Dental Insider Blog

Observation and Commentary On the Dental Industry

Here We Go Again…

Posted by dentalinsider on March 12, 2008

kerrletter2sm.jpgAs many of you have already heard through the grapevine, Danaher owned Kerr Dental, has decided to restructure it’s distribution chain by eliminating between 14-16 dealers. (Actual number has not been confirmed.) This is the same plan the Dentsply implemented 18 months ago. The big difference here is that Dentsply went from 200 dealers down to 28, while Kerr is going from 38 down to 22-24 dealers nationwide. This is an alarming trend in this industry and is hurting the industry. While not nearly as drastic as Dentsply, there is no rhyme nor reason as to who made the cut and who didn’t. The one dealer I spoke with today and who was kind enough to fax us a copy of the letter (see below) was fairly disappointed in the decision after so many years of selling Kerr products and growing the business for Kerr.

After reading the letter a few times, I find their reasoning pretty lame for the number of dealers they are reducing.

“The conclusion was based in part, on Kerr’s desire to increase the amount of time it can devote to each of the companies engaged in the sale of its products to the dental profession. Kerr believes that by reducing the number of companies to whom it sells products it will be able to provide more support to its distribution network, allowing it to compete more effectively against the product offerings from other companies.”

“We hope, however, that you appreciate our need to take action that we think is necessary for us to continue to provide the dental profession with a competitive selection of products.”

You can read the entire letter here.

This sounds like Kerr is getting desperate for market share.

One thing we did hear today is that Kerr is going to require existing dealers to provide end user transactional data to Kerr, much like Dentsply.

I will bet the gray market will be hopping with activity especially with Kerr products, but thats another story.

What do you think about this? Share your thoughts by posting a comment or send us an email.

DI

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42 Responses to “Here We Go Again…”

  1. The Pink Panther said

    I dont get it????? Makes no sense. Didn’t Kerr read the Wall Street Journal’s report on Dentsply?????? Or maybe Dentsply is buying Kerr??????Who Should Know????

  2. I have heard that there is a report by CRG that found that Dentsply’s dealer consolidation has had a negative impact on the company. Trying to get a hold of that report.

    Dentsply/Kerr (A Danaher Company)…sure has a nice marketing ring to it.

    DI

  3. Dental Guy said

    Well, isn’t it fair to say that most of these distributors will sell more of the competition? I would think that 3M, Heraeus, Ivoclar, Premier, GC, and countless others must be thrilled to hear this news.

    This doesn’t make a distributers job any easier, but there is no shortage of “me too” products in dentistry. It’s interesting to note that this is only being done for Kerr products and is not related to Sybron’s other divisions.

    I wonder if “Total Care” and the other infection control products are included since they are a separate division yest still “a Kerr Company”. When it comes to infection control, would an end user really care that much about switching to Biotrol, Clorox, or countless others?

  4. SMALL POTATO said

    this business is not getting any easier-however if you are resourceful and truly understand the products you can pretty easily switch customers over to other equivalent products from other manufacturers – this is a mistake on kerr’s part and there sales will slow just like dentsply’s -wall street report show’s a slowdown of dentsply’s products–go ahead -bite of your nose to spite your face

  5. As one of the newest ex-Kerr dealers I agree 100% does Kerr really think that I will not tell a doctor that I have a product that is just as good and may be less expensive. I think once they hear the less expensive they will jump ship right where I want them to. I believe I will only miss the Demetron lights, but countless other companies offer great lights as well.

  6. AssociateQ said

    And the cycle continues. This is only going to get worse, and anyone who thinks differently is crazy. I will bite my tongue in order to not piss a bunch of people off, but let’s just say that they cut out dealers for a reason.

    The simple fact of the matter is that as soon as Danaher buys Dentsply they will cut all the dealers our, even the Big Boys and they will sell direct. It is the DBS way. Bottom line baby, bottom line. And you know what Schein does not really care because Danaher will be making all their private label products and they will be able to sell those. Patterson is the same.

