When it comes to profitability I would say this: Compete on value NOT price.
Ask yourself "How can I bring more value, service, convenience, assurance, speed, or novelty to the service I am offering?"
This is how you can set yourself apart. This is how you can prevent your service from becoming a commodity, and how you can make your business engaging.
You are only limited by your imagination. — tagged 4 topics
Brand Your Restorations
Creating your own brand of restorations helps you stand out in the marketplace and conveys exclusivity. To distinguish their all-ceramic products, D&S Dental Laboratory, Inc. in Waunakee, WI, has created its "ZR" line of zirconia restorations including ZR Crowns, ZR Plus, ZR Fusion and ZR Micro. "We brand our products to differentiate our laboratory and reinforce that our products aren't available from any other lab. When doctors start to learn your brand and your name, they start asking for it," says Travis Zick, President.
Many laboratory owners have experienced tremendous improvement in productivity—and therefore profitability—through digital technology. By going digital with 12 CAD/CAM stations using 3Shape and Lava design software, a Straumann scanner and two 3D Systems printers, D&S Dental Laboratory has increased its unit production by about 20% in the past three years with approximately the same number of technicians. "We have about a dozen technicians who work directly with the equipment, but everyone works with it in some capacity," says Zick. "We've really gone all-in to incorporate technology anywhere we've felt it could make us more efficient."
D&S purchased the equipment over time to spread out costs, although Zick admits it was a significant outlay at first. But the laboratory calculated the ROI for each purchase, taking into account the capacity and efficiency of the product, and it has already received a full return on nearly all of the machines it purchased.
Offer Different Levels of Service
To ensure it can meet a full range of client needs, Jesse & Frichtel Dental Labs, Pittsburgh, PA, offers two levels of crowns: those made with simpler buildups and premium crowns fabricated with six to nine porcelain layers. "Part of our original business plan was to provide our doctors with options that handle all price points, and I credit our growth during these hard economic times to this plan," says President Mark Frichtel. "For example, we had a client who was doing mostly premium cases. One of his patients couldn't afford that option, but we were able to do a basic case for him. The client knew he would get the same fit as his other restorations and we'd follow his preferences, and the case didn't go to another laboratory."
Batch Your Work
Colin Gibb, the only full-time technician in his laboratory, Red Mountain Dental Arts in Mesa, AZ, pre-schedules cases and varies his turnaround time so he can organize his workflow in batches. For example, if he has five IPS e.max restorations to do in a week, he'll plan to work on them all the same day rather than doing one per day. "This way, I only have one workstation to setup, I only need to run the pressing oven one day and I can focus on a single type of restoration. Larger laboratories have different departments for each type of restoration; I have different days. With batching, I'm more efficient from a labor standpoint and don't spread myself too thin," he says.
This strategy also enables Gibb to order inventory on demand and better manage his material costs. By scheduling an e.max day, for example, he knows in advance what ingot shades he needs to order for that day. Even though he's paying for two-day shipping, he has better control of his inventory costs. "Why have all these shades of ingots with different opacities in stock? If I had one tube of each ingot shade, I'd have over $4,000 of inventory just sitting there," he says. "If you know what you've got coming up, you can watch your inventory and order only what you need."
Lean manufacturing is a management philosophy that advocates eliminating waste from a production process thereby improving workflow and enhancing product value. D&S Dental Laboratory started implementing Lean principles several years ago and has successfully shortened production time and increased capacity as a result.
The production leadership team meets regularly to discuss the workflow and continually tweaks the process to improve it; for example, it recently moved its digital design center to a central location within the lab. "The actual time it takes to make a crown is a small fraction of the time that crown is in the lab. Anything we can do to reduce the time between production steps allows us to shorten the turnaround time and increase capacity," explains Zick.
Maintain Your Marketing Budget
When times are tough, marketing is often the first expense to be cut but just the opposite should happen. This is the time to ramp up—or at least maintain—your promotional investments to make sure they're delivering what you need most: sales revenue and customers.
Zick suggests using this opportunity to market your less well-known products. For instance, given the current prominence of all-ceramic advertising, D&S Dental Lab decided to focus some of its marketing dollars on mouthguards, partial dentures and other less visible products. "Doctors don't see a lot of advertising for products like these so it's attention grabbing because it's different," says Zick. "Plus, a doctor is more inclined to try a new lab for a mouthguard rather than a more complex case."
Get Some Facetime
Connecting with potential clients at events such as study clubs or CE courses is an invaluable opportunity to explain your services and develop new relationships face to face. "I'm staying in front of the doctors, speaking with them four to six times per month and actively attending study clubs," says Greg Sederlin, CDT, FICOI, MAAIP, President of Cal Ceram Dental Lab, and Vice President of daVinci Dental Studios, West Hills, CA. "By attending on a regular basis, I have become known as the implant expert. Doctors can come to me with a new case or an issue on a previous case and, by helping them, I've been able to turn some of them into full-time accounts."
Watch Your Overtime Costs
When CDA Milling Center in University Place, WA, experienced an unexpectedly busy start to 2013, Owner Mike Shelley started crunching numbers and noticed that he was paying a lot of overtime. In the waxing department alone, he was paying 40 hours of overtime each week and still had a backlog of 50 cases. Solution: a new full-time waxer. "With the overtime hours, it was as if we were paying an extra person anyway," Shelley explains. "Now, we're saving money by not paying time-and-a-half for overtime, technicians aren't getting burned out or having to come in on weekends, and we've been able to increase production because of the additional set of hands."
Offer Value-Added Services
Not wanting to compete on price, many labs are offering value-added services such as continuing education seminars, lunch 'n learns, chairside assistance, custom shade-taking and educational newsletters. These services enhance their image as a valuable resource and can keep your clients loyal to your lab if the price-cutters come knocking.
The goal of value-added services is to make your clients' lives easier. For instance, earlier this year, D&S Dental Laboratory launched a free mobile app that puts the lab's resources at the doctor's fingertips. The app includes a digital Rx form and a Crown Selector option that helps direct doctors to the appropriate restoration. "We want to be the main, trusted, unbiased resource our doctors can turn to for help or answers to any questions," says Zick. "This all adds value to the products we provide."
Share the Profits
At the beginning of 2012, Mitch Pruitt, President of Greatland Dental Laboratory, a four-person removable lab in Anchorage, AK, was optimistic about the coming year. He started a profit-sharing structure whereby instead of raising hourly wages and paying overtime, he switched everyone to a base salary plus a year-end bonus based on laboratory profits.
This new structure helped Greatland stay profitable during harder times such as the fourth quarter of 2012 when business suddenly dropped off, with clients across the board sending about 25% less work. "If we had locked in higher wages for everyone, we would've had to lay someone off last year," says Pruitt. But with profitability being averaged throughout the year, he was able to keep everyone on staff and each employee received a bonus equivalent to 16% of his annual salary just before Christmas. "The bonuses not only motivate the staff to work harder," he says, "it's also a nice way to share extra profits with employees and avoid the risk of paying higher wages when profitability is down."
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When it comes to profitability I would say this: Compete on value NOT price.