We recently completed a Dental Inventory Makeover in Baltimore and wanted to share with you what does the process involves. It's a lot of fun for us and we hope you get excited so one day we meet you in person at your dental practice. Please enjoy! [embedyt] https://www.youtube.com/watch?v=-tBCVE7ZxYA[/embedyt]
We are excited to bring you this new episode from the Zen & Work podcast archives! In this episode, Tiger Safarov, Founder of Zen Supplies, and Dr. Andy Tran (Apex Dental Studio) talk with Dr. Mohiuddin, an owner, and doctor at the Chicago based practice Dentologie. Listen along as they discuss User (ie. patient) Experience, dental school, and the importance of having a long-term vision for your practice. Thanks for tuning in! Check out the Dentologie page for a look at professional dental care re-imagined for the millennial generation.
[embedyt] https://www.youtube.com/watch?v=gZ2Iw1HYmpc[/embedyt] Warning: uncensored interview A good friend of mine Dr. Bryan Stimmler and I seat down for a casual conversation at Bryan's home in Brooklyn NY. You can give it a listen or watch full length. We go in different directions, discuss dentistry, everything around dentistry and much more. Hope you enjoy it! Tiger
[embedyt] https://www.youtube.com/watch?v=9W1d0kHNAHA[/embedyt] Welcome to another webinar/interview with CEO of Studio Dental Lowell Caulder. We discuss how to match Physical space to their Virtual Space in Zen, How to get entire team compliance, and in case of turn around how to onboard new team members on Zen within minutes. Lowell explains their hiring process, books that helped him to become the Please Enjoy! Conversation Notes and Recommendations: 1. Image of the storage with E1/E2/E3/E4 Also an image of their Zen Setup with Storages 2. Book recomendation: -Be the Boss Everyone wants to work for -Mastering Rockefeler Habits - Dare to Lead 3. Software Recomendation: - https://bonus.ly/ - Slack
I’ve been asked this question a lot of times. Every time we onboard and train new dental practice this question comes up “How do I track my free goods?” My concern, they are not FREE!! There is no Santa Claus. There is no Easter Bunny. There is no such thing as FREE DENTAL PRODUCTS! Now here are my top 3 reasons why FREE goods are a bad idea to focus on: Reason 1: Cash is King and Cashflow is the vein system of your Practice! Buying more than you need is killing your cash flow. Can you imagine Starbucks or McDonalds saying “Let’s buy beans on special and we will use it in the next 6 month”? Let’s apply this example to a specific use case, most of the time and for most practices, you need one box of lidocaine (average cost $30/box). But there’s a special, buy three get one free (theoretically making a unit price of $22.50/box – paid for 3 and divide the total by 4 units). All of a sudden your attention is on buying three items because you’re going to get one box for free. See what happens here, you are buying three boxes versus one, therefore, you’re spending extra $60 on buying these two additional boxes. Therefore, you spent a lot more money than you should have. On one item it seems minor, only $60, however, this happens across 3-5 items per order, totaling $250-400 in extra spend per ORDER. 3 Problems arise from this reason: Expired Products: Typically these items are going to be sitting on the shelf and at some point will get expired. Cash should be used on marketing and other revenue producing activities. The business decision that you are making that extra cash flow is going to be sitting on the shelf (in the form of a product) versus producing you the money is terrifying. By the way, as of April 2019, investing an additional $250-$400 a month on Facebook/Instagram marketing can generate significant ROI. You are becoming a warehouse. Some offices are willing to turn an operatory room into storage!!!! Please avoid doing this. Most products can be shipped within 3-7 days. There is absolutely no need to stock items for more than 2-4 weeks. Don’t be in the warehouse/logistics business. Reason 2: Undersupply vs oversupply I remember being a kid. If I have a jar of cookies for the whole day and let’s just say they’re 10 of them, I’m going to eat the whole 10. But if I have a jar with just the one cookie, I’m probably going to get that one cookie carefully throughout the day. You get the idea! It’s the same mentality in a dental practice. If you’re going to put a stack of bibs, all of them at the same time in front of the team (where your daily stock is), most likely you’re going to use a lot more than if you just put 10 a day and you say this is all we’ve got. Or if we have 30 patients on the schedule, we’re going to put 35 on the shelf and that’s all we got. I visit practices weekly and it’s very common to see carpules, burrs, composite tips and all sorts of other things laying around on the floor, behind cabinets, and even in the garbage can. From day one, each practice should establish min use or develop a checklist for Lead Assistant to use when restocking the room with exact QTYs. Reason 3: Most Manufactures also don’t like free goods! During my meetings with manufacturers and distributors, everyone rolls their eyes on free goods. Then I ask “Why are you still doing it” and the answer is “Well, everyone else is doing it”. The point is it’s an old trick of getting people to buy more. At least at Zen, we are approaching it differently. Set a minimum price for the product and let the customer decide how many they need without forcing them into specials and free goods. Many times when you see a product on special or with a free good, you can purchase it at a lower cost per unit if you ask your rep (or ask your supply rep to get manufacture rep involved) or if you are part of the buying group. Conclusion: Above are just my very subjective reasons. However, after visiting 15-25 dental practices that consistently run dental supply budget under 4%, I realized the secret is in buying only what you need! End of Story. “If you look at how to get your practice to 5% overhead on dental supplies or below, it’s not that complicated. 80% of it is managing QTYs and only 20% looking for cheaper alternatives. With a proper inventory system and good discipline, you should be at 5% even using your favorite supplier” – Dr. Benjamin Johnson, AcreWood Dental P.S. If your budget above 6% it might be budget allocation issues. You can check my interview with Jake Conway where we discuss if Implants or Ortho should be in dental supplies or Laboratory. What are your thoughts? Let’s discuss this together!
