04 Aug Global PPE Supply Challenges and Price Increases
Global PPE Supply Challenges and Price Increases
As we sit here managing incoming and outgoing orders for PPE four-and-a-half months into the pandemic, we’ve also had to manage ongoing cost fluctuations in the supplies we offer to our doctors. Needless to say, we’ve found ourselves going through some pretty acute sticker-shock as our new pricing guides are dropped in our laps. Let’s just say it’s a good thing that we’re usually sitting down when we open up these price increase notifications–though this time around, it would have been handy to have a paper bag to breathe into to take the edge off the surprise. What’s with the sudden spike in PPE costs? It may be more complicated than you think.
How Much of an Increase are We Talking About?
If you’ve worked with us at Yaeger Dental Supply for any length of time, hopefully we’ve been able to show you the steps we take to create value in everything you come to us for, whether it’s service, repairs, purchasing new equipment, or procuring supplies for your practice. For the last few months, we’ve been receiving some steep price increases. The world of personal protective equipment has become a far more complicated market than ever before, which makes sense seeing as how the entire globe is competing for a finite amount of supplies.
Several compounding factors have culminated in both supply becoming hard to come by, as well as prices hitting all time highs.
Production Has its Limits
From the reports we’ve gotten from our manufacturers, facilities around the world are producing products at 100% capacity within the new sanitation and social distancing guidelines set forth by their respective governmental agencies. Manufacturing in China, Malaysia, and Vietnam (to name a few places) originally had to halt production to evaluate the risks associated with the Covid-19 outbreak when it first became a threat, however most facilities are working again.
Regardless of falling behind on production early on, the added demand for PPE products has risen exponentially, far beyond anyone’s forecasts. As soon as March of this year, The WHO proposed a 40% increase in manufacturing as they saw the spread of the virus take off (Source: WHO). Even with outside manufacturers retooling their production lines to help with the added strain on PPE production, we’re still seeing a far greater demand.
Our largest supplier of gloves has even run into challenges getting the raw materials to keep production going, which has caused different delays and challenges to work through.
Demand from Governmental Agencies Across the Globe
When it comes to purchasing power, it’s hard to match the might of governmental agencies. The largest consumers of PPE gear by far are governments, both large and small. According to a report by CNBC, even individual states in the U.S. are bidding against the federal government for supplies (Source: CNBC), which in turn drives up costs, as well.
Due to the global demand for PPE on this scale, along with more costly raw materials and ever-changing manufacturing guidelines, costs are indeed going up, and at a staggering rate. Not only that, but agencies like FEMA have been intercepting some shipments for medical establishments, causing other bottlenecks in delivery (Source: Vanity Fair)
How do these Challenges Affect the Bottom Line?
Early on in the pandemic, we were seeing how panic-buying consumers could adversely affect the price-points of certain items on the market. (I’m sure we’ll all remember The Great Toilet Paper Shortage of 2020 fondly for years to come.) But on a serious note, in terms of PPE, we saw a lot of heavy price gouging for sub-standard products because of the severe limitation of supply on the market.
Without getting into the economic theory behind price gouging and free-market corrections, I just want to make it clear that Yaeger Dental Supply has made it one of their goals to offer products at a competitive price point, and in no way wants to take advantage of their hard-earned customers. We’ve actually taken a stance against exorbitant price hikes recently, which has given us new challenges in offering supplies to our doctors. We do not offer products at above retail level set by the manufacturers–and will continue to hold true to that, as we’ve seen some suppliers do (without naming names, most likely you’ve seen some surprising cost increases come across your balance sheet depending on who you do business with). In fact, we’ve passed on several suppliers offering us supplies to resell due to their obvious utilization of price gouging which we didn’t want to support.
Here’s the part where we ask you to sit down with us before looking at the new prices of the PPE products hitting the shelves this month. Though we are working hard to keep the costs down to the end user, we’ve been hit with upwards of 75%+ increases (You were sitting down, right?) in PPE, and this is coming from some of our long-trusted, market-dominant brands. Across the board, we are seeing wholesale markups that are unprecedented, and unfortunately, it is nigh impossible to fight off completely. But we have a few tips to give you that may save you money in the long run.
Buy From Established Companies
Being a distributer for medical devices and infection control supplies, we get approached quite often to carry more manufacturers’ products. However, we won’t just carry anything that comes across our inbox. We thoroughly check out companies that offer us product lines to make sure they have a stake in not only their own success, but our’s and our doctors’ as well. This means we avoid flash-in-the-pan manufacturers who may not have stable supply chains, or even have proper quality controls in place to make sure their products are up to our standards. Be sure to vet the companies you deal with to avoid being taken advantage of.
Check Quantities Versus Durability
Specifically with exam gloves, be sure to not only take into account the quantity per case you are purchasing, but also look into reviews of the products you are interested in to get the most bang for your buck. Most glove companies sell 200 and 300 count boxes (usually 10 boxes per case). The lower the count (in most cases) means the gloves are made of a thicker, usually more durable material, hence why they can only fit a smaller amount into each box. There are some budget brands out there that do not follow this standard. Gloves that come in 300 count boxes tend to be thinner and more delicate. If you’re unsure that you’re using a solid, well-rounded product, talk to your service professionals for recommendations! We’re here to help!
Check with Suppliers at the Local Small Business Level
Unfortunately, some suppliers out there try to charge above retail prices for their products, but many companies do not. The companies that go to bat for their customers to reduce prices are the companies that want your business for the long haul, so support them whenever you can! Check out your local small business suppliers who take part in your local Dental/Medical Societies, as they have a vested interest in the success of your private practice.
Ask About Bundled Deals
Ask your supplier if they run any specials for loyal customers. In most cases, if you are a customer of a full-service company, they will help you save money by bundling their services together. In Yaeger Dental’s case, we work to add additional savings to our doctors that call us for equipment service, equipment purchasing, and supply fulfillment. These cost savings can add up surprisingly quickly, and are mutually beneficial arrangements between you and your supplier.
It’s Time for Businesses to Help Each Other Out!
In summary, in order to ride out this expensive wave, it may be time to reevaluate your business connections and find a supplier that you can work together with to find mutually beneficial ways save money and gain access to trusted products. If you have any questions or comments, feel free to contact us with the button below!
A REMINDER TO TAKE STEPS TO PROTECT OTHERS
Stay home if you’re sick
Cover coughs and sneezes
Wear a facemask if you are sick
Clean and disinfect
About the Author – Allen Ortiz
Allen has worked in the dental industry with Yaeger Dental Supply, Inc. since 2005. He is a trained expert technician in traditional dental equipment, radiology devices, and digital imaging. Allen has spearheaded many company projects, and with his outside photography and videography expertise, leads all media campaigns within YDS.
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