Supply chain crisis increases dental costs

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The bullwhip effect: Supply chain crisis increases costs for dental practices

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Experts say that it could take at least two years for ports to recover from the 2021 supply chain crisis. (Image: Travel mania/Shutterstock)
Jeremy Booth, Dental Tribune International

By Jeremy Booth, Dental Tribune International

Thu. 6. January 2022

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NEW YORK, US: Many consumers became aware of supply chain disruptions during the holiday period. Christmas lights were hard to come by in some cities, as were toys and certain electronics; more earnest, however, were the recent shortages of commodities such as paracetamol and semiconductors and the raw materials used to make prostheses and other medical devices. As healthcare providers, dentists have been conscious of the pandemic’s effect on global supply chains since personal protective equipment (PPE) became scarce in early 2020. Nearly two years on, dental practices are still facing higher costs for essential supplies owing to the disruptions.

Economists speak about the “bullwhip effect” to describe how significant distortions in demand send ripples throughout global supply chains. The COVID-19 pandemic has not only triggered such fluctuations in demand but also compounded their effects by grounding flights, shuttering ports and manufacturing facilities and causing bottlenecks in global shipping lanes. Healthcare supply chains “suffered the equivalent of a cardiac arrest” when Chinese exports stalled in early 2020, said Magnus Meier, vice president and chief of wholesale distribution at business software developer SAP. Writing in Forbes in December, Meier said that healthcare was now feeling the bullwhip effect in the form of pent-up elective procedures and the over-ordering of supplies—both of which send unclear signals to manufacturers.

What does the supply chain crisis mean for dentists?

In an article published by the New York State Dental Association (NYSDA), Burke Spielmann, general manager at Henry Schein subsidiary TDSC.com, said that the cost of supplies remained high despite the demand for PPE having stabilised. He explained that, whereas US dental clinics had been, on average, spending 5.5% to 6.0% of their revenue on dental supplies before the pandemic, this spending has increased to 8.0% to 9.0%.

Fear of running out of stock and delays caused by supply chain bottlenecks have resulted in over-ordering by buyers, and this has helped to keep prices elevated, and Spielman wrote that dentists should expect to continue to shoulder higher costs for supplies in 2022. Dr Chris Salierno, chief dental officer at New York-based dental start-up Tend, told NYSDA: “We are at risk for seeing new waves of supply delays and price increases as long as our global supply chain is stretched thin.”

Jorge M. Gomez, vice president and chief financial officer at Dentsply Sirona, commented last year that it was difficult to say when supply chain issues would ease. Gomez told analysts in October: “It’s hard to predict how long the supply chain issues are going to last because, again, this is not something unique to the dental industry. This is impacting pretty much all manufacturing industries globally, so we are a relatively small piece of that big, big equation.” He added: “We are taking a lot of actions to minimise the impact.”

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