Poor Inventory Management Could Be Costing You
By: Eric Olmstead | April 13th, 2021
Inventory management is crucial to the success of any specialty practice. Not having enough items on hand risks losses in sales when your supply fails to meet patient demand for certain items. Of course, having too much inventory in stock can also cost you as unsold items expire on the shelf. If you are not implementing and maintaining best practices for inventory management, you leave your practice vulnerable to financial risk and related inefficiencies.
To assist our readers, this blog will show you how to take better control of your practice’s inventory and make it work for you to increase profitability and reduce losses.
Create an Inventory Team
Think of your inventory management in terms of team management. When reviewing your current inventory processes, how many people have their hands in the pot? Consider using only one or two staff members to manage your inventory. This is all dependent on your office size and levels of inventory, of course. You also need to think about who these individuals are going to be. You need to consider which team members you would hire or assign the position of counting the cash in a bank. They need to be competent and trustworthy. You don’t need a “rocket scientist” in this role, but you do need to look for someone who can stay organized and maintain an attention to detail when it comes to managing inventory.
Start with the basics and build on that. First and foremost, you need to get your on-hand items under control. For an established office, all too often their inventory values are in the negative because no one has been made directly responsible for managing what is in stock. How can a practice effectively report on inventory values, if they are not kept current and accurate? How would you know if product is “walking out the door,” so to speak? Well, if you are not tracking your inventory or holding someone responsible for that task, the answer is simple—you don’t.
Secure & Categorize Your Inventory
Next, you need to take a close look at where your inventory is being stored. You should think of this area like a bank vault, and you should treat it as such. Your inventory is your cashflow. Just like a bank vault, security for inventory storage is key as well as maintaining control over who can access it. Bank vaults do not have an open-door policy, and neither should your inventory storage. Access needs to be controlled and the room should be secured when not in use.
With security in place, you can start categorizing and documenting your inventory. Consider categorizing your inventory into different priority groups. This can help you understand which items need to be ordered more frequently or in greater quantity, as well as which are important to your business but perhaps are high cost and/or move more slowly.
You might consider separating these into different groups A, B, and C. Items in Group A are higher-ticket items that do not need to be kept in high quantities. Items in Group C, on the opposite end, are lower-cost items that usually have quick turnover. Finally, in between you have Group B—items that are moderately priced and move out the door more slowly than Group C, but faster than Group A.
Review Your Suppliers
Where you purchase your products from is just as important as the products themselves. Your vendors and suppliers need your business, not the other way around. Are they the only game in town? Check if they have any competitors that might be willing to offer you better pricing. Even if that means it takes an extra day for delivery, if the cost is cheaper, that is a win for your bottom line.
You also need to take reliability into account when choosing and continuing to work with a supplier. If they are habitually late with deliveries or short your orders or make mistakes, take action and reach out to that supplier to find out why this is happening. Be prepared to switch or deal with uncertain levels of product.
Have a plan to store your invoices. Better yet, store them electronically for easy access and less physical paper laying around. Also, if you are receiving any special pricing from a supplier, be sure to get it in writing and documented and store those agreements as well. This will make it easier to keep suppliers honest to their word.
Be sure not to allow poor inventory management to cost your practice money. With the simple strategies in this blog, you can limit losses and boost profitability. To enjoy in-depth sessions on how your practice can adopt better inventory management along with other best practices, join us for our Seventh Annual User Conference, EDGE, April 15-16, 2021.
To learn more about how Nextech can offer your practice with Inventory Management solutions, fill out this form and a member of our team will be in touch soon!
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