Inventory Management Part II — Staff, Software, and Storage

Missed Part I of this series? Check it out here!

There’s so much more to good inventory management than spreadsheets and percentages. In this part of our Inventory Management series, we take a look at critical non-quantitative components of a well-managed inventory: staff, software, and storage.

Staff

Staff are the heart of a practice — from the owner, to the doctors, to the technicians, to the practice manager, and everyone in between, a veterinary practice is only as good as its people. And in most clinics, a lot of staff wear more than one hat — practice owner/veterinarian, technician/manager, receptionist/kennel tech, groomer/boarding supervisor — the list goes on.

Because it’s all hands-on deck so much of the time, it’s important that everyone on the staff understands the fundamental components of inventory management. Perfectly timed reorder points, efficiently stocked pharmacies, and streamlined inventory budgets won’t make up for product (and profit) loss due to excess waste or misplacement of goods. Remember — you’re only as good as the records you keep. This means that everyone needs to know how to keep track of in-house use of supplies, wasted product, and the FIFO (first in, first out) principle. Ask the staff in different departments what supplies they seem to throw out most often, and communicate that across the clinic staff. In staff meetings, talk about important changes in price or supply of high impact goods, and the way the practice is affected. Often, a little knowledge can create a deeper level of investment from staff that don’t often deal with pricing or ordering.

For staff that do deal with ordering, it’s important to keep focused on the bottom line, rather than incentives and ‘deals’ that may be offered from vendors. Sure, that case of dewormer may be 50% off, but if it’s only effective against parasites your clinic never sees, it will probably sit on the shelf until it expires. Don’t let tempting offers or “free gifts” take focus off of making sure you’re getting the things you need at the best prices — Vetcove’s price comparison tool is great for this.

Software

Dedicated inventory software and tools in your hospital’s computer system can be powerful in the fight for organization. But be careful — sometimes these tools can do harm as well as good if they aren’t used appropriately. For instance, in many programs a specific procedure includes as part of its price various supplies to be used in, say, a splenectomy. The code for ‘splenectomy’ is added and not only are services charged but inventory amounts change depending on what items are included in the procedure’s code. But if the procedure has changed since the item was entered — say, you use a different anesthetic gas now, or the doctor now prefers the skin stapler over traditional suturing — then not only will the pricing be inaccurate, but the inventory adjustments that the program performs automatically will also be inaccurate. Periodically check these bulk entry codes to make sure they are up to date, and verify the house account is being subtracted from appropriately.

Storage

Seems simple, right? Just putting things away when they arrive in boxes? Well, storage can just be a means to an end — or, you can maximize your storage system to make your inventory management easier. First of all, it’s critical to have a central location that’s easily accessible and visible to you and the staff (not to clients); more than just being accessible, it should be countable — that is, invest in drawers, bins, shelves, whatever you need to make it easy to count your supplies.

Speaking of inventory counts — a full count is not only helpful to figure out where you stand with your general investment, but also is usually required by accountants for tax filing every year. A total, accurate count can be vital to preventing ballooning inventory budgets, excess waste profit losses, and more — but the task can be daunting. Instead of trying to count everything at once, try breaking it into sections — count antibiotics and NSAIDs in January, surgical supplies in February, and so on until everything is accounted for. Break the groups into weekly tasks, and make it a team effort.

Once you have a handle on the yearly counts and an organizational system that works, begin to implement the 80/20 rule to classify and restock — the products that make up 80% of your income should be under strict control, counted frequently (weekly if possible), and should be stocked in such a way that it is never in danger of running out. Everything else can be kept at lower stock and counted less frequently.

Up next: Inventory Management Part III — Costs and Pricing

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