Your dental practice uses a wide array of supplies to serve its patients, likely including both branded and private label products. Analyzing how well you purchase those supplies allows you to identify opportunities for improvement. By better leveraging your buying power, you can realize cost reductions and increase operational efficiency, improving your profitability.
In this post, we’ll cover the most critical aspects of procurement analytics and how they can provide insight into your inventory management and procurement habits and practices.
Increasing visibility on your procurement habits opens new avenues of effective business management, so you can learn to work and buy effectively and get on with taking care of patients and scaling your business.
Whether you’re a DSO or a single practice, read on to find out how dental procurement analytics can help.
Dental procurement analytics empower better spend management, helping you take control of your supply purchases so you can improve profits and free up cash flow.
Improve profits and cash flow by:
The right spend data can assist you in transitioning your procurement lifecycle to a savings lifecycle and implement the governance you need to execute on savings projects, tracking improvements to your bottom line as you progress.
By visualizing trends across multiple locations, departments, categories, and even at the most granular product level, you can highlight opportunities for improvements by identifying synergies and anomalies. For example, did you purchase too much of a certain item that then sat in stock for far too long, or buy the wrong compound and then have to rush in the right one and pay extra fees? Dental analytics can help you avoid these types of costly mistakes.
Procurement analytics will let you know how you’re doing. We know that ideally, a dental practice will spend 4% to 6% of its overhead on supplies, for an office that spends $650,000 on overhead, that comes out to be $26,000 to $39,000 a year.
However, many dental practices don’t meet the ideal benchmark. According to an Aldrich report, the average single dental practice spends 7.2% of collections on supplies, which means there’s plenty of money being left on the table. Procurement analytics can help you monitor the spend of each of your practices separately and compare against benchmarks so you can see where you should be doing better.
You can also analyze your purchases by department or category to further fine-tune exactly where you may be going wrong or improve future materials cost forecasting.
As we’ve said, your dental office relies on a very long list of dental supplies required for providing the high level of patient care that you do. Managing and tracking each transaction—including the supplier, manufacturer, and supplier part numbers, pricing, dates, etc—for each and every item you purchase via spreadsheets and emails is extremely cumbersome and prone to error.
Historically, garnering procurement analytics meant digging out documents upon documents, gathering everything onto a spreadsheets and manually building reports. This is why most dental offices lack good visibility into their past purchases. Without the right software solution, it simply isn’t viable for most offices to spend the time needed to track, never mind analyze their expenditures.
Today, powered by automation, procurement analytics can combine data from many different sources and aid in informed decision making, even predicting future purchases and helping to create budgets.
Perhaps most importantly, procurement analytics allow you to measure business success by monitoring against Key Performance Indicators (KPIs) such as average onhand inventory, turnover rates, inventory write-offs, and cost savings.
Know how much you spend on a specific item or with each vendor, so you can roll out procurement strategies that leverage your volumes for better pricing.
For instance, you may be able to standardize your purchases to better leverage volumes across locations by having each location move to a private label alternative and negotiating a special rate with the manufacturer. Or, to avoid stockouts, your employees could be over-purchasing items with a short shelf life, causing you to incur a financial hit once they expire. With better visibility, you can better plan and avoid overbuying and wasting stock.
The right procurement software will have all these capabilities at the ready, so you can quickly improve your dental inventory management and make for a calmer, more profitable practice that has all the supplies it needs and none it doesn’t.
Your spend analytics should allow you to look back at past procurement habits to determine what you’re likely to require in the future, extract valuable information for negotiations, as well as identify opportunities for improvements.
To enable informed decision making, you’ll want to look at your procurement data from different angles and ensure you can answer any questions you may have.For example, your procurement analytics should be able to show you for any given time period:
Extracting valuable information that can inform decision making and drive strategy involves pulling together purchasing history in ways that allow you to look at all angles of your expenditure, including all relevant data points such as product, price, quantity, supplier, unit of measures and even payment terms and delivery location.
By providing the right information from the right view point, spend analysis can assist you in looking beyond past performance and guide you in assessing future performance, trends and requirements as well.
By offering a consolidated view on procurement spend, procurement analytics can help dental organizations to analyse, predict or improve business performance. When utilized effectively, procurement analytics can drive better decision making and improve supplier relationship management.
Although every practice may have their own way of evaluating what is best for them, here are a few key points that may help you in accessing the suitability of procurement analytics for your dental practice or organization:
Procurement analytics can pay off in sizable financial benefits, but to effectively implement their use, you must first define and prioritize the business problems you are looking to solve or processes you are trying to improve upon.
Looking to implement cost savings strategies, standardize the items purchased across locations so you can better leverage spend, or wrangle your purchasing to come in under budget?
Setting your priorities will allow you determine the types of data you’ll need and the kinds of insights required to drive the results you’re looking for.
If you haven’t yet started on your better procurement journey, now’s a great time to start, and Method Procurement Platform with analytics will help get you there. By delivering the benchmarking, insights and performance evaluations you need to ensure improvements, secure cost savings and improved profits.
Discover the ultimate method for driving dental supply savings, contact us now to request a personalized demo.
