During the continuing education this weekend, I got several questions about what to do when someone first starts managing inventory, so I wanted to share some insight into that.
First of all congratulations!! I think inventory management can be such a fun and exciting part of a veterinary hospital… as long as it isn’t frustrating! I enjoy managing inventory for all of the puzzles, the new and exciting products, the analyzing, and the data. It’s great!
Remembering back to when I first starting managing inventory, I recall how nervous and overwhelmed I was! I didn’t really know what I was supposed to be doing it, or the best way to do it, and I’m not a fan of not knowing how to do something. So in that spirit, I’m sharing what I recommend to do when you first start managing inventory.
The first things to do when starting to manage inventory:
- Learn your hospital’s formulary. It is important to know what products, medications, controlled substances, hospital supplies, and surgical or specialty equipment your hospital carries. In addition, it’s also important to be familiar with most medications, why they are used, and the doctor’s preferences. If you are also ordering food, I would recommend knowing which brands and types you carry, what they are used for and the benefits of each prescription diet. Also, it is helpful to have an idea of the full line of prescription foods offered by the brands you carry.
- Resources: your practice management system (the inventory list), Plumb’s Veterinary Drug reference book, product catalog for the prescription diet’s you carry, etc.
- Learn what your hospital sells a lot of (and what sits on the shelf). It is important to know what products are favored, and how much is used or prescribed on a monthly basis. Ideally, your practice management system should be set up with reorder points (an inventory level of a 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 orders as things become low in your hospital.
- Find out what your budget is, and if expense costs are higher than they should be. When managing inventory, it is a balancing act to make sure you have what is needed in stock, but also spending wisely within a budgeted amount. Ideally, your practice should be monitoring cost of goods monthly and ensuring it is at an appropriate level in comparison to revenue. If you are unsure, I highly recommend running an ABC analysis. This will give you insight into your cost of goods in comparison to recommended benchmarks. You can read more about an ABC analysis HERE. I would also read information on indirect costs, and how they may affect your hospital and profit. It is important to remember that there are more costs associated with purchasing a product than the cost of an item itself.
- Recruit helpers! This will be especially helpful if you are newer to the veterinary industry. Check with the lead technician, or the technician with the excellent dental knowledge, or the person who knows the ins and outs of your in-house laboratory analyzers to help with reordering and the familiarity of products. If you need extra help, they could help you put together a list of what and how much should ideally be stocked in that department.
Also, as a side note, if you are not apart of our Facebook Inventory Management group, I highly recommend it! Everyone is very kind and helpful, and more than happy to give suggestions!
I hope this was helpful in pointing you in the right direction. Please let me know if you have any questions… I would be more than happy to answer! If you need more help setting up your inventory system, stay tuned… we have a VERY exciting announcement at the beginning of March!