Looking back on the beginnings of my inventory management career, I realize there are several things that I wish I knew sooner and so I wanted to share them with you. One of the biggest challenges that I have noticed about managing inventory is there are a very limited number of resources available. I think this is unfortunate for several reasons! First of all, if you are just starting out, one of a couple things can happen. There might be no one available to really train you and show you the ropes, or the person before you didn’t really know much and left you with a mess. Or even worse, they might train you on their ways, but maybe they weren’t managing inventory correctly (or profitable!).
So going forward into 2018, one of my big goals is to bring inventory management training and continuing education to light. I want to make it available (and build a helpful community of people who manage inventory) so that no one feels frustrated and alone! As an industry we have so many challenges and difficult aspects of our jobs, that training and education should not be one of them!!
So in that spirit, let me share my top 5 things I wish I knew when I first started managing inventory.
- Learn how to set up the Practice Management Software: When I started managing the inventory, it was a hot mess. Nothing was set up correctly, or it was only half entered. I didn’t realize how much information could be entered into the Practice Management System, and how much easier it would make my life. Even entering the packaging quantity, and the markup percent made a world a difference! Side note: are you completely overhauling your inventory? When I was revamping the practice management system, I would update each item as I added it to my order. That way, I could break it up into manageable chunks, rather than staring at my entire hospital inventory list. Also, with my practice management system set up correctly, I was able to work towards printing a report to formulate my order, rather than looking at every item in the hospital to see what was low.
- Drug/Vendor/Distributor Reps are your friend (most of the time!): I realized that reps can hold a lot of information, power, samples, and the inside scoop on backorders, new releases, and other pieces of juicy information. Of course, not all reps are great, but it’s helpful to find awesome ones to have on your side.
- There are recommended guidelines/benchmarks to follow. When I realized there are guidelines to follow, as far as mark up percentage, targets to shoot for, and cost of goods financial guidelines, it changed my whole perspective! As a general rule, your cost of goods as a percentage of revenue sold should be lower than 20%. This will, of course, depend on the type of practice (specialty, general practice, equine, etc.). I finally had a goal and something to strive for. There are several great places to check financial guidelines. One of my favorites is the Well Management Practice study that produces benchmarks annually. The report on the findings of the top 100 practices within the United States and what makes them successful. There are countless financial and key performance indicators. You can read more information about it HERE. Also, AAHA has countless reports, books, and resources available in their library. You can check it out HERE.
- Run an ABC analysis yearly. Running an ABC analysis was hands down, by far the most insightful thing I started doing. It provided SUCH helpful information. The analysis was able to point me in the direction I need to make next in order to reduce my cost of goods, and increase revenue. You can read more about what an ABC analysis is HERE.
- Create purchase orders in your practice management software, and receive invoices from them. I learned how to add purchase orders from my orders and added them into AviMark right away. These allowed several things, first and foremost when something is on order, it displays blue in the inventory screen. That finally decreased the questions of “did you order this?”, “have you ordered this yet?”- it was fantastic!! Secondly, I was able to receive invoices straight from the purchase order so it saved time. I was also able to see if the incorrect product was sent, charged for, or if something didn’t arrive as ordered.
So there is my top 5 of what I wish I knew sooner. Comment below; what do you wish you knew sooner? What do you wish you had more knowledge or understanding of?