    Small Potato, sure you might be right about it being a huge mistake, but you might be dead wrong. Danaher did not grow to 11 Billion in revenue and a 23 Billion dollar market cap by making huge mistakes. This is only the first step in a plan they have laid out.

    The industry is changing and it is no place for the small guy. I don’t necessarily think that is a good thing but it is the way it is headed.

    Nothing anyone can do but sit back and watch the show. I have been saying this for a couple years now. There will be more manufacturers cutting more dealers out and more manufacturers selling direct.

    Q

  7. jd said

    Reading these posts from discontinued vendors I have just one question. If you have known of superior products at lower prices before being dropped by these manufacturers, why have you not told your customer base?

  8. SMALL POTATO said

    i did not say “huge ” mistake -simply a mistake
    and going direct would be fine with me because then it is an equal playing field between the little guy’s and big guy’s
    however, when you start to dictate to the dealers and tell them they can only sell to the end user -and that you need to see reports backing it up – then you are stepping into area’s called anti-trust , restriction of trade , and collusion
    -the key to the little guy’s survival is “diversification”
    -if the little guy’s take on the big guy’s mentality of “order taking” and not “selling” then they will evaporate -i agree , however , most little guy’s are in this or any business because they are entrepeneurial
    -don’t underestimate the entrepeneur –those are the people who built this country from nothing into the world power in 200 short years!

    and a host of other’s

  9. AssociateQ said

    JD, I was going to say that but did not want to piss anyone off. But now that someone else said it I would like to know as well. For those dealers who have been cut off, why did you not “sell” your customers a better product at a better price before you were cutoff instead of just taking orders?

  10. AssociateQ said

    Small Potato, I have been and always will be a little guy. It is just what side of the fence I am on. Entrepreneurship? I am not saying that you or anyone else is not, but I certainly am an entrepreneur. I have put my ass on the line. I have put my house, my life and my first born on the line. I have taken risks and won; I have taken risk and lost. But I always learned.

    And to be completely honest with you and everyone else, one large trend I have seen start over the past couple of years is the absolute laziness of most dealers. Also, the shear ignorance and greed. They all want to make 40% margins but they don’t want to stock a damned thing. They only want to sell your product once you have built the sales up. They all want to dictate to manufacturers how they should run their business. They want terms, and then they want to ride you out 60 or 90 days and then tell you that it is the doctor’s fault. You know what, I prepay for orders that are thousands, tens of thousands and hundreds of thousands of dollars. I am not a freaking bank, so pay your bill.

    And honestly it is not a matter of “when” they take the big guys mentality of “taking order”, because they already have. There are so few true salesmen left it is not even funny.

    And how can you call yourself a dealer when you sell directly competitive lines? Then you are either a distributor or a mail order house. Dealers SELL and SERVICE products. They don’t merely use manufacturer’s literature as sales flyers and take orders. Then when something happens they tell the customer to call the manufacturer.

    Now this does not apply to everyone, but it does apply to most everyone. It is even more so in the lab side of the business. Sure, sure I know there are some good reps left at even the biggest dealers, but they are few and far between. And I know there are some good indy’s out there. But 30 years ago this was an entirely different industry. It was better and you could actually trust people. Now, you can’t go to a trade show without Kevlar. You walk out with all kinds of knives sticking out of your back.

    I am sorry but this is why more and more manufacturers are cutting back, going direct and doing what they can to promote their products. Why should they spend thousands upon thousands of dollars in marketing while the dealer does nothing, then the dealer wants to collect their 40% margin for taking the order and pushing paperwork. Yea right.

    If you know the names of any good salespeople please let me know. In fact if anyone out there can still sell and wants to earn some money please e-mail me at associateq@gmail.com. I know tons of companies looking for reps that want to sell product.

    Q

  11. I’ll defend my post the reason being for selling customers the Kerr items over others is because I sell them what they want. It’s like going to buy a car if you are set on a car and see it on the lot is the saleperson going to be able to convice you to buy another car, probably not? But if that car is not on the lot anymore and I can show you something which I have been told is just as good of course I’m going to talk up that car. The main point here is that it is harder to switch someone that is used to getting that item from me all the time than when I have a reason to switch them. When I say a cheaper product it’s usually $2 – $5 cheaper not a huge savings.

