement in 2021

In their latest Chief Procurement Officer (CPO) Survey, Deloitte’s consulting team referred to 2020 as the “year of the supply chain.” From masks and toilet paper to groceries and other goods, the world’s global supply chains were put to the test last year by the COVID-19 pandemic, battling supply shocks and demand surges in a rapidly changing purchasing environment. 

The dental industry was no exception – dental practices faced significant hurdles as they adapted to a “new normal” of sanitization protocols, protective gear, and scheduling changes. Many offices closed down for a short period, while others dealt with a drastically reduced patient load. Further up the supply chain, dental supply manufacturers and distributors had to deal with production bottlenecks and hazy demand forecasts of their own. Navigating these sudden highs and lows made it more difficult for practices to acquire supplies, and order backlogs and shipping delays were not uncommon in 2020.

Fortunately the future is bright for the dental industry in 2021. Patients are once again filling offices, in part thanks to new features that the pandemic helped bring about, such as online appointment scheduling, and dental organizations can get back to operating their business and meeting revenue goals as usual. However, for dental supply chain managers and procurement officers, there may be no going back to “the way things used to be.” 

As dental organizations recover from the pandemic and set their sights on an increasingly digital future, it has become clear that the dental procurement process must evolve to keep pace with the growing sophistication of the modern dental practice. Now, perhaps more than ever, there is a strong desire among industry professionals to build an agile supply chain environment that is supported by a smarter, more efficient procurement process. 

Your dental supply chain as a competitive advantage

Dental practices run on supplies. From bibs and crowns to composites and brackets, dental practices require a large variety and quantity of supplies in order to deliver the patient care that is critical to their mission. Some of these goods, such as disposable gloves, may be easy to obtain. Others, such as implants or private label products, may require extensive lead time, custom specifications, and close coordination between the manufacturer, distributor, and receiver. 

The goal of supply chain management for dental practices is not only to ensure that doctors have what they need to serve their patients, but also to responsibly manage the costs associated with obtaining supplies. Price creep, misquotes, and overspending are just a few of the challenges that dental supply chain managers must overcome. And in a competitive marketplace, where dental organizations can use their purchasing power to drive down rates and leverage negotiations between vendors, an efficient supply chain is a valuable advantage.

PROCUREMENT VS. PURCHASING

Procurement, and by extension, purchasing, is a significant cost driver for dental organizations as they manage their supply chain. After staffing costs, supply costs are often the highest for an organization. Purchasing fits under the wider umbrella of procurement and is focused solely on placing purchase orders (POs), receiving inventory into stock, and submitting payment to suppliers. Procurement spans the entire buying process, from identifying needs and gathering quotes to selecting vendors and managing contracts. Because purchasing deals with the direct costs for raw materials and products, the procurement process presents a unique opportunity for dental organizations to earn significant savings.

TOTAL COST OF OWNERSHIP

It is also important to consider the total cost of ownership that goes into managing a dental organization’s supply chain. Lead dental assistants may spend up to 20 hours a week scrolling through catalogs, searching for supplies, logging in and out of multiple supplier portals, receiving shipments, and following up with vendors. Procurement managers may spend even more time handling order requests, purchase approvals, and tracking down shipments and payments. Ultimately, some organizations process hundreds of invoices per day – and the more suppliers they buy from, the more invoices that accounts payable (A/P) departments have to spend time managing.

Automating these manual tasks with digital tools and implementing a streamlined procurement solution allows dental organizations to reduce the total cost of ownership, freeing up staff to focus on clinical or other growth-oriented activities. At the practice level, lead dental assistants can look forward to spending less time ordering and more time chairside. At the organization level, procurement managers can speed up purchase approval workflows and spend management tasks while A/P clerks can automate other time-intensive chores. 

