“Veterinarians can’t practice without inventory, and sometimes we can’t get products in time; ‘just in time’ inventory management doesn’t work for equine vets,” said Amy L. Grice, VMD, MBA, in episode 42 of The Business of Practice podcast.
“Inventory control is about protecting what you own,” she stressed. “Inventory management means reducing the cost to fill orders. You need to have the right amount of the right stuff at the right time at the right price!”
She noted that back orders can be an issue, as can buying multi-dose vials of products simply because they are cheaper.
Inventory is the second-largest cost of expense in equine veterinary practice following employee costs, said Grice.
She reminded veterinarians that for every $1 of inventory on the shelf there is $0.23-$0.35 of cost for ordering and holding it. “You should add 15% to the cost of the item just to have it on the shelf,” she said. “You have to order, unpack, inventory, enter it in your software, and have a lighted, heated insured space to store it … there is a cost to buying and storing inventory!
“Then there is the need for someone to keep it clean and managed and shrinkage—dropped, expired or stolen product,” she added.
She said veterinarians need to never forget that inventory is money. “Know what you have, count it and lock it up,” she advised.
Veterinarians don’t want to “run out” of any drug, and they don’t want to lose money with expired product. There is a fine balancing act. But in order to keep inventory lean, she said you might occasionally run out. “Keep a good relationship with your colleagues to borrow product and pay them back” in an emergency, she said.
In the podcast, Grice tells veterinarians how to calculate their inventory turnover ratio.
“Managing inventory can save you money. Poor inventory management causes poor cash flow,” she stated.
Grice also stressed the need to get paid at time of service. “You have to pay for product before you get paid by clients, so make sure to get paid at time of service,” she said.
She also discussed how to make your practice management software work better for you when invoicing clients.
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