  12. JD, Q…

    Let me throw a few thoughts out there…

    The reason Dealer X is not trying to push the better product at a better price is because most of the major manufacturers have yearly minimum purchase requirements. Therefore dealers dont switch customers until absolutely necessary (Dentsply, Kerr consolidation)for fear or not meeting the minimum and losing the line.
    I do agree that there are alot of order takers in this business, especially at the PDCO and HSIC level. I think you see true salespeople working for independents where in situations like Dentsply or Kerr, they are able to retain their customers and switch them to other products. I think they were highly effective with Dentsply products. Dont get me wrong, there are order takers on the independent level as well.

    I think you will see Dentsply and Kerr going to a direct model in short time. I know it’s been rumored about for years with Dentsply, but they already sell direct to the end user in many of their divisions and around the world.

    I would love to be in the room when Bret Wise tells Stan Bergman and Jim Wiltz that Dentsply will now be sold directly to the end user.

    DI

  13. The only part I thought was funny about the letter was that one of the reasons they are cutting down distribution was so the reps could better service the larger clients. I haven’t seen my rep in 4 years and I’ve never even meet the regional manager so I’m not sure what help it will do in my area.

    I know I never did but was Kerr gathering end user information from dealers?

  14. AssociateQ said

    DI, I don’t disagree with what you said but the fact remains that if a small dealer is under the gun to meet minimums and they do have better/ as good products that are the same, a little less or a little more as far as price then why not tell Kerr to go F%^# off and work with the manufacturer that is willing to take there business whether it is 2 units or 2000 units?

    The fact is that Shawn said why it does not happen. And Shawn, this is not meant as a diss at you but you but we are not talking about cars. I mean sure when you get into larger equipment purchases there is brand loyalty or a desire to have a certain brand, but on consumables? I mean if a customer wants Cement A, and you sell Cement A but you also sell Cement B. Now the Cement B is just as good, comes from a respectable company, the manufacturer is willing to work with your company and support you then why don’t you promote Cement B. I just don’t understand why everyone chases the same thing. It is like everyone is fighting over the same piece of a shrinking pie. Why not go your own way?

    In fact is anyone willing to drop manufacturers? I have seen it happen. Manufacturer was acting up, asking for information that was out of line, constantly back ordering items, etc, etc. The company sold more than 300,000 worth of their product. In fact I will tell you it was Heraeus Kulzer. The company sells Whip Mix so they planned to switch as many customers to their gypsum. Whip Mix produces better gypsum and that is a fact. They are better priced. Etc, Etc. So one day the company packed all the HK shit up and sent it back. Sent them a check for the balance and told them to close their account. They retained 85% of the business and actually made larger profits, along with having to carry one less line of products. This company took a stand. They had it with the BS and said no more. It was a risky move but if you actually stand for something and stand up for what you believe in then maybe you can come out better on the other side. For this company they increased their sales with one manufacturer, worked out a sample program to switch the customers and actually worked to get it done.

    I guess my point is why don’t some of these dealers work with companies that are more tuned into their needs? I have talked to numerous manufacturers who have reached out to smaller dealers only to be snubbed. Why is that? Maybe because the dealers are already selling Cement A and their theory is “if it ain’t broke don’t fix it”. But the problem with that theory is that one day might come along when it will be broke. The day that the next manufacturer pulls their line. Then what? I guess that is the day they start selling Cement B.

    The fact is, and I am repeating something I have said and DI just said, that Dentsply and Danaher will go direct in the end. But DI where we disagree is on the conversation between Bret, Stan and Jim. I think it will be about how they can offer products that are corporate branded. In fact those conversations are already happening and it is pissing off a lot of manufacturers. Schein has been bringing in more and more private label products and trying to switch people off of the brand name products.

