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Although dentistry is a growing industry,1 many US dental laboratories are concerned about their future survival. Increasing competition from digital production and overseas manufacturers seems especially threatening for small and medium-sized businesses. One solution is to employ the very things that threaten—outsourcing and new technology. Many laboratory owners feel it is difficult to find reliable outsource partners, and no one wants to invest in technology that will soon become obsolete. But who would have thought that the “threat” of outsourcing would change so dramatically in the last 2 years? Or that using low-cost technology could help dental laboratories save so much money? Outsourcing now enables small businesses to compete head-to-head with bigger competitors—even low-cost overseas laboratories. And by harnessing free or low-cost technology, outsourcers can be used to fill gaps in your product line. In effect, small laboratories can now offer a “full-service” product line without increasing expenses.
Canvas Your Client Base
To provide a full-service product line, you first need to learn what your dentists want. This may involve swallowing some pride and asking hard questions about the restorations you have been selling for years. Due to intense product marketing, rising metal prices, and/or lowered insurance reimbursements, dentists are now seeking specific products. The days when dentists relied solely on their laboratories to choose quality porcelains, alloys, and branded restorations are rapidly disappearing.
Start your dentist survey by creating a list of general questions about material preferences (hand-crafted versus CAD/CAM, high noble versus all-ceramic, etc.), and then ask detailed questions about your current product line (ie, what’s missing, what products are no longer of interest, etc.). Success depends on being systematic and precise. The process of talking with your clients is just as important as the end result. Therefore, treat these meetings as you would a breakthrough sales opportunity. Schedule the meeting ahead of time, prepare your questions in advance, set expectations with your client, and focus the meeting on your agenda. When finished with the dentist, keep your momentum, and pose the same questions to the office manager or back-office assistants. Often they understand the business better than the client.
After meeting with your top 10 clients, you should be able to confirm the “missing” parts of your product line. And by asking these questions, you will stand out from the competition. Very few small laboratories spend the time, or even have the time, to formulate and methodically ask product-related questions. In the end, the hope is that you will have created a product line that each client believes is tailored to his or her practice.
Finding an Outsource Partner
Once you have figured out what products you need from outsource providers, it is time to look for the right partner. The advantages of outsourcing some of your products are clear—providing a full-service product range, focusing on your manufacturing strengths, avoiding capital-intensive investments for new product lines, and retaining existing clients. However, if the outsource partner cannot meet or exceed your quality requirements, it defeats the whole purpose of using them. Therefore, the first criterion for choosing a partner—whether local, national or overseas—is determining if the prospective partner can meet your quality standards. Look for manufacturers who demonstrate attention to detail in both manufacturing and communication. Be wary of splashy advertisements with too-good-to-be-true prices because it suggests big volumes and high customer churn. Do not feel shy about asking for references from existing clients. Since most of us start our outsourcing research online, company websites are the easiest place to find important information about product range, experience, management team, and contact information. If the website is forthcoming with information, the outsource center probably will be, too. If the website of an overseas manufacturer contains too many typos or grammatical errors, look elsewhere. It suggests a lack of attention to detail. Laboratories that make medical devices for the foreign market should have the resources to hire a translator. Finally, ask prospective outsourcers if they provide web-based logins for case ordering and shipment tracking. It is actually not that expensive, and investment in management software implies a commitment to transparency and communication. The bottom line is to collect enough information to get a good idea of the operational attention to detail of a prospective outsourcing partner.
Tapping into Free Technologies
Once you have found your outsourcing partners, it is time to incorporate the low-cost (or free) technologies that help small laboratories survive and thrive. Fortunately, many of these technologies seem tailor-made for outsourcing management. For example, instant messaging with Skype (www.skype.com) allows you to get case updates and questions from half a world away for free. Skype has been around a long time, but there are also newer technology tools that can help you save money. Web- or cloud-based tools work best because they can be accessed from anywhere. For dental laboratories, the tools you need generally fall under three categories—communication, office efficiency, and workflow management. Communication for most begins with e-mail. Free Gmail (www.gmail.com) or Hotmail (www.hotmail.com) accounts save money and the stigma of “free” e-mail for your business has largely disappeared. Today, even large corporations are adopting Gmail for their employees.
Both Microsoft and Google offer free instant messaging for laboratory owners needing urgent questions answered from overseas outsourcers working in different time zones. Skype now even has a desktop sharing application for reviewing digital cases or training. Fee-based alternatives such as GoTo Meeting (www.gotomeeting) or Webex (www.webex.com) allow for remote desktop control. The same technology can be found for free with TeamViewer (www.teamviewer.com). For office efficiency, tools for managing shipments, pricelists, and invoices, you can use shared documents such as Google Docs (docs.google.com). Dropbox (www.dropbox.com) and cloud storage companies—including Hotmail’s Skydrive (www.skydrive.live.com)—help with CAD/CAM file transfers. A very simple but extremely important online tool is shipment tracking with UPS or Fedex, two examples of free, web-based software at its best.
Laboratory workflow management and case tracking is best achieved with specialized cloud-based management software. Currently, there are two exclusively web-based alternatives—SoundTrack (www.soundbitetech.com) and Evident (www.evidentlabs.com). Both have features for managing outsource manufacturers with modest fees for smaller laboratories. Case management tools such as manufacturing countdown clocks, shipment tracking reports, and restricted logins for outsourced manufacturers are particularly helpful. If you do not have web-based management software, the ideal outsource partner should still provide you with online access to your cases.
This new approach is working for resourceful laboratories with small budgets. These laboratories have evolved into a “general contractor” of client management. They own the client relationship but use multiple outsourcing partners, or “subcontractors,” to help complete cases with such services as CAD/CAM milling, full-contour design services, implant expertise, coping manufacturing, etc. Not only are they plugging holes in their product line with outsourced help, these successful and growing businesses are also adopting web-based technologies to save money on phone calls, meetings, and sometimes even manpower. The benefits of selective outsourcing and savvy use of technology directly result in healthy dental laboratory businesses.
1. Palmer C. Dental spending growth projected through 2021. ADA News. Available at: http://www.ada.org/news/7173.aspx. Updated June 12, 2012. Accessed June 30, 2012.
About the Author
Jeffrey Noles is the chief executive officer of SoundBite Technology in Los Angeles, California.