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How a Single Location Practice Can Obtain DSO Type Discounts

October 4, 2021

Think only DSOs have the volumes necessary to achieve DSO level discounts? Not so. With the right tactics, systems, and processes, single location practices can obtain deep DSO-like discounts on their dental supplies. And don’t worry, it’s easier than it sounds.

There is no need to price shop every item yourself, although we make it easy for you to do so if you like, with real-time market pricing and availability on over 400,000 products at your fingertips. Doing your homework and getting to know market pricing and who the aggressive players are, is never a bad thing. But it isn’t the only, or even the best, way to save.

An automated RFQ process is a simple but powerful process that allows you to leverage your purchases for better pricing so you can play like the big guys and save like them too.

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    Request for Quote (RFQ)DSO discount

    From Investopedia, a request for quote (RFQ), also known as an invitation for bid (IFB), is a process in which a company solicits select suppliers and contractors to submit price quotes and proposals for the chance to fulfill certain tasks or projects. The RFQ process is especially important to businesses that need a consistent supply of a specific number of standard products.

    Simply put, an RFQ asks suppliers to quote on your needs, saving you time while presenting them with the opportunity to sharpen their pencils and put their best foot forward. Selecting and awarding business is tactical procurement rather than transactional purchasing as is done with the intention to shift volume from other suppliers in exchange for special pricing.

    The RFQ process is made up of four phases: preparation, processing, awarding, and closing. Method streamlines, standardizes, and automates these processes, making it easy for you to play, and save, like multi-practice DSOs.

    Preparation

    Methods pre-vetting of dealers mitigates your risks and allows you to safely increase competition. You can issue your RFQ to a list of vendors, resting assured you’ll receive authentic, licensed products from legitimate vendors.

    Firstly, consider who you want to put the quote out to. In your first few rounds of RFQs, you likely want to cast the net wide and ask them to bid on a specific order to be fulfilled. At this point, the more knowledge you can gain, the better. You’ll also start to attract the attention of new suppliers, creating more competition for your business, and the better you’ll be able to negotiate.

    However, as your procurement practices mature and you have gathered enough historical data to know your monthly requirements, you may want to put out an RFQ for longer-term or higher volume commitments.

    Processing and Analyzing Bids

    The utilization of streamlined procurement software provides a uniform format that aids in the bidding and comparison process. Suppliers are asked to respond digitally, and inputs are automatically loaded into your system and displayed in a user friendly, easy-to-compare format.

    However, now comes the tricky part, deciding on your steps forward. Awarding business should be a tactical move, with thought given to longer-term strategies. A little extra effort here looking “outside the box” can go a long way because there is more to good procurement than just pricing per item.

    Ask Your Supplier Questions

    Humans often tend to have a hang-up with asking for things. However, when it comes to negotiating yourself a better deal, it’s a roadblock to cost savings that is easily overcome. Take a moment to make the ask and give your suppliers the chance to surprise you.

    And here’s one vital piece of advice to always remember when selecting your vendors. It’s easier to get a trusted, proven supplier with impeccable quality and service standards to come down on price than to improve quality and service with a less than par supplier who offers aggressive pricing. Oh, and another thing, never trust the outliers. If one supplier is offering far lower pricing than everyone else, it could very well be legit, but always ask why.

    Procurement, More Than Just Pricing

    Although it’s a crucial first step, there are more avenues to be explored when it comes to improving profitability and achieving a healthy balance than simply looking at an item’s purchasing price. Taking a look at opportunities for early payment discounts is another way to lower your costs while requesting extended payment terms and selecting vendors with lower lead times can improve cash flow.

    Some suppliers may even offer training programs, a more impressive product catalog, or better warranties. Let suppliers know that although a competitive pricing per unit is crucial, sweetening the pot with value-add payment terms and services may set them apart from the competition and make for the type of long-term, mutually beneficial partnerships you’re looking for.

    Making the Ask

    Although you can simply jump to awarding the business to the vendor that submits the lowest overall bid by issuing a purchase order, it’s worth your time to take a moment and ask suppliers to requote. If you have preferred suppliers you have a history with, you could choose to give them the last right of refusal and see if they can beat out the other players.

    However, it’s important to play fair as this ensures suppliers don’t feel like they’ve wasted their efforts and maintain their interest in your business. Always keep in mind and abide by procurement ethics and the dos and don’ts of supplier relationship management.

    As we have said before, we understand not everyone fancies themselves a master negotiator. But in truth, you don’t have to be. More often than not, once you’ve laid the groundwork by creating a competitive environment, have done your homework on market pricing, and issued RFQs, it really just comes down to making the ask.

    Gone are the days of shady negotiating tactics, be direct, honest, and transparent in your dealings and communication. Salespeople are just people who are just looking to do their jobs. Your transparency and ethical procurement practices will be greatly appreciated.

    Award

    It’s essential to keep in mind that there are costs incurred for every purchase order that should be considered. Dividing orders into a multitude of purchase orders can come at a high cost. When comparing pricing and deciding on how to award orders, make sure to keep in mind the pitfalls, such as shipping and labor costs, that may end up taking a bite out of your cost savings.

    If you’re ready to level up and are looking to move to strategic supplier relationship management, now’s the time to build your strategy and award your volumes accordingly.

    Taking the time to give suppliers a chance to sharpen their pencil goes a long way in building stronger, more conducive long term relationships. So go ahead, don’t be shy, and make the ask.

    Method’s procurement management system automates the best practices that ensure proper closing of an RFQ. Prices from submissions are automatically populated into the purchase order upon creation, and the three-way match process then cross validates the data from PO to invoice. Systematic, streamlined processes create accountability and help you avoid price creep and reduce your dental supplies costs.

    Use The Software They Use

    Learn to play like the big boys, and you’ll save like them too. With Method, you can have the systems the big boys use to help them manage the entire process. Contact us today to see a demo and ask any questions you have to one of our dental procurement experts!