The Associated Press called me for an interview a couple of weeks ago. Allegiance, who powers our customer feedback system, referred them to me for a story about how companies use technology to save money during the downturned economy. I was expecting a few questions about how we use Allegiance, but the reporter was really interested in EVERYTHING Ultradent is doing to save money this year.
I must admit, I wasn't prepared for the type of questions the reporter fired off; I was not exactly the right person to interview for this story. I thought it would be a great opportunity to brag about our great company, though, so I told her I'd go on a fact finding mission. I met with Dirk Jeffs, Kris Beynon, Mark Brinkerhoff, and even briefly with Dr. Fischer. What I learned was enough to make anyone proud to work here.
First of all, it's probably important to define the impact this economy is having on us -- we're certainly better off than many companies in the country or even in our industry. Dirk Jeffs told me that the overall dental consumables market is down by 5-7% due to the economy, but Ultradent’s domestic sales are relatively flat. He said the biggest drag on our top line has been the increased strength of the U.S. dollar this year compared to last year. The currency exchange has impacted our international sales to some degree.
Since we're so fortunate, we haven't had to take drastic measures like large-scale layoffs. Any company would be irresponsible not to consider the current economy, though, so it was nice to hear our leaders talk about internal mentality shifts. The general consensus was that we now think of costs in terms of people when weighing decisions, e.g. “This expense would pay the salaries of three people.”
Our 30-year-old company has had the advantage of being a privately held company with a visionary leader, so our priorities have always leaned toward progression and improving oral health care globally. Not being beholden to stockholders, there have been times we have considered 5-10 years an acceptable length of time to recoup our investments. Now we are looking at things in terms of “needs” instead of “wants.” We continue to invest in strategic projects, though the payoff time line is more closely considered now and we tend to focus on investments that have a quicker or more dramatic impact on revenue.
We have also reconsidered our shipping options. In the past, we have paid our shipping company for delivery within a 3-5 day window. We now save half of our shipping costs by paying for ground shipments instead of air shipments; our shipments are guaranteed to be delivered in five days. Of course, if a customer wants an order more quickly, they can pay for expedited shipping, but we have chosen to eliminate expensive shipping where less expensive shipping will suffice. There is no reason for us to pay double the freight charges for orders unless our customers need the materials immediately.
We've started using cost-saving technology, as previously mentioned with Allegiance. This customer feedback system helps us collect, respond to, and track customer feedback efficiently and without paper.
Another cost-saving technology, Webex, is an online conferencing tool we now use to save expenses for training our outside sales staff. Dr. Fischer said the technology helps us to be better stewards of our capital by meeting online instead of flying all reps to corporate headquarters multiple times per year. Between online meetings and smarter staffing of trade shows, we have been able to reduce corporate travel by 25%.
We also use Webex to help our customers save money. So far, we have hosted two continuing education Webinars, for which the dental staff members were able to earn three CE credits each. We pay a nominal monthly fee to use the system, plus a per minute charge for each conference attendee who dials into the toll free Webex line. Most conference attendees have opted to listen to the audio over their computer speakers or headphones instead of dialing in, however, so our cost is minimal and the benefit to the attendees (our customers) is great. We always schedule the Webinars on Fridays when most dental offices are closed, so they don’t have to rearrange patient schedules. The attendees are able to earn continuing education credits for their state license renewal from their own home or office instead of incurring costs of travel, days out of office, etc. Also, we usually charge around $395 per dentist to attend a live continuing education event, but the Webinars have been free to this point.
Within the company, we have formed two committees:
$1 Million Club
Has a goal to save $1 million this year through initiatives that present a low impact on employees. Examples:
- Negotiating lower fees with the vendors who take care of the plants inside our building - Adjustment of travel policy, which still fits within IRS and DOL guidelines but reduces overtime, etc.
- Leveraging technology we already own that hasn’t been fully taken advantage of (e.g. Setting up an automated, direct connection between our bank and the Oracle system we use for operations has saved ½ person’s time. We always had this capability, but never made the time to configure it.)
- Coordinated purchasing effort – After investigation, we found that having multiple administrative assistants throughout the company order their own supplies has contributed to over-purchasing and varying price models for the same types of items. Coordinating these efforts more tightly is saving us over $200,000 per year in office and event supplies.
Operations Excellence
All employees from the Operations team are working together to make our systems more efficient and save money. The internal philosophy is to work smarter and encourage an atmosphere of change. Employees receive bonuses when they come up with true cost saving ideas. We are trying to encourage the area/department experts to think about cost savings in their own areas and then share a piece of the corporate savings as a reward. Employees have come up with ideas big and small that they have to map out and justify. This has saved us in labor and system costs, with employees contributing valid, implementable savings ideas of up to $60,000 per year.
So, after all this fact finding, a tiny blip about our company was mentioned in a few publications (and I was unfortunately misquoted about the extent of our layoffs), but I think they did their best to convey our message. You can read this story in a lot of regional papers across the country or on Yahoo.com.
I'd like to applaud everyone at Ultradent who is working so hard to be financially responsible in this time of economic difficulty. I'm always grateful to work here and this year, that point seems especially poignant.