As we move into the new year and our industry continues to move to the digital age a lot of lab owners I talk to are constantly wondering if it is better to scan and mill in-house or outsource the work to a large milling center or a different lab. There are pros and cons to each that are worth taking a look at.
In LMT’s 2015 State of the Industry Survey, it found that 20% of labs outsource the entire case, while 38% of dental labs surveyed handled everything in-house, an increase from 20% just 5 years ago. In addition, the survey found that 28% of dental labs have a scanner and outsource the milling. Whatever category you fall into there are pros and cons you should consider when deciding what is best for your dental lab.
The pros of outsourcing is that you have access to milling centers all around the world, the work can be performed at a substandard discount, you can focus on obtaining new business and it can easily handle any increased workload. Of course the biggest con to outsourcing is the lack of control over the quality of work. I have been told multiple times by labs that they see a decline in the work they receive from large milling centers toward the end of the month. This is because they have numbers to hit and are rushing cases out the door. There is a cost associated with fixing this substandard work that is often overlooked.
This leads us to the pros of in-sourcing or bringing the operation in-house. By bringing your CAD/CAM work in-house you control the quality of the work and the people performing it. In addition, bringing your CAD/CAM operations in-house shows an investment in the workforce, which can be good for morale. I’ve heard Al Fillastre, CDT say many times, it made his job fun again. The cons of in-sourcing of course is that it does require more up-front money and resources than outsourcing. It requires “biting the bullet” on outsourcing and that can be tough to do.
Making the Decision
There are several calculators available for determining the return on your investment for bringing your milling operation’s in-house. Roland has one on their website that shows an ROI once your outsourced milling invoice has reached $1,500 a month. When discussing this with labs I usually take a little more conservative approach and tell people to start looking at purchasing a milling machine once their invoice is in that $1,800-$2,000 a month range. At that amount it gives you an early return on all of the equipment you will need to start milling in-house based on a 60 month lease.
Outsourcing is convenient and it is difficult to walk away from. If you think you are ready to at least take a look into bringing operations in-house feel free to give me a call and we can discuss it. I hope everyone has a nice holiday break, and just remember if the holidays become too much, you can just “park the cars and get the luggage, and well, be outside for the season” (Clark W. Griswold).