    Eventually it will all be corporate branded or it will be a variation on the Lowe’s/Home Depot/Wal-Mart way of doing things. Where a manufacturer offers a retailer a certain product line that is only sold by them. It is like GE and their appliances. Notice how you look at the Sunday paper and the add for your big box appliance store says “if you find it cheaper we will beat it by 20%” Well the fact is you can’t find it cheaper anywhere else because you can’t find it anywhere else at all! GE sell the Eterna line through Circuit City, they sell the Provera line through Best Buy and so on. It is a joke.

    But hey, what do I know?

    Q

  15. Pink Panther said

    Q……Reguading your last line…….. Evidently Everything

  16. jd said

    Shawn,

    You illustrate my point perfectly when you say:

    “I’ll defend my post the reason being for selling customers the Kerr items over others is because I sell them what they want. It’s like going to buy a car if you are set on a car and see it on the lot is the saleperson going to be able to convice you to buy another car, probably not?”

    If you are truly looking out for your customer’s best interest as a sales rep should, isn’t it you obligation to tell your customer about a newer model car that is less expensive on the lot?

  17. Let me jump in here again…I won’t say I am going to defend Shawn as I know he will be back to defend himself.

    For a smaller, independent dealer, there is a lot of value in having the “prestige” lines (Kerr, Kodak, Dentsply, SS White).It allows them to offer the products to their customers without having to “out source” it. So these guys have to walk a fine line when choosing to sell the customer the “better, cheaper car” or the higher priced, not so good car, if that’s what the customer wants. If you go to the grocery store(Kroger) and they dont carry the hostess 100 mini cinnamon crumb cakes (tasty, by the way) that you want, you will go to the store down the street (Winn Dixie) and get them because they do carry them. It’s about the customers wants and needs and how to keep them happy.

    Just my 2 cents

    DI

  18. Dental Guy said

    Winn Dixie! I didn’t think those were around anymore. If only I could head on down to the Piggly Wiggly.

    Oh, those were the days!

  19. AssociateQ said

    Pink Panther, I will take that as a compliment! Thank you.

    DI, you are right again but I msut say that if Kroger had a sample of the Sara Lee Crumb Crumb Cakes that ended up tasting better I might just buy those.

    However, you are exactly right again when you say it is about the customer’s wants and needs, and keeping them happy.

    I don’t disagree with your statement about prestige in carrying certain lines, but I don’t think that really leads to higher profits. Everyone may mock some of these companies that sell certain products and sell a lot of off brand stuff, but you know what, those guys are making a killing. They sell a discount line of workhorse products and they sell a lot of it. Plus they are doubling their money on everything they touch. It is odd that people chase down a $50,000 equipment sale, when they could have sold $10,000 in consumables and made just as much profit. Always out for the homerun, when they should settle for singles an doubles.

    And I want to make it clear that I am not trying to single out anyone. I am speaking in broad terms and my comments are in no way directed at one person or another. I am only speaking from my experiences and talking about certain dealers with whom I have dealt with in the past.

    Q

  20. Pink Panther said

    To Dental Insider…… I cant believe you used the 100 calorie mini crumb cakes by Hostess for an example. I can only find them in 1 supermarket & they are rarly in stock!!!Love them!!!!!

    Q……. A compliment is in the eyes of the beholder only…….God Speed

  21. Pink,

    The reason that they are so scarce is that Weight Watchers people love them because they are worth 1 point whereas all of the other Hostess mini’s are 2-3 points. I have heard from a friend of mine in the bread industry that Hostess is addressing the issue and ramping up more production on the mini crumb cakes.

    DI

  22. AssociateQ said

    DI you really do get around. You have a friend in every industry. I mean come on, you have inside informants in the bread indsutry?

    Pink…. Basically what you are syaing is that it was not a compliment? Or that it is a compliment if I want to perceive it as such?

    Or is it that I really should not give a shit what anyone else thinks about me?

    It is just funny that you made the first comment in this thread and it was second guessing the Kerr decision. So maybe you are the one who actually is in the know.

