There is a life cycle to every product. The upside of getting in early on cutting-edge technology such as CAD/CAM is that you're part of an innovative, select group and there is less price sensitivity, which means you can maintain better margins because there is limited competition. The downside is that you've got to educate your clients and you have to have an appetite for risk.
Here are 10 tips for selecting a CAD/CAM system:
1. The rule of 10. Restoration options vary by CAD/CAM system; for instance, some systems can only produce all-ceramic crowns whereas others can mill almost any type of material. In general, the more you spend, the more material options available with the system. To help determine the needs of your market, pick out the 10 cases that are most representative of the type of work you do and make duplicate models or dies of each one. Ask the CAD/CAM manufacturer to make the 10 cases so you can see how applicable its system is to your case type and work load and evaluate the quality and fit of the restorations.
2. Think about the per-block yield. Usually, manufacturer's data is based on optimum workflow and production capacity. With some CAD/CAM systems, there are predetermined numbers of units you can mill from a block of material; other systems offer you the ability to "nest" units, meaning you can optimize the number of units you can fabricate from one block. Maximizing your per-block yield can bring your material costs from $35 to $40 per unit down to $18 to $20 per unit (depending on the system), so this is important information to know upfront.
3. Understand supply/demand in your market. You need to think realistically about how many units you can sell. For example, we were experiencing a high demand for a particular CAD/CAM system, the kind of demand that might cause a business owner to immediately add more machines to improve capacity. But the machine was new to the market and there was only one laboratory that had the same machine. We created a spreadsheet with various what-if calculations and determined that only a small number of system installations in other laboratories would meet the current demand, and that a very feasible number of installations would create a four-fold surplus in supply. This led us to buy two machines rather than the four we had originally planned. Less than two years later, our forecasts proved correct and the imbalance of supply and demand on a national level led to price cutting and a natural erosion in profit margins.
Also think about your capacity alignment needs: can you scan the same number of units you can mill and sinter? Ideally, you want to make sure your scanning capacity equals your milling capacity; for example, you might need two milling units and yet three sintering furnaces to get the maximum yield from your scanning processes. Optimizing and aligning your assets for maximum capacity and throughput can dramatically improve your return-on-assets (ROA).
4. Ask about dongle fees. Dongle fees are a per-unit fee--on top of the price of the system--ranging from a couple of dollars to eight or nine dollars depending on the system. Not all systems have dongle fees. Typically, they are more common among hardware manufacturers that don't sell material; this is their way of creating ongoing profitability and generating a revenue stream for R&D on new systems. Dongle fees usually cover maintenance and software upgrades and the manufacturers that don't charge dongle fees typically sell annual service contracts.
5. Research your inventory costs, including how much material you need to stock and frequency of backorders for each vendor. Unlike PFM alloys that allow you to make any indication or span from a single ounce, new systems require indication-specific material such as long or short blocks, shaded blocks, etc. This means new inventory, which means more money sitting on your shelves and less sitting in the bank. Imagine you buy a new system that can mill several different materials and in different colors or translucencies and yet the materials are on backorder frequently. Unless you're running an impressively tight "just in time" inventory system, you could easily have many dollars tied up in an inventory that doesn't even turn once per month.
6. Consider your implementation costs. We use our Dale Technology Cost Index or (DTCI) to help outline the costs associated with implementing a CAD/CAM system. First, you have to consider the Decision making process and Diligence; this may consist of travel time or other time away from your revenue-generating activities. Next is Trial: testing a new system and materials costs money in both time and errors. This step is followed by Cash or Capitalization, which again takes time and may include costs such as accounting or other consulting activities. Finally, the bulk of the expenses are in the Installation and Implementation. This can include everything from changes to your facility or utilities (gas, electric or plumbing), training, inefficiencies and wasted material, and dissatisfied customers because of an inability to deliver on time or within quality tolerances. Training your staff can be expensive, especially given the cost of the material blocks.
A general rule of thumb: you can expect your implementation cost in terms of time, energy and material usage to be about 15% of the cost of the system. So, for example, if you're purchasing a $100,000 machine, your implementation cost will be $15,000.
7. Cut down on implementation time by picking an understructure that works with a porcelain system with which you're comfortable. Today, most all-ceramic restorations are fabricated with fluorapatite, alumina or zirconia ceramic layering systems and over the last five years, many manufacturers have introduced new all-ceramic systems keyed to their existing conventional feldspathic systems. If you already have an all-ceramic layering system that is compatible with the CAD/CAM system(s) you're considering, this could reduce your learning curve and save you time and money. For example, if you're comfortable with an alumina porcelain system you already have in house, consider working with a CAD/CAM system that is alumina based.
8. Compare on-site vs. offsite manufacturing options. In the past, there were only a few scanner options that could successfully submit files electronically for offsite manufacture. But now, more manufacturers are selling stand-alone scanners in addition to complete systems, giving the laboratory the option of scanning in-house and then sending the data to a decentralized outsource center. This can be an attractive option as you'll have less training and less equipment to buy.
Also, consider that having the machinery in house leads to increased maintenance requirements and possible downtime.
9. Look at redundancy. Few things are more important to a laboratory than its product quality and on-time delivery to its customers. That's why keeping your machines running, and having backup for when they're down is of paramount importance. Contrary to what system manufacturers will tell you, our machines do "call in sick" more frequently than employees and their "insurance" [maintenance agreements] can be very expensive. Unlike employees, you can't cross train a machine so when one is down, another manufacturer's machine cannot "fill in" for it. Keep in mind that replacement parts and equipment for smaller machines are lighter and can be shipped to your laboratory next day to get you back up and running, while larger machines typically require remote diagnostics and travel to repair and can take several days or longer to get back online.
10. Consider outsourcing as an option. Outsourcing has grown tremendously in popularity since I started Dale Dental in 2000. Since then, the array of new technology has increased substantially and keeping up with all of it has become more challenging than ever before. Outsourcing high-tech products makes sense for three key reasons. One, it's a way to offer the broadest range and newest products to your customers. Two, it can be a segue to ultimately bringing the technology in-house. This is effective because outsourcing customers can validate the technology, build acceptance among their customer base and create necessary demand for profitability before making an investment in the system. And third, it's a valuable backup for when machines are down, an employee is out or there is a sudden spurt in demand that would otherwise tax the laboratory's ability to produce quality restorations on-time. Dave Lesh, president of Dale Dental, a Richardson, Texas laboratory that works exclusively with other laboratories, started purchasing CAD/CAM systems when he opened the business in January 2000. Today, the laboratory has six different CAD/CAM systems and has several more scheduled for delivery later this year.