We traveled a long way and our first stop in Texas did not disappoint! We were blown away by the systems put in place at Acre Wood Dental. They got After embracing Zen, this office dropped their supply overhead from 10% in October to 5% in December! (And they are doing it in January) Stay tuned to the blog to see more details on this and other success stories from our AMAZING Zen Family.
Budget is one of the main reasons dental practices sign up with Zen. A single place for all distributors provides a better platform to manage the budget. Therefore that's one of the questions we ask and the answer can be anywhere from 2.8-12%. To be honest, when I hear anything more than 7% I tend to think it's primarily due to wrong budget allocations. So I decided to ask my good friend Jake, who is VP of Business Intelligence at Flagship Dental Group and works along the side of Dr. Mark Costes, to help me out on this one. I asked Jake proper allocations, sample form and what targets practices need to look for. Hope you enjoy it. Tiger Savarov: You and I went on this back and forth several times, and I still keep coming back to it, I guess, until, with your help, I want to write a solid piece on my blog about budget allocations and the details of the budget allocations. So I do want to take maybe 10, 12 minutes of your time to go into this because you have so much perspective, you have so many clients coming to you. Tiger Savarov: I'm just going to fire up some questions at you and let's go into the details. Jake Conway: Sure, go ahead. Tiger Savarov: Okay. So, first of all, when people come to you before they join the DSI and mastery group, what are the percentages that you see that people spend on supplies? Jake Conway: Oh, the percentage of the supplies. So once we sift through the missed allocations and get a true percentage, I'd say it's between 6% and 8% on average before they come to us. Tiger Savarov: Okay. We will get to the missed allocations. What do you think drives that 6% to 8%? What's your gut feeling? What's the number one reason? Jake Conway: Just not knowing, just unaware of what they're spending, unaware of their ordering processes, and unaware of their inventory, so just overall general unawareness of those three, I guess, three underlying issues in the practice. Tiger Savarov: And then when you sit down with them, what's the number one thing you tell to do? When you see that high percentage, what would you say that would help them to get pretty quickly to a lower number, at least cut a percent out? Jake Conway: I would say start by looking at what a budget would be. So yeah, we can look at percentages, but what's that dollar amount look like and what are we currently spending per month? *Tiger: Take your last month collections (or as Jake suggested net production) and multiply that by 4%, that’s the dollar amount you are looking to spend per month Jake Conway: Once we find out that dollar amount, then we can start looking at how our ordering processes work to start, who's in charge, how does that work? Is anyone in charge? I guess alongside that is to get a handle on who you're ordering from. So, looking at ways you can shave two, three, five, 10, sometimes 15, 20% off of each item line and kind of start there to see how we can start shaving and kind of get a spreadsheet going or a list of the supplies you're currently ordering, who you're ordering from, and then start the negotiation game there. Tiger Savarov: Got it. So why are you doing budget off of the collections? Because I know you and I and Mark talked about this extensively. Why not productions or net productions? Why do you always go by collections? *Tiger: This is where I have my own point of view. I like to spend what’s on the bank for the last month. I see that net production is a more accurate way to plan for supplies. However, this is just my POV. In the end, we are talking about minor difference. Jake Conway: Sorry, I meant to say ... did I say collection? I meant to say net production. Tiger Savarov: Okay. Jake Conway: I mean, ordering is based on that and, of course, you have ebbs and flows in the collections. So it is based on net production just because that's what's driving the ordering. It's not collection. Tiger Savarov: So now let's look into the missed allocations. What are some missed allocations have you seen? Jake Conway: Oh man, a lot of implant material. We actually have a lab/specialty item line and that's where we allocate implant supplies. I see a lot of like BioHorizon, which is I think along the same lines. Some Ortho lab cases will go into supplies (Invisalign), and equipment as well. Equipment is a big one. If the accountants or CPAs don't know if it's a Henry-Schein order or something like that, even like a chair repair or whatever, a lot of equipment gets snuck into supplies as well, which actually should go in facility equipment. Jake Conway: So between facility equipment, lab, and supplies, there's a lot of misallocation between those three item lines. Tiger Savarov: Okay. Would it be possible if you share how you do the allocations, like a spreadsheet or a screenshot, of what you suggest? Jake Conway: Yeah, I can actually send you a ... I have a 2019 allocation cheat sheet that breaks all that down every category. Tiger Savarov: Awesome, awesome. So under supplies, you're just going to have dental supplies, and then you have a lab bill or the lab line item, and under the lab, you're going to have the implants and ortho and stuff like that, right? Jake Conway: Yes. That will fall into a lab and what we're calling this year labs/specialties. That way we can discern the difference between the two, lab and what true supplies are. Tiger Savarov: Got it. And what are you