I had a supply chain conversation yesterday with, of all people, my dentist. His practice recently invested in a build-your-own-crown system.
It starts by photographing/X-raying a tooth, capturing its dimensions before and after it is prepped for a crown. The system then manufactures the crown while you wait. It uses a CAD/CAM system on the front end and a laser on the backend. The CAD/CAM system renders the crown in 3D; allows manipulation of the size, shape, width, depth, and margins; and downloads the specs to the manufacturing module. The entire process takes about an hour.
In the module, a block of porcelain is shaped by lasers while being supercooled by streams of water. Since heredity has saddled me with very brittle teeth, I spend a lot of time in my dentist's office. The dentist knows what I do for a living, so he shows me all the “neat stuff” he buys to stay on the leading edge.
Before he purchased the laser system, my dentist would send X-rays, a rubber mold of my mouth, and other things to a lab that makes porcelain crowns. The lab would make a clay model of my jaw and teeth and then send him the crown mounted on the model. More often than not, the crown had to be shaped, ground down, or otherwise changed. If the changes were significant, the crown went back to the lab. This process could take four to six weeks.
Despite the Novocain in my mouth, I asked my dentist yesterday if the labs were suffering because they were cut out of the supply chain. He said no, because they have adapted. For one thing, they've cut costs because they don't have to make models and mail them back and forth. Labs accept the design specs directly from dentists and then manufacture the crown — if it's not done in the dentist's office. Additionally, the labs have invested in materials and technologies to build better teeth. Crowns are now made out of cubic zirconia, which my dentist says is nearly impossible to break. And some high-end products, such as implants, bridges, and certain crowns, still can't be made in a dentist's office. The labs have managed to retain their value in the supply chain.
In almost any supply chain situation, the DIY model can disrupt relationships. In electronics, ordering components directly from manufacturers was supposed to cut out distributors. This didn't happen, in part because of the complexity of the supply chain. Distributors focused on the high-end problems of their customers while enabling DIY orders (mostly at low volumes) online. The global fulfillment business is still firmly in the realm of distribution, with a few exceptions for massive customers. EMS companies the size of Foxconn can still order components direct or, in some cases, manufacture the components themselves. In these cases, scale makes all the difference.
The same holds true for high-tech teeth. Manufacturing one crown in an office makes sense. Costs are offset by efficiencies (manufacturing close to the customer) and logistics (the crown fits perfectly the first time). There's also an element of risk involved. The initial investment in the crown-making machines, software, and training is significant. Yet I haven't seen my prices go up, and I make one trip to my dentist's office instead of three or four.
I already know I am facing more dental work, but I'm not shopping around. There are low-cost suppliers in the Boston area — a number of dental schools provide discounts to customers willing to be treated by a student. But I am getting value for the dollars I spend, and as long as that persists, I'll stick with the dentist I have.
Value versus price is a constant battle in the supply chain. Running a comparison — especially when a lot of dollars are at stake — is a worthwhile effort. For me, the decision often comes down to this: How much is my time worth?
You might be surprised by the answer.