INCREASING PROFITABILITY WITH A SMARTER SUPPLY CHAIN

With the rise of dental support organizations (DSOs), profit and loss statements have never been under more pressure to ensure waste and inefficiency are removed from the bottom line. When it comes to improving margins, most dental organizations instinctively turn to their revenue streams – working more hours and treating more patients leads to increased productivity and greater profits, so the thinking goes. 

While this is a tried and true approach to financial growth, there is only so much an organization can do to increase output and drive its bottom line. On the flip side, there are also rising costs and associated expenses to consider. After all, the easiest dollar to make is the one you don’t spend. As Chief Financial Officers (CFOs) and Chief Operations Officers (COOs) look into overhead costs at dental practices, more often than not they are finding tremendous hidden profits in the source-to-pay procurement process. 

Today, digital tools like dental-specific procurement software are transforming the dental industry with modern solutions to outdated processes. Establishing an all-in-one dental procurement ecosystem can help dental organizations cut costs by ensuring each office buys the right thing from the right place at the right time. And with e-procurement tools, DSOs can bring visibility and control to purchasing chaos – increasing formulary acceptance and reducing rogue spending. For these reasons alone, it’s no surprise that one case study found dental procurement software can save a 20-office DSO more than $16,000 per month.

What is the dental procurement lifecycle?

The dental procurement lifecycle is the entire process of finding, negotiating, and contracting with a supplier of dental goods; purchasing and receiving the goods; and submitting final payment for the goods. In other words, dental procurement covers every aspect involved in getting dental supplies from point A (the manufacturer or distributor) to point B (the dental practice). And it’s not just regular dental practices that need supplies – orthodontists, oral surgeons, pediatric dentists, prosthodontists, and endodontists all use dental procurement to get the products and equipment they need to operate their specialties. 

SOURCE

The dental procurement lifecycle begins with the strategic sourcing of goods from vendors. This is the initial planning stage where a dental organization evaluates its inventory needs and determines the right supply partners.

Analyze

Whenever deciding where to source dental supplies from, it is important for the dental organization to first analyze its spend history and current state. This information gives CFOs a better understanding of the organization’s expenses, and helps them identify opportunities to leverage their purchasing power to drive down costs. This process is also the beginning stages of building a formulary, or custom supply catalog. By gaining visibility into where cost savings opportunities exist, the dental organization can then generate a more beneficial Request for Quotation (RFQ) to identify the best partners for their strategy. 

Select

In order to begin the selection process the dental organization will send an RFQ out to bid with every major dental supply distributor in the industry, as well as smaller local distributors and direct manufacturers. The RFQ gathers relevant information, including: product manufacturer, item skus, item descriptions, item category, item subcategory, unit of measure, quantity ordered, and price per product. Once price quotes are returned, the procurement team can start to make an apples-to-apples price comparison between vendors. The organization may also choose to conduct clinical evaluation trials for new supplies. Following the results of the trial, the dental procurement team can map out the potential savings for preferred goods from each supplier and make selections.

Formalize

After a last round of negotiations, the dental organization finishes its sourcing process by signing a written contract to document the scope of the supplier partnership and ensure clarity and accountability. The procurement team should take steps to alert the organization’s offices and clinicians of any impending changes to the supply catalog in order to avoid costly mistakes. Finally, the procurement team consolidates all new products into the proper formularies so that offices can purchase the appropriate items and maintain formulary compliance.

PROCURE

After the dental organization has solidified its supply partners, the next step of the dental procurement lifecycle is to execute a procurement strategy on a daily basis by getting products: 

    • At the right price
    • From the right source 
    • On the right budget
    • In the right quantity
    • For delivery at the right time 
Catalog

First, the procurement team must centralize all supplier relationships so that all of their supplies can be purchased from one platform. Whether there’s one supply catalog used across the whole organization, or several sections of a catalog (formularies), a digital catalog serves as a tool to implement the organization’s purchasing policies by leading purchasers to choose goods from the correct suppliers. In doing so, catalogs help create a “single source of truth” for the organization by allowing all purchasing to take place from a safe and predetermined ecosystem under the dental organization’s full control.

