Consolidating and managing your hospital inventory can save money and streamline practice recommendations.
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When was the last time you dusted off your inventory shelves, emptied cabinets, and cleaned up your practice information management system (PIMS)? If it’s been a while, there’s no time like the present to tidy up. Organizing and consolidating inventory is one of my favorite things to do—the outcome can be rewarding both visually and financially.
While it can be time-consuming, determining the turnover rate for all inventories is extremely beneficial. You can accomplish this by analyzing the sales history for each item. Some PIMS can produce turnover reports, making the process much more efficient. Based on your ABC analysis, your A products (top 20% of inventory items) should turn a minimum of 12 times, B products slightly less frequently, and C products significantly less. Use your turnover data to clean up your reorder quantities and points.
Determining correct reorder quantities builds the foundation for your turnover rate. Order too much and a product will sit on your shelf, too low and you will run out. There are a few ways to determine reorder points. I prefer to take an average of how much product we sell in 1 week and order for the month, with 1 week added in for lead time.
Additionally, reorder points alert you to restock an item. You should not order inventory every day(and if you do, these tips will help you), but rather every 3 to 7 days, for example. I use 1 week as a reorder point based on my average weekly sales.
In the past, we’ve had a few products on our shelves that were repetitive: multiple brands of ear medications, eye medications, and—you guessed it—parasiticides. We were able to quickly consolidate the ear and eye products, but the parasiticides took more time to conquer.
When it comes to consolidating parasiticides, consider the following:
I challenge you to dig deep and evaluate the parasiticides on your shelf. You could reduce your cost of goods sold significantly by modifying what you stock.
Additionally, there is no need to carry both name brand and generic drugs. Get all of your doctors on the same page and select what’s best for your patients and practice. Bottle sizes are another way to consolidate. Instead of carrying a product in 30- and 180-count bottles, stock the 180-count only and dispense 30 when needed. This is an especially good idea when there are price breaks for purchasing bottles in larger quantities.
Search your shelves and cabinets for expired products. Quarterly, the inventory manager should compile a list of products with upcoming expiration dates. This aids in pulling expired products in a timely manner and, depending on the product, allows you to return them for a replacement or credit.
As you navigate your spring cleaning, always keep your budget in mind. Do you need to replace expired products? Can you consolidate products? And be sure to set aggressive turnover rates to minimize what sits on your shelves.
Don’t spin your wheels or try to cram all of this into what you do on a daily basis. Involve the team. I bet you have someone in your practice who loves to organize things and would be happy to help. Create a fun challenge and set them free. Happy spring cleaning!
Emily Shiver, CVPM, CCFP, is regional director of operations at the Family Vet Group, headquartered in Chicago, Illinois. Shiver resides in Florida.