    Q

  23. wayne said

    JD, I think most of these guys answered your questions as best as they could,they werent selling a crap product with Kerr, now that they no longer have the line they are gonna have a different approach with the staff and doctor, let me show you a product that can save you a few bucks and do the same job as Kerr has been doing for you in the past,,,,why dont they go thru that process in the begining? Same as equipment,if people believe Adec is the best and I have Adec to sell Im gonna put it down on paper and get the ink,when I no longer have Adec Im gonna have to work a lil harder to show them I have a equall product that will save them 15%, also if you have the line,you have an obligation to sell that line,why direct the doctor away from Kerr when I have it,he wants it and I already have another bur line Im trying to get him to buy because I dont have midwest,most doctors have sympathy with the small dealers, since they like us are indys,we explain the situation ask them to try a solid sub,if they like it great,if not…..find another gap to fill, if dentist were treated like we are by the big companies, they wouldnt sell anything to anybody but the large factory dentist,western dentals,britesmiles,etc… couldnt deal with the indy dds because your not large enough to understand the complexity of thier product, the large companys treat indys like crap and expect the independt dentist to buy from large retailers only, but…..god bless em, they help keep all the GP fat and billable service over 200 bucks an hour….wayne

  24. Christina said

    Shawn:

    Just wanted to let you know that there are better products at better prices for your doctors and we have them and can help you. (And it won’t take 4 years to see you in person)

    Christina

  25. Iselldental said

    We were recently let go by Kerr after a 60+ year relationship. What we can’t figure out is what kind of “fuzzy math” Kerr used to determine which dealers stayed and which went. In 2007, we did 150K in sales of Kerr products and were set to hit 210K in 2008. Kerr kept on a local glove dealer that acquired the line about a year and a half ago, who until they got the Kerr line was selling Kerr “gray market” products and today is selling gray market products from GC, Ivoclar and others.

    It was also confirmed by Kerr that they were keeping 2 other dealers in our state that combined, has sales less than our. It makes no sense.

    iselldental

  26. Pink Panther said

    No it does’nt. Unless like I previously said they might have a merge with another manufacturer like Dentsply in mind. If they dont…..then they are making a BIG mistake. But who knows anything is possible. But I do think this will all backfire on the BIG Buisnesses & the little guys will fluorish just a feeling…….

  27. Dental Guy said

    Oh yes it does! The big boys don’t like you. So, as they say in some quality reality TV shows. “One day you are in, and one day you are out!”

    I am sure that 3M will be delighted to have you promting their products now! Besides, they are more pleasant to work with.

  28. mr said

    I would be willing to bet that every single dealer that got cut, had a significant market share. Think about it, these manufacturers can’t be making these decisions without outside help (pressure). It wouldn’t make ANY sense, but if they are guided by people who have something to gain, it makes total sense. You take an independant dealer with a very large market share where they are competing against the big guys, and the big guys are doing EVERYTHING they can to make inroads in the market, what better way than to gain an unfair advantage? Whittle away the amount of products the independant dealer has access to, to the point of pushing him out of the business or coming in with an extremely low ball offer to purchase the company.
    Is this legal? Probably not. Are we going to get together and put up a fight to see that this stops? Probably not. It’s so much easier to whine about the sorry state of this business than to actually do something about it.
    Has anyone heard of the SBA? They are there to help small businesses. Don’t you think if 12 or more companies contacted them with the same scenario, we could get some intervention? Let’s not continue to take this bullshit!

  29. Dental Guy said

    What about the members of the American Dental Cooperative? What are they doing to address this?

  30. AssociateQ said

    “Mr”, what do you consider to be “significant market share”?

    DG –

    The ADC is probably trying to figure out how they can get private label products from these companies so they can call it Quala Brand This or That.

    The ADC is like a really mean looking pit bull that growls at you, but then you soon realize it has no teeth. Plus, they are even more than a pain to work with (from a manufacturers point of view) than some of these big dealers.

    Q

  31. Pink Panther said

    I am with Mr 100%. This is how I feel & no I do not think it is legal at all……But who has the $$$$ to fight it. Unless it becomes a class action which would be amazing. One could only hope that the nice guys finish first!!!!!!

  32. I have heard that there is a group that is trying to catch the attention of each of the State’s attorney general’s office in regards to the Taft-Hartley Act. Names being tossed about are Kerr/Danaher, Dentsply, Sullivan-Schein and Patterson.

