You Should Know
You Should Know
Recently, JDT Unbound sat down with NADL Co-Executive Director Bennett Napier, CAE, to talk about his recent fact finding mission to China. You can read an in-depth report about what he saw during a tour of Chinese dental laboratories in the January issue of the Journal of Dental Technology. Below is an excerpt from NapierÃs interview as he addresses what American dental laboratories should know to maintain their competitive edge in today's global community.
What are the most important things that the average NADL member laboratory should know?
If you are looking at utilizing offshore trade as part of your business model, you have to be accountable. That means if you choose to utilize offshore laboratories to fulfill a need for your clients, if something goes wrong your dentist clients are not going to go to
Does
From an FDA standpoint, yes, because that's part of their quality system practices. You have to verify who you subcontract work from whether that subcontractor is someone that you buy materials from or an outsource domestic or foreign laboratory. You must perform due diligence when making that decision. If you went through this process and still something went wrong, that's one thing. However, if you chose them because they had the cheapest price, that's another thing. That's not really going to hold much water with the FDA.
So if a laboratory decides to use an offshore laboratory, how should they go about finding the right offshore laboratory?
Personally, I would never pick a laboratory to work with without going to see it. I would never visit only one laboratory and then choose that laboratory instead of looking at several. Another thing is you have to make sure they are who they say they are. It's not very uncommon for brokers to come and market themselves as a laboratory when they are actually brokers. Brokers act as a pass-through where you ship your products to them and they just farm it out to one of the many laboratories in the country. You have no idea who they are, where they are, if they have quality systems, if they have any material control, etc. You have to verify that you're actually working with the entity you think you are. NADL has heard of examples, where
Most of the laboratories exhibiting at the DenTech China dental tradeshow I visited touted their ISO certified in terms of medical device regulations. My question is, who's going to go in and verify that? You need to take the next step and verify their active registration directly with the ISO. You need to do the due diligence to ask about their systems, look at their documentation and have them walk you through their production and quality assurance checklist. Interview their staff just like the FDA would do.
The FDA is going to come down the line and not only talk to the manager who should know what the quality system is, they ask the person at the bench who is doing work. You have to ask them even just the basic questions about explaining their system and what they do on a day-to-day basis. See if they can answer. Some of the people we talked with at the tradeshow couldn't even answer basic questions even though the first thing out of their mouths was that they were ISO certified because that's what they think we want to hear. It is what we want to hear, but we want also to hear that they're actually doing what they need to do to stay ISO compliant or maintain quality processes.
Ask the offshore laboratory about the materials they use, where they get their materials, how they control it and do they mix batches of inventory? Even if you choose to have U.S. FDA-approved materials drop-shipped to them for use, you still don't know if those materials are being mixed with other materials or if they're actually using those materials you sent. They could turn around and sell them at a pretty nice price for them. Also, you should choose a partner that has staying power. Find out who's funding the laboratory and what capital they have behind them. You have to be sure that they won't disappear overnight. If you send of the majority of your work to an offshore laboratory and they disappear, then you're in trouble.
I would say that the U.S. laboratory probably is more trusting of their domestic outsource partners and really makes a lot of assumptions they probably shouldn't. Many don't perform due diligence with their outsource partners whether it's a domestic laboratory or one that is offshore. The point of the matter is, the geography is such that a U.S. laboratory may not go visit an offshore laboratory, but they should.
What about the U.S. laboratory who is not going to utilize offshore services, what can they do to maintain a competitive edge?
It's no question that it's no different from three or four years ago. The major advantages offshore laboratories have over U.S. laboratories are labor costs and production capacity (depending on the size of your laboratory). The offshore laboratories are going to continue to have that production capacity and they will continue to compete on labor costs. If your laboratory is part of the lower-cost market in the U.S., you are forced to make a decision to work with an outsourced partner (domestic or foreign) or you will lose your business to an outsourced laboratory simply because of the volume you'll need to produce to be able to survive. Another option is to make a change and go to the next tier of dentistry. You're going to have to go beyond your current price point to survive in dentistry. I think those are the only choices you have if you are in the lower-cost market. You either choose to utilize it if you're going to stay in that niche or you go in the next tier where a low-cost unit is not an attractive to that dentist client, or you can combine both options and business niches under one roof.