shooting between ... So what's your goal for supplies when it's properly allocated and what's your goal for the lab/specialty? Jake Conway: Good question. So ultimately, we want to get our supplies to 4.5% or lower and lab, we want to get that to 7% or lower. So between the two, it's 11.5% Tiger Savarov: Okay. Where have you seen people putting CAD/CAM? Jake Conway: Supplies. A lot of times it goes in supplies. I've seen it in office supplies as well, but that should be ... it should be facility equipment. Tiger Savarov: Well, what about the blocks? If we look at the ... like if people are buying ... Jake Conway: Oh, the blocks themselves? Tiger Savarov: Yeah. Jake Conway: Yeah. That usually goes to supplies, which should go into the lab. Tiger Savarov: So that would be lab/specialty? Jake Conway: Correct. Category Sub -Category "Overhead Goal %" Facility & Equipment Rent Facility/ Equipment Repair Equip Lease Storage Real Estate Tax Landscaping Alarms/Fire Protection Building Insurance Cable/Utilities Computer Hardware/Repairs Dental Supplies 4% General Dental Supplies Ortho Supplies Lab Fees/Specialties 7% Implant Materials Crown and Bridge Ortho (Invisilign) Specialty Supplies Tiger Savarov: Okay, got it. So I've talked to some of the offices, probably the last question. I've talked to some of the offices, right, and some of them are very successful, and you and I both know people that run at 2.8%, 2.9%. Obviously, the reallocation plays a huge role, right? Tiger Savarov: They would put separate items in the lab/specialty separate in supplies, but one of the things that I hear from some of my offices, they say, "Look, I want to put implants as part of the dental supplies because if we start doing implant cases, our collections are going to go up or the net production is going to go up. So we want to make sure that it's in one category so that the budget is there if it goes up and down based on the net production that we're doing for the implants." What's your take on that? Jake Conway: I mean, you could track that in a lab. If you have a big lab spike and overhead in general spikes, there are a few things that could come out of that. Either we're not collecting and collection percentage drops, maybe the treatment of customers is going down, whatever the case may be, but the bottom line is if, if we see a spike in the lab or overhead, then we can look at the different contributing factors to that. So I would say that's a mute point because either way, you can track that. Tiger Savarov: But technically it doesn't matter. As long as they know where they're tracking it, they can put it under supplies, right? Jake Conway: They could, but just know that that's going to obviously fluff the supply category. Speaker 1: Have you seen people, and again, we'll look at your sample. Once you share it, I'll include it in the article. Have you seen people doing these allocations within the supply category? Like they will have dental supplies, and under dental supplies, they'll have a subcategory as they would do in QuickBooks? Jake Conway: Yes, I have seen that often. In fact, so I've had actually some of the clients request in our reporting where we break out implants under lab, so we can track that stuff like implant supplies and so forth, or like Ortho sometimes we'll break out Ortho Sub Category. So I do see that, especially if it's like a big specialty office with GP/Specialty, we will just have like a blended reporting where we do break out like specific item lines out. So we can track those separately, but ultimately it does fit the bottom line of either supplies or lab when it comes to that, so, to answer it in short, yes. Tiger Savarov: Would you suggest startups or the growing private practices to start doing it from the get-go? Jake Conway: I mean it's nice to have that broken out for sure. If, your plan is to be a specialty of multi-specialty office or if you really want to push, you know, big cosmetics or whatever, you know, I would say that it might be a good, a good idea to go ahead and break those up just so you can track that as you grow with it. You know, if it's sort of built in, you can see the impact of not only production collection, but the cost associated with that. Tiger Savarov: Got It. Anything else you would add to this question? What you've seen, anything that I missed that I should've asked you? Jake Conway: I would say to make sure we're tracking on an accrual basis because sometimes that will definitely jack with the numbers month to month. So, accrual, what I mean by that is let's say you get, you know, a lab or dental supply bill, we're going to record that bill when it comes in rather than when we pay it because that's the truth, you know, the true nature and the true performance of the practice itself. Jake Conway: So when you're trying to, you know, for dentist's office, they are trying to nail down their budget. I've worked with your CPA to get accrual basis going on the expenses side and make sure that's in place so you can get a truly accurate representation of the expenses coming in. Tiger Savarov: So meaning you got the bill from your lab April 15th and even though you have been at 30 and you're gonna pay it May 15th, you need to record as the April 15th bill? Jake Conway: Absolutely. That's exactly right. Tiger Savarov: Okay. Awesome. Well, I hope this would be one of the pillars that we don't need to go back and forth on, too because I've been asking you this question probably like 55 times, and I really appreciate you finding the time for me to do it to answer these. You can contact Jake directly for a more detailed template for budget allocations and consulting on your financials - Jake Conway jake@custompracticeanalytics.com