Order

Now that the dental organization’s digital catalog is centralized, purchasers can now log in to one platform and, factoring in key data points such as budgets, preferred product lists and formularies, create streamlined order requisitions with all the necessary items for the practice to run efficiently. For most dental organizations the supply ordering process is usually initiated by the dental assistant and office managers at each location. 

Review/Approve

This is where the organization has the opportunity to proactively review and/or approve any potential roque spend that does not align with their procurement strategy. When the management team receives a purchase requisition, they can choose to either approve, alter, or deny the request as part of the official review and approval process within the organization. (The best solutions will help you automate these decisions by factoring in key criteria tailored to your organization.) If the order is approved, a purchase order (PO) will be created and sent to the supplier. The review and approval process is an important step in the procurement lifecycle as a cost-prevention measure designed to create a proactive spend management culture that eliminates rogue spending. 

Receive

The final step of the Procure phase is to confirm receipt of the order. The dental office receiving the package will confirm receipt and check to make sure that the correct quantity and exact items were delivered according to the original PO. It is important to verify that no items are missing or damaged, and to escalate any shipment issues, as failure to do so can create a costly misalignment between procurement and A/P departments. 

PAY

The third and final stage of the procurement lifecycle is billing and payment for the goods and services that have been sourced and procured. Here, the dental organization aims to create an efficient, visible layer of accountability ensuring accurate billing, payment, and reporting of all expenses. 

Invoice Match

First, the accounts payable (A/P) department tracks and organizes supplier invoices and approves them for payment after validating the invoice matches the approved PO, and that the order was also received at its destination. The best invoice matching process utilizes an automated 3-way invoice match, an accounting control to make sure that the purchase order, inventory packing receipt, and invoice are an exact match. The goal is to reduce the risk of mispayment for duplicate, unauthorized, or inaccurate invoices – limiting costly overspending while also bringing much-needed price transparency across the supply chain. 

Data from APQC’s Open Standards Benchmarking® Accounts Payable survey shows that on average, most organizations report up to 2% of their payments as duplicate or erroneous, costing them tens of thousands of dollars each year. 

Payment

When an invoice is approved, the A/P department will submit payment to the vendor. Each vendor may have different payment terms, and preferred methods of payment which must be managed accordingly. 

Record

Last but not least, the procurement journey ends with the recording of the completed transaction marked with the proper general ledger (GL) code, speciality code, and other important information that allows for a seamless integration to the dental organization’s financial system.

Benefits of streamlining the dental procurement process

As the dental industry continues the trend toward the consolidation of operational processes, there are rising expectations across the industry of increased operational margins. An area that is often overlooked is the dental source-to-pay procurement process. Many dental organizations are stuck using inefficient processes dependent on spreadsheets and manual data entry for approvals, forms, paper catalogs, numerous vendor ecommerce portals, paper and emailed invoices, and snail mail to process and pay for thousands of orders. Implementing a holistic dental software solution can help alleviate these issues and bring a tremendous boost to an organization’s productivity with much-improved visibility, efficiency, and control over its supply chain.

1.)  Visibility

An effective dental procurement strategy starts with establishing one environment where all procurement activity takes place. Every office, user, and purchase order exists within a controlled procurement ecosystem, giving the dental organization a “single source of truth” to store and manage all company procurement knowledge. This data and visibility empowers dental organizations to make intelligent decisions and plan toward mitigating supply costs, while also facilitating proactive spend management and inventory practices. 

