As the owner or office manager of a dental organization, one of your primary responsibilities is maintaining a specific budget. A key facet of this responsibility is to make sure you are saving money on dental supplies. A common solution to this issue is to shop around on an open marketplace to find individual materials and equipment at the lowest price your research uncovers.
On the surface, it makes sense right? Search for a product, compare the prices you see, and purchase the lowest-priced item. Repeat this process until the end of time. If this is the method you use or considering using for dental supply purchases you would expect to keep things under budget and get good deals. Unfortunately, you would be wrong. you
As seasoned veterans in the dental supply chain industry, and a group that specializes in dental supply procurement, what we have found is that most of the time this method of purchasing has hidden costs associated with it. Before you continue (or begin) shopping for your dental supplies on a marketplace, consider the following hidden costs: Time, Billing & Accounts Payable, Shipping, Customer Support, and Unplanned Variance.
Hidden Cost 1 – Time
Any well-oiled business knows that time is money. The time that you spend doing product research, creating purchase lists, making comparison notes, filling out various forms, and ordering from multiple resources ultimately affects your bottom line. While this amount of time may seem minimal initially, let’s look at some numbers.
Let’s say Super Cool DSO’s office manager, Julie, is in charge of ordering supplies for 3 locations. Each location has a list of 25 things of varying brands that need to be purchased on a monthly basis. Therefore, each month Julie is searching for the best price on up to 75 individual products and places orders. If Julie is ultra-efficient she can spend as little as 10 minutes on each product’s research, comparison, and placing orders. That means that conservatively, Super Cool DSO is paying Julie to spend 12 and a half hours each month just ordering supplies on the marketplace. That doesn’t even account for products that take longer or if there are additional items out of the norm needed.
That’s more than a full day each month unnecessarily wasted.
Hidden Cost 2 – Billing & Accounts Payable
If you’re making purchases through an online dental marketplace, you are most likely paying with a credit card. If you’re paying with a credit card, you’re paying extra processing fees. Depending on the marketplace, payment method, and processing platform, you could be paying up to an extra 5% on all products in processing fees or surcharges. These fees are eliminated if you use a purchasing partner as they cover these extra expenses through different methods and flat fees. Unfortunately, if you use an online marketplace for supplies you likely won’t get this option.
Another facet of extra costs for your payment system is with regard to your Accounts Payable team or system. To circle back to the cost of time, when you are purchasing from a variety of marketplaces in hopes to get the absolute best deal, you are making more work for your accounts payable team. You are creating more charges, more vendor setups, more invoice tracking, etc. All of these little things have the potential to add up to more time and more room for error in your books.
Hidden Cost 3 – Shipping
The unrealized cost of shipping when using marketplace bargain shopping is twofold: time and money. With multiple vendors, marketplaces, shipping policies, and no consistency in where you are purchasing from you open yourself up to the increased risk of shipping delays and errors. Humans make errors. Those errors have an impact. When running a business, you have to evaluate the cost of additional room for error when managing multiple locations, multiple products, and multiple shipping addresses.
You also need to consider that with more shipping opportunities you are more likely to get affected by delays. This is especially true if you are shopping in an online marketplace every time you need to order and you don’t have a streamlined subscription or recurring order process in place. To put this into perspective, you can expect that every order you place has between 15-20% chance of being delayed.
Actual monetary expense is another shipping consideration. It’s simple, every time you order something and need it delivered you pay a shipping fee. If you are purchasing items from multiple places, you’ll have multiple shipping fees. Not to mention, the global cost of shipping and freight is continually increasing and this trend doesn’t appear to be changing anytime soon.
Hidden Cost 4 – Customer Support
You may be thinking that the cost of poor customer service is minimal and that it doesn’t actually equate to actual monetary savings. You could be right. However, you could also be sadly mistaken.
The best case scenario is that you order a variety of products, you get decent deals, they arrive on time, and everything arrives just as you expected. In this case, you don’t even need customer support. Everything is sunshine.
Alternatively, you could be missing an item. Maybe a safety seal was broken on an item. Maybe you received too few of something. Perhaps an item wasn’t what you thought it would be or ended up needing and you want to make a return. What now? Now you need to track down a customer service representative to help. If you’ve ever purchased something, dental supply or otherwise, from a major online retailer you know that this is usually not a piece of cake.
The time and effort (and frustration) you are going to expend tracking down a human representative and getting an actionable piece of advice or assistance is going to be well over what you bargained for.
Hidden Cost 5 – Unplanned Variance
The cost of unplanned variance and micro-decisions made by dental assistants and other staff are an adjacent cost of purchasing through an online marketplace. To illustrate how this problem leaves money on the table, we are going to revisit Julie, the purchaser of supplies for Super Cool DSO.
Julie is executing her usual process of taking the materials each location needs monthly and is getting ready to start searching for prices. She has to do this every time she makes a purchase because the lists change, the brands vary, and there’s usually a new or different item each month. There is no formulary or consistency. With Julie’s method there technically doesn’t have to be. She is going to shop around each month, so all she needs is a grocery list of items.
With this ideology, there is room for unintended changes and input. So let’s say that Julie has her lists from each location and is working through finding items. During this process, she gets a call from Dr. Dentist at Location One. He says that his assistant has a last-minute change to a product or request. Now Julie has more work. She has to adjust and change her order. This common issue seems minor but leaves money on the table and wastes time.
This process keeps a very human element at play. Humans change their minds all the time and make mistakes. These things are minimal if they happen once. However, if this is the process you use every single time you have an increased risk of wasting more time and money.
The allure of buying your dental supplies on a marketplace is real. There are so many marketplaces available. They all have a huge catalog of products and a wide variety of prices listed right on the site. There is an appealing idea of total ownership and full flexibility in the process in turn saving money. These are the reasons this is the prime choice and method for many dental organization purchase processes. Like most things this shiny and alluring in life, this is too good to be true.
So now what? What are you supposed to do? You need to get organized and find a purchasing partner. While it may seem that you are relinquishing your purchasing freedom, what you are actually doing is handing over a messy, flawed process to experts. The goal in doing this is to keep you organized, save you time, and ultimately save you money.
Maybe you don’t want to work with a traditional Group Purchasing Organization (GPO) and are wary of the pitfalls and closed doors of that system. We get it, that’s why SourceClub was created. We are a purchasing organization that is an alternative to a traditional GPO.