Veterinary Economics and Firstline will be publishing dozens of personal stories, in-the-trenches advice and bright practice management ideas in the coming months—all from the final nominees in the 2015 Veterinary Economics Practice Manager of the Year contest, sponsored by VPI-Nationwide. The final winner will be announced at a special reception CVC Kansas City Aug. 30.
My father always told me, “Manage the pennies and the dollars will come.” When I took over as veterinary practice manager, I went line by line through the expenses and looked for areas to save money. One such area was our inventory management system. Having been fully trained in that in my previous job in retail management, I worked with a newly appointed team of veterinary technicians to:
> set minimum and maximum inventory thresholds for every item
> discontinue medications and dosages that weren’t regularly used
> tighten up security on therapeutic diets and heartworm and flea-tick preventives.
Stopped buying what we didn’t need
The veterinary technician team and I analyzed every inventory item and size based on use. If the item wasn’t selling, we returned it. We figured which size of each inventory item was the best seller and quit stocking the other sizes; we either returned them or let them sell through if they were popular enough.
Next, we determined the total supply to maintain on the shelf—based on weekly sales—to maintain on the shelf and returned excess quantities. We set our reorder point at a month’s supply, comfortable that this would avoid the risk of depletion because 99 percent of the time we get next-day delivery.
Lastly, we asked the veterinarians to review medications on hand and decide whether we really needed to keep all of them on hand. Unnecessary medications were returned.
Rather than just ordering more flea, tick and heartworm preventive as we ran low in various sizes, we chose to continually balance our supply prior to reordering. Working with the pharmaceutical representatives, we exchanged sizes we were heavy in for those we were light in. We decided that any new products available in various sizes would have a three-month trial and only the best-selling size would be stocked after that point.
The bad news was that $3,000 of product overstock was expired and had to be disposed of during the transition. The good news was that the year after we implemented our new rules our inventory dropped from $125,000 down to $90,000.
Watched our preventives
When you walk into a department store, you see the jewelry locked in a glass case. I treat our flea, tick and heartworm preventives like a jewelry department.
In the past, products for dispensing were located in four areas of the hospital, unlocked on various countertops. Single doses were kept inside plastic bags alongside the dispensing stock. The bulk stock was kept in an unlocked storeroom. All employees were allowed to restock product. Inventory was counted monthly and was consistently off by 75 to 100 doses.
To tighten up security, I consolidated the dispensable product in one location at the reception counter and bought a nut-and-bolt organizer from the hardware store to manage all the single doses. Each drawer contains an index card listing the number of doses. Once dispensed, the receptionist writes the client’s name next to the dose number, and when the card is completed it’s returned to me. This way, we verify that every dose dispensed has been accounted for.
When we replenish general inventory, a moderate amount of surplus product is kept under lock and key in the pharmacy. Only one employee has a key and is in charge of filling the display. She keeps a log to record the inventory coming into and out of the cabinet. Our main locked storeroom contains the bulk of our supply and is managed by a different employee. She replenishes the stock in the pharmacy cabinet, maintains her own storeroom log and double-checks the pharmacy log for accuracy.
That’s not all. Flea, tick and heartworm products are counted every two weeks during peak season. If there is a discrepancy, I want to know immediately. With this new program, inventory of these common items is only off by a few doses.
Considering we sell approximately $150,000 worth of these products annually, the savings with appropriate inventory management is significant.
Kept a closer eye on the kibble
When it comes to therapeutic diets we carry, I expanded the kennel manager’s job description to include food inventory management. Prior to this, a receptionist would take a client’s order, a technician would order the food plus whatever extra they thought we needed, the food would go into the basement storage area and be brought to the front and paid for when the client arrived.
Now with one person in charge, all the duties—including counting and reporting inventory—are streamlined and one person is accountable. The food is also labeled and charges entered into the computer upon arrival, thereby ensuring charges aren’t missed and clients have to wait that much less to take their purchases. Veterinarians are asked to make a list of food to have on hand so no guesswork goes into what’s in stock.
A remaining concern was treats. The hospital assortment was too vast, with numerous slow sellers. I spoke to our sales representatives and was able to return almost all of our expired and slow-selling treats. We now only carry top sellers.
Lastly, I added an online store to our website in hopes of decreasing our burden of in-store food inventory management. Unfortunately (or not depending on how you look at it), our clients have been slow to catch on and seem to prefer to stop by and chat and visit with us while picking up their food.