    I am not sure if any of this falls under the Taft Hartley Act but you can read about it here… http://en.wikipedia.org/wiki/Taft-Hartley_Act

    DI

  33. Dick McManus, DMD. said

    Well it’s a federal law so they are looking at the wrong attorney generals! Also Taft- Hartley is an employer-employee relation law regulating strikes & political contributions. It seems to me to have no application whatsever to big companies buying smaller ones!
    Dick McManus

  34. mr said

    I will respond to the comments posted as best I can. I totally agree that ADC/UDD does not seem to be helpful with this issue. There was a lot of talk after Dentsply, but nothing has happened there. I don’t think Kerr worries them. I am amazed that they don’t see this trend as alarming as I think they should.

    As far as a significant market share goes, when an independant in a given market is doing as well as or better than the big 2, that is significant in my eyes. I truly believe, that the greater the market share of an independant dealer, the more likely they are to lose the line. Schein and Patterson don’t care about the really little guys, they care about the ones that are giving them too much competition.

    I checked out the link to the Taft-Hartley Act, but don’t understand how a labor/management act is relevant to this. I admit I could be missing something! It seems that anti-trust laws, or like I mentioned earlier, the Small Business Administration would be a better fit.

    To Pink Panther, I hope nice guys finish first also, but I don’t think it will magically happen. I think if that is to happen, we need to all get together and work at it. Sooner rather than later!

  35. AssociateQ said

    Understood and agree with your statement Mr.

    If they can’t put them out of business, they buy them. I don;t think anyone should be surprised, I mean look at other industries.

    Look at the fines Microsoft has been paying lately. But until it effects the public in some way, I am not sure if anyone will take up the case.

    But we’ll see what happens, you just never know.

  36. Mr,

    I agree, I sifted through the Taft-Hartley act and I can’t find anything that would relate to Dentsply or Kerr, but that was what the 2 people I spoke with were claiming.

    Dick,
    I think the goal was if they could garner enough interest on the state level then the US attorney general might have an interest in pursuing the case.

    DI

  37. Dick McManus, DMD. said

    I read the entire thread and believe me if Mr. is correct then this is anticompetitive and someone should write a letter to the U.S. Justice dept. Believe me they do followup on these matters and you’ve got nothing to loose and besides – I like Benco a lot.

    Dick McManus

  38. Dick McManus, DMD. said

    does anyone have figures on the number of Dentsply “former” dealers that have been purchased by either Schein or Patterson since they lost there Dentsply dealership?

    Dick McManus

  39. mr said

    Dick,
    Great idea regarding a letter to the U.S. Justice Department. I don’t have the figures for former Dentsply dealers that have been purchased by Schein or Patterson since losing the line. I wonder if that is a figure that DI could get somehow….I would think Leventhal would be the biggest one. There was another one just last month that was a member of ADC.
    mr

  40. Does anyone have figures on the number of Dentsply “former” dealers that have been purchased by either Schein or Patterson since they lost there Dentsply dealership?

    I think it is only a couple, Leventhal (PDCO), Marcus (Benco), RJM Dental Advantage (Closed for unknown reasons), Eastern (Benco)

    Thats all that I can think of…

    DI

  41. dbbill said

    Taft Hartly is 100 % a labor management issue. People get it confused with the Sherman Act and the Clayton Act, which is 100 % anti-trust, because it has long been argued that some things that labor unions can do that would be considered anti trust, are exempt.

    http://en.wikipedia.org/wiki/Taft-Hartley_Act
    http://en.wikipedia.org/wiki/Sherman_Act
    http://en.wikipedia.org/wiki/Clayton_Antitrust_Act

    is that the Clayton act contained safe harbors for union activities. Section 6 of the Act (codified at 15 U.S.C. § 17) exempts labor unions and agricultural organizations. Therefore, boycotts, peaceful strikes, peaceful picketing, and collective bargaining are not regulated by this statute

  42. Dick McManus said

    It’s seems from the above list that the big winner is Benco not Schein or Patterson.
    Dick McManus

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