The hidden cost of ordering errors in the dental industry

Nov. 1, 2008
Would you be interested in knowing how you, as a dental equipment manufacturer, could take a fairly simple and relatively inexpensive action to significantly eliminate errors associated with the ordering process, and by taking this action, save you and your dealers thousands (maybe even hundreds of thousands) of dollars a year?

By Joe Kennedy

Would you be interested in knowing how you, as a dental equipment manufacturer, could take a fairly simple and relatively inexpensive action to significantly eliminate errors associated with the ordering process, and by taking this action, save you and your dealers thousands (maybe even hundreds of thousands) of dollars a year?

Having been associated with the dental industry for more than 36 years, and having been responsible for many areas of the design, development, and production of dental equipment, I can state without any fear of contradiction that one of the most overlooked areas of substantial potential cost savings is in the product ordering process.

At one time in my career, managing the order department was one of my responsibilities. It was staffed with at least six individuals whose sole full–time duty was to attempt to create a “buildable order” (correct and complete) for the production facility. They were needed to deal with the many errors associated with the ordering process. Even with this staff of product–knowledgeable order checkers, errors got into production and even to our customers. In my routine contact with both manufacturers and dealers, I am told these problems continue.

There are many causes for these errors. Probably the biggest single cause is that dental equipment is fairly complicated and usually can be ordered in so many different ways. Adding to the complication of the ordering process is that there are “option–sensitive options.” Translated, that means that if an equipment option is selected, another decision(s) is required to place a complete and accurate order. It has been reported that there is one manufacturer who has a product that can literally be ordered “a million different ways.” Further complicating the ordering process is that our industry has some idiosyncrasies. For example, manufacturers may have different names for the very same type product, e.g., delivery units attached to a dental chair may be named an OTP (over–the–patient) or a CMU (chair–mounted unit). Another cause for error is that too many companies – in their haste to get a product to the marketplace – simply “let the paperwork follow” (get the product made and shipped and let the peripheral support data follow at a much lower priority). Sometimes changes made to the product that affect cost and pricing are simply not documented. It is not reasonable to expect manual systems that many manufacturers rely upon to successfully deal with these and many other challenges. In fact, they do not!

The problems are further complicated by the fact that many companies are forced – perhaps by tradition – to produce and distribute thousands of copies of product literature, which contain many errors, at the cost of many thousands of dollars. These errors occur for the reasons stated previously, but are further complicated by the fact that they don’t have an electronic system in place to catch these errors. Specifically, there is usually no electronic check to determine if the current price list matches the catalog data they have already distributed. Most manufacturers find out, after the fact, that their catalog data does have errors and they have few viable choices for corrections. To recreate and redistribute the catalogs is very expensive and addendums are usually ignored by their customers. Usually, most manufacturers decide to live with these errors.

If it were possible to know the total cost of these errors in our industry, I am convinced that it would be astronomical. On a recent visit to a dental dealer, I was given a tour of their facility. We entered a warehouse containing a large amount of dental equipment in various conditions. I asked the question, “What is this?” The dealer responded, “Ordering errors.”

Where are the hidden costs associated with these errors? Space limitations prevent a complete list, but among them are: Some of a manufacturer’s key personnel spend endless hours attempting to remedy ordering errors (hours that could be spent on more productive tasks); incorrectly ordered products sometimes must be scrapped; additional construction costs, e.g., cost of digging up concrete floors; overtime needed to replace an incorrectly ordered product; air freight charges needed to expedite delivery of replacement equipment, etc. Perhaps the biggest hidden cost is the loss of business due to customer dissatisfaction.

The good news is that there are some very viable solutions to these challenges, and the results will be “found money” when manufacturers first acknowledge these problems and then look to modern technology to provide the solutions. One of the solutions is in the creation of catalog “configurators” used in the ordering process; and such technology already exists. Configurators will essentially require the order to be complete and accurate before the order can be entered. It also has the “intelligence” built–in to “know” what options are available, what exact information is needed to place a complete and accurate order, etc. Some manufacturers have already implemented configurators and have gained the many benefits they provide. Most of us already use configurators in our daily lives (perhaps without knowing it). When we go online to order airplane tickets or make hotel reservations, we are using configurators, and we clearly understand how easy they are to use and how they help us avoid errors and save time.

Another technology just being introduced in our industry is a “smart catalog.” This technology directly addresses the challenges of entering a correct part number, product description, and price. First, the smart catalog is compared electronically with an up–to–date interactive price list, all discrepancies are identified, and corrections made. The corrected data is then made accessible over the Internet within hours of when the corrections are made. There is no need to reproduce catalogs, send addendums, etc. When an order is placed with a smart catalog, the salesperson simply clicks on the desired product part number in the catalog, and the part number, description, and correct price are transferred to a worksheet, which then can be automatically converted into a contract, ready to be signed. All the data is linked to avoid typos, transposing, etc.

I think most manufacturers and dealers will agree that it is imperative, especially in our current economy, to find ways to reduce the cost of producing and selling dental equipment. Implementing configurators and smart catalogs are some of the best ways to achieve these goals. Those making this relatively small investment will be rewarded with many thousands of dollars in cost savings!

Joe Kennedy is the president of DentaCAD Corporation. For more information, Kennedy can be reached at (770) 271–4142 or by e–mail at [email protected].