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When it comes to dentures, one size definitely doesn't fit all. The same goes for transportation insurance.
What do those two things have in common? They're both major concerns of American Tooth Industries, a maker of Justi Dental products, including hardened plastic teeth. The company operates in a highly specialized field, which demands a tailored approach both to its customers and supply chain.
Those customers vary widely in size and scope. Located throughout the U.S., Canada and Puerto Rico, they fall into three main groups: dental laboratories, ranging from multimillion-dollar operations to one-person setups; clinics, set up by dentists who have pooled their resources to justify the expense of an in-house lab, and licensed denturists, technicians who fit patients with dentures and partials. The last are especially prevalent in remote areas where full-fledged dentists are rare.
The three classes of customers represent a broad range of service demands. Office hours aren't uniform, with some sites closing on Wednesdays or Fridays. Packages might get left outside, where they are subject to theft or damage from heat.
Orders consist mostly of small packages, but that's not the whole story, according to president and chief executive officer Emilio Pozzi. American Tooth also imports 20-foot ocean containers full of the chemicals and other raw materials that go into the manufacture of acrylic teeth.
The need for shipment insurance is evident, given the value of the product and the complexities involved in getting it to the customer. As with the dentures themselves, however, no single solution can address the full range of the company's needs. Until recently, American Tooth was insuring its small-package deliveries through the same big underwriter that was providing coverage for the inbound ocean shipments. But that was an expensive option, says Pozzi, and the claims process was slow and complex.
Parcel carriers offer package insurance as a matter of course, but generally only cover the losses resulting from lost or damaged shipments. The standard liability rate is $100 per package - grossly inadequate for shipping a set of dentures that might cost upwards of $1,000 to the buyer. Temperature-related damages caused by late deliveries aren't included in that coverage.
UPS has long been American Tooth's nationwide parcel carrier of choice, says Pozzi. The carrier also turned out to have an answer for the shipper's domestic insurance needs. It came from UPS Capital, the financial services arm of UPS.
In late 2008, UPS Capital began providing American Tooth with the service that had launched its operations 10 years earlier, a product called COD Secure. It allows the shipper to collect upon delivery from buyers to whom it doesn't wish to extend credit. UPS Capital ensures that the funds get back to the seller quickly, and covers any losses if the check is bad. Pozzi says American Tooth ships about 30 percent of its parcels COD, mostly because many smaller labs and denturists don't want to fill out credit applications.
Some shippers have moved away from the COD option with growth of the credit-card market, says Marshall Christman, vice president of trade risk solutions for UPS Capital. But his business unit had another product up its sleeve for American Tooth: Flexible Parcel Insurance. In addition to offering standard coverage of goods in transit, it protects the shipper against lost or damaged goods. And it does so at a savings over American Tooth's previous domestic insurance costs. With Flexible Parcel Insurance, the company was able to increase its deductible and lower premiums for small-package moves, Pozzi says.
The combination of services from UPS Capital helped American Tooth to realize further economies in its domestic supply chain. The company had been shipping from two distribution facilities, one at its headquarters in Oxnard, Calif., and the other on Long Island in New York. Around the same time it began using the COD service, it closed down the East Coast facility and began serving nearly all customers from Oxnard. Today, says Pozzi, American Tooth is one the biggest users of UPS's Blue Label second-day air service.
The company, which operates one of the two remaining denture factories in the U.S., also relies on insurance from UPS for transporting trade show materials. The service is cheaper than that provided by the big van lines, according to Pozzi. American Tooth exhibits at some 14 trade shows a year, moving delicate and expensive displays, as well as sample packages, all over the country.
Business has been relatively strong for American Tooth in recent months, given the woes that many other sectors have suffered. Dental services tend not to experience the same decline during a recession as consumer goods, although the cosmetic side of the business has seen a sharper drop. Says Pozzi: "We've had two good solid years."
American Tooth has used the lull to work on new products, mostly in the way of incremental improvements in quality and presentation. ("We've used the same materials, molds and shapes for 30 to 40 years," Pozzi says.) The company is also developing packaging that uses more environmentally friendly materials, without endangering the condition of fragile items in transit.
American Tooth plans a geographical expansion as well. It has already broadened its presence in Canada, and is now eyeing Florida as a key market for growth because of the state's large community of retirees. For the same reason, it maintains a sales office and small warehouse in Arizona.
For many manufacturers, transportation insurance has become a key element in their bid to expand market share in an uncertain economy. "When you're dealing with unknowns," says Christman, "you need risk-mitigation tools to make you comfortable. And there's been more of a need in the last couple of years than there ever has been."
UPS Capital, www.UPSCapital.com
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