TRANSPARENCY INTO ORDER VOLUME AND HISTORY

One of the greatest benefits to be gained from an end-to-end procurement ecosystem is the visibility, storage, and management of order data. By implementing a source-to-pay platform across the organization, order data can be quickly accessed from anywhere and for spend across all vendors in a single, centralized location. Procurement teams can view order volume, and budgeting insights in real-time, creating an accurate and proactive spend culture across their organization. This transparency also carries over into order history – while most dental organizations depend on their suppliers to provide them with their spend history, which creates a conflict of interest when negotiating new terms, e-procurement provides an environment under the organization’s full control. Thanks to dental procurement software, it’s easy to view and export an organization’s complete order history at the click of a button.

TRACEABILITY FOR REPORTING AND AUDITING 

It can be hard to keep track of received orders with just a few offices, but as dental organizations scale, it becomes a significant challenge for an entire enterprise with hundreds of locations and thousands of invoices, purchase requisitions, and contracts. In the modern era of e-commerce where shoppers can monitor their online purchase activity at any time, there is no reason why dental organizations should not be able to enjoy the same capabilities across all suppliers. Dental procurement software provides full traceability for every order placed by every office within an organization. And with receive and reconciliation features in place, a holistic source-to-pay solution delivers added visibility in the reporting and auditing process, helping both procurement and finance leaders easily confirm what has arrived, when, where, and at what price.

2.)  Efficiency

Inefficiencies cost dental organizations money in two main ways. The first being increased time to execute a given process, and the second being the opportunity cost when the best process is not executed properly due to the inherent human errors that come with manual work. Streamlining the various aspects of the source-to-pay process into a single solution can help dental organizations improve inefficiencies by reducing the time it takes to execute procurement actions; erasing department bottlenecks and blindspots; and limiting human error through the automation of manual workflows.

AUTOMATING TRANSACTIONAL CHORES AND MANUAL PROCESSING

Dental organizations can quickly improve their source-to-pay process and drastically reduce operational costs by implementing an integrated solution that automates manual tasks with software. 

    • Source – A holistic suite of e-procurement tools helps managers speed up activities like spend analysis and vendor catalog onboarding by automating time-intensive chores. E-procurement allows dental organizations to automatically track vendor spend, down to every dollar, rather than relying on complicated spreadsheets with manual inputs.
    • Procure – Purchasers will earn significant time savings by ordering from a single online platform rather than navigating different vendor workflows and purchasing experiences. Procurement managers can speed up the onerous process of review and approval workflows by using automated order rules, resulting in significantly lower operational costs.
    • Pay – Verifying invoice matches and making payments has never been easier with one software to connect procurement and A/P teams. Adopting a single platform across the organization to submit, approve, and pay for purchases helps remove costly departmental bottlenecks and silos.  
SIMPLIFYING THE PURCHASING PROCESS

Supply purchasing proves to be one of the most cumbersome, time-consuming tasks for office managers. Rather than catching up to the modern expectations of enterprise procurement, purchasing remains a significant source of stress and frustration for staff at the practice-level as they deal with manual, redundant, antiquated processes. It is not uncommon for office managers and lead dental assistants to fill out purchase orders by hand or spend hours managing an office spreadsheet. 

Automating these mundane tasks with e-procurement software is one of the easiest and most effective ways to improve an organization’s operational capacity. Whether a dental office orders supplies every 2 weeks or every 2 days, by integrating its formularies into a centralized solution, DSOs can ease the burden on staff searching for the right products at the right price. It’s no wonder why DSOs are able to reduce their staff’s supply ordering time by as much as 76% with dental procurement software – resulting in massive payroll savings and freeing up practitioners and support staff to focus on patient care.

CONSOLIDATING WORKFLOWS INTO ONE EASY SOLUTION

While some dental organizations try to scratch together multiple isolated solutions, a holistic source-to-pay system efficiently consolidates workflows for the sourcing, procurement, and payment of supplies into one simple solution. An organization relying on separate systems opens up its procurement process to greater opportunity for human error, and cross-departmental activities such as invoice matching, order processing, and purchase approvals can take much more time than necessary. Instead, using an all-in-one dental procurement software provides a smoother experience – reducing time spent on procurement for all employees across the supply chain. Purchasers no longer need to juggle convoluted ordering flows and administrators can quickly view and analyze data from across the procurement lifecycle as the organization achieves optimal efficiency.

