Just in the nick of time
"I don't believe in just-in-time inventory," says Joe De Deo. "Just in the nick of time is more like it." De Deo has managed the Equine Clinic at Oakencroft in Ravena, N.Y., for four years. With eight full-time veterinarians, De Deo has plenty of inventory to track. And his background of 10 years in the financial services field gives him eagle eyes when it comes to hidden costs and freeing up cash flow.
That attention to detail is anything but trivial when it comes to inventory. A few dollars here, a half hour there. It adds up. Equine practices average $46,873 in inventory at any given time and spend an average of $228,415 on supplies in a year, according to the AVMA's "Economic Report on Veterinarians and Veterinary Practices," 2005.
"I think a lot of veterinarians and managers don't pay as much attention to inventory as they should. It's one of the largest fixed costs. And a couple of percentage points in fixed dollars makes a difference. In fact, most managers can save 10 percent to 15 percent," De Deo says.One way to save money is to get a better deal on the price of products. Another is to cut down on the hidden costs of inventory—time spent searching for distributors and ordering products, carrying costs, and so on. These costs are harder to track. One of the easiest solutions: Cut down on how much inventory you're ordering and stocking. "I'd rather have money in the bank than on the shelves," says De Deo. "It's a cash flow thing."
Of course, he says, you can never compromise the integrity of patients' well-being. "You must stock some critical items at all times—fluids, IV sets, and so on. You might not use 12 boxes of plasmalyte for a few months, but when you need it, you need it."
For other items, keeping a minimal amount in the clinic and trucks is ideal. And yes, equine practices enjoy the added challenge of stocking both. Dr. Mark Baus, an owner at Fairfield Equine Associates in Newtown, Conn., says overstocking vehicles leads to some of the biggest wastes in equine practices. "The products become outdated, disheveled, or dirty," he says. "Often you don't turn over the product nearly as quickly as you need to."
Dr. Baus' practice stocks nine ambulatory vehicles. To minimize overstocking, the practice has come up with an interesting solution: drop shipping. Here's more about this inventory management strategy and seven others that could save you time and money—and headaches.
I Consider drop shipping products. This ingenious idea is one of the ways Dr. Baus and his colleagues keep their trucks minimally stocked. Basically, the practice ships products from its facility or from the distributor directly to the client on an as-needed basis.
"In most cases, we fulfill the entire order that we'd otherwise sell in the field by mailing the product, unless the products are needed at the time service is performed."
One warning: Make sure the distributor doesn't include the invoice. Otherwise, the client could see what you pay and compare it to what he or she pays.
II Centralize inventory management. Dr. Baus recommends that one person in the practice handle inventory. "That person develops relationships with distributors," he says. And keeping this job with one person increases the accountability of this important position and also reduces the chances for duplicate ordering, Dr. Baus adds.
At Fairfield Equine Associates, the position of inventory manager is a full-time job. Previously, the position was combined with receptionist responsibilities. Dr. Baus says the change to a full-time position was remarkable and allowed the practice to start adding services like drop shipments.