4 reasons to reevaluate your materials inventory

January 16, 2019

Article

Poor materials inventory management can have implications for your patient experience, staff morale and productivity.

How a practice manages its materials inventory affects its bottom line. No dentist wants to waste money, at least not if he or she is going to stay in practice.

However, wasting money isn’t the only challenge presented by materials inventory mismanagement. Poor materials inventory management can have implications for your patient experience, staff morale and productivity too.

Here are four reasons you should reconsider how you manage your materials inventory at your practice.

Reason #1: Minding the bottom line requires tight materials inventory management

The practice overhead should be as low as possible to be profitable. One of the sources of overhead in a dental office, per Four Quadrants Advisory, a dental financial planning firm, is inefficiencies in ordering.

Inefficiencies in ordering can lead to several problems. First, you can over or undersupply the practice. When you oversupply, you tie up money and space in the office; undersupply creates patient experience problems, staff stress and higher costs, to name a few challenges.

Also, as Four Quadrants points out, if you order from several suppliers, you’re an average account to many companies rather than a large account to one. In other words, you can’t leverage all your ordering with one vendor to earn a higher discount.

Over a decade ago, Dr. Roger Levin wrote about “Just in Time” inventory management for the Journal of the American Dental Association (JADA, 2004). Originating in Japan, Just in Time inventory management means you order things as you need them (i.e., at the last minute) rather than having much inventory on site. The system helps businesses avoid tying up capital in materials that sit in storage. Dr. Levin advocated for practices to modify this concept and maintain in inventory a 30-day supply of necessary materials.

The practice enjoys several benefits of the modified Just in Time inventory, according to Dr. Levin:

1. It frees up cash flow that would otherwise be tied up in materials for other investment opportunities or to enhance the bottom line of the practice.

2. It maximizes the space in a practice by optimizing storage.

3. It allows the dentist to make changes to what he or she uses day to day without wasting the materials he or she already purchased of a previous product.

4. It illuminates for the practice what materials it uses the most and which ones it doesn’t.

5. It creates a system for the staff to follow and promotes organization for inventory management.

“The overhead should be as low as possible if you want to be profitable,” says Dr. Sheri Doniger, an international speaker and the author of “Practical Practice Solutions in Dentistry: Building Your Successful Future.”

Dr. Doniger has a private practice in Lincolnwood, Illinois, just outside Chicago, and says her practice keeps a tight inventory because her practice is small. “We don’t have much space, so when I am ordering something like an anesthetic, I order just what I need.”

She also recommends exercising caution about what you bulk order on a deal. For example, if the deal is, “Buy seven, get one free,” you need to think about if you need seven and where to store them. Dr. Doniger also advises practices to consider what happens when the team members use the product you now have eight of and who don’t like it.

However, Dr. Doniger acknowledges that the deal could be appealing, depending on the product.

“I could see buying seven autoclave bag orders and trying to find a place to tuck those in because you use those constantly,” Dr. Doniger says. “However, for most things, you have to watch what you are ordering in bulk.”

Dr. Jeff Lineberry, a general and cosmetic dentist who practices in Mooresville, North Carolina, and a lecturer, recommends reviewing your materials in inventory on an annual basis to see what you use a lot of and what’s sitting there expiring on the shelf. A yearly review not only ensures you don’t waste money but also shows which materials to pre-purchase at year end to offset taxes for the upcoming year.

“If you want to spend tax dollars and you see you use a ton of a particular material, then you might want to buy some at the end of the year,” Dr. Lineberry explains. “But only if you go through it really fast.”

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Reason #2: Having what you need when you need it is essential to productivity

Productivity is critical to practice management and leads to more revenue for the practice. The more work you do, the more patients you help. Increasing patient care also increases your billing.

Productivity is critical for staff. Staff are part of your overhead costs as well. Not only does more production from your team provide a better experience for the patients, but you also have a better return on investment for your labor cost expenses.

Productivity is also crucial for patients. Reduced chair time and elimination of multiple visits are excellent improvements to the patient experience. Furthermore, the happier the patient is, the more likely he or she is to return, leave better reviews online, and refer his or her friends and family.

Dr. Doniger believes productivity is essential to practice management. Recently, she discovered that she didn’t have the dental stone for an impression she had to pour up. Her solution was to borrow some from the dentist downstairs. “It was like borrowing a cup of sugar from the neighbor,” Dr. Doniger says.

Dr. Doniger shares that story because it demonstrates that there are some products that you don’t often use that can slip through the cracks. There are also essentials that you need to run a practice every day and some that you need to have once in a while.

“The last thing you want to do is turn down production,” Dr. Doniger says. “You don’t want to tell a patient, ‘I’m sorry. I can’t do that treatment for you because I don’t have the materials on hand to do it today.’"

Delegation is critical to the doctor’s productivity as well. Managing inventory is an excellent task to give to a member of the team.

Dr. Lineberry has his long-time assistant manage the materials for his practice. However, he says you can assign it to anyone on the team. “The person who opens the boxes and puts things away would be a good person to order material and manage it,” Dr. Lineberry says.

