How to Set Up Reorder Points

Does your hospital struggle with when to order an item, and exactly how much to order? Does it feel like you are always running out of items, or items are expiring left and right? This is where reorder points come in to play! By implementing these, it can aid in keeping things running smoothly and efficiently. As an added bonus, once reorder points are set up in your practice management software, it will allow you to print out a report that tells you exactly what to order, and how much. Although it depends on your practice management software, most are set up with this capability.

So first of all, what is a reorder point? A reorder point is basically a level of inventory at which point you place an order for a specific amount. The best way to calculate this is by using your annual usage. This can typically be found in most practice management software systems using some kind of income report. (Need to know exactly what report to use, or where to find it? Email me!) Once you have your annual usage, you divide it by 12 months, and then you will find your monthly usage. You can set up inventory one of two ways; you can either order 1 months worth when you have 1 month on hand. Or, order 1 month worth when you have 2 weeks on hand.

Which option will work best for you depends on your hospital. If you choose to order 1 months worth at 2 weeks, it will be important to count more often, and take a more hands-on approach to your inventory. If you are a high volume, very busy practice, this will be even more critical.

Let’s do some examples. Let’s say that you determine from your annual usage that you prescribe 10,392 capsules of Gabapentin. Divide that number by 12 = 866 capsules. Divide that number by 2 to determine the 2 week order point = 433. So, when you have 433 capsules, you will order 866 (or in Gabapentins case, you will order 2 bottles of 500).

Now, a hospital supplies example: It can be difficult to track usage of a hospital supply in your practice management software, so the easiest thing is to get your usage report from your main distributor. Most can email you an excel spreadsheet of your ordering history (use that for your annual usage information).

Let’s figure out a hospital supply example; gauze! Let’s say you receive your report back, and it says last year, you ordered 516 sleeves of white gauze. So again, we will divide that number by 12 to get your monthly usage. 516 / 12 = 43. So, that means if you were ordering at 2 weeks supply, 22 gauze sleeves, you would order 43 more.

I hope this helps to calculate your order points. If you have any questions about implementing this in your hospital, please contact me!

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By |2018-09-29T23:10:21+00:00October 29th, 2017|Inventory, Management Strategies, Profitability|5 Comments

5 Comments

  1. […] product which alerts the system and you to order more). Read more about setting up reorder points HERE. If your practice management software is set up correctly, it will help you formulate purchase […]

  2. […] Reorder Point (ROP): The inventory level of a product at which additional product is ordered. You can find out more about calculating reorder points here. […]

  3. […] of the curve, and anticipating the needs of the hospital. This goes above and beyond setting up reorder points and using reorder quantities. This is all about preparing for the abnormal and planning for the […]

  4. […] Usage Log– this form will be helpful in determining your monthly usage for products. This can either be calculated in one of three ways. The first is to have each team member mark off when they have used or prescribed something (which likely won’t be very reliable), second is to calculate the difference of product between physical counts, and thirdly it can be calculated using an order history from your main distributor. This third option will not be as accurate if too much or too little was ordered. Once the usage has been established there is room to calculate reorder points and reorder quantities. Need a refresher on reorder points? Check out the guide here. […]

  5. […] One of the things to look at is relying more on your practice management system, setting up reorder points, and reorder quantities more. Having an established, standardized system will yield SO many […]

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