Supply Chain Lessons From High-Tech Teeth

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.

10 comments on “Supply Chain Lessons From High-Tech Teeth

  1. dalexander
    November 9, 2012

    @Barbara, I just wanted to take this opportunity to acknowledge what a great job you are doing with the regular summary email notifications. Your grasp of each contributor's blogs is precise and adept. I look forward to reading your summaries as much as reading the blogs themselves. You are doing a brilliant job on this effort.

  2. dalexander
    November 9, 2012

    @Barbara, can you ask you dentist to tell you how many crowns the machine has to make to reach the break even point? If it is significantly low, then he can eventually reduce his fees for crowns and word of mouth will increase his customer base. If it is really high, then he gets high marks for foresight and concern for his customer's time and schedules. This will also garner him more business. Either way, he wins. Smart guy and savvy businessman.

    November 9, 2012

    @Barb.  Did this high tech crown process result in a less expensive crown or is the dentist charging the same as the old route?  I suppose if the laser system costs a gazillion then it still might be a very expensive procedure as he amortizes its cost.

  4. Barbara Jorgensen
    November 9, 2012

    Douglas — thanks so much! I try to find a theme every week, and your blogs are relevant to every one I've come up with so far. I love it when things work the way they are supposed to 🙂

  5. Barbara Jorgensen
    November 9, 2012

    @SCOT: So far, the cost to me has been the same, but keep in mind I have insurance that pays a portion of what the company deems as an acceptable cost. In other words, insurance says $XXX is what the dentist should charge and they'll pay 50% of $XXX. Dentists can either stay within those guidelines or charge their patients more. So far my out of pocket expenses have been the same. But I do joke with my dentist that he gives me a volume discount because of all the dental work I have done.

  6. SP
    November 9, 2012

    Yes in US you pay a good amount from the pocket even if you have the insurance and also that you can go to specific practitioner only those are associated with the insurance provider. There was a big talk on US Healthcare system. But then noone can doubt the quality of healthcare that you get in US.

     Canadian healthcare system is more attractive. Wish that is there all over the world.

  7. Eldredge
    November 11, 2012

    @Barbara – Interesting article – and you point out how innocation impacts the supply chain, and the supply chain must adapt to accommodate and maintain a place by providing value.

  8. Ariella
    November 12, 2012

    @Barbara When I first needed a cap, I had to wait a few weeks to get it because the dentist — here in NY — favored a lab in California. When another dentist ordered the cap for me, he had it in just a few days because he used a closer lab. So that was much better for me. I don't know if all dentists will invest in the equipment to have the caps done on site, but it is an appealing option. With my insurance, the contract amount limits what the dentist is allowed to charge members. The dentist may put down $1000, but if the insurance only allows for $600, then that's all the dentist can collect, and the patient does not have to make up any difference beyond the obligatory 20 or 50 percent and deductible. 

  9. Barbara Jorgensen
    November 12, 2012

    Ariella: Yes, I asked my dentist what the equipment cost and it's in excess of $100K. Big investment. I'm not sure it will bring costs to the patient down but at least it seems in parity with other options.

  10. Ariella
    November 12, 2012

    @Barbara yes, for dentists it would only pay if they do so many caps that they would recoup the costs in whatever timeframe is acceptable to them. From the customer's end, the advantage wouldn't be saving money but saving time if one doesn't wnt to have to wait a week or more to be done with the cap.

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