Dr. Doniger agrees but emphasizes that one person should do the ordering for organizational purposes. “You need to have a point person to do inventory control, especially if it’s a big office because there are so many different sites now,” she says.

Dr. Doniger compares inventory control to grocery shopping; you either like doing it or you hate it. However, with all the requirements for OSHA, infection control and regular patient care essentials, you should have a point person who takes time to assess the space to see what you have and what you need.

She also recommends taking time out of the daily huddle to discuss what the different team members need. You don’t want to be out of inventory on a basic dental material when a patient is in the chair.

“The last thing the assistant wants to do is look up at the doc and say, ‘I’m sorry, I don’t have any shade A2 composite today,’ or ‘I’m sorry ,I don’t have any more short-gauged needles.’ There are workarounds of course, but you don’t want to be in that situation,” Dr. Doniger says.

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Reason #3: New tools and systems are available to reinvent how you manage inventory

Inventory control is a term that describes managing all the supplies in the practice as well as maintaining storage and facilitating accessibility. The concept promotes the idea that you should have an adequate amount of given materials but not too much or too little supply.

Having a system is crucial to maintaining inventory control. The Wisconsin Dental Association (WDA) addresses the components of a materials inventory management system that will help you to avoid both oversupplying or undersupplying the practice:

1. Determine which materials need more oversight or control.

2. Keep a list/log and build in accountability for the staff.

3. Learn how much of a material you use and what event should trigger an order.

Let’s say composite resins are a material you use a lot of and you want to control the inventory on it. First, make a list of all your composite resins and have team members check it out on the log with their initials, so you know who is using what, how often and how much. Then, create triggers for ordering more product. For example, if you need to have at least one full composite while you wait for your next order to arrive, then the WDA suggests putting an ordering card right before the last composite on the shelf to remind you to place the order.

As the WDA says, the system can be analog or digital, but either way it’s imperative to let you know what you have and when you need to get more.

Dr. Doniger uses a spreadsheet that includes pertinent information for inventory management. She covers all the details of the product, manufacturer, where they order it, what the minimum order is, and how much they need to have on hand for a week or month. Then, everyone has a reference if the point person is out of the office for some reason.

“A lot of people don’t like paper in the office, but I think this is the perfect thing for paper. You can see it easily. You can access it easily if you can’t get to a computer and it’s something you can keep in the lab,” Dr. Doniger says.

For paperless offices, new practice management software features functionality that can help you manage your materials inventory. Many have cloud-based services that allow you to access the inventory control and distribution from wherever you are.

The materials change also. From zirconia to porcelain, adhesives to composites, materials are always evolving and improving, which can change how and what you take into inventory.

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Reason #4: Expiration dates can cause shortages even when you have plenty of the material

Expired product is a cost of doing business at many practices. Some experts estimate that hundreds of thousands of dollars’ worth of inventory get thrown out because the product expires in the stock room.

Maintaining awareness of and managing expiration dates are crucial parts of any materials management system. Dr. Lineberry suggests having an honest look at your materials’ shelf lives periodically. Do all of the materials have a similar expiration date in any given category? If not, which ones expire the fastest and which ones last the longest?

Another question Dr. Lineberry encourages practices to ask on a regular basis is whether your supplier always gives you the freshest supply. Dr. Lineberry says all suppliers aren’t the same.

“If I order from Henry Schein or Patterson, you would hope the shelf life on it is two years,” Dr. Lineberry says. “If you order it from mom-and-pop places, sometimes the expiration date might be 2019. It might not be the latest lot, so to speak.”

Dr. Lineberry has had a couple of incidents in which the materials expiration date was six months out or less. If he uses a lot of the material, then the date isn’t a concern. However, if he doesn’t use it often, then he could be paying for materials he might not have time to use.

“It’s like picking up a loaf of bread at the grocery store. You want to get the freshest loaf because you want it to last the longest,” Dr. Lineberry says.

Dr. Doniger says expiration dates could be a problem if you don’t maintain tight inventory control. If you have a comprehensive inventory control system, then you won’t be throwing away product that expired.

“You are going to be using all the bonding agent and you will have the new one when the present one is halfway finished. Plus, you know that there is another one coming,” she says. “But something like a local anesthetic with no epinephrine that you may not be using a lot of, you have to watch the expiration dates on that and then throw it away when it is past the date.”

An excellent relationship with your supplier is another critical element for managing materials expiration dates, Dr. Doniger says. The practice can’t control the expiration date on the product it receives from a supplier, but it can control from whom it orders future product. Dr. Doniger uses a mix of suppliers she knows well, from Patterson to smaller suppliers like Net32 and Dental City.

“I have not had a problem with getting close to expiration date product in a long time,” Dr. Doniger says.

References

1. Levin, DDS. MBA, Roger. “A Better Practice: Inventory Management.” Journal of the American Dental Association. Vol. 135, June 2004, 786-787. Web: https://jada.ada.org/article/S0002-8177(14)61322-2/fulltext.

2. Ibid.