3.)  Control 

Establishing an end-to-end procurement ecosystem not only brings visibility and efficiency to an organization’s source-to-pay lifecycle, it also gives dental organizations the tools they need to take control over rogue spending. 

REAL-TIME SPEND ANALYSIS

A proactive approach to spend management starts with knowing what an organization’s order volume is at any moment. With a centralized and digital procurement environment, supply managers can get a real-time spend analysis at the touch of a button, viewing custom dashboards and downloading spend reports based on vendor, office, region, product, and more. The days of dissecting complex office spreadsheets are being replaced by enterprise technology designed to give dental procurement teams the control and customization they need to make fast and accurate decisions. And as historic order data turns into predictive buying signals, an organization can better equip for the ups and downs of its order flow without overspending.

ORDER RULES & APPROVAL WORKFLOWS

As DSOs grow in scale and incorporate new practices, each with their own inventory needs, it becomes progressively more difficult to manage purchase requisitions with budget goals. The ability for procurement managers to monitor and react to spending activity in real-time is a valuable edge, turning an organization’s supply process into a competitive advantage. E-procurement technology can give dental organizations this ability with a suite of automated tools for proactive spend management, including: 

    • Setting minimum and maximum budget alerts
    • Creating order rules and workflows for who orders what
    • Automatically approving/denying purchase orders
    • Enabling or disabling user permissions
    • Notifying the right person for event triggers such as broken rules, order volume, etc.

Automated PO review and approval workflows can be tailored to any organization’s procurement process, bringing a healthy mix of freedom and control that empowers procurement leaders to design a spend management environment conducive to their organizational goals.

What size does my practice need to be to start considering dental procurement solutions?

The benefits of an all-in-one procurement solution can be realized at any level of organization, regardless of how many dental offices you are operating or what your order volume is. Most dental practices spend anywhere from 5-8% of their revenue on clinical procurement. However, with an effective dental procurement system in place, many DSOs are able to reduce this cost to 3% of revenue or less, not including the total cost of ownership.

dental_supply_expenses_cost_of_revenue
SCALABILITY

For dentists and dental specialists who wish to pursue an exit, implementing e-procurement software can help increase your valuation. Standardized and structured operational processes, especially for cost drivers such as procurement, can indicate how scalable a practice is, possibly warranting a higher valuation. More importantly, a structured approach to purchasing behavior produces data, which can be captured in one centralized system. With all the organization’s data in one place, the true savings of each supplier, and the KPIs that make each office run more efficiently, are easily quantifiable – an attractive proposition for investors. 

Regardless of the size of a dental organization, a digital procurement platform helps provide a wealth of benefits. Dental procurement software makes it easier for DSOs to onboard new practices efficiently, while maintaining purchasing standards and alleviating any integration pain points for the doctor or staff whose practice is being acquired. And as more and more dental practices look to join together under a DSO structure, having a predictable and duplicative process for sourcing, procuring, and paying is a proven way to get the most out of your supply chain and stay competitive in an ever changing landscape of buyers and suppliers.

Finding the best procurement software for your dental organization

According to a recent survey, 22% of dentists are seeing new opportunities that have emerged because of the pandemic. As businesses delve deeper into technology, analytics, and automation, enterprise procurement software is only getting stronger. And with dental-specific procurement software designed to meet the needs of DSOs, there’s never been a better time to take your dental organization to the next level.

CureMint is the leading provider of dental procurement technology helping dental organizations scale across North America. With a holistic approach to procurement and an intuitive platform optimized for dental practices, CureMint helps dental organizations increase spend visibility, automate workflows, and gain better operational efficiency. Learn how CureMint can cut costs and streamline procurement for your organization today.